Agricultural Growth, Sustainability, and Poverty Alleviation in the Brazilian Amazon Aerio S. Cunha and Donald R. Sawyer

Humid tropics of South America - Amazon Basin : 7.8 million square km, 8 countries (Bolivia, Brazil, Colombia, Equador, Guyana, Peru, Surinam and Venezuela) Focuss on : Brazilian Amazon (= 6 northern states of Brazil) and its agricultural production as the most important source of sustainable development 3 main factors of failure in implementing sustainable management of agricultural land: 1. Government policy failures (tax and subsidy policies, ill- concieved or ill-executed government projects, deforestation ) 2. Market failures (undervaluation of resource base and inadequate appreciation of economic potential) 3. Speculative rush of natural resources, esp. land

Sustainability - 3 dimensional definition  Technical dimension : - concerns preservation of the resource base - or invention of adequate substitutes or technology at competitive prices  Economic dimension: - choice of technology as a substitute depends on relative factor prices  Social dimension: - social stability is necessary for long-term sustainability and powerty alleviation

Unbalanced Factor Endowments Richness in natural resources - but: Exploiting of resources is costly and risky Many resources have just a potential value Fragile and biologically diverse ecosystem requires special technological methods of exploitation Disminishing returns to land Scarcity of other factors : labour and capital Access to fertile land is uneasy Fertile land is scattered throughout the region, mainly in ateas without proper transportation infrastructure Most of land is claimed by government or private individuals without proper titulation

but: Because of low density of population, there is still a lot of land available for further cultivation Amazon area has disadvataged position in national economy - factors: Uncompetitive agricultural production Other areas of Brazil are more promising for agriculture (Southeast, Center-West region) as they have better conditions  Agricultural expansion in Amazon involved large opportunity costs and thus stopped in the late 1980s Low wages for agricultural workers  Decline in rural population growth because of emigration to towns whith public services available Commercial agriculture largely restricted

Technology enhancing sustainability Is not available because of :  Lack of competitivness of Amazonian agriculture  Not priority of Brazilian government  Natural resources are not conservated (land is used to maximize output of scarce labour and capital resources)  Technological innovations are focussed on savings of rare labour and capital factors rather than on preservation of natural resources

Evidence on Agricultural Growth and Poverty in Amazon Agricultural activity and output remain modest  yields per hectare for the major food crops (rice, maize, cassava, beans) : do not increase but do no decrease Growth in harvested area is highly correlated with population growth  average annual rate of growth : 5% in 1970s x 4.6% in 1980s  level of urbanisation rose from 51.7% in 1980 to 58.3% in 1991  rapid decline in rural population growth in 1980s  Lack of social sustainability of Amazonian agriculture

Poverty indicators` improvement Infant mortality - sharp decline in course of 1980s 61 per 1000 in 1980 x 48 per 1000 in 1988 Malnutrition - also improved in 1980s from 24.5% in 1975 to 10.6% in 1989  56.7% decline Food supply - from 1980 to 1988 the production of beans and maize per inhabitant rose; the production of cassava and rice per capita remained almost constant

4 Top Policies Recomended To promote sustainable growth and alleviate poverty, Brazilian government should : Create stable conditions for development (incl. law enforcement, construction of basic infrastructure etc.); Limit speculation on land and natural resources (proper land titling, progressive tax on unproductive landholdings, put end to subsidies and incentives for land speculation); Upgrade current methods of production (support to adoption of labour and resource-saving technologies); Implement planning (create inventory of natural resources, plan research priorities, reasonable use of Amazonians competitive advantages)