The perverse nature of agribusiness for Brazilian society


Dear friends of the MST,

In this special edition, we will discuss AGRIBUSINESS. This discussion will be a bit lengthy, but only because we believe it necessary to explain our position and the reasons that cause us to be radically against this practice in the Brazilian countryside.

I – What is agribusiness?
The word agribusiness has a generic meaning, refering to all business activities with farm products. When a small farmer sells a product at the market, he is practicing agribusiness. When a market vendor sells fruits and vegetables, he is practicing agribusiness. That is the essence of the meaning of the term, used on an international level.

However here in Brazil the expression was used by the ranchers, by university intellectuals, and above all by the press, to designate a characteristic of production in the countryside. They call those modern plantations that use vast expanses of land and are dedicated to monoculture “agribusiness”. That is, plantations that specialize in one product, with technology, mechanization, sometimes irrigation, little manual labor, and for this reason they speak with pride that they achieve high productivity. All based on low salaries, intense use of agro-toxins and GMO seeds. In the majority of cases, production is for export, in particular, sugar-cane, coffee, cotton, soy, oranges, cacao, besides cattle raising. This type of plantation is called agribusiness.

But what’s new? Nothing. If we study it carefully, it is the same type of production that was used in the colonial period, during the period of the agro-export model. What has changed is only that slave labor has been changed to wage work and the techniques have been modernized. And studies show that the wages are the lowest when compared with pay in industry, trade and on the big plantations in the developed countries. Many Brazilian studies affirm that it is not our climate and our farm know-how that give Brazilian ranchers the comparative advantages but rather the lack of respect for their employees and lack of control on the part of the government in relation to the agression against the environment without any sense of responsibility to future generations. There are, for example, numerous accusations by agronomists and scientists of the damage that the planting of soy causes in the pasture land of the Northeast region of Maranhão.

II. The false propaganda of agribusiness and its class alliance:

In the last few years the Brazilian media, mainly the large newspapers and TV stations, have done systematic propaganda in favor of the agribusiness model, as if it were the salvation of Brazil. They claim that it is responsible for the growth of our economy, for job creation, for modern agriculture and for the production of food.

All these arguments used in their propaganda do not sustain a more rigorous analysis:

- Agribusiness is responsible for the economic growth of the GNP: agricultural production, strictly speaking (farming and ranching) correspond to only 12% of all national production. So even if agriculture were double the value or volume of production, its influence in the total economy is very small. The ones who promote agribusiness usually mix agriculture with agro-industry, to say that its importance in the economy is growing by 37%. Even so, the importance and growth of agro-industry does not depend on the area cultivated but on the consumer market. If the people in the city have money to buy more food, agro-industry would grow in Brazil. However, its success depends on the value of the minimum wage and on income distribution in the urban centers.

- Agribusiness is responsible for the success of industry: nothing could be more of a fantasy. At the end of the 1970’s and beginning of the 1980’s, at the peak of agriculture subordinated to industry and with easy credit to expand the industrialization of farming, around 65 thousand tractors of all types were sold per year. Thirty years have passed, agribusiness of the neoliberal model has been implemented and at the height of the so-called success of agribusiness in 2004, only 37 thousand tractors were sold. The industries had to sell another 35,000 units outside the country to keep from failing. Worse yet: according to the data of the IBGE (Brazilian Institute for Geography and Statistics), in the last census the ranches with more than 2,000 hectares had only 35,000 tractors. On the other hand, the small properties with fewer than 200 hectares had more than 500,000 tractors.

- Agribusiness took charge of Brazilian agriculture: if agribusiness is so great, why hasn’t the cultivated area in Brazil grown? Since the 1980’s, the total area cultivated for farming has not gone above 45 million hectares.

- Agribusiness is the activity that creates jobs in the countryside: according to IBGE data, there are only 350,000 wage workers in the ranches with more than 2,000 hectares. A lot fewer than the 900,000 wage workers employed on small properties. That is, the production mode of the agribusiness plantation, which is always modernizing, expels manual labor from the field instead of creating jobs for workers.

-Agribusiness distributes income in the countryside: slavery continues and profits are limited to the ranch owners.

