Agribusiness and the Brazilian State: turning deforestation into profits
By Karina Kato
Every day, in different ways, through different channels, we hear about agribusiness in Brazil. In the newspapers, on university research agendas, in social movement documents, and in public policy discussions on the economy, land, environment and labor, it sounds like as a self-evident and obvious notion. But what, after all, do we mean by agribusiness, this “somewhat phantasmagorical” being that has become part of our daily lives?
The term agribusiness was coined in the 1950s, in the United States, by authors John Davis and Ray Goldberg (1957) in their research on changes observed in the North American countryside caused by innovations and technologies in agriculture. Their objective was to lobby for specific, novel public policies to support the sector. Soon, the term came to be used in Brazil as well, in reference to modernized agriculture. Since the 1970s, still under the military regime, many terms came into use to refer to the modernization of agriculture, such as “modern agriculture” or “capitalist agriculture”. For Beatriz Heredia, Moacir Palmeira, and Sergio Leite, researchers who have done extensive studies on society and the economy under agribusiness in Brazil, the notion of agribusiness is “a kind of radicalization of this vision, in which the ‘agricultural’ side is diminished and the ‘industrial’ side is addressed with reference not to some local industrial unit, but to all the activities of the group that controls it, and its forms of management.” Soon, producers and producer associations adopted the expression, with a landmark in 1993 upon the founding of the Associação Brasileira do Agribusiness (Brazilian Agribusiness Association) which, in 2010, became Associação Brasileira do Agronegócio (ABAG) (now entirely in Portuguese). The association was created, according to them, to tackle agribusiness bottlenecks and overcome the Brazilian government’s “short-sightedness” towards the sector.
Agribusiness is usually related to modernized agriculture, with the intensive use of technology, closer relations between industry and agriculture, and greater presence of professional management along the production chain. It consists of four pillars: technology, finance, production, and organization. In technology, we have the intensive use of biotechnology and information and communication technologies, which have revolutionized production and farms themselves. When we speak of agribusiness, we are, above all, talking about control by huge corporations and financial players over export-oriented commodity production chains. The dynamics in local territories thus become highly connected with agricultural futures markets (like the Chicago Mercantile Exchange), driven by opaque networks of players that coordinate agents and territorial operators, local elites, and large corporations and international investment funds. Recently, there has been a noticeable increase in the weight of institutional investors (pension funds, insurance companies, investment funds, etc.) and complex financial instruments, in particular bonds and securitizations (appreciation of alternative assets) that have accelerated the commodification of land. The organizational dimension has seen the incorporation of new management tools and a reconfiguration of productive, political, social, and institutional practices.
Guilherme Delgado, a retired researcher from the Institute for Applied Economic Research (IPEA) and the author of benchmark studies on agribusiness, reminds us that, more than a name to refer to the business sector in the countryside or a particular production and management model, agribusiness expresses the junction of concentrated national and international agro-industrial capital with large landholdings, the trademark of Brazil’s social and economic formation. It represents the renewal of financial and productive strategies for capital accumulation in agriculture, and the expansion of profit opportunities for elites, bringing “modernized” properties into their portfolio of “benefits”, along with those that still profit from speculative land rent. Often ignored in the literature, large landholdings’ usual close links to agribusiness have grown even tighter during the recent land rush.
Delgado sees agribusiness as a political-economy pact that combines appreciation of land values, large landholdings, and the advance of agribusiness, with significant backing from the state. This pact was shaped in the late 1990s, driven by the 1999 currency crisis and the commodities boom that propelled agribusiness to the role of the leading economic strategy for foreign trade and a major pillar in the macroeconomic policies of successive Brazilian governments. In agricultural frontier expansion areas, for example, land values have increased due to both production- and equity-related aspects, which in many cases have been accompanied by the commodification and foreign takeovers of rural lands, along with the expulsion of small farmers and squatters.
This same issue was addressed by Beatriz Heredia, Moacir Palmeira and Sergio Pereira Leite in their paper “Sociedade e Economia do ‘Agronegócio’ no Brasil”, published in the Revista Brasileira de Ciências Sociais (v. 25, No. 74) in 2009.
