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Brazzil - Economy - July 2004

Agribusiness is Bad for Brazil and Brazilians

If Brazil wanted to solve the problems of unemployment and poverty
in the rural areas it would be by land reform, which is the
democratization of the ownership of land. If there is no change,
we will continue having a minority earning lots of dollars,
poverty on the rise, and the government making empty speeches.

João Pedro Stédile


Picture The press deifies agribusiness, without pointing out that it employs only half a million people. Since the Lula government took office, the Brazilian press, strangely enough, has unanimously dedicated itself every day to singing the praises of agribusiness.

Why this unified ongoing campaign right now? One of the explanations could be the growing influence of neoliberals in the Lula government, represented by the Ministries of Agriculture, or rather of Agricultural Export, and of Industry and of Health and in the economic area.

Another explanation can be an attempt to stop the government from carrying out a massive land reform. And so they preach that the only way to resolve the problems of poverty and unemployment in the rural area would be the agribusiness model.

The fact is that the poverty, unemployment and social inequality that exist in the Brazilian countryside are precisely the fruits of the 500 years of an agrarian model that gives priority to exports ever since the arrival of the Europeans and their interests.

Twenty Million Without Shoes

The Brazilian press, monopolized by seven groups and clearly tied to the interests of the large landowners and transnational exporters of raw materials, carries out their role of making propaganda.

Every day they show new farm machinery, carrier ships, and indexes of farm exports as if they were synonymous with economic and social solutions. And they hide the fact that in the Brazilian countryside we have 30 million who live in conditions of absolute poverty, that 20 million have never put on a pair of shoes, that 50 million Brazilians go hungry every day. That 30 million don't even have teeth.

They forget to show that only 8 percent of the population goes to the university and that in the Northeast, 60 percent of the rural population is still illiterate. They forget to say that in the country with the largest agricultural border in the world there exist 4.5 million families of landless workers.

Which of these problems are solved by the model of agribusiness? Not one. On the contrary, it's exactly this model that creates so much inequality, poverty, and unemployment. Because the agribusiness model is organized to produce dollars and products that interest Europeans and Asians, not Brazilians.

And for this reason they do not produce food, jobs, or social justice. Agribusiness is concentrated. It takes the wealth produced here out of the country, instead of distributing it.

But I wanted to take advantage of your patience to show that even from the logical point of view of national capitalism, the agribusiness model is irrational, or, if you wish, stupid. Or rather that this model is only of interest to international capital and not even to the development of Brazilian capitalism.

Let's go to the statistical data to see the results of this agrarian model that is praised in song and verse. Brazil has approximately 350 million hectares that can be cultivated, that could be dedicated to farming. And this area that can be cultivated has remained stable since 1985.

The modern agribusiness farms occupy 75 percent of this cultivated area, the best lands, to produce only soy, cotton, cacao, oranges, coffee, sugar cane, and eucalyptus. That's what interests the foreign market. Imagine if the Brazilian people had to put only these products on their tables!

And another group of farms that constitute this model, even worse yet, are dedicated to extensive ranching or to using income from the land for speculation.

According to data from Incra (Instituto Nacional de Colonização e Reforma Agrária—Land Reform and Settlement Institute), based on statements by the owners, there are 54,761 rural properties in Brazil that are classified as "large unproductive properties" (which however cannot be expropriated) that together make up no less than 120 million hectares (the size of all of Europe).

The Fallacy of Modernity

The National Plan for Land Reform divided all the existing properties into small (up to 200 hectares on average), medium (from 200 to 2,000 hectares) and large (above 2,000 hectares). And afterwards it analyzed the behavior of the production factors in relation to each sector.

In relation to employment, the small property gave work to 14 million people, the medium to 1.8 million, and the large agribusiness property to only 500,000. The famous modernity of capitalism is a fallacy. 63 percent of the entire fleet of Brazilian tractors is used by properties under 200 hectares.

And the properties over 1,000 hectares own only 36 percent of the tractors. That is to say, the so-called "modern" property does not even stimulate the national industry of tractors. For this reason, the demand for tractors has not grown in 25 years. The industry is selling around 50,000 tractors a year while at the beginning of the 1960s it was selling 65,000.

But when the time comes to use rural credit from the official banks with public resources and special interest rates, the different interests can also be seen.

In the last harvest (2003/04), the small property had access to US$ 1 billion (3 billion reais) and the medium and large properties, US$ 8 billion (24 billion reais) from the Banco do Brasil. And what is worse, just the 10 transnational corporations tied to agribusiness picked up US$ 1.3 billion (4 billion reais) of public Brazilian money.

Ten transnational corporations had access to more credit than all the four million families of small farmers. And there are still people who believe that the transnational corporations come here to apply foreign capital. On the contrary, they come to access our national treasury! We are financing these foreign corporations and the press is applauding.

In terms of production results, according to the IBGE (Instituto Brasileiro de Geografia e Estatística—Brazilian Institute of Geography and Statistic), the large property represents only 13.6 percent of all of production. Medium properties represent 29.6 percent. And 56.6 percent of all farm production comes from family farms.

In the branches of production, the interests that each segment defends can be seen even more clearly. Even in animal production, the small property represents 60 percent of all of production in milk, hogs, and poultry.

On the question of rural wage-earners, the symbol of capitalism, the medium-sized property gives employment to one million people, the large property to only half a million. And even being family property, the small property gives employment to almost one million rural wage earners besides its own families.

Misalignment Comes From Colonial Times

Brazil has been a victim of this policy of encouraging farm exports ever since colonialism. And everyone knows that not a single country was developed with this model. Even in terms of export, the country earns when it exports merchandise from an industrial source with a high aggregate value.

And for this reason Embraer alone, with its exports of aircraft, represents half the value of the entire export of soy! No country develops itself exporting raw materials.

And in the Brazilian case, it's even worse because the ones who earn money from exports are the transnationals like Monsanto, Cargill, Bunge, ADM, which control worldwide farm trade. They have an average profit of 28 percent over the export value, without producing a single grain.

If Brazil wanted to resolve the problems of unemployment, poverty in the rural areas, and social inequality, it would certainly not be along the path of agribusiness. It would be by land reform, which is the democratization of the ownership of land. By the organization of farm production through family farming, directing production toward food destined for the internal market, for the people.

If all the Brazilian people had enough income to eat well, there would be a national demand infinitely superior to what is exported today. The solution is to create the conditions for the people to buy food.

If the policy does not change, we will continue having a minority earning lots of dollars, poverty on the rise, and the government making speeches to say that it is going to raise family stipends (the "bolsa") to take care of the starving, who will continue to increase.

Until one day when the accumulation of these contradictions will create a genuinely new policy.

This article appeared originally in the magazine Caros Amigos - http://carosamigos.terra.com.br/

João Pedro Stédile is an economist graduated from PUC-RS (Pontifícia Universidade Católica do Rio Grande do Sul) with post graduation in Mexico. He is a leader of the MST (Movimento dos Trabalhadores Sem Terra—Landless Workers' Movement) and of Via Campesina Brasil.
You may contact the MST at anca-rj@veloxmail.com.br.

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