PUBLIC INVESTIMENTS FOR AGRICULTURE DEVELOPMENT: the

Brazilian story

José Garcia GasquesEliana Teles Bastos

Seminar IFPRI / Embrapa

Brasília, June 2, 2010

2SOURCE: MINISTÉRIO DA FAZENDA - TESOURO NACIONAL - PORTARIA N.371, 29 DE JUNHO DE 2009

Consolidation of Public Accounts – Consolidation of Public Accounts – Expenditures of 2008Expenditures of 2008

Millions R$Millions R$

  FunctionsFunctionsMUNICI-MUNICI-

PALITIESPALITIES STATESSTATES UNIONUNION TOTALTOTAL

AGRICULTUREAGRICULTURE 1.703,71.703,7 4.421,04.421,0 9.475,59.475,5 15.600,215.600,2

AGRARIANAGRARIANORGANIZATIONORGANIZATION 2,52,5 172,8172,8 4.444,04.444,0 4.619,34.619,3

TOTALTOTAL 1.706,21.706,2 4.593,84.593,8 13.919,613.919,6 20.219,520.219,5

Percentage (%)Percentage (%)

  MUNICI-MUNICI-

PALITIESPALITIES STATESSTATES UNIONUNION TOTALTOTAL

AGRICULTUREAGRICULTURE 10,9210,92 28,3428,34 60,7460,74 100,00100,00

AGRARIANAGRARIANORGANIZATIONORGANIZATION 0,050,05 3,743,74 96,2096,20 100,00100,00

3

Growth rates of GDP, Union, Agriculture and Agrarian Organization ExpendituresGrowth rates of GDP, Union, Agriculture and Agrarian Organization Expenditures

Annual growth rate (%)Annual growth rate (%)

1980 - 20091980 - 2009

UnionUnionExpendituresExpenditures 6,176,17

GDPGDP 2,492,49

AGR+ AOAGR+ AO 0,300,30Source: MF/ STN, Ipea - Ipeadata

4

Share of Share of Agriculture Agriculture

and Agrarian and Agrarian Organization Organization in Total Union in Total Union Expenditures Expenditures

Share of Share of Agriculture Agriculture

and Agrarian and Agrarian Organization Organization in Total Union in Total Union Expenditures Expenditures

source: Ministério da Fazenda/STN; Ipea - Ipeadata; FGV - Fundação Getúlio Vargas

Union Expenditures

AGR+ AORelation

%1980 207.871 15.670 7,541981 187.517 8.346 4,451982 196.565 10.923 5,561983 185.665 11.377 6,131984 176.319 7.767 4,411985 208.904 7.338 3,511986 362.395 25.778 7,11 Plano Cruzado1987 328.744 39.268 11,95 Plano Cruzado1988 411.378 35.518 8,63 Plano Cruzado1989 968.110 18.677 1,931990 1.388.200 26.929 1,941991 573.462 25.135 4,38 Drought in Southern Region1992 721.135 18.088 2,511993 834.498 21.161 2,541994 604.538 22.293 3,691995 525.723 27.812 5,291996 549.468 19.322 3,52 New Instruments1997 726.976 24.795 3,411998 829.436 18.353 2,211999 784.018 19.631 2,502000 680.757 13.329 1,962001 749.767 13.321 1,782002 756.543 11.856 1,572003 692.230 11.134 1,612004 697.375 13.150 1,892005 734.574 14.603 1,992006 949.249 16.802 1,772007 1.319.623 18.041 1,372008 1.272.538 14.206 1,122009 1.423.883 18.942 1,33

Million reais of 2009

5

Share of Agriculture and Agrarian Organization in Total Union Expenditures

Share of Agriculture and Agrarian Organization in Total Union Expenditures

Source: Ministério da Fazenda/STN; Ipea - Ipeadata; FGV - Fundação Getúlio Vargas

7,5

6,1

11,9

4,43,7

5,3

3,5

2,2 2,0 1,9 1,81,31,1

1,42,0

1,6

1,82,5

3,42,5

1,9

5,6

3,54,44,5

8,6

7,1

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

%

High inflation subsidies

Economy Opened to International

Markets

Family Agriculture Plan (Pronaf)