Maria Luisa Mendonça shared this analysis in her article “O Papel da Agricultura nas Relações Internacionais e a Construção do Conceito de Agronegócio”, published by Contexto Internacional in 2015.
Heredia et al, 2009, p. 159-196.
For more information, see, by the same author: “Do capital financeiro na agricultura à economia do agronegócio”, 2012
To read more about the recent land rush in Brazil, see the article by Karina Kato and Sérgio Leite published in the ANPEGE journal, entitled “Land Grabbing, Financeirização da Agricultura e Mercados de Terras: velhas e novas dimensões da questão agrária no Brasil” (in 2020). We also recommend the paper by Sergio Sauer and Saturnino Borras, entitled “Land grabbing’ e ‘green grabbing’: uma leitura da ‘corrida na produção acadêmica’ sobre a apropriação global de terras” published in Revista Campo Território (2016).
Sergio Sauer and Sergio Leite, in their article “Expansão agrícola, preços e apropriação de terra por estrangeiros no Brasil”, published in Revista de Economia e Sociologia Rural (2012) explain how this process takes place.
Agribusiness and its relationship with the Brazilian state
Without downplaying the role of major global corporations, any discussion on agribusiness must look at the state, and the public policies that have enabled them to emerge and expand. Over time, the state has been quick to design macroeconomic policies favorable to the sector’s expansion, renegotiate the debts of large producers, and coordinate implementation of infrastructure policies (like the so-called Northern Arch, a string of logistics corridors for the flow of commodities to Brazil’s northern coast). It has also broadened sectoral policies, particularly agricultural and land-tenure policies.
In terms of agricultural policies, we highlight recent initiatives to increase financing through financial securities, expanding public credit, rolling back pesticide regulations and investing in research and development, among others. Land tenure policies, in turn, have paralleled the advance of agribusiness, mainly through weak oversight and the recent dismantling of the social function of property, changes in land tenure regularization frameworks, and the blocking of agrarian reform and of the titling of indigenous peoples’ and traditional communities’ lands. Another significant support provided by the state has been through the flexibilization of its environmental and labor policies.
The coordination of the interests of agribusiness and large producers with the state involves several different channels, but primarily the Parliamentary Front for Agriculture and Livestock (or Rural Caucus: Bancada Ruralista), which has been in operation since 1995. The Front’s members represent no less than 40% of the Brazilian Chamber of Deputies and a third of the Senate. A survey by the journalist watchdog “De Olho nos Ruralistas” shows that the caucus is funded by 38 agribusiness associations, which include large national and international business groups including traders, technology companies, processing companies, banks, etc. (among whom we highlight BRFoods, Monsanto/Bayer, Seara, Bunge, Raizen, Tereos, Phillip Morris, Souza Cruz, Amaggi, Basf, Yara, Suzano, Klabin, Rabobank and Santander).
Photography: Monocultures devastating the Cerrado in the west of Bahia state.
Author: Thomas Bauer
See: Priscilla Arroyo. Multinacionais são financiadoras ocultas da Frente Parlamentar da Agropecuária. De Olho nos Ruralistas, De Olho na Política, Bancada Ruralista, May 21, 2019.
Recent Dynamics of Agribusiness in Brazil
Agribusiness has concentrated its production efforts on grains, coffee, fruit, beef cattle, dairy cattle, lumber and cellulose, sugar and ethanol, etc. Geographically, the sector has recently spread beyond Brazil’s more “capitalized” and modernized areas in the South and Center South, into the so-called new agricultural frontiers, particularly in the Matopiba region and parts of the Brazilian Amazon. The spatial expansion of soybeans, one of the sector’s most typical products and a major export item, gives us a good indication of its recent dynamics.