- Agribusiness means development of the towns and local economies: in all the regions in which agribusiness plantations exist, income is taken to the large cities. It may be because the largest part of the cost of production (machinery, fertilizers, seeds) comes from other cities and therefore on paying these costs the money returns there; or perhaps because the landowner rarely lives in the city in which the plantation is located. In general, he lives in the large cities and therefore the profits he gains with exports go to luxury consumption, on apartments, and so on. At least the “farm” for his employees is acquired in a local sale, being bought in general in more distant centers where prices are lower. For this reason, the cities dominated by agribusiness, instead of developing, suffer from an influx of people caused by the exodus from rural areas, which increases the poverty on the outskirts of these cities. A completely different scenario from the places where poly-culture predominates, the production of food and small farming that contributes to the wealth of the town and keeps it going.

If this information is official and in fact the big ranches of agribusiness do not represent a solution for the agricultural and social problems in Brazil, why then is so much propaganda published? For an ideological reason. Brazil is experiencing a debate about the model for the economy and for farm production. The agribusiness plantations represent the part of the national bourgeoisie that has assets in agriculture and which has allied itself or rather subordinated itself to foreign capital represented by the interests of the large multinational corporations. These businesses not only participate in the profit obtained by international agricultural trade and by agro-industries, but they also maintain strong economic and ideological ties with the media. There is a triple alliance between the ranchers of agribusiness, the multinational corporations that control agriculture, and the media conglomerates.

Only 10 multinationals have monopoly control over the principal agricultural activities in the country. These are: Bunge, Cargill, Monsanto, Nestlé, Danone, Basf, ADM, Bayer, Sygenta and Norvartis. Just look at their TV commercials to see their degree of involvement with the media.

III. The influences of agribusiness in the Lula government

The Lula government was elected in October 2002 with propaganda and commitments clearly opposed to the maintenance of the neoliberal economic policy, opposed to the priority given by the Cardoso government to agribusiness. All those who voted for Lula wanted changes. If not, they would have voted for José Serra.

However once the elections had passed, the Lula government revealed itself as ambiguous, that despite promising changes, based itself on party and class alliances that still defend neoliberalism, remaining hostage to international finance capital. In economic policy, administered by the Finance Ministry and by the Central Bank, the old line was maintained with those responsible clearly identified with the losing party. For the Ministry of Industry and Trade, in charge of exports, (but which should be in charge of taking care of the internal market), and for the Ministry of Agriculture, ministers were nominated who were identified with the agribusiness model. Minister Luiz Fernando Furlan is a member of Sadia and Minister Roberto Rodrigues owns ranches in Ribeirão Preto and in the south of Maranhão, dedicated to agribusiness of soy, sugarcane, and oranges.

In the policy of the agricultural public sector, the government did not succeed in reversing the picture of abstention by the State. For rural credit, there was an effort by the government to create farm insurance, which would be of particular interest to small farmers. There was an effort to increase the funds for credit aimed at family farming, through PRONAF, that jumped from $R2 billion to $R5 billion. But this did not mean changes in the structure of land. Public funds being allocated by the Bank of Brazil and by the BNDES for the ranches that dedicate themselves to export were not reduced. The Bank of Brazil itself published propaganda in the newspapers and magazines showing that it conceded a volume of credit more than $R5 billion to those 10 multinational corporations that control agriculture and for some few multinational cellulose businesses. That is, fewer than 15 businesses received the same amount of funds that were destined to 4 million family farmers.

In this way, although the government made some commitments to Land Reform and to strengthen rural agriculture, in practice the strongest Ministries clearly gave priority to agribusiness, monoculture, and the export of grains.

IV. The strength of agribusiness in our society:

In 2003, technicians and students of the Ministry of Agrarian Development, of INCRA (National Institute for Colonization and Land Reform) and of IPEA (Institute for Applied Economic Research) of government agencies and also those tied to various universities prepared the National Plan for Land Reform. The latest statistical data collected by the IBGE in the farming census of 1996 and in the INCRA register of 2003 was used. Based on these, Professor Ariovaldo Umbelino Oliveira of the University of São Paulo organized the following table of comparisons:

1. Animal production

Indicators Small / family Medium sized Property Large property / agribusiness
Large animals 46% 37% 17%
Medium-sized animals 86% 13% 1%
Small animals and poultry 85% 14% 1%

