Evaluation of the World Bank’s Rural Programs in Brazil

This article is the first comprehensive review of the World Bank’s programs in rural Brazil.  The study was a result of the work of the Land Research Action Network (LRAN). The coordination and fiel work was done by the Network of Grassroots Researchers, constituted by Via Campesina organizations in Brazil – the Pastoral Land Commission (CPT),  the Landless Workers Movement (MST), the Rural Women’s Movement (MMC), the Movement of Small Farmers (MPA), the Movement of People Affected by Dams (MAB), the Rural Youth Pastoral (PJR), and the Brazilian Federation of Agronomy Students (FEAB), as well as by the Social Network for Justice and Human Rights.  The technical coordination of the study was done by Criterium Advisors in Research.

The survey was conducted with 1,677 interviews.  This sample was taken from  about 60 thousand families participating in the World Bank’s rural credit programs in Brazil: Cédula da Terra, Banco da Terra, Crédito Fundiário, Nossa Primeira Terra, during the period between 1997 and 2005. 

The World Bank projects contradict the agrarian reform system based on the social function of land, as determined in the Brazilian Constitution.  The Bank’s projects promote the “negotiated” purchase and sale of land, or the “counter-agrarian reform.”

The Counter-Agrarian Reform of the World Bank

The World Bank has been the target of denunciations by social movements throughout the world, which protest against the impacts of the policies and the ideology of this institution, which promotes the expansion of neoliberalism.

Under the pretext of “economic aid,” the World Bank influences the model of development and the economic policies of peripheral countries.  These policies are reflected in rural areas, where the World Bank concentrates its programs, and promotes the privatization of territory through the rules of the market.  According to this model, the rural poor should pursue “efficiency”, integrating their production to the necessities of large agribusiness.

During the last few decades, in different parts of the world, the idea was created that rural areas are not significant for development.  The process of rural exodus was based on the concept of urban centers as the principal generators of wealth and economic opportunities.

However, the regions most concentrated with natural resources – such as water, land, minerals and biodiversity – are in the rural areas, and these came to be the focus of multilateral financial agencies, especially the World Bank.  It is not by coincidence that today, the major World Bank projects are located in rural areas.

In Brazil, the ideology of the Bank had the biggest impact during the government of Fernando Henrique Cardoso (FHC), which established an agrarian policy called the “New Rural World,” with three basic principles: (1) the settlement of landless families under a policy of social compensation; (2) the de-centralization of land settlement projects, transerring responsibility from the federal government to state and municipal governments; (3) the substitution of the constitutional instrument of land expropriation with the propaganda of market-based land reform, based on the “negotiated” purchase and sale of land.

During the government of FHC, the World Bank initiated three programs which inaugerated a neoliberal model of access to land and rural development: Cédula da Terra, Banco da Terra, and Crédito Fundiário These programs have benefitted large, unproductive landowners with cash payments for their unused lands, many of which are of poor quality and sold with inflated prices.  The associations created for the beneficiaries’ purchase of these lands are often organized by the large landowners themselves, due to the fact that often the lands they are selling could be considered for legal expropriation.

Additionally, the conditions of these projects make it impossible for beneficiaries to pay their loan debts, and make production (either for market or for the settled families’ subsistence) unviable.

With the beginning of Luis Inacio “Lula” da Silva administration, rural grassroots movements expected a reversal of this policy.  Their expectation was that agrarian reform would be at the center of the political agenda, because of its potential to create jobs, for the guarantee of food sovereignty, and as the basis for an alternative model of development.

To the contrary, what we have seen is the continuance of the World Bank policies in rural areas.  In November of 2003, the Minister for Agrarian Development announced the “National Plan for Agrarian Reform: Peace, Production and Quality of Life in Rural Areas.”  One of the principal proposals in the plan, with the goal to reach 130,000 families, was the continuance of the Bank’s program. This project legitimates rural oligarchies, and weakens the agraria reform process.

INFORMATION ABOUT THE RESEARCH METHODOLOGY

Sample Group: 1,677 interviews in 161 municipalities, in 13 states of Brazil, including: Bahia, Maranhăo, Paraíba, Pernambuco, Piauí, Rio Grande do Norte, Sergipe, Espírito Santo, Goiás, Minas Gerais, Mato Grosso do Sul, Rio Grande do Sul and Santa Catarina.  This sample is representative of about sixty thousand families.

Note: In the states of Santa Catarina (SC) and Rio Grande do Sul (RS), in which the Bank’s loan contract is individual, 292 interviews (118 in SC and 174 in RS) were made in 40 municipalities (16 in SC and 24 in RS).  In the other states, where the loan contracts are collective and made through associations, 1,385 interviews were made in 121 municipalities.

Sample Drawing: Probabalistic sampling stratified by state.

Margin of Error: ±4 percentage points.

Dates of data collection: July to December of 2005.

PRINCIPAL RESULTS

LAND PURCHASE

The research shows that 35% of the families surveyed did not have the opportunity to choose the land they purchased.  This percentage increases to 51% of the families in collective contracts, and to 52% of the families which entered into the program between 2003 and 2005.

In regard to the negotiation for the purchase of land, 41% of the families surveyed stated that they did not participate in this process.  This number increases to 61% when the land was purchased through collective contracts, which represent the majority of the land purchase projects financed by the World Bank.  Amongst the families that entered into the program between 2003 and 2005, 58% did not participate in the negotiation.

In 50% of the cases surveyed, there had been a substitution of the family residing on the land, a percentage which signifies a high level of land abandonment and residence turnover in the programs.

