Brazil-Agriculture Structure of Production

When examining the behavior of the agricultural sector in the postwar years, it is possible to identify two distinct periods: horizontal (geographical) expansion from 1949 to 1969 and conservative modernization, from 1970 to the present. In the immediate postwar years, Brazilian agriculture included an export sector that relied heavily on coffee but also on cotton, sugar, and a few minor commodities, and a semisubsistence sector that produced for the domestic market. At the time, the country's population, its per capita income, and its urban sector did not yet impose a large demand on the agricultural sector. With import-substitution industrialization, however, the situation changed drastically. This particular industrialization strategy required that the agricultural sector generate most of the economy's foreign exchange, produce growing outputs of food and some industrial inputs, and transfer resources for import-substitution industrialization. The transfer mechanism was a tax on the foreign exchange earned by coffee exports and the persistent implicit taxation of agriculture. The virtual exclusion of many agricultural products from the world market was caused by the highly overvalued cruzeiro, which resulted from this strategy. Consequently, the cheap domestic food policy that prevailed depressed prices in favor of the urban-industrial sector.

Paradoxically, the overall performance of agriculture during the horizontal expansion period was adequate. Agricultural GDP increased 4.2 percent a year between 1949 and 1969, a considerably higher growth rate than that of the population; between 1950 and 1959, food production increased 5.4 percent a year, and the production of exportables rose 4.1 percent annually. A major factor in this performance was horizontal expansion, that is, the incorporation of new land, especially along the agricultural frontier, made possible by an aggressive policy of road construction (see Frontier Expansion That Shaped Brazil, ch. 1). Moreover, the disincentives of the import-substitution industrialization policies were circumvented by maintaining ample access to land at concessionary terms for the landowning elite and for commercial farmers, reproducing a pattern established early in the colonial period.

By the late 1960s, it was clear that horizontal growth of agriculture was reaching its limits rapidly and that increases in productivity would be essential for a continued expansion of production. Moreover, the growth strategy of the military regime required a fast expansion of exports, including agricultural commodities. Thus, the government implemented a conservative modernization strategy consisting of technical change for a restricted number of subsectors and incentives for the formation of agribusiness complexes.

Technical change involved the development and adaptation of green-revolution technologies, geared mainly toward large agricultural operations that had important roles for mechanization and chemical inputs. Regarding the agribusiness complexes, the government provided strong incentives for the creation and expansion of processing industries and for the development and modernization of agricultural input industries. Moreover, the agricultural phase of the soymeal and oil, instant coffee, processed beef, poultry, orange juice, and sugar and alcohol agribusiness complexes received subsidized credit, guaranteed prices, and tax exemptions and subsidies when exported. Traditional, unprocessed, agricultural products, however, were subjected to heavy taxation and to price and other controls. As in the import-substitution industrialization phase, the production of cheap food was required, but only recently have government policies begun specifically to address this need.

Products benefiting from agricultural modernization responded well to the conservative modernization strategy. Their production methods underwent considerable technical change, and their production and yields increased markedly. Traditional products, however, failed to modernize and tended to perform poorly. They had scant access to credit and to the price-support policy. Moreover, they were frequently subjected to price controls, to a maze of regulations and export restrictions and quotas, and to competition from subsidized imports when they failed to supply the domestic market adequately.

At the beginning of the 1990s, the main crops in the modern segment were cocoa, cotton, rice, sugarcane, oranges, corn, soybeans, and wheat; those in the traditional segment included beans, manioc (cassava), bananas, peanuts, and coffee (see table 9, Appendix). Brazil is also one of the largest exporters of guavas, lemons, mangoes, passion fruit, tangerines, and tobacco. Crop production between 1970 and 1990 shows that the components of the modern segment grew considerably, both in production and in yield, while those of the traditional segment stagnated or declined. The growth in export crops allowed Brazil to become one of the world's largest soybean producers and to earn needed foreign exchange. It also allowed the substitution of sugarcane alcohol for imported oil.

Data as of April 1997

The growth and diversification that took place after World War II brought considerable changes to the productive structure of the Brazilian economy. The share of the agricultural sector in GDP declined from 24.3 percent in 1950 to 11 percent in 1993. In the same 1950 to 1993 period, the share of industry increased from 24.1 percent to 29 percent, if this sector includes manufacturing, mining, and construction (see fig. 8). The share of agriculture in total employment dropped from 62 percent in 1950 to 29.2 percent in 1994, and that of services increased from 25 to 43.6 percent. (Taking into account the informal economy, the services sector totaled 56 percent of GDP in 1993, depending on the source of information.) Yet, despite the industrialization that took place, the share of industry in total employment increased only from 13 to 23.4 percent between 1950 and 1994.

