TRADE-BRAZIL: Int’l Protectionism a Blow to Farm Sector

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, May 22 2002 (IPS) - Brazil doubled its grain yields in the last 18 years – without expanding the area cultivated – in a drive to increase production, but it has now run into the wall of protectionism erected by the world’s leading markets.

Estimates are that Brazil’s grain output this year will reach 100 million tons, a dramatic contrast to the stagnation recorded through the mid-1980s, when average yearly production was 50 million tons.

The area in Brazil planted with grains saw a slight decline of two percent in the last two decades, standing at 39.2 million hectares last year, according to figures from the Ministry of Agriculture.

But productivity reached nearly 2.6 tons per hectare in the most recent harvest, exactly twice that of 18 years ago.

Most of the progress made took place in the 1990s and is due in great part to the expansion of production of soya and maize, grains that today make up more than three-quarters of Brazil’s cereal and legume output.

Furthermore, Brazil offers coffee, sugar and orange juice, sectors in which this South American giant is a word leader in production and exports.

Farm trade is the country’s largest source of revenue. Last year agriculture saw a trade surplus of 19 billion dollars, which was nearly annulled in the state’s overall accounts by the deficit recorded in industry, particularly in electronic and chemical products.

This situation has pushed Brazil to fight harder against the trade barriers and farm subsidies of wealthy nations, which use those measures to protect their own rural economies and thus cause international prices of agricultural products to fall.

The administration of Brazil’s President Fernando Henrique Cardoso decided to file a legal complaint with the World Trade Organisation (WTO) challenging the subsidies the United States grants its soya and cotton farmers.

But the U.S. Congress’s approval of a new law earlier this month, which increased state subsidies to farmers to more than 180 billion dollars over the next 10 years, has triggered a global uproar.

Governments of developing and industrialised countries alike charge that the United States, which claims to be a champion of free trade, will reverse the progress made in liberalising the world economy.

The National Confederation of Agriculture (CNA), which represents Brazil’s large farming operations, calculates that the country will lose 2.4 billion dollars annually as a result of the new U.S. “farm bill”.

Brazilian soya will be hit hardest, with losses of 1.6 billion dollars yearly, according to Antonio Donizeti, head of the International Trade division of CNA, which has stepped up pressure on Brasilia to challenge the U.S. policy through the WTO.

The government is steadfast in its decision to request a special WTO panel to issue a ruling on the U.S. soya subsidies, said Foreign Minister Celso Lafer after Washington threatened to initiate similar actions against alleged pirating and other intellectual property violations committed in Brazil.

Brazil’s Ministry of Agriculture, meanwhile, is considering applying an additional tariff to U.S. cotton imports in order to balance out that country’s subsidies, which reached the equivalent of two-thirds of its total cotton production costs in 1999.

The outcomes of the disputes involving global farm trade are of vital importance to Brazil, which seeks to reduce its dependence on foreign capital so that the country is less vulnerable to the international financial crises that have upset its economy since 1995.

The sharp rise in agricultural output, achieved through the intensive use of fertilisers, pesticides and improved seeds, increased the country’s competitiveness and export capacity.

The Brazilian Agricultural Research Enterprise, a government network of 40 centres dedicated to studying specific products or ecosystems, contributed greatly to this process, developing higher- yield crop varieties that are more appropriate for the country’s climate and soil.

Soya, a crop originating in temperate climates, is currently planted in nearly all regions of Brazil, including the tropical areas of the Amazon. The improved seeds also allowed soya production in central Brazil, where soils were long thought to be of low fertility.

Agriculture Minister Marcus Pratini de Moraes points out that new soya varieties added 90 million hectares to farm production, but without the need to cut down forests.

However, in order to realise the potential created by boosting export-focused agriculture, open global markets are needed.

Critics of the Cardoso government are calling for reforms of the country’s farm policy and economic model.

They propose encouraging family farming and agricultural output aimed at the domestic market instead of focusing on exports as a means of solving the country’s foreign accounts imbalance.