New commercialization

instruments

6

ExpendituresExpendituresExpendituresExpenditures

Key Actors Key Actors Agriculture SectorAgriculture Sector

Key ActorsKey ActorsAgrarian OrganizationAgrarian Organization

MAPA63,3%

OTHERS6,1%

MF30,6%

MDA96,9%

MAPA2,5%

OTHERS0,7%

MAPA63,3%

OTHERS6,1%

MF30,6%

MDA96,9%

MAPA2,5%

OTHERS0,7%

Source: MF/ STN

7

Federal Expenditures on Agriculture and Agrarian Organization Functions– 1980-

2009

Federal Expenditures on Agriculture and Agrarian Organization Functions– 1980-

2009

Agriculture

14.18115.523

Agrarian Organization

147

4.760

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.00019

80

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

* deflated by IGP-DI of FGV

mill

ions

R$*

200

9

source: STN/MF

8

Federal Expenditures on Agriculture and Agrarian Organization Functions 2000-

2009

Federal Expenditures on Agriculture and Agrarian Organization Functions 2000-

2009

Source: STN/MF

10.9

69

10.7

20

9.47

7

9.12

8

9.79

3

10.2

12

11.8

18

12.6

27

9.67

0

14.1

81

02.0004.0006.0008.000

10.00012.00014.00016.000

mill

ion

s R

$ 20

09*

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

*deflated by IGP-DI of FGV

Agriculture

2.36

0

2.60

1

2.37

9

2.00

6 3.35

7 4.39

2

4.98

4

5.41

4

4.53

5

4.76

00

1.0002.000

3.0004.0005.0006.000

milli

ons

R$

2009

*

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

*deflated by IGP-DI of FGV

Agrarian Organization

9

Share of National Treasury resources

in financing of farmers and cooperatives

Share of National Treasury resources

in financing of farmers and cooperatives

And now, How And now, How farmers obtain farmers obtain

Resources?Resources?

• Self capitalSelf capital• Firms that sell Firms that sell

inputs (Credit inputs (Credit from Industry).from Industry).

• Banking systemBanking system

And now, How And now, How farmers obtain farmers obtain

Resources?Resources?

• Self capitalSelf capital• Firms that sell Firms that sell

inputs (Credit inputs (Credit from Industry).from Industry).

• Banking systemBanking system

Source: Banco Central do Brasil, Anuário do Crédito Rural

yearsyears Share %Share %

19851985 63,9863,98

19861986 64,8764,87

19871987 37,2937,29

19881988 24,5124,51 What Happened ?

19891989 23,9623,96  

19901990 26,7226,72

Changes in Rural Credit Legislation

19911991 24,1824,18

19921992 22,9722,97 New sources of financing

19931993 26,6726,67

19941994 27,1127,11 Real Plan “Plano Real”

19951995 19,7019,70 PRONAF

19961996 3,483,48

19971997 1,501,50

19981998 1,661,66

19991999 0,110,11

20002000 0,020,02

20012001 1,611,61

20022002 1,681,68

20032003 1,901,90

20042004 3,833,83

20052005 2,172,17

20062006 0,960,96

20072007 0,960,96

20082008 0,560,56

20092009 0,550,55

10

Evolution of Rural Credit Resources - values of 2009 deflated millions reais

75.186

19.28630.308

48.491

104.438

49.114

132.610

117.232

26.304

0

20.000

40.000

60.000

80.000

100.000

120.000

140.000

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: Banco Central do Brasil, Anuário do Crédito Rural

11

Expenditures on Research: Embrapa and Total Factor Productivity

344

TFP

Expenditures on Research (Embrapa)

606

1000

100

200

300

400

500

600

70019

7519

7619

7719

7819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

09

Source: Embrapa

Ind

ex

12

Time Series Model ResultsTime Series Model Results

• Figura 1 – Cummulative effects of Embrapa Expenditures shock on TFP.