2. Total agricultural production – products for export

Indicators Small / family Medium sized Property Large property / agribusiness
Cotton 55% 30% 15%
Cacao 75% 24% 1%
Sugar-cane 20% 47% 33%
Oranges 51% 38% 11%
Soy 34% 44% 22%
Coffee 70% 28% 2%

3. Products for the internal market and food:

Indicators Small / family Medium sized Property Large property / agribusiness
Tree cotton 76% 20% 4%
Rice 39% 43% 18%
Bananas 85% 14% 18%
English potatoes 74% 21% 5%
Beans 78% 17% 5%
Tobacco 99% 1% zero%
Papaya 60% 35% 5%
Manioc 92% 8% zero%
Corn 55% 35% 10%
Tomatoes 76% 19% 5%
Wheat 61% 35% 4%
Grapes 97% 3% zero%

V. About the renegotiation of the debts of the latifundio owners in the Northeast:
Those who have always had privileges do everything to keep things as they are. This week, they want their debts to be rolled over to be paid from the national treasury. The latifundio owners of the Northeast ask for $R7 billion from the public coffers. With this money, only 30,000 medium and large ranchers will benefit. The four million Northeastern rural workers will not benefit.

In the whole country, the debts prior to 1995 for rural products related to agribusiness totaled $R26 billion. They were renegotiated in 1995, when all the medium and large debtors with $R200 thousand had their payment schedules lengthened and rates lowered. Those who had debts over $R200 thousand entered into the Special Program for Asset Restructuring, created by Law 9.318.

In 1998, when the period arrived for ruralists to begin payment of the debt, the federal government authorized two more years of non-payment and new interest rates, besides benefitting the ranchers who were in PESA. It put off the payment of at least 32.5% of the initial parcel until October 31 2001 and the remainder of the loan was incorporated into the debt balance to be paid in annual payments until 2025. Insolvency rose to 90%. But amongst the small producers and settlers, late payments are lower than 2%.
With this money it would be possible to solve the problems of the rural poor. However, with the Brazilian people paying the debts of the ranchers and without anything to produce for the nation, agribusiness comes out ahead one more time. The Chamber of Deputies and the Senate already approved the renegotiation for the Northeast latifundio owners, but we hope that President Lula vetoes this maneuver.

VI. The debate amongst academics and in the newspapers:

The power of the influence of agribusiness is so great that it affects even intellectuals and journalists who reproduce the ideological struggle in the universities and in the press. It’s common to see articles and reports singing the praises of agribusiness. Some intellectuals, including from the left, defend the idea that small farms should also enter into agribusiness. Syndicalists already made a poor copy of this idea, even calling it “small agribusiness”. They do not perceive that in fact there is a struggle between two ways of organizing farm production in our society. The agribusiness way, which we have described above, and the other way, peasant agriculture, based in small family farm establishments that produce several food products, give work to millions of people, in the family and outside it, that produce and develop the local and internal market.

Some argue that it is possible for the two models to live together. This is just a shameful way to defend agribusiness. It’s clear that there will always be larger production units dedicated to export. But it’s necessary to identify the type of priority and farm policy that the government and society defend.

Is our society going to use land and agriculture to produce food, to distribute income, and to keep men and women working the land or are we going to hand over the lands to the large plantations that are going to expel the population, to gain a lot of money and to make exports the top priority?

This is the real debate. There are two agricultural projects for Brazil. For this reason, the representatives of agribusiness attack Land Reform so much. There is no apparent reason because if agribusiness has productive ranches, they are exempt from expropriation. So why does agribusiness attack Land Reform, and even use the ministers of Agriculture and Finance to do this?

For two reasons: first, because they know that Land Reform strengthens the model of land occupation and farm production, In second place, because they also are owners of unproductive latifundios, which instead of being shared in order to have a social function, create jobs, distribute income and improve the living standards of our people, are maintained as a type of reserve for speculation or future expansion of their plantations.

However, it is not possible to make the two models compatible. They can live together for a long time, but from the point of view proposed for our society, it is necessary to choose: either to defend of agribusiness or peasant agriculture — the permanence of men and women in the countryside and food sovereignity. To define oneself by the mode of agribusiness production is to accept also the neoliberal economic model dominated by the banks, by finance capital, and by the multinational corporations.

As the popular saying goes, you cannot “light one for God and the other for the devil”

Sincerely,

National Secretariat of the MST

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