Development & Aid, Food & Agriculture, Global Governance, Headlines, Latin America & the Caribbean, Tierramerica

Brazilian Agriculture Can Help Combat Hunger and Inflation

Mario Osava* - Tierramérica

RIO DE JANEIRO, Mar 11 2011 (IPS) - The current rise in agricultural prices, which now overshadows the increase seen in 2008, highlights the contribution that Brazil could make towards curbing the growing hunger and inflation that are threatening the world once again.

Banana plantation in Pernambuco, Brazil Credit: Alejandro Arigón/IPS

Banana plantation in Pernambuco, Brazil Credit: Alejandro Arigón/IPS

The Brazilian agricultural sector is expected to grow more than any other in coming years, expanding by 40 percent between 2010 and 2019, which is double the worldwide increase needed to meet the growing global demand during this same decade, according to the Food and Agriculture Organization of the United Nations (FAO).

By 2050, global agricultural production will need to grow by 70 percent, further increasing Brazil’s responsibility, as well as its economic prospects.

This South American giant has the “land, technology and gutsy farmers” needed to rise up to the challenge, but it lacks a strategy for fulfilling its “destiny”, said Roberto Rodrigues, who was the Brazilian minister of agriculture between 2003 and 2006, after having chaired the World Committee on Agricultural Cooperatives.

The world is offering Brazil an opportunity to step up its development, but the country’s leaders do not seem to have grasped this potential, Rodrigues commented to Tierramérica.

In any event, high prices will lead to an expansion of food crops everywhere, demanding more fertilizers, pesticides, machinery and land and increasing the prices of everything involved until the enlarged world food stocks bring prices down again, Rodrigues predicted.

Brazil, with its large amount of available land and the knowledge it has accumulated in tropical agriculture, will head up this increase in production. But if the country had a strategic plan, it could “accelerate” this process and save time, he stressed.

In Rodrigues’s view, since the 1970s, when the state-run Brazilian Agricultural Research Cooperation (Embrapa) was created, the country has not had a national agricultural strategy.

Embrapa played a key role in boosting productivity.

In the meantime, the wealthy countries should eliminate subsidies, because in this way markets will opened, another factor that will promote agricultural production, he noted.

However, the inflation spurred by rising prices for food and raw materials is rooted in a complex situation that goes beyond questions of supply and demand.

Much of this inflation has been attributed to financial speculation. And climate change, which aggravates the intensity and frequency of extreme events like droughts and excess rainfall, also plays a significant part in the current volatility of agricultural prices.

China’s accelerated economic growth, along with that of other Asian countries, has served to keep the prices of raw materials high, altering the conditions of trade that used to work against the countries whose economies depend on agricultural production and were seen as responsible for the underdevelopment of many nations, according to the initial theories of the UN Economic Commission for Latin America and the Caribbean (ECLAC).

China brought down the prices of manufactured goods, helping to lower inflation worldwide in recent decades, while its growing demand has raised the prices of raw materials.

“Trade relations have changed, and the theories of (Raúl) Prebisch (ECLAC executive secretary between 1950 and1963), which applied to the 19th and 20th centuries, are no longer valid,” said economist Maria da Conceição Tavares, a major Brazilian contributor to ECLAC thinking, in a recent interview with Rumos magazine, published by development finance institutions.

Environmental limitations have also contributed to maintaining high agricultural prices, because they raise costs and prohibit farming in preserved natural areas, such as forests and wetland ecosystems.

In Brazil, government and business leaders agree, there is no need to deforest the Amazon in order to increase agricultural production at the required pace.

Mechanisation, which is currently used for 70 percent of the sugar cane harvest in the southern state of São Paulo and will reach 100 percent of the harvest by 2014, improves soil that was previously degraded by livestock farming because it leaves much more organic matter in the soil, the president of the Sugar Cane Growers Association of Western São Paulo State, Manoel Ortolan, told Tierramérica.

It is entirely possible to increase production without expanding into new areas of the Amazon rainforest.

A total of 72 million hectares of land, or 8.5 percent of the country’s land area, is currently used for sugar cane cultivation, and another 90 million hectares could easily be added without affecting native forests, since there are at least 70 million hectares of degraded pastureland, noted Rodrigues.

Brazil’s grain output grew by 150 percent in the last 20 years, reaching 148 million tons in the 2010/2011 season on an area of land that is only 30 percent greater than in 1990, according to official figures. Productivity has remained high and will be crucial in the livestock sector.

Cattle farming accounts for close to 200 million hectares of land in Brazil, most of it used for extensive livestock raising, with less than one head of cattle per hectare. Modernisation, now made possible by high beef prices on the international and domestic markets, could free up much of this land for other agricultural activities.

Brazil is already the world’s biggest exporter of sugar, coffee, beef, soybeans and orange juice. The agricultural sector ensures the country a trade surplus that was 20.244 billion dollars in 2010. In terms of manufactured goods, however, Brazil has a growing trade deficit that has sparked concerns about premature de-industrialisation.

Agriculture, even when it is strong, does not promote development in the same way as industry, because it generates less employment, which is also seasonal in nature, despite the incorporation of a great deal of technology and knowledge such as those promoted by Embrapa. There is obviously a reason why industrialised countries are known as “developed” countries.

Rodrigues disagrees with this view, however, arguing that agriculture requires fertilisers, transportation, warehouses, machinery, vehicles, food packaging and a wide range of logistical services, and as a result, “industry follows behind.” And while agriculture may be seasonal, “its production chain is a permanently ongoing activity.”

It was coffee that created the wealth of São Paulo and its entrepreneurial class, Rodrigues recalled. After the global financial crisis in 1929 and the consequent fall in coffee prices, coffee growers and workers, especially Italian immigrants, sought to add value to agricultural production and in this way created the São Paulo industrial sector, which is a driving force of the Brazilian economy, he concluded.

(* Originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme and the United Nations Environment Programme.)

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