By JEAN MARC VON DER WEID*
The Supreme Federal Court decides between the paíseo agribusinessócio
In the coming days, the STF will be judging a Direct Action of Unconstitutionality (ADI 5.553) filed by the PSOL, questioning bill 6.299/2002, which modifies the current legislation on pesticides, aiming to expand subsidies and tax exemptions in Brazil.
For some years now, Brazilian agribusiness has been the world's largest consumer of pesticides, with at least a third of them being highly toxic and many of them banned by regulatory agencies in both the United States and the European Union. Tax cuts play an important role in this process, but agribusiness wants more, especially a 60% reduction in ICMS and zero IPI on pesticides.
In other legislative maneuvers, the ruralist bloc aims to further facilitate the release of new pesticides, despite the fact that it is managing to place these products on the domestic market more and more quickly, at the rate of hundreds each year, eight times faster than in the European Union. This would be done by removing the jurisdiction of ANVISA and IBAMA from the approval system, handing it over strictly to the complacent and complicit bureaucracy of the Ministry of Agriculture and Livestock.
Brazilian agribusiness argues that without these and other subsidies (especially for fertilizers and seeds) they would not be able to compete in the international market and would have to offer more expensive food to the domestic market. It is important to discuss these claims and compare the potential advantages pointed out by agribusiness with the negative impacts (external costs) of their activities.
With all the high-quality, high-cost advertising in the Brazilian media (“agriculture is pop, agriculture is tech, agriculture is everything…”) our agribusiness confesses its inefficiency when it charges the public treasury for the cost of its survival.
The argument about the concern about the rising cost of food is pure fallacy. The increase in the price of rice and beans, which we will use as an indicator of the basis of a desirable national diet, is not caused primarily by production costs (including pesticides), but by the low supply of products on the domestic market.
The per capita supply of rice and beans has been falling steadily over the past 50 years. Between 1977 and 2022, per capita consumption of rice fell from 79 to 49 kilograms per year, a reduction of 38%. That of beans fell from 24,7 kg to 14 kg, a 43% decrease.
The consumption of other staple foods in the traditional Brazilian diet (the one enshrined in Getúlio Vargas' minimum wage law in the 2022s and which is far from being the most correct from a nutritional point of view), such as corn and cassava, followed the pattern of rice and beans. In 8,7, corn used for human consumption did not exceed XNUMX kg per capita in the year, a seventh of what was consumed by animals in the form of feed and half of what was used to produce biodiesel. The time when cornbread was the bread of most Brazilians is long gone.
To show the fate of Brazilian agricultural production in general, it is enough to look at the area cultivated for products mainly intended for the domestic market and those mainly intended for export. Among the 22 most important crops, occupying nearly 2022 million hectares of crops in 2023/88, soybeans and corn (largely exported as grains, bran or for fattening chickens, pigs and cattle, also largely exported) occupied 71% of the total area. Another 15% of the area was destined for other export products such as sugar cane, cotton, coffee, cocoa and tobacco. Only 11,5% of the crop area was destined for food crops for the domestic market, such as rice, beans, wheat, cassava, bananas, potatoes, oats, onions, tomatoes, etc.).
This process of internationalization of our agriculture is not new. After all, the country was born and grew under the sign of exporting agricultural products, sugar, coffee, cotton, cocoa and others, in the famous economic cycles that only had a period in which minerals (gold) dominated exports. What is new is that, after a period of accelerated industrial development that began during the Vargas governments, but continued even during the military dictatorship, we have returned to being essentially an exporter of primary products, agricultural and minerals, with industrial production falling to just over 12% of GDP.
This regression has a brutal effect on the cost of food for Brazilians. In this century, we have had only six years in which general inflation measured by the IPCA was higher than food inflation (60% higher on average), while in the other 18 years the latter beat the former with more or less the same annual average.
Let us therefore discard the argument that subsidies are intended to make food cheaper for Brazilians. They are intended to increase the competitiveness of our products in the international market, leaving domestic food consumption permanently insufficient to meet consumer needs.
To give an approximate idea of the problem, just remember that the annual pent-up demand for rice (in husk) is 18 million tons, an extrapolation made by the author based on the desirable consumption indicated in research by the Nutrition Institute of UERJ, published in Public Health Journal. The annual pent-up demand for beans is 7,6 million tons, by the same criterion. This means that rice production needs to be multiplied by 2,8 and bean production by 3,4 to properly feed Brazilians (not counting, of course, several other necessary and equally deficient food products). And while soybean and corn prices on international markets are commodities are higher than those of beans and rice in the domestic market, the agribusiness orientation will be to prioritize exports.
