Module 10 - Brazil: Participatory Negotiations and Market-Assisted Land Reform

The Northeast, accommodating one-half of all Brazilian poor people and two-thirds of all rural poor people, is vulnerable to drought and has a relatively poor resource base. Additional constraints to improved investment and productivity in agriculture include ineffective financial systems and distorted land distribution. Studies have shown that smaller family farms in Brazil are more productive and labor intensive than large farms. The highly distorted land ownership pattern is the result of economic distortions, including subsidized agricultural credit, high inflation, and inappropriate tax provisions. Past approaches to land reform, based on centralized government-administered expropriation and redistribution, have had limited success. As a result, the government was interested in experimenting with faster, cheaper, and less conflictive approaches to land reform.

Project Objectives and Description

The objective of the Land Reform and Poverty Alleviation Project was to raise agricultural output and increase poor family incomes by providing improved access to land and funds for complementary investment subprojects planned and implemented by community associations. The project experimented with a program of market-assisted land reform in which beneficiaries are given access to financing for the purchase of suitable land. The purchases are negotiated between willing sellers and willing buyers. Five states were selected for participation in the pilot project based on the severity of the landlessness problem and conditions for successful implementation (that is, the immediate availability of land in the market and the capacity of the State agencies to implement the project). The project had five components:

• A land purchase fund to finance land purchases.
  
  
• Community subprojects (small matching grants to communities for investment projects, technical assistance, and start-up).
  
  
• Institutional strengthening (technical assistance and training at the state level).
  
  
• Project administration, supervision, and monitoring.
  
  
• Impact evaluation and dissemination by the federal government.

Community associations consisting of landless rural workers or rural workers owning land sufficient only for subsistence farming selected suitable land and negotiated its purchase with willing sellers. Following negotiations, the associations consulted with the State Land Institute to confirm that the title was clean and that the negotiated purchase price was consistent with market conditions. Communities then presented their project to the State Technical Unit (STU), which verified the eligibility (based on agricultural skills) of the beneficiaries.