OECD Review of Agricultural Policies: Brazil 2005

image of OECD Review of Agricultural Policies: Brazil 2005

This Review measures the level and composition of support to Brazilian agriculture, and evaluates the effectiveness of current measures in attaining their objectives. The study finds that Brazil provides much lower support to its agricultural sector than most OECD countries. However, a large and increasing share of that support is provided in the form of credit subsidies; support which could be more productively oriented to areas such as research and extension, training, and the development of rural infrastructure. A greater focus on such long-term investments could help Brazil to address the two major challenges confronting its agricultural sector: the need to sustain improvements in international competitiveness, and at the same time draw poor smallholders into the development process. At the international level, the report finds that, having substantially reformed its own agricultural policies, the main source of future benefits to Brazil will be reforms in other countries, where access to OECD country markets is the most important issue. Yet while trade liberalisation offers important benefits for the majority of households, those gains need to be placed in the context of the broader opportunities and adjustment pressures confronting both commercial farmers and smallholders.



The Policy Context

Over the past 15 years the Brazilian economy has undergone dramatic structural reforms and achieved much greater macroeconomic stability. The agricultural sector has both contributed to these reforms and benefited from them, with production and exports growing rapidly, particularly in recent years. Yet although economic growth has helped reduce the incidence of poverty, low incomes remain a concern, especially in rural areas, and there has been little progress in reducing income inequality.


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