IFPRI Meeting, Bold actions for stimulating inclusive growth, June 2 2010

Great concentrationGreat concentration of productionof production2006 Census2006 Census

Explanation: technology or farm size in ha?Explanation: technology or farm size in ha?

Great concentrationGreat concentration of productionof production2006 Census2006 Census

Explanation: technology or farm size in ha?Explanation: technology or farm size in ha?

Eliseu AlvesEliseu Alves

The role of agricultural research and Embrapa in Brazilian poverty reduction

Agreement Embrapa – IFPRI

IFPRI research project title:

• Sinshen Diao leader and responsible for step 4;

• Eduardo Magalhães consultant at IFPRI and responsible for Step1;

• Daniela Rocha consultant and data support collection at IBGE

Research team from IFPRI:

Embrapa – IFPRI partnership

• Geraldo da Silva e Souza, leader and responsible for step 4;

• Antônio Flávio Dias Avila responsible for step 4;

• Eliane Gomes responsible for step 3.

• Collaborators from Embrapa

• Eliseu Alves, Fernando Garagorry, Cláudio Barroso and Maria Abadia Alves.

Research team from Embrapa:

Embrapa – IFPRI partnership

• To establish gross income classes for the IFPRI research project;

• To give an idea of the groups of farms for which there is in agriculture a solution of the income problem ;

• To classify the farms to fundament the sample design.

Objectives of the gross income study

• 85% of the population is urban: urban competition for labor;

• Minimum wage is required and well known;

• Strong links with the international market;

• Enforcement of the minimum wage law;

• Presence of television, newspaper and radio;

• Social movements.

Gross income study: dynamic labor market:Opportunity cost is well known by family. Reasons:

Region Index (%)

North 74.40

Northeast 72.55

Center-West 89.50

Southeast 93.28

South 84.11

Brazil 84.59

Urbanization index, 2007

Region Number (1,000) %

North 3,630 11,6

Northeast 14,770 47,1

Center-West 1,789 5,7

Southeast 6,440 20,5

South 4,739 15,1

Brazil 31,368 100,0

Rural population, 2007

Region Farm number % R$/farm

North 475,775 9.2 12,923.88

Northeast 2,454,006 47.4 11,578.44

Center-West 317,478 6.1 62,495.55

Southeast 922,049 17.8 52,009.71

South 1,006,181 19.5 41,210.64

Brazil 5,175,489 100,0 27,789.50

Number of farms and gross income by farm

• gifmw = gross income by farm by month in minimum wage units

Gross income

RegionsFrequency

NºFrequencyRegion (%)

FrequencyBrazil (%)

ProductionRegion (%)

gifmw

Brazil 3,775,826 72.96 100,0 4.04 0.43

North 360,190 75.71 9.54 11.07 0.53

Northeast 2,149,279 87.58 56.92 9.64 0.35

Center-West 216,215 68.10 5.73 1.79 0.46

Southeast 572,859 62.13 15.17 1.99 0.46

South 477,283 47.44 12.64 2.60 0.63

Minimum wage gross income class [0,2]

Obs.: Month value of the minimum wage = R$300.00 (2006).

Minimum wage class

Number of

Farms

% R$/farm/month

0 579,024 15.46 0

(0, ½] 2,014,567 51.62 53.64

(1/2. 1] 611,775 17.11 214.57

(1, 2] 570,480 15.81 428.55

Total 3,775,826 100.00 189.00

Subclasses of the [0,2] minimum wage gross income class [0,2]

Regions FrequencyNº

FrequencyRegion (%)

FrequencyBrazil (%)

ProductionRegion (%)

gifmw

Brazil 975,974 18.86 100,00 11.08 4.53

North 92,799 19,50 9.51 21.79 4.01

Northeast 228,076 9,29 23.37 12.19 4.22

Center-West 71,287 22,45 7,30 5.56 4.30

Southeast 226,625 24,58 23.22 7.83 4.66

South 357,187 35,50 36.60 15.12 4.88

Minimum wage gross income class [2,10]

Regions FrequencyNº

FrequencyRegion (%)

FrequencyBrazil (%)

ProductionRegion (%)

gifmw

Brazil 423,689 8.19 100.00 84.89 80.04

North 22,786 4.79 5.38 67.13 50.32

Northeast 76,651 3.12 18.09 78.17 80.49

Center-West 29,976 9.44 7.08 92.65 170.35

Southeast 122,565 13.29 28.93 90.18 98.01

South 171,711 17.07 40.52 82.28 55.19

Minimum wage gross income class >10

Regions FrequencyNº

FrequencyRegion (%)

FrequencyBrazil (%)

ProductionRegion (%)

gifmw

Brazil 22,188 0.43 100.00 51.34 924.37

North 585 0.12 2.64 25.52 745.17

Northeast 3,521 0.14 15.87 49.3 1,112.58

Center-West 4,389 1.38 19.78 73.09 917.99

Southeast 7,830 0.85 35.29 60.36 919.67

South 5,864 0.58 26.42 35.49 697.10

Minimum wage gross income class >200

Economic policies for each of the three minimum wage classes

Economic policies for each of the three minimum wage classes

• Income transfer policies:

• Retirement policies;

• Food stamp policies;

• Elimination of restrictions to part time work

[0,2] minimum wage class

The low income problem cannot be solved in agriculture only

Whenever possible:

• Small irrigation systems;

• Home industry;

• Simple technologies that increase yield;

[0,2] minimum wage class (cont.)

• New rules for rural credit: operational or investment credit;

• Contract between extension office and farmer or group of farmers with explicit penalties for both parties;

• A plan that integrate farm and home operations for credit purposes;

•The participation of family farmers in extension boards with supervision powers.

[2,10] minimum wage class

The low income problem can be solved at the farm level

• Competitive interest rate at the international level;

• Training of private extension at research units;

• Simplification of the export procedures;

• Reduction of the Brazilian cost: infrastructure,

• Excess of bureaucratic rules and corruption;

• Sound macroeconomic policies.

• Policies to foster the exports and to reach new markets.

• To increase investments in research.

Over 10 minimum wage class

They can take care of themselves

Thank you!Thank you!

Eliseu AlvesEliseu Alves

eliseu.alves@embrapa.breliseu.alves@embrapa.br

+55 61 3448-4202+55 61 3448-4202