Agriculture

When examining the behavior of the agricultural sector in the postwar years, it is possible to identify two distinct periods: horizontal (geographical) expansion from 1949 to 1969 and conservative modernization, from 1970 to the present. In the immediate postwar years, Brazilian agriculture included an export sector that relied heavily on coffee but also on cotton, sugar, and a few minor commodities, and a semisubsistence sector that produced for the domestic market. At the time, the country's population, its per capita income, and its urban sector did not yet impose a large demand on the agricultural sector. With import-substitution industrialization, however, the situation changed drastically. This particular industrialization strategy required that the agricultural sector generate most of the economy's foreign exchange, produce growing outputs of food and some industrial inputs, and transfer resources for import-substitution industrialization. The transfer mechanism was a tax on the foreign exchange earned by coffee exports and the persistent implicit taxation of agriculture. The virtual exclusion of many agricultural products from the world market was caused by the highly overvalued cruzeiro, which resulted from this strategy. Consequently, the cheap domestic food policy that prevailed depressed prices in favor of the urban-industrial sector.

Paradoxically, the overall performance of agriculture during the horizontal expansion period was adequate. Agricultural GDP increased 4.2 percent a year between 1949 and 1969, a considerably higher growth rate than that of the population; between 1950 and 1959, food production increased 5.4 percent a year, and the production of exportables rose 4.1 percent annually. A major factor in this performance was horizontal expansion, that is, the incorporation of new land, especially along the agricultural frontier, made possible by an aggressive policy of road construction (see Frontier Expansion That Shaped Brazil, ch. 1). Moreover, the disincentives of the import-substitution industrialization policies were circumvented by maintaining ample access to land at concessionary terms for the landowning elite and for commercial farmers, reproducing a pattern established early in the colonial period.

By the late 1960s, it was clear that horizontal growth of agriculture was reaching its limits rapidly and that increases in productivity would be essential for a continued expansion of production. Moreover, the growth strategy of the military regime required a fast expansion of exports, including agricultural commodities. Thus, the government implemented a conservative modernization strategy consisting of technical change for a restricted number of subsectors and incentives for the formation of agribusiness complexes.

Technical change involved the development and adaptation of green-revolution technologies, geared mainly toward large agricultural operations that had important roles for mechanization and chemical inputs. Regarding the agribusiness complexes, the government provided strong incentives for the creation and expansion of processing industries and for the development and modernization of agricultural input industries. Moreover, the agricultural phase of the soymeal and oil, instant coffee, processed beef, poultry, orange juice, and sugar and alcohol agribusiness complexes received subsidized credit, guaranteed prices, and tax exemptions and subsidies when exported. Traditional, unprocessed, agricultural products, however, were subjected to heavy taxation and to price and other controls. As in the import-substitution industrialization phase, the production of cheap food was required, but only recently have government policies begun specifically to address this need.

Products benefiting from agricultural modernization responded well to the conservative modernization strategy. Their production methods underwent considerable technical change, and their production and yields increased markedly. Traditional products, however, failed to modernize and tended to perform poorly. They had scant access to credit and to the price-support policy. Moreover, they were frequently subjected to price controls, to a maze of regulations and export restrictions and quotas, and to competition from subsidized imports when they failed to supply the domestic market adequately.

At the beginning of the 1990s, the main crops in the modern segment were cocoa, cotton, rice, sugarcane, oranges, corn, soybeans, and wheat; those in the traditional segment included beans, manioc (cassava), bananas, peanuts, and coffee (see table 9, Appendix). Brazil is also one of the largest exporters of guavas, lemons, mangoes, passion fruit, tangerines, and tobacco. Crop production between 1970 and 1990 shows that the components of the modern segment grew considerably, both in production and in yield, while those of the traditional segment stagnated or declined. The growth in export crops allowed Brazil to become one of the world's largest soybean producers and to earn needed foreign exchange. It also allowed the substitution of sugarcane alcohol for imported oil.

