Missing the Target: Brazil's Agricultural Policy Indirectly Subsidizes Foreign Investments to the Detriment of Smallholder Farmers and Local Agribusiness

Abstract

Currently there is controversy about the effect of direct foreign investment in the Brazilian agricultural sector, mainly due to the impact it has on small farmers, land use, the environment, and food security. In this context, Brazil finds itself in an even more delicate situation, since in order to remain a bulwark of the economy, Brazilian agribusiness depends heavily on public policies that directly impact its treasury. This suggests there is an indirect transfer of public resources to transnational companies involved in agribusiness production chains. This paper assesses the allocation of agricultural credits in Brazil and the market share held by Brazilian groups, vis-à-vis multinational corporations in the agribusiness supply chains. The study was carried out analyzing the three largest supply chains established in the country: soybean, corn, and cattle. Results reveal that 75% of the operating credit (crédito de custeio), which represents 60% of the total government credit in Brazil, goes directly to soybean, corn, and cattle farmers. Most of this subsidized credit budget goes to the soybean farmers, which are mostly encompassed by large farmers. Results also reveal that 76.1% of the soybean supply chain in Brazil is controlled by foreign multinational corporations. These findings suggest that resources invested in large farmers that take part in supply chains controlled by multinational foreign groups end up indirectly financing foreign companies to the detriment of local smallholder farmers and domestic agribusiness. This highlights the need for restructuring Brazilian agricultural policy in favor of family farmers and domestic agribusiness.

Diversification of crops: Assessment of managerial flexibility and economic impact on sugarcane medium-sized farms

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Do Agricultural Reforms Increasing the Prosperity of Indonesian Farmers?

“…In Brazil, for example, the commercialization of agriculture went wrong, contrary to the initial scenario. Ironically, agricultural credit via foreign investment has made it difficult for local farmers (Corcioli et al, 2022). Broadly speaking, the share of the agricultural market has always been controlled by multinational companies in supplying subsidized credit budgets.…”

A framework for understanding land control transfer in agricultural commodity frontiers

“…After establishment, networking leads to the formation of strategic state‐agribusiness coalitions and the self‐reinforcing implementation of ‘towing strategies’ (Gasparri, 2016) or ‘agro‐strategies’—political actions and narratives that ‘remove juridical and formal obstacles to an increase in grain production’ (de Almeida, 2010, p. 102, translated by Sauer, 2018). In this way, these extractive enclaves become fundamentally entangled in national political orders (Rasmussen & Lund, 2018; Regassa, 2021), gaining the ability to shape policies (Brannstrom, 2005; Eloy et al, 2016; Leme da Silva et al, 2019), steer the land grant process (Albertus, 2019), redirect public funds (Corcioli et al, 2022), and to obtain legal leniency (Berry, 2017; Wesz Junior, 2022). In other words, the agribusiness sector acquires ‘institutional control’ (Lund, 2011), leading to a structure of frontier governance that stabilizes and reproduces the agro‐industrial economy (Thaler et al, 2019; Vergara‐Camus & Kay, 2017).…”