Brazil gives up on land reform

Latin American governments have for fifty years tried and largely failed to carry out land reform that relieve rural poverty. Brazil, which has more land to distribute than any other Latin American nation, is no longer trying.

Dilma, much like Lula in the later years of his administration, has concluded that traditional land settlement for the rural poor just doesn’t work in a modern economy. It’s not terribly surprising that the drop-off in government efforts to distribute land has come alongside the rise of the country’s biggest money-maker -- agribusiness that generates huge amounts of foreign exchange but few jobs. Dilma’s recently released Zero Misery program is aimed in particular at improving the lot of some 7 million people living in rural poverty, but it does not plan to give them land. It may be a reality of an emerging market nation on the rise – general improvement of living standards that overshadow nagging inequality and growing concentration of wealth.

The collapse of Brazil’s land settlement programs is brilliantly documented in an article by Ricardo Carvalho and Soraya Aggege in Carta Capital (in Portuguese, behind a paywall). They chronicle the early hopes of the Landless Workers Movement, or MST, that Lula would distribute land to families who could farm small plots of land, and how those hopes gradually faded as Lula shifted to the center dedicated fewer and fewer resources to that effort.

Since 2005, when Lula’s government set aside 2.5 billion reais to purchasing land and helping settle rural squatters, outlays have steadily fallen. Dilma’s government this year budget only 530 million reais for land purchases – and as of July had only spent around 50 million. Only about 10 percent of what was budgeted for loans to resettled families has actually been disbursed.

The dream of land reform has run up against the economic realities of making it happen. Lula from the beginning decided that the government would buy land – not expropriate it. This decision – a wise one in my view – created the Achilles heel for Brazilian land reform: its cost. Carta Capital estimates the government would have to pay 20 billion reais ($12 billion) to settle just the 170,000 families in the greatest need. This was complicated by soaring commodities prices that boosted the value of Brazil’s highly productive land; precisely what made agribusiness so profitable.

Economists argue that it simply doesn’t make economic sense to spend that level of money on small family farming operations when large-scale agriculture is far and away more profitable. That money might be put to better use training landless workers in basic skills to work in industry. And to some extent, the underlying assumption of an Arbenz style land reform -- that subsistence farming is appealing to a broad segment of the population – is much less true now than in 1954. It’s hard to assume that rural residents today would be willing to live the way their grandparents did, and hard to begrudge them for expecting running water, electricity, cell phones and internet. Failure to perceive this was always my principal criticism of Chavez’s agrarian reforms – the romantic and star-gazing vision of Cuba-style land redistribution belied the fact that Venezuela is a highly urbanized nation where few people are directly involved in agriculture and almost none at a family or subsistence level.

Brazil’s government has, however, done quite a few smart things to help folks in the country. The Family Agriculture Program pays premiums to small farmers to help keep them in business, provides them with financing, and gives them technical training – crucial elements lacking from most Latin American land campaigns in the last fifty years. But these only apply to farmers that already have land, not to squatters.

Dreamers like me would like to see a place for small farmers even a world of mega-food industry. Carta Capital points out, after all, that the state of Mato Grosso – an agricultural behemoth nearly the size of Venezuela that is home to thousands of miles of soy, cotton and corn fields – has to import lettuce from other states because it doesn’t produce any. Locally produced fruits and vegetables can break up the econometric logic of factory-sized farming industries while providing economic opportunities for the landless poor, and produce healthier food to boot. A glance at these OECD figures shows that Brazil, thanks to an abundance of processed food, could soon have an obesity problem to rival that of the United States.

But I have to keep myself from floating into Organic Dream-Land here. Groups of displaced, illiterate, and often violent rural squatters are not easily going to be ushered into community supported agriculture to grow watercress and baby greens for community restaurants in the middle of a Matto Grosso. In the end I can understand the calculus being made here – a small group of rural poor get left behind while the rest of the country prospers. An unfortunate decision, but not one the United States never made, and not one I can’t understand.

Still, there’s a growing problem that I think could someday come back to bite Brazil in the ass. The government is has embarked on a strategy of building up big industry to make a name for Brazil in the world. It has brokered the creation of the world’s biggest poultry processor (Brazil Foods) the world’s biggest beef processor (JBS), and is a major investor in the world’s biggest iron ore producer (Vale) and is closely allied with one of the world’s top soy farmers (Grupo Maggi). This sort of power concentration risks sowing the seeds for the sort of inequality we have today in the U.S. It may be the reality of the modern prosperity Brazil is seeking today. It may mean something different tomorrow.