Brazil s Agriculture Productivity Story

Transcription

1 BRAZIL PRODUCTIVITY GROWTH FLAGSHIP REPORT Brazil s Agriculture Productivity Story Farms for jobs, growth, and the environment Authors: Diego Arias, Pedro Vieira, Elisio Contini, Michael Toman, Michael Morris, and Barbara Farinelli Authors of background papers: Jose Eustaquio Ribeiro, IPEA Jose Garcia Gasques, MAPA Roberto Giolo de Almeida, Embrapa Vinicius de Melo Benites, Embrapa Junior Garcia, Universidade Federal do Parana

2 Story Line 1. An island of productivity success 2. Brazilian agriculture has been a net job creator. 3. Past drivers of ag productivity: agriculture innovation, facilitation of sector financing, and trade liberalization. 4. Further potential based on lagging mid-size farmers and regions, reforming agriculture policies towards agriculture financing, agrologistics, and R&D. 5. Agriculture productivity can continue to grow sustainably. 6. Agriculture productivity growth in Brazil can therefore continue its positive upward trend, while being environmentally sustainable, creating jobs, and increasing incomes for the rural poor. 2

3 1. Agriculture: An island of success Contribution of TFP to GDP Growth in Selected Countries Evolution of Productivity by Sector,

4 1. Evolution of agriculture productivity Agriculture TFP Growth, (average annual growth rate in %)

5 1. Evolution of agriculture productivity Agriculture productivity growth in Brazil Source: Gasques et al. (2012) 5

6 2. Agriculture has been a net job creator Job creation and destruction in agriculture ( ) 100% 90% Occupational structure in the Brazilian economy 80% 70% 60% % 40% 30% 20% 10% % Agriculture Mining Manufacturing Utilities + Construction Services Source: Squeff and De Negri (Chapter 8).

7 2. Past Ag Productivity Growth Drivers Impact on Agriculture TFP of a 1% increase in different agriculture policies (elasticity) a. Embrapa s agriculture research budget b. Public resources for rural credit c. Value of Brazilian agroexports Source: Gasques et al. (2012) 7

8 3. Allowing mid-size farmers to catch-up Total Factor Productivity Growth Decomposition in Brazil by Farm Size ( ) (% per year) Brazil (total) 0-5 has 5-20 (has) (has) (has) 500+ has TFP Change (Total) TFP Change (90th percentile) TFP Change (10th percentile) 8

9 3. Allowing other regions to catch-up Variation in agriculture productivity in Brazil (2006) Evolution of productivity and area for cattle in Brazil ( )

10 3. Further opening to imports and land rentals Import tariffs for industrial and agriculture goods 1 (2012 or latest available year) Land Tenure 2000 (agriculture area, %) Brazil LAC Asia Europe USA Owner and owner-like Rented from others Under other forms

11 3. Improving agrologistics Global competitiveness index: infrastructure (1-7 scale, higher indicates greater competitiveness) Brazil: Farmers Cost Structure MT MAPITO PR R$/ton % share R$/to n % share R$/to n % share Total Cost % % % Production cost* % % % Logistic cost** % 89 15% 63 12% Source: World Economic Forum, Morgan Stanley LatAm Economics *Includes fertilizers, chemicals, seeds, process, etc. ** Includes transportation and ports MT=Mato Grosso; MAPITO=Maranhão, Piauí and Tocantins; PR=Paraná. Source: MS LatAm Agribusiness Report, Agrianual, Conab, Morgan Stanley LatAm Economics

12 R$ Bilhões 3. Reforming agrifinances Funding for rural credit in Brazil Mês Recurso à Vista Poupança Rural Total

13 3. Further focusing on innovation Composition of General Support Services Estimates GSSE (also called agriculture public goods and services) for 2012 or latest estimate Source: OECD 13

14 4. Agriculture productivity and the environment GHG Emissions Brazil (CO 2 eq) Successful deforestation reduction policies and programs in the Amazon Increasing importance of agriculture in the overall GHG emissions of Brazil Land Use Change and Forestry Agriculture Other Sectors (energy, industry and waste) 14