Figure 1, produced by the Group for Studies in Agribusiness, Social Change and Public Policies (GEMAP), illustrates two interrelated processes: the crop’s expansion into new regions (new “frontiers”); and its consolidation in more “traditional” areas in Southern Brazil, where output had stagnated until recently. Agribusiness thus expands by intensifying production in more capitalized areas, with higher yields, scales and production costs (including land prices), while at the same time it opens new agricultural frontiers, pushing into new areas. The fastest growth in the volume of soybean production has been observed precisely in the Northern region of the country (2,830%, from 2000 to 2018, according to IBGE’s Municipal Agricultural Production, 2020). Each with its own peculiarities, similar movements are also underway for other products such as sugarcane, corn, livestock, etc.
Figure 1 - Area planted to soybeans per micro-region (selected years)
The sector has also gained strength in Brazil through ongoing ideological initiatives associating agribusiness with the general interest: we are all “agro” because “agro is pop!”, as the prime-time ad campaign puts it. This imagery seeks to identify the sector with modern agriculture, cities and modern life, which can almost do without land (by “rebuilding” soils with chemicals), promoting environmental sustainability with state-of-the-art technologies. On the institution’s 20th anniversary, ABAG’s founder, Ney Bittencourt de Araújo, identified the sector’s main challenges as overcoming its internal differences and offering the general public a strong, single narrative to project agribusiness as “one” in its public policy making, decision making and branding. Regina Bruno, who has done years of research on agribusiness, agricultural elites, and power relations in this field, describes the sector’s constant concern with repositioning itself in society as focused on strengthening a unifying narrative that extols its economic (especially re food security), social, and environmental contributions.
Ney Bittencourt not only chaired but also idealized ABAG when it was first established, and in its founding speech tried to relate food security to the success of agribusiness. Agribusiness seeks to legitimize itself by projecting an image that gives it a vital role in food production for a “hungry planet”. This narrative, however, is somewhat contradictory. Smaller farms and so-called family farms do still play important roles in food production for rural and urban markets, in addition to helping maintain the social fabric of rural areas and reviving and preserving diversified food traditions and cultures. Agribusiness, meanwhile, continues to have a major presence in exports. In 2020 it accounted for 48% of Brazilian exports, especially soybeans, meat, forest products, sugar and alcohol, grains, flour, and prepared foods. It is no wonder then that so much has been said recently about inflation rates driven by food prices, for example rice, beef and soybean oil, due to a combination of a stronger exchange rate with the increase in exports of agricultural commodities. At the same time, recent studies have drawn attention to health risks caused by foods produced with many chemical inputs. They criticize the fact that Brazil has recently become one of the world’s largest consumers of pesticides and warn that we must urgently reinforce new alternatives for farming, more connected with nature, with ecosystems, and with human beings.
Agribusiness also seeks to expound on the theme of sustainability. Since its foundation, ABAG has reinforced the interconnection between respect for the environment and investments and productivity, associating poverty and ignorance with pollution. Today this narrative has been radicalized, positioning environmental protection as a factor for competitiveness, associated with efficiency, the application of technologies, and intensive (“land sparing”) production. They thus bolster the idea that it is small and medium-sized farmers, with their “backward” techniques, who deforest and pollute, while agribusiness, by optimizing the use of resources, applying technology, and replenishing soils, is an agent of sustainability par excellence.
Contrary to its discourse, however, agribusiness’ march through Brazil has caused more deforestation. Currently, three states (Pará, Mato Grosso and Amazonas) account for more than half of all deforested areas in the country. Deforestation goes hand in hand with the spread of agricultural activities into the Cerrado and the Amazon. In a short period of time, from 1985 to 2019, these biomes underwent intense changes in land use and coverage, causing the decline of forest areas with the growth of areas devoted to agricultural production.
Agribusiness has been a major driver behind the expansion of agricultural frontiers. The intensification of production in more capitalized areas often entails the systemic expulsion of farmers unable to achieve the scale imposed by current levels of competition. These farmers seek other opportunities in the new frontiers, moving even further into the Cerrado and the Legal Amazon. In these frontier areas, where there are many undesignated public lands, agribusiness expands through deforestation, expelling or purchasing/leasing land from squatters and small farmers, and intensifying its illegal land grabs. The greater profitability of agribusiness and land valorization, coupled with the introduction of infrastructure, have made expropriation and illegal takeovers attractive as instruments to increase the stock of areas in the land market, available to new investors. The “legislative stampede” to dismantle policies that once controlled and monitored deforestation, combined with environmental laws rendered more “flexible” and environmental agencies weakened and demoralized, have all been a significant chapter in these recent transformations. Land regularization programs, such as Legal Land (2009), institutionalized by Law 13.465 (2017), end up stimulating land grabs by offering a near horizon for easier regularization processes.
