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Agribusiness and Agrarian Reform: The Impending Debate

By: Gustavo Souto de Noronha

The recent exchange of views between the incoming ministers of Agriculture and Agrarian Development, respectively, has restored the agrarian reform debate to the foreground.

If on one hand Katia Abreu sought to deconstruct the mythology of the latifúndio by declaring that it no longer exists, Patrus Ananias restored a discussion of the social function of landowning to the agenda.

The continuing existence of latifúndios was demonstrated immediately after Abreu’s remarks in two articles in the Brazilian press.

The magazine Carta Capital published a piece by Marcelo Pellegrini, who showed that Brazil not only has latifundios: it has 70,000 of them as of January 6, 2015.

The following day, O Globo ran a report by Tatiana Farah on Page 3, headlined “Concentration of land ownership increases throughout Brazil.”

If we examine the Gini coefficient for evidence of this concentration, however, we find no significant changes in the last 50 years. We do well to remember that fear of radical agrarian reform was part of the cultural reaction that led to the overthrow of President João Goulart, also 50 years ago.

Discussion of the social function of property, however, has faded in the last 30 years. If before the 1988 Constitution it was possible to expropriate latifúndios by extension, afterwards, in its Article 185, it provided that expropriation of productive lands was not permissible for the purposes of agrarian reform.

On the other hand, we have Article 186, in which the social function of property is specifically defined: compliance with a rational and adequate plan of improvement; the adequate use of available natural resources and the protection of the environment; observance of legal provisions that regulate labor relations; and a [division of labor] that benefits both owners and workers. The contradiction with Article 185, however, meant that only unproductive lands would be expropriated for agrarian reform.

This [apparent contradiction] has long framed the debate over expropriations of lands not fulfilling their social function in terms of environmental protection, labor relations and human well-being. The recent approval of a constitutional amendment that calls for the expropriations of lands whose owners exploit slave labor, the rural benches of Congress used their hegemony to block the bill from moving forward because it remains necessary to define, in another, more specific bill, exactly what slave labor is. That is, environmental degradation, constant failures to pay workers or improve working conditions are not enough to levy the sanction of expropriation.

And so the question of productivity seems to be suspended in time. Representatives of agribusiness brag of their efficiency, position themselves as engines of Brazilian development. At the same time, with all the technical progress that has been made in the last 40 years, the ruralists will not accept a revision of the indices of productivity based on the census of farming and stock breeding of 1975.

Another issue that is not even brought to the table in the expropriation debate, despite its relation with the environmental aspect and the labor issues, is the use of agrotoxins. Today, Brazil is the largest consumer of agrotoxins in the world, damaging the health of workers and consumers and the environment.

It is also the case that agribusiness owes an enormous debt to the federal government (leaving aside debts owed to state governments) and to the public banks. Rather than being called to account, including the adjudication of rural properties, these debts are eternally renegotiated.

What underlies this issue is the determined defense of what the ruralists call property rights.

In reality, the topic of agrarian reform meets so much resistance because it signals the beginning ofa process of politial reform. In a country in which 15% of the population is rural, family agriculture occupies 24.3% of the arable land, produces 70% of the food, and employs 74.4% of rural workers, the ruralist benches will count on 257 federal deputies and a majority in the House. Only agrarian reform can bring about a rupture with the powers of the deeply rooted oligarchies.

In the CM, Marx e Engels write:

You are horrified that we might want to abolish private property, but in your own society today, private property is effectively abolished for nine-tenths of its members. It is precisely because these nine out of 10 have no such rights that you possess them. You accuse us, then, of wanting to abolish a form of property that can only exist when the vast majority of a society is deprived of all property.

In sum, you accuse us of wanting to abolish private property. In fact, that is exactly what we want.

We are not this radical: when we support agrarian reform, we seek merely the universalization of property rights in the fields. The right to property is not absolute, and as Minister Patrus Ananias reminded us in his address, must be balanced against other fundamental rights.

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«The Latifúndios Exist»

Source: CartaCapital

By: Gustavo Souto de Noronha

The grand unproductive landholdings, considered latifúndios by definition, not only exist in Brazil, contrary to what the Minister of Agriculture said on January 5, but continue to grow.

During the Lula administration alone (2003-2010), latifúndios grew by 100 million hectares.

Furthermore, in 2010, unproductive lands represented 40% of the grand rural properties, according to data from the National Institute of Colonization and Agrarian Reform (Incra).