Data as of April 1997

• Brazil-Brazil and International Conflicts, 1917-95
  
• Brazil-Women in Politics
  
• Brazil-State and Local Governments
  
• Brazil-The Political Party System
  
• Brazil-The Second Empire, 1840-89 The Regency Era, 1831-40
  
• Brazil-The Presidential Election of 1989 Elections
  
• Brazil-Growth of Social and Environmental Movements Conflict and Nonviolence
  
• Brazil-Chapter 2 - The Society and Its Environment
  
• Brazil-The Physical Setting
  
• Brazil-The Services Sector Nuclear Power
  
• Brazil-Brazil's Real Plan
  
• Brazil-Civil-Military Relations, 1985-94
  
• Brazil-The Military Republic, 1964-85
  
• Brazil-Trade Patterns and Regional Economic Integration
  
• Brazil-Defense Expenditures
  
• Brazil-Organization of the Armed Forces
  
• Brazil-The 1981-84 Period
  
• Brazil-Transportation and Communications
  
• Brazil-Cardoso's Presidency, 1995
  
• Brazil-Multilateral Relations Foreign Policy Decision Making
  
• Brazil-Cultural Unity and Diversity
  
• Brazil-Rural Groups
  
• Brazil-Missile Programs
  
• Brazil-Mass Communications Language
  
• Brazil-The Elderly Youth
  
• Brazil-Social Security Public Health and Welfare
  
• Brazil-Economic Outlook
  
• Brazil-Emperor Pedro I, 1822-31 The Empire, 1822-89
  
• Brazil-Fiscal Trends in the 1980s Fiscal and Monetary Policy, the Public Sector, and Inflation
  
• Brazil-Table A - Selected Acronyms and Abbreviations
  
• Brazil-The Post-Vargas Republic, 1954-64
  
• Brazil-Science and Technology as Modernization, 1945-64 The Search for Alternatives
  
• Brazil-Brazil
  
• Brazil-Ranks, Uniforms, and Insignia Conscription
  
• Brazil-Democratic Labor Party
  
• Brazil-Literacy Education
  
• Brazil-The Legislature
  
• Brazil-National Security
  
• Brazil-Family and Kinship
  
• Brazil-Religion
  
• Brazil-Federal Police Security Forces
  
• Brazil-Migration and Urbanization
  
• Brazil-Social Structure
  
• Brazil-Country
  
• Brazil-Geography
  
• Brazil-Employment and Earnings
  
• Brazil-Penal Institutions
  
• Brazil-Toward the Future
  
• Brazil-Minor Parties in Congress
  
• Brazil-The Environment Center-West
  
• Brazil-Nuclear Programs
  
• Brazil-Society
  
• Brazil-Airports
  
• Brazil-The 1990-94 Period
  
• Brazil-The Labor Force and Income Levels
  
• Brazil-The Judiciary
  
• Brazil-The Era of Getúlio Vargas, 1930-54
  
• Brazil-Preface
  
• Brazil-Fishing Livestock
  
• Brazil-Housing Sanitation and Public Utilities
  
• Brazil-Energy
  
• Brazil-The Colonial Era, 1500-1815
  
• Brazil-The Indigenous Population
  
• Brazil-Amerindians Race and Ethnicity
  
• Brazil-Principal Research Libraries
  
• Brazil-Social Conflict and Participation
  
• Brazil-Population Size and Distribution Population
  
• Brazil-Mining Industry
  
• Brazil-Science for Industrial Competitiveness
  
• Brazil-The Computer Industry Policy
  
• Brazil-Africa The Middle East
  
• Brazil-Chapter 1 - Historical Setting
  
• Brazil-Party of National Reconstruction
  
• Brazil-General Elections, 1994
  
• Brazil-University Research and Graduate Education Research and Development
  
• Brazil-Chapter 5 - National Security
  
• Brazil-Inland Waterways
  
• Brazil-Women in the Armed Forces Officer Recruitment
  
• Brazil-Indicators of Health Health Status and Health Care
  
• Brazil-Stagnation, Inflation, and Crisis, 1981-94 Growth with Debt, 1974-80
  
• Brazil-Applied Science in Agriculture and Health Imperial Science
  
• Brazil-Telecommunications
  
• Brazil-Other Activities by the Federal Government The Coordination of High-Level Personnel Training
  
