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Feeding the World: Brazil’s Transformation into a Modern Agricultural Economy

Author(s):Klein, Herbert S.
Luna, Francisco Vidal
Reviewer(s):Davis, C. Austin

Published by EH.Net (December 2019)

Herbert S. Klein and Francisco Vidal Luna, Feeding the World: Brazil’s Transformation into a Modern Agricultural Economy. New York: Cambridge University Press, 2019. xvii + 453 pp. $33 (paperback), ISBN: 978-1-108-46097-2.

Reviewed for EH.Net by C. Austin Davis, School of International Service, American University.

 
In Feeding the World: Brazil’s Transformation into a Modern Agricultural Economy, Herbert S. Klein and Francisco Vidal Luna describe Brazil as “continental.” Indeed, one thing that impresses about the transformation documented by the authors is its broad sweep. The dramatic modernization of Brazilian agriculture took place across an area larger than the continental United States. It included a diversity of crops and livestock cultivated in rain forest, savanna, and subtropical landscapes. But, despite the breadth of modernization, it is by no means uniform or complete. Productivity of land and labor evolved differently across a number of dimensions, including geography, commodity, and farmer characteristics. These are two central contributions of Klein and Luna’s work: first, to describe authoritatively Brazil’s agricultural development and, second, to develop hypotheses from the juxtaposition of broad and uneven progress.

This transition can be systematically observed via agricultural censuses, population censuses, and a range of other data sources. Klein and Luna use detailed, comprehensive, and high-quality data to chart the path of Brazilian agriculture. As late as 1960, they show, Brazil was globally competitive in only sugar and coffee, two crops that grew especially well in certain regions of Brazil. Today, deriving from eye-catching increases in productivity throughout the country, Brazil’s agricultural exports are diversified, including meat, corn, soy, and citrus, among other products.

Exploiting disaggregated data, Klein and Luna reveal the heterogeneity of progress. In three chapters each focusing on the experience of a single state, we see how the adoption of new agricultural practices differed significantly across space. Mato Grosso do Sul exemplifies the development of the cerrado, a vast savanna in central Brazil; the conversion of frontier plains into large soybean farms was facilitated by new varieties and practices, by large stretches of flat land well suited to mechanization, and by significant migration. Rio Grande do Sul entered the late twentieth century as a productive agricultural region with extensive vertical integration and a relative abundance of small commercial farms; since 1970, soybeans have become increasingly important, but the state has increased production of its diverse mix of crops and livestock products. For almost two hundred years, São Paulo has maintained its position as Brazil’s premiere agricultural producer, but it too experienced major change since 1960, with coffee being superseded by sugar, oranges, and pastoral products.

Disaggregating by establishment income, the authors highlight a bifurcation of Brazilian agriculture between large, modern, high-productivity farms and smaller, less productive farms. In a chapter on Brazil’s relatively modest land reforms, we learn that about two-thirds of Brazilian farms generate gross income below two times the minimum wage. Many of these have negative net income. Klein and Luna go on to emphasize regional differences in the distribution of land and the education of farmers, noting that the receipt of technical assistance is highly skewed towards larger farms with well-educated managers.

From the juxtaposition emerges a number of hypothesized causes for the changes in Brazilian agriculture. Klein and Luna develop these hypotheses by combining data with other sources describing events, policies, and institutional arrangements. Broad progress suggests an important role for policy or other forces operating at a national level. For instance, various schemes for subsidized credit, price controls, and regulatory stocks existed during the period of modernization. Many of these were phased out before or during the liberalization of the 1990s, when lowered trade barriers brought international competition to both input and output markets. The government developed a sophisticated network of research institutions to adapt and develop technologies for local conditions.

The authors also present more local explanations; they suggest the astounding expansion of soy cultivation in the Center-West region owes much to the development of transportation infrastructure. A lack of education may be to blame for persistent poverty and low productivity among the country’s many family farms. The reader’s attention is drawn to differences in industrial organization across products and regions. Finally, path dependence is suggested as an explanation for modern outcomes, with historical episodes of international migration and infrastructure development appearing to have lasting consequences.