THE LOAN CONTRACT FOR LAND PURCHASE

Only 53% of those interviewed affirmed that they had received a copy of the loan contract for the purchase of their land.  Only 36% had actually read the contract. in spite of having received the contract, 15% had not read it.

Amongst those interviewed that participated in the collective contract projects through associations, only 31% had access to the loan contract.

Of the families surveyed, 42% did not know the penalities listed in the contract in the case that they were unable to pay their loan.  Amongst the families in collective contracts, this number increase to 48%.

More than one-third of those interviewed (36%) did not know the number of loan payment installments to which they had agreed upon signing the contract: 26% admitted they did not know the number, 7% did not remember the number, and 3% gave wrong responses as to the number of loan payment installments stated in the loan contract.  Amongst the families with collective contracts, 50% did not remember the number of loan payment installments to which they had agreed.

The large majority of those interviewed (81%) did not know the interest rate amount to which they had agreed upon signing the loan contract:  51% admitted that they did not know the amount, 11% did not remember the amount, and 19% cited an incorrect interest rate amount.  The low level of beneficiary knowledge as to their interest rate amount is highlighted amongst those with collective contracts (64%), and amongst those which signed the contract between 2003 and 2005 (68%).

ASPECTS AND CHARACTERISTICS OF THE LANDS PURCHASED

In terms of the productivity of the lands which they had purchased, 41% of the families stated that they had received land which was totally abandoned.  This number increases to 56% of the families with collective contracts which bought their land through associations.  Because in these cases the lands purchased are large in size (and therefore can be classified as latifúndios), this signifies that these lands should have been expropriated from the landowner by the government for agrarian reform.

INVESTMENTS IN IMPROVEMENTS AND/OR PRODUCTION

36% of the families surveyed did not receive additional financing from the Bank to begin agricultural production.  Amongst the families with collective contracts, only 47% received financing.

In the areas researched, there was a general lack of basic infrastructure for the maintenance of the families on their purchased land: 20% did not have electricity, 27% did not have potable water, 48% had no access to schools or creches, 74% had no irrigation or access to water for production, 76% did not have a health clinic, 29% had no health practitioner, 72% had no ambulance service, and 22% had no public school transportation.  The lack of specialized technical assistence for agricultural production was also noted: only 14% of the families surveyed received regular technical assistance.

KNOWLEDGE OF MISAPPROPRIATION OF RESOURCES

In spite of the possible intimidation which could be caused by questions about the missappropriation of project resources, 16% of those interviewed stated to have knowledge of corruption in the negotiation for land, and 15% stated to have knowledge of corruption in infrastructural improvement projects.  As openly acknowledging corruption can be dangerous to respondents, it is possible that the number of cases of corruption is higher.

QUALITY OF LIFE AFTER LAND PURCHASE

Due to the difficulties experienced with the lack of infrastructural investments or financing to begin production, a high number of respondents were unable to produce sufficiently to sustain their families, and far fewer were able to pay intallments on their loans.  In 46% of the cases, agricultural production on the land did not meet the production necessities to sustain the families, and 47% stated that the money that they earn through agricultural production is not sufficient to pay installments on their loans.

In the collective contracts, 56% of the families stated that the agricultural production on the land was not sufficient to sustain the family, and 54% stated that  the money that they earn through production is not sufficient to pay installlments on their Bank loans.

In spite of the World Bank’s argument that its projects work to “alleviate poverty,” 19% of the families surveyed revealed that they currently or had experienced hunger since their entry into the Bank’s program.  Amongst the families with collective contracts this number increases to 26%.  Because this type of question can cause embarrassment, principally for male providers of food for the family, we can assume that this number is actually higher.

PARTICIPATION IN SOCIAL MOVEMENTS

The research shows that 58% of the families surveyed have never participated in an organization to defend its rights.  This number reveals the high level of social alienation these families experience.  This social alienation increases the likelihood that these families are misinformed about the real conditions of the Bank’s program.  When they join the program, many of them do not even understand that they are getting into debt.

In the legitimate search for a plot of land on which to live and work, these families are deceived by associations which have no legitimacy or real collective participation, and by deceitful propaganda from government bodies, labor unions and other intermediaries.  Many of the families already lived on the lands that they purchased, and could have staked a legal claim to these lands.  Yet in order to obtain easy money, large landowners organizes these families into associations, and through collective loan contracts sold unproductive lands of poor quality at inflated prices to families.

When the question was asked as to the disposition of families to participate in some movement for the struggle for their rights, 78% responded positively.  This reveals that amongst the families surveyed, there exists a large propensity to organize.

Despite all of the propaganda that exists in order to deter these families from agrarian reform, 25% of them admitted that they had participated in a land occupation.

SOCIO-ECONOMIC PROFILE

Many families that participate in the program depend on other income generating activities to survive.  In most cases, they work as laborers on large farms in the region, or receive some form of financial aid from government social programs.  This signifies that the families that are able to pay their loan installments may be using government resources including the Bolsa Familia, pension plan, etc.

The majority of the families that participate in the program already lived in rural areas (73%). However, a relevant percentage (26%) lived in urban areas.  This signifies that, as also proven through agrarian reform, in Brazil there currently exists a sizeable sector of the urban population that wants to leave the social problems of the city (unemployment, lack of housing, etc.), and seeks to obtain a plot of land on which to live and work.  This data reveals the large public demand for a comprehensive agrarian reform in Brazil.

The researchers found many of the projects abandoned. In many cases, the unviability of the program caused the abandonment of the land by the families.  In other cases, the land was bought by middle-class urbanites which use the areas for recreation and/or holidays.

Maria Luisa Mendonça is a journalist and coordinator of the Social Network for Justice and Human Rights.

Maria Luisa Mendonça

(17 January 2006)