15 4. Agriculture productivity and the environment Produto, Insumos e Produtividade Total dos Fatores Produto, Insumos e Produtividade Total dos Fatores Taxa anual de crescimento (%) Taxa anual de crescimento (%) (DEGRADADAS 6,189%) PERÍODO PERÍODO ÍNDICE ÍNDICE PRODUTO ÍNDICE INSUMOS PTF ÍNDICE MÃO-DE-OBRA ÍNDICE TERRA ÍNDICE CAPITAL PRODUTIVIDADE PROD. MÃO-DE-OBRA PROD. TERRA PROD. CAPITAL ÍNDICE ÍNDICE PRODUTO ÍNDICE INSUMOS PTF ÍNDICE MÃO-DE-OBRA ÍNDICE TERRA ÍNDICE CAPITAL PRODUTIVIDADE PROD. MÃO-DE-OBRA PROD. TERRA PROD. CAPITAL ( Supondo terras homogêneas ) PTF 3.99 Prod. Terra 4.55 Pastagens degradas 6,189 % e preços de pastagens degradas 10.0% menores PTF 3.96 Prod. Terra

16 4. Agriculture productivity and the environment Evolution of phosphorous in the soil of agriculture lands in Rio Verde, Goias, Brazil Source: COMIGO Lab Results. 16

17 4. Agriculture productivity and the environment Soy productivity response curve to the use of phosphorous fertilizer (lands in Rio Verde, Goias, Brazil) Source: COMIGO Lab Results. Source: Author s calculations. 17

18 4. Conclusions and Policy Recommendations Further agriculture productivity growth in Brazil is an urgent and important need Internal Factors: Jobs Poverty Reduction Environmental Protection and Natural Resources Management External Factors: Increase in Global Food Demand Changing Global Food Demand (diets) Climate change 18

19 4. Conclusions and Policy Recommendations Policy Drivers Raising agriculture productivity for economic growth, shared prosperity, and poverty reduction 1. Pushing the agriculture productivity frontier further Ag innovation system Public-private R&D Ag trade policy Ag risk management Land rental markets Ag credit Agrologistics investments Environmental sustainability 2. Raising agriculture productivity for those left behind Rural education ATER Access to credit Access to markets Adaptive ag R&D Alignment with social protection for productive inclusion 3. Raising agriculture productivity for more and better jobs Farm productivity (2 nd harvest) Agribusiness support Training of rural workers Agrologistics investments 19

20 Myths vs. facts of agriculture productivity in Brazil While productivity in Brazil has stagnated and even dropped in a few sectors in the last decades, in agriculture productivity has increased and even accelerated. In the last 2 decades, agriculture productivity in Brazil has created more jobs than the ones it lost due to adoption in labor saving technologies: It has often been said that agriculture has shed jobs (in accordance to international trends) as agriculture productivity increases and agriculture GDP decreases in importance as a share of total GDP. However, in the last few decades, agriculture productivity growth has accelerated and this has led to net job creation in the sector. Agribusinesses are becoming an important source of urban employment as agriculture productivity increases. In particular in the States of Minas Gerais and Sao Paulo, secondary cities are attracting agribusiness jobs in large quantities. Agriculture is no longer only linked to rural employment generation. Brazil has shown that agriculture productivity growth can be done in favor of environmental protection and even support climate change mitigation. Cases such as sugar cane, soy and livestock. Medium size farms are the ones that have been falling behind in agriculture productivity growth. Small farms, in particular family farms, have done well, but with great variation among regions and within regions. Agriculture productivity (and income) increases continues to be a major driver of poverty reduction among the rural poor.

21 Next Steps Finalize the work on agriculture TFP and GHG emissions (May 217) Finalize the work on agriculture imports and agriculture TFP (May 2017) Undertake discussions on findings with key stakeholders (June 2017)