The Comparison of Current Agricultural Policies between Brazil and China
Research Paper Supervisor : Dr. Sekou Conde
Minzhu University of China
2006-2007 Academic Year
Abstract:
This research paper mainly introduce the agricultural policies in Brazil and China, through the analysis of the current agricultural policies in Brazil and China, the author summed up the lessons and experience, which can be learned by the Chinese government. This paper includes two parts??/span>The first part is to introduce Brazilian and Chinese agricultural policies by comparison; the second part is a summary of gains and losses of the two countries’ agriculture, and some aspects in which Chinese agricultural policies should improve.
Keywords : China , Brazil , Agriculture , Policy , developement
Brazil is an important participant in world agricultural markets. Its agricultural sector represents a large part of the total economy. In contrast with most OECD countries, the share of agriculture in Brazilian GDP (at 14%), trade (25% of exports) and the labor force (27% of employment) is still relatively high, although it has been declining for some time.[1] Also in the last two decades, Brazil has become an increasingly influential exporter in several agricultural markets. How can Brazil achieve that?
There are many reasons for the rapid development of Brazilian agriculture, for example, Brazil is endowed with vast agricultural resources. It has a semi-temperate climate and higher rainfall, the better soils. Furthermore, higher technology and input use, adequate infrastructure, and more experienced farmers are also promoting the agriculture. Among these reasons, the main one is the agricultural policies.
The agricultural policy has changed among many aspects since 1995, the policy includes many fields such as structure policy, national supporting policy and trade policy .All these policies together promote the development and progress of agriculture and increase of income of farmers.
1, Policy Structure
This policy includes the reform of land and family-support-agriculture policy (FSAP). The purpose of reform of land is to attract farmers to develop reserve plowland in the Mideast, meanwhile FSAP is made for those small size farms which have less international competitive power, with this policy small size farms can have steady income so that they will not move into cities.
(1)The reform of land
Brazil has abundant reserve plowland in the Mideast , in order to promote the development of agriculture of this area. The government has been trying to channel the farmers in the South to develop the farmland .the main measure is land confiscation, the government distribute the confiscated land to the farmers. And another measure is founding “Land Bank”; its purpose is to provide credit to farmers to buy land property.
In China, 5 years ago, Agricultural land contract system was introduced, which is the policy that the right of using land can be calculated among farmers, thus the abandoned land can be developed. Because the income from the land was very low before, many farmers abandoned their land and moved into cities to look for jobs. It is obvious that China takes different measure from Brazil.
(2) FSAP
FSAP has three sections: the first one is infrastructure constructions such as rural road , telecommunication, electric power, exploration, warehouse and so on .Municipal office submit plans to the state office of the Ministry of Agriculture, the feasibility of the project will be examined according to atropism climate ,soil ,farmers experience , local market ,and yield of crops. If the project is feasible, it will be fund-supported by Federal, state and municipal government jointly, the farmers needn’t fund.
The second one is to resort to agricultural credit. Small size farm can get 17% or as low as 2- 6% interest rate for loan; with budget plans, farmers can be exempted from 30% of the downpayment. If farmers failed to return money within deadline, they can explain to relevant agricultural department for extension time. In Rio state, there are five criterions to regarded farms as small size one: [2]
1) Less than 20 hectares of farmland
2) Income only coming from agriculture
3) Family income less than 12000 US dollars
4) Must be run on family basis, with at most 1 employees or one more in special circumstances.
5) Must live in countryside or nearby area
The third one is to provide free training to farmers or technicians, offer them all kinds of anti-sect technology or literature, with exception in seeds and fertilizers.
The purpose of FASP is to ensure that small size families can have stable income, to provide more employments for farmers and get small size farmers stay in their farmland instead of flowing into city areas, thus avoiding social problems brought out by over fast flowing of country laborers into city area. This plan is helpful to keep society stable. This plan was begun in 1997 and widely applied in 1999. Take Rio state for example. There is no large scale farm in this state and most of the farms are of medium and small size. 54%of the farms are less than 10 hectares and 37% of them are from 10 to 100 hectares, with the rest 9% ranging from 100 to 1000 hectares. Almost no farm is more than 1000 hectares. (While in northwestern part of the country, an average farm can reach 25000 hectares.) In recent three years, this plan has been carried out in 34 cities and about 14000 farmers have joined in this plan. Among the capital budgeted for the plan, 3 million reais, 37 million reais are used for technology training and facilities respectively.( 15million from federal government and the rest form state and municipal governments).For agricultural credit, 12million reais is provided.[3]
In the process of the Construction of a New Socialist Countryside, the government has also made a number of agricultural policies, the government has actively invested a lot of funds, and these funds can be used for the building public facilities such as public toilets, road lights, warehouses, roads, which can be used by the villagers. Although this policies include agriculture support policy but most of funds are used in such image-building projects public toilet, road lights and villagers entertainment facilities, less funds are used for the direct benefit to agriculture .Moreover, lack of monitoring mechanisms is in the release and use of these funds ,therefore these funds will not be well used. In China, the farmers lack of training, many farmers plant rice, fruit and other kind of crops just according to their own experience, so it is very necessary to provide free training to farmers or technicians, offer them all kinds of anti-sect technology or literature.
2. National supporting policy
National supporting policies are varied, such as price support policy, agricultural insurance policy, farmers’ debt reduction and exemption policy, co operational organization policy, processing industry encouraging policy, tax policy, road construction etc. The purpose is to support farmers by all means, make them more competitive.
The core measure is price policy. Price policy has change from government buying to product sellout, this price policy measure can alleviate pressure on government brought out by storage cost. agricultural insurance is to promote farmers’ participation in insurance to avoid risks; policy for processing industry is to ensure a better sale for agricultural products; road construction policy and policy in cooperational organization is to create opportunities for improving farmers’ and agricultural products competitiveness from the aspect of organization and ground; tax policy and debt reduction and exemption policy is a reflection of government’ support for farmers who are at an weak position.
(1) Price Support Policy
When farmers from Midwestern part sell their products to food processing industries of wholesalers, the products are more expensive than local price due to transportation cost. Under this plan, the price difference caused by transportation is compensated by government in the form of price support. This plan is to encourage food processing enterprise to go to local market to get agricultural products by giving them transportation fee. Only 5 to 6% of the yield can have access to price support. Government will allocate quotas through auction. Products within the quota are granted price support and those beyond are not. In practice, three crops are benefiting: cotton, corn and wheat. In 2000, PSP support reached 7650 reais with 5700 reais and 1950 reais for cotton and corn respectively. [4]
In China, the vegetables from the south to the north can get green channels, that means the vehicles transporting vegetables from the south to the north of can be exempt from bridge tolls and tolls. The government doesn’t provide price support policy like Brazilian government.
(2) Agricultural Insurance Policy
Due to imbalance between national and regional development, agricultural insurance is mostly implemented in developed areas. Brazilian insurance has the following features: solely within the responsibility of federal central bank with other banks working as its agents. The four stages which are plowing preparation; planting; managing and selling are in the scale of insurance. Insurance is taken at the same time credit is carried out. The coverage of insurance ranges from a highest level of production cost to any level down. Government and farmers shoulder half of the risk respectively. Insurance policy helps reduce agricultural production risk through their participation.
In China, insurance is [...]
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