The spread of agribusiness and its new land deals have maintained and intensified inequality in land tenure. Recent studies based on data from the 2017 Agricultural and Livestock Census reveal a slight intensification of inequality in Brazilian land holding patterns. Since access to land profoundly restricts opportunities for social, political, and economic inclusion in society, inequality in access to and ownership of land can be considered not only a result but also a source of other forms of inequality. Land access is therefore one of the greatest challenges to be overcome to achieve a more democratic, fairer country with greater respect for nature. The interconnections described here undoubtedly challenge us to deepen our understanding of multiple dynamics underpinning agribusiness that, with state oversight, make land a mere commodity for sale on the market.
See: 20th-year commemorative publication by ABAG entitled: ABAG 20 anos: há 20 anos contribuindo para o agronegócio crescer.
For more information, we suggest the text: “Movimento Sou Agro: marketing, habitus e estratégias de poder do agronegócio”, by Regina Bruno (2012).
According to data from the Bulletin of the Department of Trade and International Relations of the Ministry of Agriculture, Livestock and Supply (MAPA), in 2016, agribusiness exports accounted for 46% of total exports in FOB dollars; in 2017 they were 44%; in 2018 42%; and in 2019 43%, underscoring the importance of agribusiness in Brazil’s trade balance.
See: Luciano Nascimento. Balança Comercial do Agronegócio soma US$ 100,81 bilhões em 2020. Agência Brasil, 13/01/2021.
See: P. Salati; R Tooge. Arroz e Óleo mais caros: entenda por que a inflação dos alimentos disparou no país. G1, Agro, Sept. 9, 2020.
In 2015, Fernando Ferreira Carneiro, Raquel Maria Rigotto, Lia Giraldo da Silva Augusto, Karen Friedrich and André Campos Burigo organized the “Dossiê ABRASCO: um alerta sobre os impactos dos agrotóxicos na saúde”, to warn society and public authorities, through scientific studies, about the need for policies to protect and promote human health and ecosystems.
For more details, see: T. R. de Azevedo; M. R. Rosa; J. Z. Shimbo; E. V. Martins; M. G. de Oliveira. Relatório Anual de Desmatamento 2019. São Paulo, SP: MapBiomas, 2020. Pp. 1 – 49.
Several recent studies have connected the spread of agribusiness with deforestation and land grabbing. For more details, we suggest:
Karina Kato; Fabrina Furtado.; O. Aleixo Junior; Jessica Siviero. Global Financial Funds, Land Grabs and the (Re)Production of Inequalities: a contribution from Brazil. International Land Coalition, 2020.
GRAIN et al. Foreign pension funds and land grabbing in Brazil (2015).
Mauricio Torres; Juan Doblas; Daniela Fernandes Alarcon. “‘Dono é quem Desmata’: conexões entre grilagem e desmatamento no sudoeste paraense”. Pará: Instituto Agronômico da Amazônia, 2017.
Inequality in land ownership is an important dimension of the social formation of Brazil, whose colonization was marked by large landholdings. For more information, see:
R. Hoffmann. A Distribuição da Posse da Terra no Brasil, com Resultados Preliminares para 2017(2019);
L. F. G. Pinto; V. G. de Faria; et al. Quem são os Poucos Donos das Terras Agrícolas no Brasil: o mapa da desigualdade(2020); and C. A. Wegerif and A. Guereña. Land Inequality Trends and Drivers(2020).
Karina Kato is a professor at the Federal Rural University of Rio de Janeiro (UFRRJ) and a researcher in the Study Group on Agribusiness, Social Change and Public Policy (GEMAP).
The author thanks Sergio Leite (CPDA/UFRRJ) and Valdemar Wesz Junior (UNILA) for their comments and suggestions.