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

At this stage, beneficiaries were eligible for credit from the Land Purchase Fund with credit initially given for a 10-year period with a three-year grace period at the government long-term interest rate. Decisions regarding land allocation to individual members and corresponding payment obligations were made internally within the association.

Communities that participated in the Land Purchase Fund program were eligible to present proposals for complementary community subprojects and technical assistance to establish their settlement and improve productivity of the acquired land. The community subprojects could be infrastructural, social, or productive, and they could be funded through matching grants by the project. Community labor and land constituted the counterpart contribution by the community.

Benefits and Impacts

The process has proven to be fair and flexible. There is self-selection of beneficiaries, who because they are expected to repay their land purchase loan, have an incentive to bid down the land price. Thus, by default, there has been an automatic focus on poor and underutilized lands where social gains are maximized. Other achievements include:

• The number of families estimated to have benefited by the end of the project is 16,439, about 110 percent of what was expected at appraisal (15,000 families).
  
  
• The cost per beneficiary was reduced from US$11,600 to about US$3,000.
  
  
• Newly-acquired farms show favorable expectations for economic and financial viability, generating sufficient earnings to finance debt and improve living standards.
  
  
• Beneficiaries are less vulnerable to drought and other climatic/economic risks.
  

Lessons Learned and Issues for Wider Applicability

• Community participation in the identification, financing, and implementation of subprojects that meet the beneficiaries’ most pressing needs increases the sense of ownership and sharpens the project focus on poverty reduction. Technical assistance should be provided to rural communities and smallholders to enable them to identify, design, and implement their own subprojects, thereby improving their capacity to compete for investment funds.
  
  
• Self-selection of beneficiaries is critical, but information on the abilities of candidates is frequently limited. Technical assistance, cofinancing, and management information systems can reduce these information limitations.
  
  
• Decentralized and demand-driven implementation is critical to achieving effective coordination of the various entities involved in the process.
  
  
• Long-term viability is dependent on the availability of working capital and marketing of increased agricultural production as a result of diversification and improved productivity. Complementary investment in infrastructure and services is necessary.
  
  
• New community associations require special support to build human/social capital.