• Brazil-Air Force
  
• Brazil-Personnel and Training
  
• Brazil-Agriculture Structure of Production
  
• Brazil-Colleges and Universities Primary and Secondary Schools
  
• Brazil-The Foreign Service Foreign Relations
  
• Brazil-Railroads
  
• Brazil-The Brazilian Way
  
• Brazil-Constitutional Framework
  
• Brazil-Brazilian Communist Party
  
• Brazil-Franco's Presidency, 1992-94 Collor de Mello's Presidency, 1990-92
  
• Brazil-The Internal Security Mission, 1964-85 From Moderator to Director, 1930-85
  
• Brazil-Liberal Front Party
  
• Brazil-The Lobbying Process Interest Groups
  
• Brazil-Acknowledgments
  
• Brazil-Soils and Vegetation
  
• Brazil-Government and Politics
  
• Brazil-Chapter 6 - Science and Technology
  
• Brazil-Colonial Science Historical Evolution
  
• Brazil-Exchange-Rate and Balance of Payments Policies
  
• Brazil-Privatization
  
• Brazil-Interest Group Politics
  
• Brazil-Municipal Elections, 1996
  
• Brazil-Foreword
  
• Brazil-Europe Latin America
  
• Brazil-Education and Training
  
• Brazil-Early Colonization
  
• Brazil-Stagnation and Spectacular Growth, 1962-80 Import-Substitution Industrialization, 1945-64
  
• Brazil-Inequality and Poverty Earnings
  
• Brazil-Army Command and Control
  
• Brazil-Defense Industries
  
• Brazil-Mission of the Armed Forces
  
• Brazil-Table B - Chronology of Important Events
  
• Brazil-Stagnation, 1962-67
  
• Brazil-Civic Action The Military Role in Counter-Drug Actions
  
• Brazil
  
• Brazil-Trade Policies
  
• Brazil-Gold Mining Displaces Cane Farming French and Dutch Incursions
  
• Brazil-The Ministry of Science and Technology Administration of Science and Technology
  
• Brazil-Early History The Military Role in Society and Government
  
• Brazil-The Electoral System
  
• Brazil-Crime and Punishment
  
• Brazil-State Police
  
• Brazil
  
• Brazil-United States Asia
  
• Brazil-Foreign Military Influence
  
• Brazil-The Military Role in the Intelligence Services
  
• Brazil-Technological Research in the Private Sector Research in State-Owned Corporations
  
• Brazil-Chapter 3 - The Economy
  
• Brazil-Historical Background and Economic Growth
  
• Brazil-Capital Flows and the External Debt Exchange Rates and Foreign Trade
  
• Brazil
  
• Brazil-The Strategic Affairs Secretariat, 1990-94 The National Intelligence Service, 1964-90
  
• Brazil-The Military in the Amazon The Military Mission since 1988
  
• Brazil
  
• Brazil
  
• Brazil-Sociology of the Officer Corps
  
• Brazil
  
• Brazil-The São Paulo Science and Technology System Science and Technology in the States
  
• Brazil-Major Parties in Congress Historical Origins and Evolution
  
• Brazil
  
• Brazil-Fertility Mortality
  
• Brazil
  
• Brazil-The Funding Authority for Studies and Projects National Council for Scientific and Technological Development
  
• Brazil
  
• Brazil-Party Legislation Regional Strength of the Parties
  
• Brazil-Country Profile
  
• Brazil-Gender Social Classes
  
• Brazil-The Kingdom of Portugal and Brazil, 1815-21
  
• Brazil-The Transition to Kingdom Status
  
• Brazil-North
  
• Brazil-Brazilian Social Democracy Party
  
• Brazil-Chapter 4 - Government and Politics
  
• Brazil
  
• Brazil-Political Culture
  
• Brazil
  
• Brazil-The Economy at Independence, 1822 The Eighteenth-Century Gold Rush
  
• Brazil-Navy
  
• Brazil-Other Religions Roman Catholicism
  
• Brazil-The Colonial Period
  
• Brazil-The Executive Structure of Government
  
• Brazil-Geographic Regions Climate
  
• Brazil-A Period of Sweeping Change, 1930-45 The Coffee Economy, 1840-1930
  
• Brazil-The Space Program
  
• Brazil-Progressive Renewal Party
  
• Brazil-Inclusion and Exclusion
  
• Brazil-Municipal Elections, 1992 Congressional and State Elections, 1990
  
• Brazil-Southeast
  
• Brazil-Frontier Expansion That Shaped Brazil
  
• Brazil-The Media
  
• Brazil-Policy Perspectives Centers of Excellence
  
• Brazil
  
• Brazil-Petroleum