Brazil increases farm production by 10 p.c.

Press, 10 November 1980, Page 18

Brazil increases farm production by 10 p.c.

From .the ‘'Economist,” London

Brazil’s decision in early 1979 to change its farming policy has already jiaid off. Helped by higher support prices, and by good weather, farmers have increased agricultural output by 10 per cent this year, a record leap. The area brought under the plough has increased by more than 8 per cent this year; in the three preceding years it rose by an annual average of 2 per cent. The grains harvest in 1980reached 51M tonnes. Weath■er permitting, it could be 60M tonnes next-year. Food exports, up in vol-

ume, have stagnated in value because of low world prices for Brazil’s staple crops. But food imports have been reduced by more than half, to about $1 billion. Wheat accounts for about three quarters of these food imports, because it does not grow well in Brazil. The Government hopes to curb wheat imports by encouraging the production of alternative grains and by removing subsidies that encourage wheat consumption. This is all part of Mr Antonio Delfim Netto’s new

farm policy, introduced 20 months ago when he became Minister of Agriculture, and continued since his promotion to be Minister of Planning. The essence of the policy is a shift towards new, higher support prices for all food actually produced, whether by large farmers or small ones — and an end to bargaimrate loans for fertilisers and machines (which in practice meant cheap loans to all large landowners, who then used much of the cheap money to speculate in real estate).

Technocrats are already taking credit for part of this year’s jump in farm output. Next year they hope to do even better, Helped by an increase in average support prices of 136 per cent, well above even the gloomiest predictions for inflation, now running at nearly 100 per cent. A key figure in the agricultural team is Mr Paulo Yakota, head of the Institute for Colonisation and Agricultural Reform. Land reform is not top of his list of priorities; Mr Delfim Netto calls that “a job for out of work economists.”

So far, only 25 large estates have been split up, all of them in areas of acute social and political tension. Instead. Mr Yakota is concentrating on getting existing landowners to produce more. Much of Brazilian agriculture is grossly inefficient, partly because land has become a favourite hedge against inflation. Many large farms grow almost-nothing at all. Mr Yakota has devised a scheme to tax farms with poor production increasingly heavily each year until their owners farm them properly, or sell or rent them to somebody who will. An incidental benefit is that more efficient farmers can no longer wriggle out of paying income tax by claiming to be poorer farmers than they actually are. Now they must pay income tax on their true output, or be taxed as unproductive. The Institute for Colonisation and Agricultural Reform gets the tax, but does not aim to make much money out of it. Investments are exempt from tax. and so are small, owner-worked farms. .By any standards, the Government’s task is a huge one. If B r azil is to meet its targets of feeding the urban masses, ending food imports, increasing food exports and producing gasohol, the country will have to bring an extra 41M hectares (11M acres) under cultivation annually. That means digging and planting an extra area the size of the Netherlands every year.