Meanwhile, soybean production grew from 12 to 153 million tons between 1977 and 2022. Corn production grew from 19 to 125. Both products, as we saw above, were essentially aimed at the foreign market in various forms, grains, bran and chicken and pork meat.
Is agribusiness “techy,” as it claims in its propaganda? Not so much. Brazilian soybean productivity is equal to that of the United States and exceeds that of Argentina, two major exporters, but with more intensive use of inputs. Corn productivity, on the other hand, is much lower: 2,78 and 1,7 times lower than in the United States and Argentina. Our competitors have some natural advantages in terms of climate and soil, but this does not explain our backwardness in terms of productivity. However, Brazil today produces and exports more than any other country, and not only in these two dominant products. How can this be explained?
It's simple. On the one hand, environmental and health legislation in the US and the European Union implies higher costs for applying the same technologies. Our costs are much lower due to the weakness of the application of our environmental legislation, which is becoming increasingly permissive. And our labor costs are also much lower. But, above all, we have access to cheap land to expand production, something that our competitors lack.
As long as demand remains strong due to Chinese purchases, we will be booming with profitable prices, but with any reduction in prices we will be the first to lose market share because our production costs are higher. Since our productivity is lower, neither the almost zero cost of occupying illegally occupied land in the Amazon nor the low-paid labor will compensate for the higher production costs.
Of course, there are sectors of agribusiness that are more technologically advanced and competitive, but most of them live by exploiting local natural and human advantages without thinking about tomorrow. If they were in fact “high tec”, as they proclaim, would already be applying available technologies to reduce the use of chemical fertilizers and pesticides, instead of fighting to facilitate the use of increasingly dangerous … and expensive products.
In fact, international experience shows that agribusiness is the same all over the world. American producers only adopt more rational techniques that pose less environmental or health risks when pressure from legislators or the market forces them to do so.
An example from the other side of the world illustrates this axiom. In the Philippines in the 1990s, the FAO convinced the government at the time to draw up a plan to reduce the use of pesticides in rice crops, which were central to the country's economy and society. The project aimed not at eradicating the use of pesticides, but at using them rationally, in the form of integrated pest management, or IPM. The program was aimed at small, medium and large-scale farmers, but its initial success was mainly among the first group.
Small producers, with less access to financial resources, saw the opportunity to reduce costs without losing productivity and joined the program in large numbers. Medium and large producers only joined when the Philippine government removed subsidies for the use of pesticides in rice production. In ten years, the Philippines reduced the use of pesticides in rice to less than 20% of the volumes previously used. With gains in productivity and lower costs.
The FAO program won awards for excellence and began to be disseminated in Asia and Africa with the support of the World Bank, which was in need of something to improve its image among environmentalists. Although the IPM is far from being an agroecological program and does not even consider other components for rationalizing the use of inputs, the result, although strategically small, points in the right direction. It has become even more relevant with the rise in the prices of pesticides and chemical fertilizers in recent decades, which tends to intensify even further.
As far as I know, there is no calculation in Brazil of the indirect costs of using pesticides in agribusiness production systems. It is known that around 25% of food samples contain, on average, doses of pesticides above the tolerable level, according to ANVISA definitions. It is also known that contamination of agricultural workers is a continuous world record. But it is not known how much this costs in terms of private spending or the SUS. The environmental impacts on fauna and flora are observed on a large scale, but also without cost assessments.
The only indication found was from a study of technical cooperation in Germany, which pointed to an indirect cost (covering all impacts) of 20 reais for each real of revenue from agribusiness. I did not have access to the study, only to its conclusions, which seem somewhat exaggerated to me, but in comparison with studies in other countries, these “external costs” indicated by the study may be correct.
What we have to understand in the Brazilian case is that the predatory and short-sighted nature of our agribusiness can only be stopped with greater control of its environmental and health impacts and not with the program of the ruralist caucus, which is to dismantle legislation and state control instruments so that they can devastate at their will.
Without a shadow of a doubt, the greatest possible brake on the use of pesticides is financial, in the form of a reduction in tariffs until the elimination of existing subsidies. The Supreme Court has the possibility of putting limits on this devastating fury, since the Lula government either decided to ally itself with agribusiness, in the illusion of taming the beast, or it capitulated to the ruralist caucus due to a total lack of firepower.
It remains to be seen whether the remaining votes in the STF (in previous sessions, their excellencies have already voted in favor of agribusiness by 6x2) will balance the result and encourage some of the previous ones to repent and review their position, perhaps thinking about the good of Brazil, its people and its fauna.
*Jean Marc von der Weid is a former president of the UNE (1969-71). Founder of the non-governmental organization Family Agriculture and Agroecology (ASTA).
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