In all, 228 million hectares were abandoned or producing below capacity, which leaves them without a social function and therefore appropriate for agrarian reform under the Constitution.

The statistics do not support he statement of Kátia Abreu, that “the latifúndio no longer exists” in Brazil, and demolish the argument she presented in an interview with the Folha de S. Paulo, to the effect that Brazil needs no systematic reforms, just “[a touch] here and there.” Continue reading

Checking Out | Grocery Market Concentration in Brazil

brfshare

«BRF is on the table of some 90% of 45 million Brazilian households»

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Source: Escrevinhador.

Supermarket shoppers may not realize it, but a small group of multinational corporations concentrate the majority of brand-name products bought by Brazilians. Ten large corporations — among them Unilever, Nestlé, Procter & Gamble, Kraft and Coca-Cola – control  60% to 70% of a family and make Brazil one of the countries with the highest degree of market concentration in the world. The remaining portion is occupied by 500 smaller, regional brands.

faustao

Procter and Gamble is currently blitzing the media with an advertising campaign emphasizing the range and depth of its family of products, with Globo’s beloved Faustão as official spokesman.

Would you like an example? When the shopper visits the personal hygiene aisle of a commercial establishment and pick out a Gilette shaving cream, a box of Tampax or a package of Pampers diapers, they are buying three brands from the portfolio of the American giant, Procter & Gamble — which also owns Oral-B dental products.

unilever

The Power of Unilever

A housewife shops once a month for the family together with her husband and children. For the kitchen, she buys Knorr, Maizena, Ades fruit juice and Hellmann’s mayonnaise. For housecleaning, the laundry powder Omo and Brilhante. She visits the cosmetics aisle and picks up Rexona antiperspirant for her husband and Lux soap for herself. She buys  Closeup toothpaste, her daughter’s favorite brand. As they leave the supermarket, the son calls and asks for ice cream. His mother buys Kibon-brand popsicles. All of these are brands belong to  Unilever, which in 2013 was Brazil’s largest advertiser, spending R$ 4.5 billion. Omo controls 49.1% of market share in its sector, according to a study by the Nielsen Institute in 2012. Hellmann controls 55% of its market. Unilever sells more than 200 products per second nationwide. What do Coca-Cola, the energy drink Powerade, the boxed juices of Del Vale,  Crystal bottled mineral water and the Matte Leão brand of tea, have in common? … Would you like an example? When the shopper visits the personal hygiene aisle of a commercial establishment and pick out a Gilette shaving cream, a box of Tampax or a package of Pampers diapers, they are buying three brands from the portfolio of the American giant, Procter & Gamble — which also owns Oral-B dental products.

A housewife shops once a month for the family together with her husband and children. For the kitchen, she buys Knorr, Maizena, Ades fruit juice and Hellmann’s mayonnaise.

For housecleaning, the laundry powder Omo and Brilhante.

She visits the cosmetics aisle and picks up Rexona antiperspirant for her husband and Lux soap for herself. She buys  Closeup toothpaste, her daughter’s favorite brand.

As they leave the supermarket, the son calls and asks for ice cream. His mother buys Kibon-brand popsicles.

All of these are brands belong to  Unilever, which in 2013 was Brazil’s largest advertiser, spending R$ 4.5 billion. Omo controls 49.1% of market share in its sector, according to a study by the Nielsen Institute in 2012. Hellmann controls 55% of its market. Unilever sells more than 200 products per second nationwide.

And what do Coca-Cola, the energy drink Powerade, the boxed juices of Del Vale,  Crystal bottled mineral water and the Matte Leão brand of tea, have in common? They are all brands owned by Coca-Cola, which in the soft drink market alone commands 60% of the Brazilian market. And when you feel thirsty and feel like having a beer, there is a very good chance that it will have been brewed by Ambev, with a market share of 70% and such products as  Brahma, Antarctica, Skol and Bohemia. Brasil Kirin (ex-Schincariol) controls only 10%, as does the Petrópolis Group.

Brazilian Companies Also Concentrate Market

BRF – born of a merger between Sadia and  Perdigão – is the leader in the most diverse items for the shopping carts: It offers products in 28 of 30 categories of perishable food items analyzed by the Nielsen Institute, from frozen pasta entrees, say, to frozen meats.  BRF products are found in 90% of Brazil’s 45 million households. It accounts for 20% of the world poultry market. It controls 52.5% of the pizza market and 60% of frozen pasta dishes. Another Brazilian firm with a powerful presence in the Brazilian diet is JBS, owner of various well known brands — Friboi, Seara, Swift, Maturatta and Cabana Las Lilas. With this varied menu and presence in 22 countries on five continents, it serves more than 300,000 customers in 150 nations.

Has the Brazilian government encouraged market concentration?

Some economists believe that the presence of the State in the economy is an upward trend beginning in the second mandate of president Luiz Inácio Lula da Silva, when the national development bank — BNDES — began issuing credits at lower interest rates in order to promote the so-called “national champions.” In this environment, a merger between Brasil Telecom and Oi was encouraged, as was the creation of BRF, fruit of a merger between Sadia e Perdigão. The activities of the strongest Brazilian companies abroad are creating giants.

This does not necessarily mean advantages for Brazilian consumers, however, who continue with fewer options at the supermarket check-out.

I would kill for a peanut butter and jelly sandwich right now. They do not have that here. U.S. style potato chips, on the other hand, are being heavily marketed on the boob tube.

Has this activism by the State benefited the consumer? At the same time, state-owned companies were growing in size and power. In the banking sector, CEF and Banco do Brasil were among the five largest institutions in Brazil, with Caixa leading the area of housing finance and BB in the agricultural field. In energy, Petrobras is the largest oil company, while Eletrobrás led the market in generation of electricity. But this concentration of power in state-owned companies differs from that observed in the private sector. One example is in the energy sector, in which Petrobras has followed a price adjustment scheme for fuels that aligns with the federal policy on inflation.  Well-managed state-owned companies can generate handsome profits that are then paid as dividends to the federal government, which in turn can invest in essential services such as health and education.

Brazilian Companies Also Concentrate Market

BRF – child  of a merger between Sadia and  Perdigão – is the leader in various items in the shopping cart: It offers products in 28 of 30 categories of perishable food items analyzed by the Nielsen Institute, such as frozen pasta entrees to frozen meats.  BRF products are found in 90% of Brazil’s 45 million households. It accounts for 20% of the world poultry market. It controls 52.5% of the pizza market and 60% of frozen pasta dishes. It has also proven itself acquisitive in recent years. Another Brazilian firm with a powerful presence in the Brazilian diet is JBS, owner of various well known brands — Friboi, Seara, Swift, Maturatta and Cabana Las Lilas. With this varied menu and presence in 22 countries on five continents, it serves more than 300,000 customers in 150 nations.

Has the Brazilian government encouraged market concentration?

Some economists believe that the presence of the State in the economy, an upward trend beginning in the second mandate of president Luiz Inácio Lula da Silva, when the national development bank — BNDES — began issuing credits at lower interest rates in order to promote the so-called “national champions.”

In this environment, a merger between Brasil Telecom and Oi was encouraged, as was the creation of BRF, fruit of a merger between Sadia and Perdigão.

The activities of the strongest Brazilian companies abroad are creating giants.

This does not necessarily mean advantages for Brazilian consumers, however, who continue with fewer options at the supermarket check-out.

Has this activism by the State benefited the consumer?

At the same time, state-owned companies were growing in size and power. In the banking sector, CEF and Banco do Brasil were among the five largest institutions in Brazil, with Caixa leading the area of housing finance and BB in the agricultural field. In energy, Petrobras is the largest oil company, while Eletrobrás led the market in generation of electricity.

But this concentration of power in state-owned companies differs from that observed in the private sector. One example is in the energy sector, in which Petrobras has followed a price adjustment scheme for fuels that aligns with the federal policy on inflation.  Well-managed state-owned companies can generate handsome profits that are then paid as dividends to the federal government, which in turn can invest in essential services such as health and education.

The appeal to family values is interesting, engineered by Globo in its P&G campaign to assuage the moral sense of the average Globo consumer, a similar set of values used to design and execute federal poverty reduction campaigns, especially the Bolsa Família — could the family values appeal be any clearer?

The Marquis de Sabesp | Rationing Already

Source: El País Brasil

São Paulo governor Geraldo Alckmin (PSDB) and Sabesp, the state-owned water and sewer company, have admitted for the first time, after a year of critical water shortages during an election cycle, that the state is suffering from water rationing and that the situation will worsen.

Newly appointed Sabesp CEO Jerson Kelman is even considering a rotation scheme: “We could arrive at the point [of implementing a rotation scheme]. We pray that we don’t have to.”

The best answer to a blistering water shortage, according to a senior executive engineer. is prayer. Continue reading