• Figura 1 – Cummulative effects of Embrapa Expenditures shock on TFP.

• Figura 2 – Cummulative effects of price relation shock on TFP.

• Figura 2 – Cummulative effects of price relation shock on TFP.

Source: Gasques, Bastos e Bacchi, 2008Source: Gasques, Bastos e Bacchi, 2008

13

Agriculture and Agrarian FunctionsWhat Were the Priorities in 2009 ?Agriculture and Agrarian FunctionsWhat Were the Priorities in 2009 ?

ProgramsProgramsMillionsMillionsReaisReais %%

CommercializationCommercialization 4.283,434.283,43 22,6122,61

Rural CreditRural Credit 3.071,473.071,47 16,2216,22

ResearchResearch 1.855,381.855,38 9,809,80

Coffee EconomyCoffee Economy 1.776,161.776,16 9,389,38

Family Agriculture ( Pronaf ) Family Agriculture ( Pronaf ) 1.944,031.944,03 10,2610,26

OthersOthers 6.011,276.011,27 31,7431,74

Agriculture+Agrarian OrganizationAgriculture+Agrarian Organization 18.941,7418.941,74 100,00100,00Source: MF/ STN and Embrapa

14

Agriculture and Livestock Plan Agriculture and Livestock Plan 2010/ 2011 Perspectives2010/ 2011 Perspectives

Agriculture and Livestock Plan Agriculture and Livestock Plan 2010/ 2011 Perspectives2010/ 2011 Perspectives

1. To guarantee higher quantity of financial resources

2. To support medium farmers and the cooperatives

3. To maintain the investment programs

4. To improve Rural Credit operations

5. To increase the capacity of storage

6. To support commercialization

7. Encourage environmentally-friendly practices

8. To expand areas of crops/livestock, forest and Direct Planting Integration

9. Rural insurance expansion

10. Approval of the Catastrophe Fund

15

Assessoria de Gestão Estratégica - AGE

Ministério da Agricultura, Pecuária e AbastecimentoEsplanada dos Ministérios, Bloco D, 7º Andar

CEP 70043-900 Brasília/DFTel: (061) 3218-2644/2978

age@agricultura.gov.br

Chefe - Derli Dossa: derli.dossa@agricultura.gov.br

EquipeJosé Garcia Gasques: jose.gasques@agricultura.gov.brEliana Teles Bastos: eliana.bastos@agricultura.gov.br

Assessoria de Gestão Estratégica - AGE

Ministério da Agricultura, Pecuária e AbastecimentoEsplanada dos Ministérios, Bloco D, 7º Andar

CEP 70043-900 Brasília/DFTel: (061) 3218-2644/2978

age@agricultura.gov.br

Chefe - Derli Dossa: derli.dossa@agricultura.gov.br

EquipeJosé Garcia Gasques: jose.gasques@agricultura.gov.brEliana Teles Bastos: eliana.bastos@agricultura.gov.br

16

Expenditures of Union in Commercialization and Rural Credit

Expenditures of Union in Commercialization and Rural Credit

Source: MF/ STN

   CommercializationCommercialization Rural CreditRural Credit TotalTotal

20002000 3.170,213.170,21 2.446,482.446,48 5.616,695.616,69

20012001 2.820,852.820,85 2.542,302.542,30 5.363,155.363,15

20022002 1.154,671.154,67 3.013,343.013,34 4.168,004.168,00

20032003 2.105,822.105,82 3.056,163.056,16 5.161,985.161,98

20042004 270,26270,26 4.249,184.249,18 4.519,444.519,44

20052005 1.996,611.996,61 3.422,313.422,31 5.418,925.418,92

20062006 3.525,593.525,59 2.934,812.934,81 6.460,396.460,39

20072007 2.861,022.861,02 3.659,603.659,60 6.520,626.520,62

20082008 894,12894,12 2.301,652.301,65 3.195,763.195,76

20092009 4.283,434.283,43 3.071,473.071,47 7.354,907.354,90