So where does Klein and Luna’s analysis fit in the broader literature on the modernization of agriculture? In economics, this literature has several strands. One is macro oriented, developing models to explain cross-country productivity differences and the long-run dynamics of structural transformation. A few recent examples include Donovan (2019), Gollin and Udry (2019), Herrendorf and Schoellman (2015) and Lagakos and Waugh (2013). Another focuses on the micro-level determinants of technology adoption in agriculture. Some of these studies analyze historical episodes of technology adoption while others evaluate barriers to technology adoption in contemporary settings. Readers of this site may be acquainted with the historical research, but Alan Olmstead and Paul Rhode have made fine contributions, e.g. (Olmstead and Rhode, 1995). Economists have long been interested in developing-country adoption of agricultural technology, with research preceding the well-known Foster and Rosenzweig (1995) and continuing, for instance, through the Agricultural Technology Adoption Initiative (atai-research.org). Generally, this work aspires to credibly identify causal mechanisms through some combination of high-quality microdata, quasi-experimental variation, randomization, and theory.

Klein and Luna’s work relates to these literatures, but it is not fully contained by them. The book relates to the macro literature insofar as it documents the experience of a large country economy over many decades. They connect to the micro literature both through their use of microdata, from which they draw a rich description of Brazil’s agricultural transformation, and through their attention to causal mechanisms. The authors propose drivers of transformation, with special focus on policy-related explanations. Where the book departs from the economics literature, it is less concerned with developing formal models of structural transformation or rigorously estimating causal relationships from the data.

Reading as a microeconomist, it is these hypothesized drivers of transformation that consistently aroused my curiosity and further convinced me that Brazil offers the opportunity to study first-order questions related to structural change and technology adoption in agriculture. For instance, educational attainment is extremely low among small farm operators, but almost half the operators of large, highly productive farms are illiterate. How important is operator education, then, in productivity and technology adoption? Do the increases in productivity that characterize structural transformation originate within agriculture or result from changes in other sectors? Relatedly, factor prices receive limited quantitative analysis from Klein and Luna. But surely they alter farmer behavior? Can we separate the effects of historic events like the train and port investments in São Paulo from geographic characteristics of the state?

Structural change remains an essential topic in a world that where subsistence agriculture coexists with autopiloted combines, where wealthy, service-driven economies coexist with poor, agricultural economies. Combined with the looming uncertainties of climate change, Klein and Luna’s work towards understanding transformations in agriculture is more relevant than ever.

References:
Donovan, K. (2019). Agricultural Risk, Intermediate Inputs, and Cross-Country Productivity Differences. Working Paper.

Foster, A. D., and Rosenzweig, M. R. (1995). Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture. Journal of Political Economy, 103(6), 1176-1209.

Gollin, D., and Udry, C. R. (2019). Heterogeneity, Measurement Error and Misallocation: Evidence from African Agriculture. NBER Working Paper 25440.

Herrendorf, B., and Schoellman, T. (2015). Why is Measured Productivity so Low in Agriculture? Review of Economic Dynamics, 4(18), 1003-1022.

Lagakos, D., and Waugh, M. (2013). Selection, Agriculture, and Cross-Country Productivity Differences. American Economic Review, 2(103), 948-980.

Manuelli, R. E., and Seshadri, A. (2014). Frictionless Technology Diffusion: The Case of Tractors. American Economic Review, 104(4), 1368-91.

Olmstead, A. L., and Rhode, P. W. (1995). Beyond the Threshold: An Analysis of the Characteristics and Behavior of Early Reaper Adopters. Journal of Economic History, 55(1), 27-57.
C. Austin Davis is an Assistant Professor of Economics at American University’s School of International Service and a Postdoctoral Associate at Yale University

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Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII