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University Microfilms International 300 N. ZEEB RD„ ANN ARBOR, Ml 48106 8129044

K o h l , B a r b a r a A n n

STATE AND CAPITAL: AGRICULTURAL POLICY IN POST-COUP BRAZIL

The Ohio State University Ph.D. 1981

University Microfilms International 300 N. Zeeb Road, Ann Arbor. M I 48106

Copyright 1981 by Kohl, Barbara Ann All Rights Reserved STATE AND CAPITAL: AGRICULTURAL

POLICY IN POST-COUP BRAZIL

DISSERTATION

Presented in Partial Fulfillment of the Requirements for

the Degree Doctor of Philosophy in the Graduate

School of The Ohio State University

By

Barbara A. Kohl, B.A., M.A.

* * * * *

The Ohio State University

1981

Reading Committee: Approved By

William L. Flinn

A. Eugene Havens

Roscoe C. Hinkle

David 0. Hansen Adviser Department of Agricultural Economics & Rural Sociology ACKNOWLEDGMENTS

Any author of a dissertation incurs many debts in its development.

I received support and stimulation from many colleagues and friends, at the Ohio State University, the University of Madison-Wisconsin and in

Brazil. I am especially greatly indebted to my adviser, William L.

Flinn, for his unfailing moral and intellectual support. I wish to acknowledge the support of Douglas H. Graham of the Ohio State University in directing me to important data sources, crucial for the empirical investigation in this dissertation.

A. Eugene Havens of the University of Wisconsin-Madison critically read earlier versions of the central chapters of this dissertation. I owe him a special debt for his valuable comments and discussion which served to clear my mind at significant junctures in its development. I am indebted to Roscoe C. Hinkle of the Ohio State University, Eric 0. Wright,

Steven Stern and A. Eugene Havens of the University of Wisconsin-Madison for excellent theoretical debates, review and questioning, without which the theoretical framework of this dissertation would not have been possible.

Finally, I wish to thank Adriano R. Duarte, of the Universidade de

Sao Paulo, and Jovino Moura Filho, from the Escola Superior de Agricultura de Lavras (Minas Gerais, Brazil) for very stimulating discussions on the theme of this dissertation. VITA

September 13, 1951...... Born - Kansas City, Missouri

1973...... B.A., Fort Hays Kansas State College, Hays, Kansas

1973-1975...... Teaching Assistant, Department of Economics, Kansas State University, Manhattan, Kansas

1975...... Lecturer, Department of Continuing Education, Kansas State University, Manhattan, Kansas

1975...... M.A. , Kansas State University, Man­ hattan, Kansas

1976-1978...... Lecturer and Research Coordinator, Escola Superior de Agricultura de Agricultura, Lavras, Minas Gerais, Brazil

1980...... Participant in Committee on Institu­ tional Cooperation (CIC) Program, University of Wisconsin-Madison

1978-1981...... Research Associate, Department of Agricultural Economics & Rural Sociology, The Ohio State University, Columbus, Ohio

PUBLICATIONS with William L. Flinn, "The Ideology of the American Agriculture Move­ ment." Quarterly Journal of Ideology, 111:2 (Summer 1979), 3-10.

FIELDS OF STUDY

Major Field: Rural Sociology

Studies in Sociological Theory. Professors Roscoe C. Hinkle and Erik 0. Wright

iii Studies in Peasant Economy. Professor A. Eugene Havens

Studies in International Development. Professors William L. Flinn and David 0. Hansen

iv TABLE OF CONTENTS

Page ACKNOWLEDGMENTS...... ii

VITA...... ,___ iii

LIST OF TABLES...... viii

GLOSSARY OF ACRONYMS...... xiv

REGIONS, POLITICAL BOUNDARIES, BRAZIL...... xvii

INTRODUCTION...... xviii

Chapter

1. STATE, CLASS AND ECONOMIC INTERVENTION: A FRAME OF REFERENCE...... 1

Section I. Marxist Theorization of the Capitalist State.... 1

A. Elements of a Transformative Theory of the State.... 3

B. The Ruling Class and State Power...... 17

Section II. Theoretical Framework for Analysis of the Capitalist Periphery: Imperialism and the Peripheral State...... 25

A. Imperialism: The Creation of the Capitalist Periphery...... 25

B. The Peripheral Capitalist State...... 33

Section III. The Agrarian Sector and the Role of the State in Capitalist Domination...... 43

A. Conceptualization of the Peasantry and its Exploitation by Capital...... 44

B. The State's Role in Exploitation of Agricultural Producers...... 59

FOOTNOTES TO CHAPTER 1' 65 . A PROFILE OF THE BRAZILIAN POLITICAL ECONOMY...... 80

Introductory Remarks...... 80

Section I. A Brief Historical Sketch of Brazilian Capitalism, 1945-1964...... 82

A. Populism and Limited Democracy...... 86

Section II. Military Dictatorship and Monopoly Capitalism, 1964-?...... 93

A. Constitution of the State Apparatus...... 94

1. Bourgeois representation afterthe coup...... 101

B. Major Forms of State Intervention...... 103

1. The state productive sector...... 104

2. State administration: the state's role in financing accumulation...... 114

Section III. Characteristics of Capital Accumulation, 1967 and After...... 117

A. The "Boom Period", 1967-1974...... 118

B. Accumulation Slowdown, 1974-?...... 128

Concluding Remarks ...... 134

FOOTNOTES TO CHAPTER 2 ...... 136

DESCRIPTIVE ANALYSIS OF AGRICULTURAL POLICY, 1966-1979...... 145

Introductory Remarks...... 145

Section I. Rural Credit...... 149

Section II. The Minimum Price Program and Storage Policies..157

Section III. Fiscal Incentives and Special Subsidies...... 169

Section IV. Price Controls and Other Interventions in Marketing...... 179

Section V. Agricultural Research and Extension...... 186

FOOTNOTES TO CHAPTER 3...... 192

EFFECTS OF AGRARIAN POLICY: TRANSFORMATION OF CLASS RELATIONS AND ITS CONTRADICTIONS...... 197 Introductory Remarks...... 197

Section I. Land Tenure and Labour Relations...... 201

Section II. Agro-Industry: Major Characteristics, 1967- 1979 ...... 214

A. Agricultural Inputs and Machinery...... 220

B. Food Processing and Marketing...... 226

Section III. Outcome of Capitalist Rationalization in Agriculture: Food Cost Inflation and Supply Shortages...... 228

A. Characteristics of the Decline in Food Production...230

B. Welfare Effects and Balance of Payments P r o b l e m s ....237

FOOTNOTES TO CHAPTER 4 ...... 243

5. STATE, CAPITALISM AND AGRICULTURE: SOME CONCLUDING REMARKS...... 248

APPENDIX...... 262

LIST OF REFERENCES...... 298

vii LIST OF TABLES

Table Page

1. Changes in the Distribution of Industrial Output, 1920- 1968...... 85

2. Complementary and Intersectoral Relationships Between Foreign and State Capital...... 86

3. Average Rate of Profit Vis-a-vis Cost of Living, 1958-1964....91

4. Income Concentration, 1960-1976...... 100

5. Evolution of Asset Ownership, State, National and Foreign Capital...... 105

6. Evolution of Profit Rates of State Enterprises By Sector of Activity, 1967-1976...... 107

7. Profitability of 100 Largest Brazilian Corporations, 1968- 1974...... 108

8. Net Profit/Net Assets by Ownership Groups and Sector Activity in 1974...... 109

9. Brazilian Economy, Selected Indicators, Annual Rates of Change, 1965-1974...... 119

10. Indices of Real Growth Rates of Manufacturing Output: Major User Groups, 1959-1975 (1970=100)...... 120

11. Brazil: Balance of Payments, 1968-1975 (Million $'s)...... 121

12. Patterns of Asset Ownership of the 5,113 Largest Non-financial Enterprises, 1974...... 123

13. Brazilian Exports by Sector, 1964/68-1978 (Percentages)...... 125

14. Current Account Balance, 1973-1979 (US$ million)...... 129

15. External Debt and Debt Service Payments, 1973-1979 (US$ million)...... 130

16. Sectoral Distribution, Number of Requested and Decreed Bank­ ruptcies, Municfpio of Sao Paulo, 19 75-1980...... 132

viii 17. Total Agricultural Credit, By Function, 1969-1978 (Millions of cruzeiros)...... 151

18. Net Value of Agricultural Output and Total Credit to Agri­ culture, 1969-1978 (Millions of cruzeiros)...... 152

19. Agricultural Credit Use According to Farm Size, Sao Paulo, 1974-77 153

20. Distribution of Production Credits By Crop, 1975-1977 (Percentages)...... 155

21. Agricultural Credit by Type, Subsector and Region, 1977 (Millions of cruzeiros)...... 156

22. Real Financing under Minimum Price Program, By Region and Major Crop, 1967/68-1978/79 (Millions of 1965-67 cruzeiros)...... 159

23. Allocation of EGF Loans By Crop, 1968/69-1977-78 (Millions of 1965-67 cruzeiros)...... 160

24. Distribution of EGF Loans by Types of Beneficiary, 1968/69- 1977/78 (Percent)...... 162

25. Proportion of Financing According to Major Products Under Minimum Price Program...... 163

26. Maximum Price Fluctuations of Major Domestic Foodstuffs, From 1968 (Percentages of variation over 1968 prices, in constant cruzeiros)...... 164

27. Average Annual Rates of Real Increase of Minimum Prices and Producer Prices, During Harvest Months, Selected Crops, 1967/68 to 1978-79...... 164

28. AGF Operations By Region, 1973/74-1977/78 (Millions of 1965-67 cruzeiros)...... 166

29. Real Value of Crop Acquisitions under Minimum Price Program By Region, 1973/74-1977/78 (Millions of 1965-67 cruzeiros)....167

30. Distribution of AGF Purchases By Crop, 1973/74-1977/78 (Millions of 1965-67 cruzeiros)...... 168

31. Proportion of Crop Stored Under Minimum Price Program, Selected Crops, 1968/69-1978/79 (Percentages)...... 168

32. Average Annual Rates of Growth of Exports, 1969-1978 (Percentages)...... 173

33. The Diversification of Agriculture-based Exports, 1964-1977...... 175

ix 34. Structure of Subsidies and Taxes Affecting Agriculture- based Exports in 19 75...... 175

35. Estimated Value of Incentives Conceded to Agriculture-Based Exports, 1971 and 1975 (Millions of cruzeiros)...... 176

36. Fiscal Incentives Distributed By SUDAM to Agricultural and Agro-Industrial Sectors, 1966 to July, 19 78 (Thousands of cruzeiros, current prices)...... 177

37. National Static Storage Capacity, By Type of Unit, 1975- 1979 (Thousands of metric tons)...... 185

38. Regional Distribution of Storage Capacity, 1975-May 1979 (Thousands of metric tons)...... 185

39. Expenditures on Agricultural Research and Extension, 1974- 1978 (Millions of 1965/1967 cruzeiros)...... 190

40. Distribution of EMBRAPA Commodity-Specific Research, By Crop, Average 1975-1977 (Percentages)...... 190

41. Regional Distribution of Expenditures by EMBRAPA State Units, 1975-1979 (Percentages)...... 191

42. Indices of Sales Prices and Rents for Crop Land in Selected States, 1969-1976 (1969=100)...... 203

43. Growth Rates of Declared Value of Farm Assets, By Size Class, Brazil, 1970-1975 (Percentages)...... 203

44. Annual Growth Rates of Total Area and Number of Establish­ ments By Size Class, Brazil, 1970-1975...... 204

45. Number of Agricultural Establishments and Area By Size Class, Brazil, 1970 and 1975...... 205

46. Number of Minifundios (Under 10 ha.) By Region, 1970 and 1975...... 206

47. Area Harvested-Major Crops, 1966-1978 (Thousands of hectares)...... 208

48. Changes in Land Tenure Status, Brazil and Regions, 1970- 1975 (Percentages)...... 210

49. Relative Change and Growth of Total Agricultural Exports and Selected Categories, Brazil, 1964/68-19 78...... 215

50. Exports of Agricultural Origin, By Customs Category, 1965- 1977 (FOB) (Millions of US dollars)...... 217

51. Principal Crop-Based Export Products, FOB, 1967-1978 (Millions of US dollars)...... 218

x 52. Agriculture-based Exports Comprising at Least One Percent of Total Exports by Rank, Order and Percent for Selected Years, 1964-68 to 1977...... 219

53. Participation of National, Foreign and State Capital in Net Assets of the 200 Largest Firms in Sectors Linked to Agriculture, 1976 (Percentages)...... 221

54. Domestic Fertilizer Production, Brazil, 1970-1978 (Thousands of metric tons)...... 223

55. Domestically Produced Fertilizer as Proportion of Total Consumption, 1969-1978 (Percentages)...... 223

56. Apparent Consumption of Insecticides, Fungicides and Herbicides, 1970-1979 (Thousands of metric tons)...... 225

57. Percentage of Family Income Spent According to Locale of Purchase By Income Group, Greater Sao Paulo, 1975...... 227

58. Average Product Growth Rates, 14 Major Crops, Brazil, 1967-1978...... 231

59. Changes in Productivity-Major Crops, Brazil, 1967-1978 (Percentages)...... 234

60. Cumulative Percentage of Production By Size Class, Eight Major Crops, Brazil, 1975...... 236

61. Value of Production By Size Class, Brazil, 1970 and 1975 (Thousands of current cruzeiros)...... 237

62. Cost of Living Indice and Components, Rio de Janeiro, 1969-1979 239

63. Cost of Living Indice, Total and Food Costs, Five Brazilian Capital Cities, 1972-1978 (Base=1965/67)...... 239

64. Food Costs as a Proportion of Total Household Expenditures, By Income Groups and Regions, 1974/75 (Percentages)...... 240

65. Imports of Agricultural Origin, By Customs Category, 1965- 1976 (CIF) (Millions of U.S. dollars)...... 242

66. Real GDP and Industrial Growth Rates, Brazil, 1948-1967...... 263

67. Inflation Measures, Brazil, 1960-1976 (1965/67=100)...... 264

68. Evolution of Real Minimum Salary, Sao Paulo and Rio de Janeiro, 1959-1978 (1963=100)...... 265

69. Brazilian Exports by Sector and Degree of Processing, 1964/68-1978 (Millions of U.S. dollars)...... 266

70. Imports by Major Groups, 1965-1975 (In US$ millions and %).... .267 xi 71. Real Production Indices, Brazil, 1978 and 1979...... 268

72. Number of Loans to Agriculture, 1975-19 78 (Thousands)...... 269

73. Percentages of Producers According to Land Tenure Status By Number of Agricultural Establishments, Land Area and Size Class, 19 75...... 270

74. Estimates of Agricultural Credit Beneficiaries (Working Capital) as Percentage of Total Rural Establishments, By Region and Selected States, 1970/72...... 271

75. Agricultural Credit Beneficiaries, By Size Class, 1970 and 1975...... 272

76. Bank of Brazil and Private Commercial Bank Loans Outstand­ ing to Agriculture, End-of-Year 1971-1979 (Millions of cruzeiros)...... 273

77. Crop Credits to Producers and Cooperatives, National System of Rural Credit, By Crop, 1975-1977 (Millions of cruzeiros)...... 274

78. Volumes of Major Crops Financed Under Minimum Price Credit Program, 1968/69-1977/78 (Thousands of metric tons)...... 275

79. Credits Conceded Under Minimum Price Program, Center-South, By Crop and Type of Beneficiary, 1967/68-1977/78 (Millions of cruzeiros)...... 276

80. Distribution of Credits Under Minimum Price Program, Center-South, 1967/68-1977/78 (Percentages)...... 277

81. Credits Conceded Under Minimum Price Program, North- Northeast, 1968/69-1977/78 (Millions of cruzeiros)...... 278

82. Distribution of Credits Under Minimum Price Program, North-Northeast, 1968/69-1977/78 (Percentages)...... 279

83. Real Minimum Prices for Selected Crops, Crop Years 1967/68- 1979/80 (1967 cruzeiros)...... 280

84. Average Real Producer Prices During Harvest Period for Selected Crops, Crop Years 1967/68-1977/78 (1967 prices)...... 281

85. Production of Major Crops, 1960-1979 (Thousands of metric tons)...... 282

86. Real Financing Under Minimum Price Program, By Region and Major Crop, 1967/68-1977/78 (Millions of 1965-67 cruzeiros)...... 285

87. Estimated Costs of Beef Storage Program, 1975-1979...... 286

xii 88. Agricultural Labour Force, By Occupational Classification and Size Class, 1970 and 1975 (Thousands of persons) (Percentages in Parentheses)...... 287

89. Agricultural Producers According to Land Tenure Status By Size Class, 1975 (Percentages)...... 288

90. Changes in Producer Types, By State and Region, 1970-1975 (Percentages)...... 289

91. Volume of Crops Acquired Under Minimum Price Program, . 197.3/74-1978/79 (Thousands of metric tons)...... 290

92. Apparent Consumption of Fertilizers, 1969-1978 (Thousands of metric tons)...... 291

93. Average Yields-Major Crops, 1966-1978 (Kilograms per hectare harvested)...... 292

94. Percentage Distribution of Household Expenses By Type of Expenditure, Sao Paulo, 1974/75...... 293

95. Imports by Economic Destination, 1975-1978 (In millions of U.S. dollars)...... 294

96. Black Beans— Area, Production, Average Yields, and Trade, 1970-1979 295

97. Corn Area, Production, Yields and Trade, 1970-1979...... 296

98. Rice Area, Production, Yields, Imports and Exports, 1970- 1978...... 297

xiii GLOSSARY OF ACRONYMS

AGF Aquisicoes do Governo Federal Federal Government Acquisitions (Minimum Price Program)

BNDE Banco Nacional de Desenvolvimento National Development Bank

BNH Banco Nacional de Habitacao National Housing Bank

CACEX Carteira do Comercio Exterior Foreign Trade Portfolio (Bank of Brazil)

CEASA Centro de Abastecimento, Sociedade Anonima Center of Supply, Inc.

CEPLAC Comissao Executivo do Plano da Lavoura Cacaueira Executive Commission of the Plan for Cocoa Cultivation

CFP Comissao de Financiamento da Producao Commission for Production Financing

CIBRAZEM - Companhia Brasileira de Armazenagem Brazilian Storage Company

COBAL Companhia Brasileira de Alimentacao Brazilian Food Company

COFAP Comissao Federal de Abastecimento e Precos Federal Commission for Supply and Prices

EGF Emprestimo do Governo Federal Federal Government Loans (Minimum Price Program)

EMBRAPA - Empresa Brasileira de Pesquisas Agropecuarias Brazilian Enterprise for Agriculture and Livestock Research

EMBRATER - Empresa Brasileira de Assistencia Tecnica e Extensao Rural Brazilian Enterprise for Technical Assistance and Extension

FGTS Fundo de Garantia de Tempo de Servico Federal Unemployment Fund

xiv FGV Fundacao Getulio Vargas Getulio Vargas Foundation

FIBGE Fundacao Instituto Brasileiro de Geografia e Estatfstica Brazilian Institute of Geography and Statistics

GDP Gross Domestic Product

IAA Instituto do Acucar e do Alcool Sugar and Alcohol Institute

IBC Instituto Brasileiro de Cafe Brazilian Coffee Institute

ICM Imposto sobre Operacoes Relativas a Circulacao de Mercadorias Tax on the Circulation of Goods

IEA Instituto de Economia Agrfcola Institute of Agricultural Economics

INCRA Instituto Nacional de Colonizacao e Reforma Agraria National Institute of Colonization and Land Reform

IPI Imposto sobre Produtos Industrializados Industrial Products Tax

LTN Letras do Tesouro Nacionsl'l > 1 Treasury Certificates

ORTN Obrigacoes Reajustaveis do Tesouro Nacional Indexed Treasury Bonds

PASEP Programs de Assistencia Social ao Servidor Publico Social Security Fund for Public Servants, State of Sao Paulo

PIS - Plano de Integracao Social Federal Social Security Fund

PNDA - Plano Nacional de Defensivos Agrfcolas National Plan for Agricultural Chemicals

PNFCA - Plano Nacional de Fertilizantes e Calcario Agrfcola National Plan for Agricultural Fertilizers and Lime

SEAP - Secretaria Especial de Abastecimento e Precos Special Secretariat for Supply and Prices (Ministry of Planning)

SIBRATER - Sistema Brasileiro de Assistencia Tecnica e Extensao Rural Brazilian System of Technical Assistance and Rural Extension

XV SOAPA Sistema Operacional de Agropecuaria e Abastecimento Operational System of Agriculture, Livestock and Supply

SUDAM Superintendincia do Desenvolvimento da AmSzonia Superintendency of the Development of the Amazon

A SUDENE Superintendencia do Desenvolvimento do Nordeste Superintendency of the Development of the Northeast

SUNAB Superintendencia Nacional de Abastecimento National Superintendency of Supply (Ministry of Agriculture)

SUPLAN Superintendencia de Planejamento Superintendency of Planning (Ministry of Agriculture)

xvi REGIONS, POLITICAL BOUNDARIES, BRAZIL

North Southeast

Acre Minas Gerais Amazdnas Sio Paulo Rondfinia Rio de Janeiro Roraima Espirito Santo Amapa Pard South

Northeast Parana Santa Catarina Maranhao Rio Grande do Sul Piauf Ceara Center-South Rio Grande do Norte Paraxba Minas Gerais Pernambuco Sao Paulo Alagoas Rio de Janeiro Sergipe Espfrito Santo Bahia Parana Santa Catarina Center-West Rio Grande do Sul

Mato Grosso do Norte Mato Grosso do Sul Goias Distrito Federal

xvii INTRODUCTION

The principal aim of this dissertation is to analyze some relation­

ships between the capitalist state and the agricultural productive system

in Brazil during the 1964-1979 period. State intervention in agriculture

and elsewhere in the economy is understood as the exercise of state

power: it is both constitutive of contradictory social relations of domi­

nation and subordination, and a "creator" of these social relations in its

capacity to create and maintain conditions for the expansion and repro­

duction of capitalist social organization. Specific forms of state

structures and modalities of state intervention are the result of complex

historical, economic, social and political processes related to the

development of capitalism in a particular social formation. Therefore

state intervention in this study is examined in the context of the spe­

cific pattern of capitalist development prevailing in Brazil during the period under study.

In Brazil, as in other peripheral capitalist or post-colonial socie­

ties, accumulation has not been the outcome of a process initiated inter­ nally, but rather is the outcome of the extension of accumulation from advanced capitalist formations. Historically, the development of the

internal market has been dependent on the realization needs of metropoli­

tan capital, while structuration of the relations of dominated incorpora­

tion into the international capitalist system has changed according to

xviii phases of imperialism. Roughly, before the 1950s the Brazilian economy was dominated "from the outside": in a sense, formal subsumption to metro­ politan capital was characteristic of the 1930s to the early 1950s.

Thereafter, metropolitan capital established its dominance from directly within the local economy, principally in the manufacture of consumer durables and later, capital goods. This period is further characterized by real subsumption of the production process to capital with the expan­ sion of relative surplus value production. The growth and reproduction of the internal productive forces as a whole was strengthened, yet remained subordinated to metropolitan capital.

Internationalization of the Brazilian economy in the last decade features a critical dependence on imports of capital goods, intermediate industrial inputs and technology, which places equilibrium in the bal­ ance of payments as a constraint (albeit a flexible one, dependent upon favorable international commodity and money market conditions) to the capacity to produce of the most dynamic economic sectors. In the context of subordination to metropolitan monopoly capital in the international division of labour, the local modern industrial sector's capacity to pro­ duce is created by profits accruing to monopoly capital producing for the internal market, which is in turn circumscribed by the profits appro­ priated by agricultural and commercial capital from the demand for exports.

The importance of agriculture, then, in the local accumulation pro­ cess cannot be overemphasized, in terms of providing both primary and manufactures exports, as well as food supplies for urban and rural labour.

Brazil's entry into the international market of manufactures in the last decade for instance, has been celebrated as a significant departure from

xix the underdeveloped country's traditional role of primary goods exporter

and manufactures importer. However, new manufactures exports are prin­

cipally those of the traditional industries (footwear, clothing, foods), whose raw materials are agricultural in origin.

Changes in agricultural production in the Seventies were marked by

the increased production of relative surplus value, materialized in the enormous growth and consolidation of monopoly capital in agro-industrial activities. The Brazilian state's role in these developments was cru­ cial. State intervention in the interest of creating conditions for rel­ ative surplus value production in agriculture during the Seventies is represented by a vast and changing system of fiscal incentives, monetary subsidies and infrastructural development policies channeled to food and fiber producers and local agribusiness corporations in the input and product marketing components of the agricultural productive system.

The subsequent investigation of agricultural policy in Brazil con­ centrates on the state in a general way, and is not a conjunctural analysis. It is focused on the economic intervention of the state in agriculture, as opposed to detailed investigation of state structures, their formation and modification, and in contrast to focusing on politi­ cal and ideological interventions. This is achieved with the understand­ ing that in the course of the exercise of state power, social forces are transformed, and thus affect the constitution of the state structures themselves. For the most part, however, implications for the transfor­ mation of state structures devolving from state actuation in agriculture

(or in other economic sectors) are relegated to future research. Ques­ tions of length and the state of my own knowledge make these restrictions necessary. An analytical frame of reference is developed in Chapter 1 along the

lines of a general orientation to analysis of the actuation of the state

in contemporary peripheral capitalist formations. Section I investigates

the theoretical aspects of the broader relationship between state and

capitalism, while specific theoretical guidelines for the analysis of the

peripheral state are examined in Section II. The peculiarities of agri­

culture in terms of obstacles to capitalist rationalization, especially

in formations with a long history of non-capitalist production relations, and specific implications for state intervention in agriculture are inves­

tigated in Section III.

It is argued throughout Chapter 1 that an adequate assessment of the

structure and process of the preceding and prevailing pattern of develop­ ment is a prerequisite to the study of the constitution of the existent state form in Brazil, as well as of state action in agriculture. Hence,

Chapter 2 contains an extensive analytical review of the continuities and discontinuities in Brazilian economic development alongwith related major transformations in state structure before and after the 1964 military coup. The main arguments in this chapter concern the relationships between the changing form of Brazil's insertion into the international capitalist economy, internal accumulation, and correspondent political transformations.

Chapters 3 and 4 attempt to provide concrete empirical evidence in support of the major analytical propositions concerning the dynamic of interest between the state and different groups of monopoly capital.

Chapter 3 is effectively an extension of Chapter 2's discussion of the military dictatorship's increasing role in creating and directing

xxi capital accumulation in the local economy. Five agricultural policy

"sets" developed and implemented by the state in the Seventies are investigated.

In Chapter 4 analysis is focused on the overall concrete effects of agricultural policies on class relations within the agricultural pro­ ductive system, encompassing input, food and fiber, and product marketing components. In the course of this examination of policy effects, contra­ dictory aspects of agricultural policy are identified, mainly the emer­ gence of food shortages and rising food costs in the late Seventies.

Chapter 5 summarizes the major theoretical and empirical conclusions of this study. The specific forms of state intervention in the agricul­ tural economy vis-a-vis the urban industrial and services sectors in the post-coup era are outcomes of certain peculiarities of agriculture which effectively obstruct capitalist rationalization of food and fiber produc­ tion, as well as the potentially explosive political reaction implied in the state's attempts to assume direct control of land and agricultural labour at the on-farm level. The last part of the chapter is dedicated to a tentative evaluation of the effectiveness and political weight of policy attempts in the late Seventies to reinforce peasant production, while simultaneously furthering capitalist rationalization of the agri­ cultural productive system as a whole.

xxii CHAPTER 1

STATE, CLASS AND ECONOMIC INTERVENTION:

A FRAME OF REFERENCE

The play which is on in Latin America is capital accumulation, inserted in an international system: a brutal reality ungraspable in the pious or hypocritical liberal euphemisms of exchange, industrialization, development. Metaphors aside, the caudillos, the juntas, demagogues, honest and corrupt politicians, bureaucrats, technocrats and torturers, together with the peoples they are governing, are all part of an ongoing historical captialist process. Only if they are seen in this way can an answer be given to the question: whither are the leaders taking the led?^

Section I. Marxist Theorization of the Capitalist State

In contrast to pre-capitalist modes of production, the political instance in a capitalist society is separate from the strictly economic sphere of production. This distinction between the economic and the political gives rise to a basic determinant of the form of the bourgeois state as it has emerged and developed in capitalist social formations. Thus, most marxist scholars would agree that the capitalist state as an identifiable institution arises from this separation.

From this separation follows the distinction between citizens and classes; on the one hand, "free citizens" undistinguished by class, and on the other, a society of capitalists and proletariats, and other classes subordinated to capitalist social relations. The material basis of the bourgeois ideological claim for legitimacy as being.the "state of all the people" rests on its treatment of individuals as 'free' citizens, rather than as class representatives or members. Even the most repressive and fascistic of states uses notions of "equality" and "freedom," justifying its existence and actuation in terms of the (ultimate) well-being of its people- citizens.

Further, most marxists adhere to the notion that the primordial function of the capitalist state is to ensure reproduction of capitalist relations of production. However, beyond these two general notions of the make-up and functions of the capitalist state, the differences are far-reaching, leading to quite diverse political and ideological positions with regards to the necessity of and/or means of transforming the state.

Several established traditions in the marxist theory of the state can be distinguished, although considerable overlap occurs among them.

Among these traditions are the critical (Frankfurt) school of social

O thought represented in the works of Habermas and Offe; the Althus- serian or structuralist theory of the state, whose orientation receives the most systematic treatment in the writings of Poulantzas; the capital logic school, represented by Yaffee, Mueller and Neuseuss, and Blanke, et al.;^ the state derivationist school, found in the work of Holloway and Picciotto, Hirsch, Aumeeruddy, et al., and von

Braunmuhl,^ and the neo-Grainscian approach which is found also in

Poulantzas* work, as well as that of Laclau, Mouffe and a number of

£ Latin American marxists. No attempt will be made here to review in a systematic manner the major contributions of the various main lines of state theory.^ Rather, the remainder of this section consists of elemenLs of the five traditions which are incorporated in what Wright 3 Q calls a "transformative theory of the state."

A. Elements of a Transformative Theory of the Capitalist State

New departures for the theorization of the capitalist state are

now being developed with .an interest toward greater conceptual

clarity, and a more systematic incorporation of class struggle

coupled with a distinct awareness of the economic limits or boundaries

inherent to the capital accumulation process which bear on the range

of state policy options toward reproducing capitalist social relations.9

The outlines of a more comprehensive dialectical approach to the study

of the state are indicated by Therborn (1978), Jessop (1977), Gold,

et al. (1975) and Wright (1978).

General parameters of such an approach include (1) the effects of

state forms (administrative bureaucracy, ad hoc committees,

parliamentary democracy, dictatorship, for instance) on state practices

(actuation) and on classes, their formation and expressions, and

(2) effects of class struggle on the form of the state, and on state policies.i • 4 1 0

It follows that preliminary conceptual distinctions made in this approach center on the form of the state vis-a-vis state policies

(state power). The form of the state refers to the state apparatus, or more precisely, the system of state apparatuses. As defined by

Therborn, state apparatuses reflect in a particular way the social division of labour and prevailing class relations, while contributing

to their reproduction in a continuing social process. The military

(repressive), administration, judiciary, and governmental (legislative and executive) apparatuses and the relations between them are "crystallizations of determinate social relations, and thus assume a

material existence, efficacy and inertia which are to a certain extent

independent of current state policies."^

In this view, the system of state apparatuses is not a goal-

oriented subject in an environment of diverse conflicts, pressures

and demands, but rather, is conceived as a "formally bounded system of

structured processes within a global system of societal processes." 12

Specific techniques of administration develop in the course of changing modes of class struggle and related transformations in the capital

accumulation process proper, and are materialized in particular modalities of governmental apparatuses and relations between them.

While the state is always unified in a fundamental sense, the level of

cohesion among the different apparatuses varies considerably. What

this means is that within limits imposed by the general nature of the

capitalist state, it is likely that the class character of its diverse apparatuses will vary with the tasks of a given apparatus, and the

concerns of the classes or fractions of classes directly affected by

those tasks. Thus, the class character of welfare state and agricul­

tural extension bureaucracies, being directly involved in meeting at

least partially certain intrinsic needs of the working class, and petty bourgeois farmers, respectively, will reflect more directly the political struggles and interests of these classes than, for instance, state economic planning and monetary policy ministries, which are primarily charged with directing and reacting to the global movements 13 of monopoly capital.

State policies and state intervention refer to state power, a relation between social class forces expressed in the content of state policies. This relation is exercised through the state apparatuses.

The class character or content of these policies can be seen in their direct effects on the (re)product ion of conditions of existence of the relations of production in which the class in question is the dominant bearer. 'Taking' and 'holding' state power is a process of interventions in a given social formation by state apparatuses which concentrate the "supreme rule-making, rule-applying, rule adjudicating, rule-enforcing and rule-defending functions" of that social formation.

A further distinction is the form of rule or regime: in Poulantzas' words, "political regimes are seen . . . as variables within limits set by the form of the state.Political regimes can be understood as variations within limits of the relations and actuation of political parties set by a certain state form— military dictatorship, or bourgeois democracy, for instance— which reflect the pattern of representation of the dominant class or class alliance within the state apparatus, as well as the form of mediation between the dominant and subordinate classes.

Assuming the above preliminary conceptual distinctions, several related basic these can be articulated.

1. Once established, the particular form of the state and political regime has systematic effects both on a variety of social practices of classes as defined by production relations and of non­ class groups, and on the activities/policies of the state itself.

State apparatuses affect class relations and class struggle, while the former are also shaped by class struggle. The state form or structure affects intra- and inter-class relations through processes such as atomization of classes through bourgeois juridical and legal institutions; the transformation of workers, the petty bourgeoisie and other classes into juridical "citizens"; the insulation of bureaucratic centers of administration from popular pressures/ mobilizations, and in some cases (such as in Latin American dictator­ ships) , from substantial sectors of the bourgeoisie and non­ capitalist dominant classes. The structural and organizational capacities of class formation may then be attenuated or enhanced by 18 the particular constitution of state apparatuses.

For instance, in the bourgeois democratic state form politics is reduced to immediate material Interests. Przeworski points out that the reason for this is structural: it is the very uncertainty whether material conditions would improve in the future that leads to the search for immediate security. In a capitalist democratic system, immediate producers as wage-earners have no institutional claim to the product, nor can they intervene into the organization of production and allocation of profit on this basis. However, as citizens they can process such claims through democratic political institutions.

Participation in these institutions is necessary toward realizing material interest, albeit within the limits of capitalist social relations. A major effect of bourgeois democracy, then, is the blurring of class divisions, since "all" people can conceivably realize material interests in their capacity as citizens, which produces wage-earners' practical "consent" to the capitalist social order when they "act as if they could improve their material condi­ tions within the confines of capitalism."19>20

Effects of "exceptional" forms of the bourgeois state

(Bonapartist, fascist, military dictatorship) on the social practices of dominant and dominated classes are elaborated by Poulantzas (1979) , and to a lesser extent, by Therborn (1978). Examples of effects reviewed below refer principally to the military dictatorship form, due to its predominance in Latin American social formations. It is argued that exceptional state forms result from a "representational crisis," which essentially consists of the rupture (disorganization) of bourgeois ideology and political hegemony, both in terms of

'direction' among fractions of the dominant class, and as concerns the 21 domination/mediation of subordinate classes' demands.

The notion of hegemony is derived from Gramsci's insights with regards to the consolidation of bourgeois rule in regimes where force is not manifest because its utilization is rarely necessary to main- tain capitalist social organization. 29 When the political and economic interests of the bourgeoisie are part of the everyday experiences of subordinate classes— expressing their immediate interests and aspirations— then hegemony is successful. Hegemony has a definite material basis, consisting of a guarantee given to the economic interests of certain dominated classes, which effectively requires short 23 term sacrifices of economic interests by the bourgeoisie. Now, in order for the articulation of popular demands and bourgeois funda­ mental interests to occur, the ruling class or class alliance must be cohesive to the extent that the nature of short term sacrifices is agreed upon, shared out among the fractions of the dominant 2 A class(es). In this manner, the dominant class achieves hegemony by posing its economic interests as political interests, thereby present­ ing itself as the representative of the general interests of the people-citizens In the event of the disorganization of the dominant class or ruling class alliance, compromises meeting the material interests of the subordinate classes are not forthcoming, thereby threatening bourgeois political hegemony and potentially the capitalist organiza­ tion of production. In this situation, a military dictatorship (or other exceptional state form) comes to possess a high degree of relative autonomy, necessary for reorganizing bourgeois domination.

The suspension of the electoral principle and the resurgence of violent physical repression, then, is determined by the development of the representational crisis. Moreover, the (former) role of bourgeois political parties is shifted onto one or more branches of the 26 state apparatuses.

Under the military dictatorship form of the bourgeois state, characteristic effects on the political and ideological practices of dominated classes involve varying degrees of the suspension of civil rights such as the freedom of expression, freedom to organize independent class (or even non-class) organizations, and participation in political decision-making through the electoral principle.

At the same time, however, suspension of bourgeois electoral politics has effects on the political practices of the dominant classes, which are in effect precluded from organizing support for particular projects/interests among the popular classes, as well as within its own ranks. As Therborn points out, an important character­ istic of capitalist dictatorships and fascist states is that they constitute only an indirect representation of the ruling class,

"through an idiosyncratic caudillo, a fascist mass movement and its leader, or a military junta."^ A constant problem of military dictatorship, then, is bourgeois representation in the political

•y O decision-making process within the regime. Changes in the form of the regime may be ushered in via further coups, reorganization of the state apparatuses within certain limits, establishments of new branches of the state apparatus, changes in relations among existing apparatuses and establishment of procedures within selected ministries— usually de facto— whereby certain fractions of the bourgeo- sie come to participate in a more direct fashion in the formation of state policies. ^

The form of state affects state policies by imposing a determinate range of policy outcomes. A general effect of the capitalist state form identified by marxists— rooted in the structural separation of the state from private accumulation discussed previously— concerns 29 the state's dependency upon private accumulation for its revenues.

If state policies are expected to result in 'unacceptable' risks or costs to capital, the latter may retaliate in the form of investment 30 strikes or capital flight.

Moreover, having become identified as an entity which transcends the economy (representing the "general interest") and possessing certain recognized obligatory functions in economic management, the state's ability to rule in the sense of forestalling challenges from below is also dependent upon a healthy economy, or uninterrupted capitalist expansion. This, too, imposes obstacles toward creating and enforcing policies which seriously threaten capitalist profits, since in a capitalist economy, workers' immediate intrinsic economic interests are to a greater or lesser extent directly dependent on economic growth, e.g. capitalist investment. Limitations posed by 10

state apparatuses toward procuring specific policy options are

apparent in historical periods where the requirements of capital

accumulation dictate transformation of certain state apparatuses

before policy initiatives can be effectively implemented.

2. The structures of the state apparatuses do not determine

unique outcomes for state policies; they simply structure the range of

possible outcomes, and the greater or lesser probability of certain

outcomes within that range. Offe's work on selective mechanisms is

especially provocative in exploring the concrete techniques operating

within various state apparatuses, and how the very make-up of 31 these structures "screens out" certain policies. Certain bureau­

cratic practices serve as positive selection mechanisms in the sense

of establishing "limits within limits" and thus considerably narrow

the field of possible outcomes. Concrete policy outcomes are shaped by

class struggles, but operating within the limits inscribed by those

structures. Social practices effectively produce specific policies which are implemented within the limits imposed by the state form.

3. The range of possible outcomes of state policies is not necessarily in concordance with the range of outcomes which are

functionally compatible with the maintenance and reproduction of

existing production relations and the division of labour. The class

structure itself, in fact, determines what forms of the state and in

turn, which policies, would result in anti-capitalist consequences

(threatening the reproduction of class relations). This leads to the

following observation: one of the bourgeoisie's critical tasks is to

organize the internal structures of the state apparatus in such a way

that anti-capitalist interventions are systematically excluded, and 11 that optimal interventions for the interests of the capitalist class have a maximum likelihood of being positively selected. In fact, contrary to the adamant claims of some structuralist writers, instances of a highly class conscious bourgeoisie and its functionaries manipulating the state behind the scenes (or in some apparatuses more than others) have been verified and were crucial toward setting up the state apparatus in such a way as to ensure their interests.

Intense class conflict especially seems to bring forth individuals and groups of capitalists with particular projects to modify the state 32 apparatus in their favor.

What is implied here is the historical contingency and structurally problematic nature of the extent to which the form of the state apparatus guarantees interventions which are optimal for the interests of the bourgeoisie as a whole. It is argued that there is no necessary coincidence between the limi.:s of functional compatibility determined by the class structure and the limits of structural 33 possibility contained within a given form of the capitalist state.

Various structuralist arguments and those of the capital logic and state derivationist schools provide analytical procedures and empirical cases of state forms which allowed or could allow the emergence of policies going against/superceding the limits of what was objectively required by the accumulation process. Wright calls the dislocation between the limits of what is required by the accumulation process and the reproduction of class relations and limits of what is structurally possible given the existent form of the state 3 A apparatus(es), a structural contradiction. When structural contra­ dictions occur, there will be a fairly rapid transformation of the 12 economic structure toward non-capitalist production relations or the state itself will be altered in ways which make it again functional for capital as a whole. "To a large extent, class struggle determines 35 which of these occur."

Class struggle conceived as a transformative practice determines whether or not the form of the state becomes non-reproductive for the creation/maintenance of conditions necessary for capital accumulation.

In other words, class struggle and its effects within the state apparatuses may forestall the smooth functioning of mechanisms which ensure the class interests of the bourgeoisie as a whole. Class struggle transforms the very structural components of the accumula­ tion process itself, thereby producing different requirements— needs for restructuring of the accumulation process— for the continued reproduction of the capitalist system.

An example of "structural contradiction" understood in the above sense is the Brazilian state in 1962-1964 when the populist class alliance or exclusionist bourgeois democratic form of the state was no longer effective in preventing unreproductive consequences of state policies for capital as a whole, as it was constituted in that period.

State officials, whose popular support was partially based on concessions to the urban working class were constrained in terms of initiating countertendency policies necessary to recreate conditions for accumulation in the context of severe economic cyclical recession.

The solution was to radically restructure the form of the state through the military coup.

Chile in 1970-1973 provides a similar instance of a bourgeois democratic form which became ineffective in precluding unreproductive 13 consequences of state policies. Stallings and Feinberg explain that although the state form had not changed much from the previous period

(1958-1970), the conditions of struggle in the city and countryside brought about anti-capitalist policies— although in a confused and partial way— via the bourgeois democratic form itself. Allende and the progressive forces gained control of the executive and certain sectors of the military. Monetary instruments were used to effectuate the "transition" to socialism. However, the economic base of the bourgeoisie was for the most part, left intact; and, the bourgeoisie

• )£ maintained its power base in the legislative arena. The solution in Chile much as in Brazil was the military coup, followed by a restructuring of the state apparatus to "more efficiently" provide 37 conditions for peripheral capitalist development.

Changes in the form of governmental apparatuses observed through­ out the capitalist world— from bureaucracy and parliamentary politics to managerial technocratic forms— also constitute instances where the structures through which state intervention is implemented are transformed with the development of capitalism. According to Offe,^® in the course of the growth of monopoly capitalism, and the simul­ taneous decline of competitive forms, contradictions in the accumula­ tion process push the state qualitatively and quantitatively into more direct involvement in production. Offe contrasts what he calls

"allocative" policies through which the state merely allocates and distributes resources already produced, realized through legal bureau­ cratic channels and parliament, with "productive" policies, which are those directly involved in the production of goods and services required for the accumulation process, and are realized via procedures 14 which exist alongside the legal bureaucracy. Productive policies cannot be left to the give-and-take of competing capitalist interests, but must be planned to serve the collective capitalist interest.

Therborn concurs with this notion, arguing that the growth of new apparatuses of the bourgeois state related to social services and state planning in the monopoly capitalist stage necessitates organiza­ tional forms conflicting with the classical bureaucracy, which turns 39 on the efficient implementation of calculable rules. To paraphrase

Therborn, bureaucracy was the form of apparatus— more specifically, the

"political technology"— of the competitive capitalist stage in which the state functioned in the legal regulation of the market, and in resolving (after the fact) problems created by market operations.

Bureaucracy is not suited for active intervention in the market now required in 20th century monopoly capitalism. Managerial technocracy is a new "political technology" of the contemporary bourgeois state.

Like the bureaucracy, it is characteristically impersonal, specialized, and embodies the monopoly of intellectual knowledge by professionals.

It differs radically from the bureaucracy in that it does not rely to the same degree upon fixed rules and established hierarchies. "Its rationality is substantive rather than formal; and instead of juridical knowledge, it promotes technical and scientific expertise, applied with discretion and consideration of actual effects, rather than with calculable legal precision. The stable hierarchy is broken up by ad hoc committees, working parties, and special enquiries . . . [I]n the internal control system cost-benefit analysis and budgetary policy have 40 overtaken legal reviews in importance." 15 4. From the above discussion it follows that class struggles

must be understood as directed towards the structure of the state

apparatuses themselves and not simply towards state policies.

Conflicts may revolve around resistance to certain policy demands,

how policies are to be implemented and so on. As discussed above,

these struggles may produce anti-capitalist effects, or from a somewhat

different vantage point (conflicts within the dominant class or classes)

may lead to efforts to change sectors of the state apparatus or the

organizing principle of the system of apparatuses in order to create

more effective means to "manage the economy" (control class initiatives

from below). When policy initiatives arising from dominanted classes

emerge which cannot be administered by the present state apparatus(es)

in a way which does not threaten (in reality, or imagined by the

bourgeoisie) dominant class interests, and further, when the present

state apparatus is inadequate or counterproductive towards recreating

conditions favorable for capital accumulation, there will be a movement

toward modifying the state apparatus(es). On the other hand, policy

demands corresponding to certain instrumental and intrinsic interests

of the dominated classes will not be operational within the constraints

posed by the state apparatus(es). This requires then changes in the

state form. (Such modifications need not be implicated with fundamental

interests.)

Struggles over the form of the state mark the turning points in

the history of the capitalist state in any concrete social formation.

Victories and defeats in those struggles effectively define the terrain of subsequent conflict and often for generations. When Marx said

that "Men make their own history but not as they please,he meant 16 that they do not transform their situation under circumstances of their own choosing, but under conditions encountered, transmitted from the past. In other words, the objects of class struggle today are material manifestations of outcomes of past class struggles.

The historical struggles over the franchise, over civil rights, over sexual liberation, over* fascism, over agarian reform, over national political and economic independence are all struggles over state structure. As pointed out by Wright, the empirical investigation of such processes is crucial, for the historical conditions under which certain state forms are produced helps us to understand the logic of structural transformation (and therefore of changing class rela- 42 tions), and of the conditions of reproduction of state forms.

5. From the previous point, one can say that the struggles of one historical period embody a type of structural legacy, shaping the possibilities— structural and organizational capacities of class formation— of, and the range of specific interests to be pursued in struggles of subsequent periods. This is what Therborn and Poulantzas are referring to when they say that the state is a "condensation" of class struggles, or a "crystallization" of class relations.

Crudely, the victory of the bourgeoisie at one point in time may lead to the institutionalization of a set of structures which may at some later period no longer adequately provide for optimal state intervention. A particular mode of incorporation or non-incorporation of the dominated classes, the particular mechanisms of organizing the dominant classes or class alliance which are materialized in the form of state apparatuses, then, may be "functional" in one period and not in a later one.^ 17

B. The Ruling Class and State Power

The discussion up to this point has been developed around

examination of the form/structure and policies/intervention of the

capitalist state. The remainder of this section is focused on a

particular aspect of the relationship between state apparatuses and the

exercise of state power, and in a related manner, of the means by which

the ruling class in a particular social formation can be identified.

In what ways are disjunctures manifested between the state form— under­

stood as the material condensation of a particular set of class

forces— , and state power, or interventions which serve to create/

reproduce certain class relations and therefore, containing the

potential for producing/reinforcing a set of class relations at

variance with that obtaining at the historical conjuncture during 44 which the prevailing state form took shape? How do we go about

determining which class, class fraction or class alliance really

rules? As Poulantzas has shown, the genuine ruling class is not necessarily the one represented in state bureaucracies, and state

ideological emissions.^

First, it is useful to point out that the state per se has no power. Rather, it is an institution where social power is concentrated and exercised. Every state has a class character, every class society has a ruling class, or alliance of ruling classes. The question of determining the character of power and how it is exercised in historical materialism is directed at its nature, not its subject or quantity.

In these terms, in seeking to identify the ruling class and the class character of state power, one must look for the social structures and relations which are promoted and protected above all others by the 18 material force of the state. Saying that the capitalist class "holds" state power means referring to state action/intervention which furthers or reproduces existing capitalist relations of production.

State policies affect classes by reproducing or creating condi­ tions for the growth of certain relations of production and/or precluding the development of class organizations which could threaten or inhibit the continuity and growth of the former. Instances typically mentioned in the literature include cooptation of subordinate classes through fulfillment of certain immediate instrumental and immediate interests; subsidization of accumulation through the provision of physical infrastructure and financial mechanisms necessary to the establishment and growth of capital in general; transferal of surplus product from one economic sector to another through governmental administration of exchange rates, prices, tariffs and so on.

Since state power is exercised in and through the struggle of antagonistic classes and intra-class conflicts, it may be necessary to proffer concessions and compromises, whereby the state goes against the logic of capital accumulation without breaking it in the former context, and against the expansionary interests— temporarily— of a hegemonic class fraction in the latter context.

In the present stage of capitalism, big monopoly capital attains a naturally dominant position, a result of the degree of concentration of capital. "Thus, a state which today furthers or maintains capitalist relations of production ipso facto essentially furthers or maintains the 46 dominance of monopoly capital." This holds for both center and most peripheral capitalist formations, the latter owing to the predominance 19 of metropolitan (monopoly) capital in the local economy, and the tendency of local capital to develop in monopoly forms in order to compete with metropolitan capital in the domestic and international markets.

However, just as no social formation can be characterized by the pure dominance of a certain mode of production and its characteristic class relations, power relations are hardly so straightforward. In the process of maintaining its dominant position, monopoly capital encounters resistance, not only from subordinate classes, but also from the petty bourgeoisie, retrograde sectors of capital and non­ capitalist dominant classes. These conflicts of greater or lesser importance often center around counter-demands for state resources, and against state action which would result in undermining respective economic, political and/or ideological positions.

It is thus necessary to evaluate the effects of state interven­ tions on the ideological, political and economic position(s) of several classes and class fractions, and not just a single class or fraction. Suggested here is an assessment of the relative positions of two or more classes within a single social formation when investi­ gating the effects of state interventions upon their respective relations of subordination and superordination.^ The reproduction and expansion of a given mode of production or dominant class not defined by developed capitalist relations of production in a capitalist society may not alter its subordinate position relative to capital within the social formation in question. "Conversely, policies which go against monopoly capital may not directly undermine its superordinate position in the short or even medium term."^® 20 In his book, What Does the Ruling Class Do When It Rules?

Therborn distinguishes conceptually and indicates analytical procedures for determining the existence of rule by a single class, or by a class alliance. Rule by a single class covers systems of state intervention which include the following: (a) the state furthers or maintains the position of one class alone; (b) a specific class has a predominant position in at least the state apparatus; (c) state intervention operates against the position of a dominant class without furthering 49 or maintaining the position of another class.

A class alliance ranges from systems where (a) the positions of two or more classes are furthered by state intervention to (b) cases of state policies which go against "in no more than one sphere, the positions of a class which is predominant in at least one sphere," while simultaneously it "maintains at least one of the dominant positions of that class or furthers its non-dominant positions and furthers the positions of one or more other classes.The crucial indicator of the existence of a ruling class alliance is the active promotion of the positions of two or more classes by the state as seen in the effects of state interventions.

"Bare maintenance" of a non-dominant class— yet not wholly sub­ ordinated to the ruling class or class alliance— is not to be interpreted as evidence of its participation in a ruling alliance.

Typical examples of this category of classes would include the landed aristocracy in some peripheral capitalist formations, and the petty bourgeoisie in advanced capitalist societies. Supporting classes are distinguished, then, from constituents of ruling class alliances in so far as the former do not designate active promotion and maintenance of economic, political or ideological positions through state power.

Rather, supporting classes support or acquiesce in the dominance of another class.^ Examples of this situation mentioned by Poulantzas are the petty bourgeoisie in fascist regimes: these 'reactionary' forces lend their support to the state; they are ideologically bound 53 to the big bourgeoisie, while fearing the working class. Another instance is that of the French peasantry during the Bonaparte regime.

Most of Bonaparte's support for the peasantry was merely rhetorical; the state did not actively intervene to further or maintain their economic interests, nor did peasants' political expressions become 54 incorporated into decision-making within the state apparatus.

A ruling class alliance is further distinguished from instances where concessions are granted to certain classes which do not imply changes in a given political and economic system. Examples here cover granting of a shorter working day, social security benefits, work place regulation and so forth to the proletariat, and granting of subsidy payments to peasants and petty bourgeois farmers within capitalism as a means to maintain them in the countryside.

The concept of hegemony is pertinent to understanding the rela­ tions among the classes and class fractions constituting a class alliance. Hegemony denotes direction of an alliance by one class fraction or class, implying a relation of ideological direction and consent rather than one of coercion. "Moreover, the ideological direction of a heterogeneous alliance involves a global perspective attentive to the needs and demands of all its components. The needs of other sections must not be reduced, but related to those of the leading fraction, albeit as a subordinate part.""^ 22 In view of analytical procedures useful toward identifying the existence of a class alliance among fractions of capital and/or non­ capitalist dominant classes, Therborn argues that while the monopoly capital fraction enjoys a dominant position due to the prevailing concentration of capital, one cannot say it exercises exclusive power unless two further conditions are also fulfilled. First, capitalist class fractions must stand in a conflictual relationship and second, the state must systematically intervene in favour of monopoly capital.^ Assessment of these conditions requires empirical investigation, e.g. of the conflicts existing between monopoly capital and weaker sectors of capital. Two possibilities for determining the existence and nature of such conflicts are (a) advantages to monopoly capital are disadvantages to non-monopoly capital and (b) the situation where positions of capital fractions, while not directly colliding, are so independent of each other that a strategy directed against monopoly capital may include maintenance of non-monopoly fractions of 58 the bourgeoisie.

These conditions are generally satisfied when it is determined that state intervention systematically goes against the positions of non-monopoly capital. Interventions of this type involve discrimina­ tion in terms of credit facilities, taxation, direct and indirect subsidies, state purchases and so on; isolation from decision-making within the state apparatus which takes the forms of establishment of a technocratic administration overwhelmingly tied to the needs of monopoly capital, and closure or severe constriction of channels whereby non-monopoly capital could lobby in the legislative apparatus 23 for their interests (such as in parliament where it exists, and in the •» civil service).^

Although not discussed by Therborn, it is also possible to discriminate among fractions of monopoly capital with conflicting political and economic interests. This is particularly relevant in the analysis of ruling class alliances and changes in class alliances of contemporary Latin American capitalist states. Three different fractions of monopoly capital can be distinguished: (1) transnational capital, whose technological base and primary markets are established in one or more capitalist center countries. It is transnational in the sense that investment strategies and capital realization take place on a world level. (2) locally-based monopoly capital, whose origins are rooted in the domestic economy. This fraction depends upon considerable intervention by the local state in terms of credit, infrastructure, and subsidies. It is in competition with other fractions of the world bourgeoisie for market shares and state resources. (3) state monopoly capital, whose emergence and growth is an outcome of the history of local state intervention towards creation of the conditions for monopoly capital accumulation.

At one point in time, these monopoly capital fractions may constitute a fairly stable alliance in which the transnational fraction based outside the social formation in question was hegemonic. The development and growth of the other two fractions in the course of local capital accumulation may result in and have been produced by a shift in relative power. Therborn's reference to the development of a "dislo­ cation" between state apparatuses and state power would apply here.

The class alliance in effect at the time of the establishment of the 24 state apparatus(es) is no longer representative of the class alliance effectively exercising state power. What this means in concrete terms

is a certain political instability, exacerbated by and perhaps over­ shadowed by conflicts deriving from weaker sectors of the bourgeoisie demanding participation in the ruling class alliance, or merely maintenance of their current economic position in danger of further deterioration/absorption by monopoly capital. It is also conceivable that the position of one or more supporting classes may have deteriorated during a certain time period, thereby becoming potential sources of conflict with the ruling class alliance.

In summary, the five principal theses of a transformative theory of the state outlined above comprise the global framework for examining any capitalist state structure, that is, constraints posed for state policies by the state form; how policies reflect class forces and the dynamic of change which is effectuated through class struggle directed at policy formation, and consequently on forms of the state apparatus, and the processes through which the state in its capacity for inter­ vention shapes and is shaped by class struggle.

The discussion of the means by which the class nature of the state is determined indicates the primary concerns for studying the development and reproduction of the ruling class or class alliance in any capitalist social formation. The forms assumed by capitalist state apparatus(es), and in turn, modes of exercising state power are variable within certain constraints from one social formation to another.

A specific state form may be "compatible" with the expansion and reproduction of capitalist social relations in certain historical circumstances and not in,others. 25

Additional theoretical considerations are required, however, in

the treatment of concrete issues concerning the Brazilian state apparatus due to specifities of the form and functions of the peripheral capitalist state in contrast to states of center capitalist formations.

Moreover, state intervention in agriculture in peripheral societies merits special theoretical treatment owing to peculiarities of agricultural production in contrast to industry towards capitalist rationalization, and to special characteristics of the agricultural sector in peripheral capitalist formations in the current era of monopoly capitalism. The remaining sections of this chapter investi­ gate these issues.

Section II. Theoretical Framework for Analysis of the Capitalist

Periphery: Imperialism and the Peripheral State

A. Imperialism: The Creation of the Capitalist Periphery

Since the emergence of capitalism in Western Europe, economic and social relations in Brazil and other Latin American social forma­ tions can be understood only in terms of dominated capitalism and dominated capitalist development. The study of imperialism, then, conceived as the extension of capitalist relations of production on a world scale, and in a more specific sense, as a means to remove constraints on accumulation in the dominant capitalist formations, serves as a necessary corrollary to the study of the historical reality of contemporary Brazil.

The theorization of the particular social relations of production existent in Latin American and other post-colonial societies has taken 26 several directions since the early 1960s. "Dependency theory" encom­ passes a host of diverse theses and theoretical assumptions. The emergence of this body of theoretical and empirical studies was influenced by two distinct yet related political forces: first, as a repudiation of bourgeois social science which— either directly or indirectly— ascribed Latin American backwardness to the persistence of feudalism,and second, as an alternative to "traditional" ideas of the left that a bourgeois revolution in Latin America was necessary to first destroy feudalism before attempting socialist transforma­ tion. Specific attention given to classical notions of imperialism in conceptualizing the complex and diverse social and political forces abroad in contemporary Latin American societies is in a sense a more recent development. Latin American marxists have returned to the classics on imperialism, centering on re-workings of this theory in light of the different stages of imperialism transpiring since the mid-

19th century, and with greater attention given to local class struggle(s), or the effects of the latter on relations with imperialism.

Considering the conceptual vagueness and its misleading static connotation, the notion of 'dependency' has been dropped from the conceptual vocabulary of many contemporary marxists, some of them 63 former dependistas. In any case, the use of the term 'dependency' is Illogical to characterize a particular part of capitalism as an international system. By definition, all parts of a system are dependent on each other.

A more fruitful way of approaching the related issues of the political and economic instability of Latin American social formations consists of envisaging the same as dominated formations within the 27 imperialist chain, and which is characterized by uneven development.

A chain implies links, and these links are not equal: some are stronger than others, and the relative strength of some depends on the relative weakness of others. In Poulantzas' words, "reproduction of the capitalist mode of production with this two-fold tendency attests to the fact that the capitalist mode of production can only exist by subordinating other modes and forms of production and by appropri- 64 ating their elements," that is, their labour power and means of labour.

The capitalist mode of production as a system is reproduced only on the basis of expanded reproduction: capital accumulation means the commoditization of increasing amounts of labour power. Unevenness implies partial integration of sectors of the economy, the popular masses and forces of production within the dominated formation to the international capitalist system. The type and extent of this integration is turn, dependent upon phases of imperialism (corresponding to stages of capitalism), as well as upon stages of development of the internal accumulation process. The organization of class relations and state apparatuses within dominated formations reproduces within it the 65 structure of the relations of domination.

The notion of peripheral capitalism— in contrast to capitalism in the center— is a spatial metaphor for social formations with a history of capitalist penetration and domination from the outside, effectively located on the periphery of the economic, political and ideological networks of the international capitalist system.^ The periodization of imperialism into phases is legitimate in so far as the capitalist mode of production exhibits the peculiarity as compared 28 with pre-capitalist modes of pr-oduction, of being characterized by stages, distinguished by different articulations of its structure.

The stages of capitalism can be observed precisely in their relations with other modes and forms of production which it dominates in peripheral formations through capitalism's extended reproduction.

Imperialism in its narrowest sense has been defined by the marxist classics— and adhered to by many contemporary marxists including

Poulantzas, Magdoff and Baran— as a specific relation of monopoly capitalism, the export of capital. In this view, one can speak of a

'transitional' phase, during which monopoly capitalism/imperialism has subsumed other 'forms' of production in the metropoles themselves, and now dominates peripheral formations "from within" through the export of capital, rather than from the outside via the international commodity market, and through political controls.

Characteristics of the so-called pre-imperialist stage of capitalism, however, still coexist with those of the imperialist stage under dominance of the latter. This would occur both within each particular social formation, and in the imperialist chain as a whole. It must also be noted that the pattern of domination has been reproduced in different forms and to a varying extent, according to the resource base, potential and existing internal markets, composition of the labour force and forms of class struggle within each dominated social formation.

While the characterization of capitaLism in two stages, and with this a pre-imperialist and imperialist phase is useful in terms of highlighting broad d ist incL ions in parii-ms of exploitation pertinent to one broad period vis-a-vis Lhe .n h , a more comprehensive view of this process necessitates a more flexible use of the concept

"imperialism." Involved here are defining periods of colonialism and what is referred to as "commercial capitalism" as stages of imperialism proper: the first would span for Latin America (crudely) the 18th cen­ tury until about 1850, while the second would encompass the mid-19th century to the early 20th century. "Imperialism" is used then in the widest possible sense to include all forms of economic and political domination of the periphery by the center, and not simply those forms characteristic of the monopoly capital stage. Such periodization of imperialism corresponds to particular stages of capitalist development in the center. Diverse forms of imperialism are then seen as struc­ tural solutions for impediments to accumulation within the center 67 economies, or capitalism's countries of origin.

In the current advanced monopoly capitalist stage, the main constraints to accumulation in the advanced capitalist countries con­ sist of the ever-increasing reproductive cost of the system as a whole, rooted in the contradictory accumulation and legitimation func- 68 tions of the state. Stagnation and inflation are the results. On the one hand, the state has to cope with certain effects of corporate capitalism such as environmental pollution, the deteriora­ tion of and fiscal crisis of urban areas, and increasing costs of social welfare expenditures. Revenue sources are constituted by capital itself (tax monies) in economies where the state does not directly engage in the creation of surplus value. Some sectors of capital have responded to increasing regulation of the workplace

(health and safety standards), environmental laws and increasing wel­ fare costs imposed by the state through capital flight. In effect, 30 the growth of monopoly capital and the internationalization of the productive circuit of capital’ have exacerbated these contradictory tendencies. One aspect of this constraint on accumulation is the difficulty of raising the rate of exploitation due to the strength of the working class, and because the effectiveness of the reserve army of the unemployed has been reduced by social reforms, e.g. the welfare state.

Structural solutions indicated by marxist theorists of this phase are the extension of state intervention from simple Keynesian manipu­ lations of effective demand to active involvement in the productive process itself through state policies centered on increasing produc­ tivity. The emergent forms of imperialism related to this stage is the increasing scale of capital investment in industrial production within the periphery, especially in mass consumer goods ("runaway shops") which are marketed both in the advanced capitalist countries and in the periphery itself.

Emergent forms of imperialism are not necessarily dominant forms in a given period, nor is any one form of imperialism necessarily dominant in a particular peripheral formation according to the stage in which it is emergent, or dominant in the periphery as a whole.

In other words, technology export, foreign aid and military sales may remain important in a particular Latin American country alongside con­ siderable imperialist investment in the domestic manufacturing sec­ tor, both in sectors directed to supplying internal markets, as well as those oriented to exports (product components or mass consumer goods for supplying U.S. markets, for instance). As mentioned above, the links with imperialism are in part determined by the nature and stages of the capital accumulation process, the size and depth of domestic markets, the quality and cost of labour power and class struggles within the dominated formation. Succinctly, the appearance and reproduction of domination and incorporation within the international system are effects not only of international capital operating on the peripheral formation, but also of forces and struggles internal to that formation.

Implied throughout is the notion of an international division of labour. Traditional forms of the same coexist, although in decline, with the contemporary integration of the labour process under the aegis of the transnational corporation. Integration may be vertical, each subsidiary in one particular country being responsible for one stage of production of certain products which are exchanged between them.^

Integration is also achieved to a greater or lesser extent across several firms, in various current forms of conglomerate. These are major current tendencies.^

The incorporation of Latin America into the world economy can be characterized as a case of extreme domination from the outside.

However, the detrimental effects on the territorial economy as a whole— ruin of land, loss of mineral resources, depopulation, wholesale extraction of surplus product, and dequalification of labour— did not preclude opportunities for individual wealth in land and trade for a tiny minority. The latter is important toward understanding the ensuing incorporation into the international division of labour during the era of breaking ties with Spain and Portugal, and in subsequent decades. The process of original accumulation in Latin America with the break of colonial ties and most important, post-colonial class conflict, resulted in the defeat of the nascent Latin American manu­ facturing bourgeoisie,^ in a struggle with the landed rentier class

(extracting surplus via feudal or tributary relations of production) and merchant capital, both classes who benefitted from continuance of the export economy and maintenance of non-capitalist labour forms.

Further, in many regions the "revolutions of independence" became a vehicle to express the demands and dissatisfactions of the dominated classes. Fearing the challenge from below, liberal free traders and bourgeois ideologues cast their lot with mercantilist and landowner forces and (on occasion) royalist forces.

The rule of capital in Latin America has continued to be characterized by external domination and incomplete integration into the world system. The local system— a specific social formation— has been linked with the international system at certain points only partially, or not at all in others. Generally, primary commodity markets served as the principal linkages for most Latin American formations following the post-independence depression and regression, until penetration by finance capital and multinational firms after the failure of ISI strategies in creating an integrated system of capitalist productive sectors. However, the pattern of dominated incorporation into the international system is reproduced to a varying extent in the different formations. As Therborn points out, merely 'peripheral incorporation' may be a more apt term in certain periods and for 72 societies such as Paraguay, Bolivia, Chile and perhaps Peru. Dominated incorporation implies that the local system contains internal disarticulations, due both to the absence of organic links between the various capitalist sectors and to the coexistence of these sectors with non-capitalist non-commodity relations. When referring to the "internationalization" of sectors or industries in a Latin American formation, one means penetration and transformation of the productive forces and relations of production from the outside, wherein the enterprise/industry/unit is wholly interconnected with product and investment flows in the international system, representing only a territorial segment of the world system, or of the operations of a particular multinational conglomerate. There are no necessary connec­ tions between these sectors or industries and other capitalist enter­ prises in the local economy.

What are the implications of a dominated and incorporated posi­ tion in the international capitalist system upon the formation and stability of political practice, the organization of bourgeois hegemony, the size, structure and organizational capacities of domi­ nated classes? Quite simply, the major implication is a certain type 7 3 of "ungovernability." Implications for the particular features and areas of intervention of the bourgeois state in peripheral capitalist formations— which set it appart from the state in center capitalist formations— are explored in the remainder of this section.

B. The Peripheral Capitalist State

Theory of the peripheral capitalist state is not distinct from theory building pertinent to the state in advanced capitalist forma­ tions in so far as where the capitalist mode of production is dominant 34

in a society, the state is a capitalist state. What this means is that in a capitalist society a specific 'basic form' of the state is established, arising from the separation of the political from the economic. Just as there are many forms of the state pertinent to non-capitalist modes of production, and state forms which combine elements of competing modes of production during a transition period, so there are varying forms of bourgeois state. Some of these

"exceptional" forms have been discussed earlier.

As pointed out by Laclau, Jessop and Poulantzas,^ the origins of such crises vary from one case to another. Their content, however, is typically a crisis of political hegemony in the Gramscian sense of 75 'direction' of the ruling class or ruling class alliance. Another aspect of this crisis— and an important one in determining conditions for the durability of bourgeois democratic regimes— is the bourgeoisie's failure to organize ideological hegemony, the fundamental condition of which is the ability to integrate popular democratic values and economic demands into an ideology and programme that ensures the representation of bourgeois economic and political interests. The crisis in ideological hegemony is reflected in on the one hand, questioning the salience of the dominant ideological themes and on the other, divorce of popular-democratic movements from subordination to dominant forms of ideological discourse and practice.

The emergence and consolidation of particular forms of the capitalist state and in turn, various political regimes depend on the concrete situation of the class struggle, economic conditions related to the stages in capitalist development and the different conditions for establishing hegemony by the dominant class alliance. The last 35

fact.or bears on political and ideological hegemony of the bourgeoisie,

its relative capacity or incapacity to consolidate its own rule within

its own ranks under the direction of a hegemonic class or class

fraction, and through incorporating popular demands and ideological

expressions into its own global economic interests.

These theoretical concerns are of particular salience in the case

of peripheral capitalist societies, which are by definition, societies

in which bourgeois relations of production were induced from the

outside, and thus have been characterized by varying degrees of

political instability in the past century. The development of

specific forms of the state and political regimes as well as their

frequent changes are conditioned by the historical timing and nature of dominated incorporation into the international capitalist social

division of labour, pre-existent non-capitalist relations of production and changing modalities of their political and economic importance, and once established, the locally-based process of accumulation, and its

inherent crises. Certain functions of the capitalist state in peri­ pheral formations which correspond to particular state forms and regimes stem from significant differences in the development of capitalism and conditions for accumulation in contrast to center capitalist formations.

First, it is necessary to point out as implied above, there is no necessary unilinear sequence through which the capitalist economy and the capitalist state in a given social formation must proceed.

Bowles and Gintis and Jessop^ insist that the relationship of capitalism, especially competitive capitalism, to the liberal demo­ cratic form of state is not a general one. For it is "only in those 36 metropolitan nations that industrialized in the first wave that we find an extended period of competitive capitalism. [l]n others the role of the state and the banks was much greater and the stage of competitive capitalism was correspondingly weaker and more truncated.

There! simply is no intrinsic tendency for the bourgeoisie to develop a parliamentary type of democracy.

In a set of empirical studies of bourgeois democratic regimes in 78 the advanced capitalist countries and in Latin America, Therborn con­ vincingly argues that the failure to establish enduring democratic forms is first and foremost an indication of the failure of national bourgeoi­ sie to establish hegemony for itself: threats from the working class have never constituted a serious challenge to bourgeois domination, even though they have been perceived as such (Brazil in 1963-64, for example).

He identifies certain patterns of determination underlying the appearance of the bourgeois democratic form in Europe and North America which have been for the most part absent or very fragile in the peripheral social formations of Latin America.

In a similar vein, Nun argues that the primary explanation behind the wave of military coups in Latin America and the persistence of mili­ tary regimes has proved to be an organic crisis of the ruling class— its structural weakness— and failure of the respective bourgeoisies to con­ solidate hegemony in parliamentary regimes. The coups are examined as outcomes of representational crises wherein the Latin American bourgeoi­ sies were unable to secure their economic interests by presenting them as the political interests of the "people-nation," and thus were unable to articulate the aspirations or immediate interests of the subordinate classes to their own fundamental political and economic interests. 37

Certain broad generalizations are made by Therbom (1979) and

Perez-Sainz (1980) with regard to the effects of imperialism in

Latin America on the formation of the bourgeois state and ensuing patterns of bourgeois domination. First, it has severely restricted internal economic diversification and therefore, inter- and intra­ industry linkages. Regional discrepancies and conflicts are heightened since dominated incorporation tends to link growth spots with the exterior more than among themselves, which produces to a varying extent isolation from central control (by the national state apparatus).

As a consequence of this, the unity of the state in its role as the representative of the people-nation, and as a nodal point in the 79 exercise of political domination is considerably eroded. The state in these circumstances has often represented little more than a go-

Q rv between for the imperialist centers and the local population.

Second, in the absence of a real or perceived threat from the working class and the peasantry, imperialism impedes even minimal ideological unification of the various dominant classes and class fractions. The fragility of an ideological base for attaining hegemony is posed as a result both of the social heterogenity involved in capitalist penetration of non-capitalist relations of production, and the linking of ruling-class fractions to ideological and political identification with capitalist center formations. 81 Third, the local society is "permanently" destabilized both economically and socially, stemming from the lopsided, externally induced nature of the growth of petty commodity and generalized commodity production. This leaves the economic base extremely vulnerable to 82 international conjunctural cycles. Fourth, dominated incorporation "overloads" the polity with what

Therborn calls "socio-political relations, contradictions and con­

flicts of fundamentally different kinds." This refers to the inter­

locking of different historical temporalities of the sectors linked

to the international system and those "local times" of sectors and classes which are not directly integrated into the international system 83 of production relations. The classic instances of such dislocation are the agrarian sector which harbors non-capitalist classes and labour relations not subsumed to capital in more or less complete

forms, and sectors of artisan production, petty commodity production and weak fractions of national capital whose structural bases are national or local in scope, employing low-level technology and labour-

intensive production processes.

All of these tendencies have negative effects on the cohesion of the local bourgeoisie, and the "organicity" of its relationship with the bourgeois state.Induced capitalist development has also affected the absolute and relative size and structure of dominated classes. In most Latin American formations, capitalist industriali­ zation was intiated in the monopoly capitalist phase: these formations did not pass through the competitive stage of capitalist development in the same forms and for similar periods as occurred in center formations. Consequently, the working class proper employed under capitalist labour relations tended to be considerably smaller. More­ over, the incomplete penetration of the local economy at different stages in the international system and the disparities of market conditions according to productive sectors, means wide discrepancies 85 in labour relations and living conditions among workers. 39

As several Latin American inarxists®^ have observed, when tradi­ tional agriculture is rendered unviable, there is no urban indus­ trialization adequate to absorb the 'liberated' labour power. Results are the immense urban slums, the enormous mass of unemployed and marginally employed, both in the agricultural sector and urban centers.

This urban sub-proletariat is not integrated into the modern capitalist labour market, and is often isolated— socially, politically, and economically— from the industrial working class. The rural superflu­ ous population is equally isolated from stable elements of the working class, whether occupied in capitalist agriculture or in urban industry.

The history of induced capitalist development in Latin America has then implied atrophy in the growth of a strong independent peasantry and petty bourgeoisie, producing instead the growth of a mass of precarious minifundistas who barely subsist on minute plots of land and in casual wage labour occupations, and of vast numbers of an

"urban lumpen petty bourgeoisie" of legal or illegal street vendors.

The most important outcome of these characteristics of the dominated classes, petty bourgeoisie and the peasantry in peripheral formations is the tremendous difficulty in getting together for sus­ tained independent collective action on their own. In other words, structural capacities for class formation have for the most part been underdeveloped or non-existent. The subordinate classes are neverthe­ less always present with their latent threats to the social order, as well as sporadic outbursts of violence and protest. The organic inability of the subordinated classes to organize collectively— to the extent that this feature holds— contributes to the fracturing of 87 the bourgeoisie and is reflected in the bourgeois state. Bourgeois 40 political and ideological hegemony is impeded to the extent that one

(leading) or more fractions cannot rely on mass popular support to organize reforms or other projects for continued capitalist accumula-

O Q tion over the resistance of other ruling class fractions.

Implied throughout the discussion of the effects of dominated incorporation on the stability of the bourgeoisie in the periphery is a certain weakness of the bourgeois nation-state form. Perez-Sainz,

Cardoso (1973 and 1979), Dye and Souza e Silva and O'Brien seem to argue that the development of a state bourgeoisie— the peripheral state's direct participation in the production of surplus value— in 89 peripheral formations stems from the former weakness.

In this view, the state bourgeoisie is seen as an attempt to prevent the manifestation of the contradiction between the existence of a nation-state and the absence/fatal weakness of the national bourgeoisie. It follows that the peripheral capitalist state's special functions in contrast to center capitalist formations essentially consist of its important position as a 'creator' of the capitalist class through its numerous and extensive interventions, and through its own productive activities, wherein it performs to a varying extent the historical role of the capitalist class itself. In a related manner, Munck speaks of the contemporary peripheral state's inter­ vention as a pre-condition for the development of monopoly capitalism, as opposed to intervention in response to over-accumulation and crisis 90 characteristic of advanced capitalist states.

Brazilian political scientist Carlos Estevam Martins goes one step further: in center countries, the state productive sector is a consequence of capitalist development, following the unification and 41 91 diversification of the national bourgeoisie. Conversely, in peripheral societies, state enterprise in its capacity as capital, and in valorizing itself serves the private sector. Accumulation in the state productive sector then, is indispensable in so far as the economic space which makes private accumulation possible is created.

Specifically, the peripheral state's principal areas of inter­ vention in productive activities are (a) where it is not immediately profitable or feasible for local or international capital to invest, and which are essential towards the expansion and diversification of local capital as a whole; (b) where the profit-maximizing, 'predatory' nature of private capitals may impede the overall growth of capital accumulation and (c) where international capital requires state investment and/or administration to realize particular productive activities which are beneficial to the local accumulation process.

While objectively necessary to the establishment and reproduction of capital accumulation in the local economy, the existence and expansion of a state bourgeoisie presents contradictions which derive from the virtual attenuation of the separation of the political and the economic, the 'basic' form of the capitalist state. First, the state bourgeoisie as a distinct fraction of capital competes with other

(private) capitals, both international- and locally-based. On the other hand, the capitalist state intervenes to reproduce capital as a class, which includes a disciplinary or controlling function. In this capacity, it may act to dissolve or preclude the development of specific fractions of capital or ovon certain individual capitals; here the state undertakes productive activities to ensure the profitability of "capital in generaiTherefore, a contradiction 42

exists within the peripheral state in so far as state firms seek to

reproduce themselves through Lhe extortion and realization of surplus

value, while at the same time its public constraints (to serve capital

as a whole) place on them obligations other than their own reproduc- 92 tion. The question here becomes one of how to control or discipline

state capital.

Moreover, in as much as the state is directly engaged in the

production of surplus value itself, it loses its abstract form as being

"above" the particularistic interests of individual capitals or

fractions of capital, and is thus vulnerable to attacks from sectors

of private capital, especially in the event of accumulation slowdown.

In this sense, the state loses a degree of its relative autonomy to

organize the political and ideological domination of the bourgeoisie.

Second, there are implications with regard to the state's relations with subordinated classes. To the extent that the state is directly

engaged in labour exploitation, economic struggles can easily become politicized, possibly leading to direct challenge of state rule, and

therefore of bourgeois political domination. The state loses its abstract form in the sense of representing the general interests of

the people-nation, becoming instead immediately identified with the employer/exploiter, supporter and guarantor of deprivation and undesirable working conditions for the popular classes. This particular scenario has occurred especially during periods of accumulation crises,

in the course of which the state has applied recessionary policies, such as wage and hiring cutbacks, production speed-up and other mechanisms to increase the rate of exploitation in its own enter­ prises, along with similar directives toward the private sector. 43

These considerations attain special significance in the study of concrete situations in Latin America where the state is, and has been, highly involved in productive activities. Analysis must focus then on the cleavages among the bourgeoisie with regards to their potentially contradictory relationship with a state which on the one hand repre­ sents itself as an arbitrator among social antagonisms and supporter of "growth and development," and on the other, with particularistic interests of its own.

Section III. The Agrarian Sector and the Role of the State in

Capitalist Domination

In peripheral capitalist formations, the agrarian sector has played a crucial role in (re)producing the conditions for capital accumulation, both in its initial stage— 'primitive accumulation'— and after, through providing labour to the industrial sector, cheap food­ stuffs for urban workers and foreign exchange vital for financing 93 imports necessary to industrial capital accumulation. The specific contents of its role and the class relations upon which the former is based and furthered are regulated in large part by the state in its capacity to institutionalize mechanisms for extracting surplus product from the agrarian sector, and to influence the flow of capital invest­ ment within the agrarian sector, as well as between the former and other productive sectors.

While serving in a sense as the necessary foundation for capitalist development, the agrarian sector has traditionally been the primary locus of so-called internal disarticulations in peripheral formations, a product of non-commodity relations which are concentrated in this 44 sector and the absence of organic links between it and other capitalist sectors in the local economy. The reasons for the durability of what are seen to be non-capitalist labour relations in agriculture are discussed below. This discussion provides the framework for understanding the class nature of the peripheral capitalist state's intervention in agriculture.

A. Conceptualization of the Peasantry and Its Exploitation by Capital

The persistence of the peasantry in the capitalist periphery and of petty commodity production in agriculture in advanced capitalist formations has given rise to considerable debate among marxist scholars.

On the one hand, there are questions of theoretical interest regarding the disjuncture between concrete social reality and the predicted demise of the peasantry in the course of the inexorable unfolding of the logic of capitalist accumulation wherein all labour would eventually come under the real subsumption of capital. On the other are political implications derived from lessons of historical experience, requiring in effect methods of class analysis and therefore of the political consciousness of the peasantry which more closely represent 94 contradictory social realities.

It is generally agreed among marxists that peasants or simple commodity producers in agriculture are exploited and/or impoverished under capitalist domination. Major differences arise regarding units of analysis and the conceptualization of the mechanisms of extracting surplus product from peasants and in some cases, whether or not capitalist exploitation of peasants in the historical materialist sense even exists. These theoretical issues are of crucial importance 45

in a study of state intervention in agriculture in peripheral

societies. Given the particular historical role of the peripheral

capitalist state in the establishment, reproduction and expansion of

capital accumulation, how can one explain the contradictory fact of

the continued reproduction of apparently non-capitalist labour forms

in agriculture? Under what conditions will state power be exercised

toward furthering or at least maintaining the reproduction of non-wage

labour in agriculture, and equally toward preserving means of

production under the control of non-capitalist producers?

Four central related theoretical problems of relevance to these

issues which can be distinguished in the literature turn around

(a) peasant production as a mode of production; (b) peasant production

as a form of production subordinated to the prevailing mode of

production in diverse and changing ways; (c) the labour process in

agriculture posing natural barriers to the implantation of the

capitalist mode of production and therefore featuring modifications

and peculiarities of capitalist relations of production in contrast to

industry, and (d) the concrescence of pauperization of traditional

labour forms and the growth of a relative surplus population under modern monopoly capitalism.

No attempt is made to systematically review all aspects of these 95 96 problem areas. * The subsequent discussion focuses on the treat­ ment of such issues as they bear on understanding contemporary Latin

American formations in an advanced stage of capitalist industrializa­

tion, containing a pauperized mass of subsistence producers in the rural sector, as well as an urban sub-proletariat mass, equally under- or unemployed and impoverished. Included here would be Mexico, 46

Brazil, Argentina, Colombia, Venezuela, Uruguay and perhaps Chile and

Peru.

Several attempts to develop the laws of reproduction of the peasantry where the mode of production was central to the analysis have essentially focused on relations within the peasant household, and its mode of economic calculation as a unit of simple reproduc- 95 tion. In this view, peasants are not concerned with accumulation, but rather with simple reproduction. However, these theorists also admit the historical fact that peasants surrender a surplus to capitalist domination. In effect, the surplus surrendered to capital is not available for investment needed for the next production cycle, or for family consumption needs. As more and more surplus is appropriated, pauperization deepens and the family begins to distribute labour outside the "peasant mode." Further, as the sale of labour power becomes more prevalent in order to maintain household income, peasants are transformed partially or wholly into wage labourers.

From this recognition flow varied attempts to conceptualize appropriation of surplus from peasant labour. One form of appropria­ tion is ground rent.^ Absolute ground rent can be a form of surplus extraction from the peasantry, but is external to capitalism, which 97 is the dominant relation. Another major form of surplus appropria­ tion is self-exploitation, or the notion that peasants do not appropriate for themselves the full product of their own labour.

While formally owning the means of production and in control of their own labour, surplus is nevertheless appropriated by industrial and commercial capital through unfavorable terms of trade imposed in the 98 sphere of circulation. This argument, however, has come under severe 47 criticism, usually directed at its unjustifiable assumptions, such as the possibility of "equal exchange" and its misplaced focus on the

QQ level of circulation in contrast to focus on production relations.

Another possibility, and a more theoretically coherent one, is that formal ownership of the means of production does not assure that peasants can couple them with their own labour voluntarily. Peasants must couple their formally owned means of production with labour power in accordance with the needs of capital. The "needs" of capital vary from one historical period and place to another, as well as the mechanisms through which surplus is extracted for use in capitalist reproduction. Discussion of these mechanisms center on the various means and degrees of capital's effective control of peasant labour­ time, the labour process and means of production, exercised via the capitalist state or private capital. Included here are the imposition of taxes; sale and financing of production to state co-ops, or marketing boards; similar contractual arrangements with private firms; usury and merchant capital performing functions of industrial/ productive capital in relation to peasant producers of cash crops, and imposition of fixed prices by the state to reduce costs of agricultural products to capitalist industry, e.g. reduction of the reproductive costs of urban labour.

In summary, there are no internal laws of production and repro­ duction of an agarian sector of simple commodity producers. As evidenced in the works of Kautsky (1976), Ennew, et al. (1977),

Hussain and Tribe (1979), Littlejohn (1977), Rello (1976) and

Bernstein (1977) among others, there is no theoretically coherent concept of a peasant-mode of production. Peasant production is only a specific form of agricultural production which can exist in different

social historical epochs. The specific characteristics of peasant

production are (a) absorption of surplus production through mechanisms

in the broader society within which the peasant is integrated, and

(b) reproduction of a household (the family) without accumulation,

implying also that family members are not remunerated. Peasant production exists in varying relations with other forms of production

in different times and places; the latter forms are specific to the mode of production in which they exist. In capitalism, other "forms" of agricultural production are the capitalist farmer, who while also

employing little or no wage labour, in contrast to the peasant,

produces to accumulate, and industrial farming, production for accumu­ lation and organized on the basis of wage labour. Peasants' relations with industrial forms of capitalist agriculture in many regions of

the world consist of providing cheap wage labour. Costs to agrarian capital are reduced to the extent that peasant labour is reproduced via its own subsistence farming.

Suggested here is concentration on the intensification of commodity relations at the level of the household economy (the degree

to which the reproductive cycle is realized through production and exchange of commodities), and differentiation of the peasantry in the materialist sense, e.g. tied to conditions in which wealth becomes capital when it is not consumed individually, but productively through

investment in the means of production. With intensification of commodity relations, some peasants manage to accumulate wealth and invest in means of production, farm improvements and the like, while others simply reproduce themselves, or are gradually pauperized, forced 49 to seek employment outside the household unit to reproduce the peasant family.* 101

The approaches outlined above require acceptance of the notion that peasants are a transitory class in a more or less gradual process of absorption by the essential classes of the capitalist mode of production. However, at this juncture one encounters the problem of conceptually and empirically defining the end points of "transition." 102

As mentioned above, the development of capitalism in Europe and North

America clearly has not resulted in the disappearance of petty commodity producers. It is well-known that the 'rural exodus' in these countries has dwindled to a mere trickle, although family labour farms as a whole continue to decline in numbers and in terms of their contribution to total agricultural production. Nevertheless, in particular commodity sectors and in certain regions, petty commodity production persists, showing a tenacity which cannot wholly be explained by these producers' tendency for self-exploitation or their non-economic attachments to farming as a way of life. In Latin

America, peasant populations as a proportion of the total population have been considerably reduced over the last 50 years, and even as recent as ten years ago. Nonetheless, especially in formations where capitalist industrialization commenced as long ago as the early 1920s

(Mexico, Brazil, Argentina, for example), peasant numbers have actually 103 increased in the 1970s.

Conceptualizing the peasantry (or for that matter, petty commodity producers in agriculture) as a transitory class is fruitful in so far as it alerts the researcher to the constant movement and transforma­ tions occurring among agrarian populations, products of the movement 50 of capital itself, its diverse modes of expropriating labour power, and means of production in agriculture which are themselves specific outcomes of the confrontation between capital and peasants who struggle to resist commoditization of their labour, their land, their product.The notion of "class in transition" and the corresponding concentration on the social differentiation process, its rate and forms among peasant producers are insufficient conceptual approaches, however, to the extent that they alone cannot account for the persis­ tence of the peasantry in regions and product sectors from one social formation to another long after they "should have" disappeared.

Kautsky and more recently, Vergopolous, Bennholdt-Thomsen

(1976, 1981) and Mann and Dickinson, who have dealt with these problems in empirical studies argue in different ways that peasant production not only fails to be dissolved by capitalist penetration and increasing production of relative surplus value in agriculture, but that in specific circumstances peasant production is a result of capitalist development and an integral part of modern monopoly capitalism. The points of departure for arriving at these conclusions are taken from (a) Marx's observations that the labour process in agriculture is much more resilient than industry to complete subordina­ tion by capital, and of certain peculiarities of agriculture which determine that industrial capitalism's consequences in agriculture produce production relations that, while capitalist, are not wage labour forms common to capitalist industry, and (b) recognition of structural blockages toward absorbing labour in industry released from agriculture in peripheral formations in the monopoly capitalist era. 51

Some frequently mentioned obstacles to capitalist rationaliza­ tion of the labour process in agriculture are the difference between the period of work and the period of production, the slowness of capital turnover, inefficiencies in the use of constant capital, relatively high circulation costs related to the long production time of some agricultural commodities, and the high risk of capital resulting from perishability of certain agricultural products. Each of these will be briefly reviewed in the following.

In Marx's words, the period of work is always production time.^®^

However, another portion of production time is that when the unfinished commodity is "abandoned to the sway of natural processes. In this period, capital is tied up, and value or surplus value is not being created. Examples include chemical, physiological and natural processes such as required in the production of livestock, drying stages of pottery, bleaching, fermenting, the growing period of cereal grains, etc.-^7

The more productive and working time coincide, the greater the productivity and self-expansion of capital in a given period of time.

"Hence capitalist production strives to reduce not only the labour time necessary for the production of a commodity, but also the 108 'excess' of production time over labour time." This divergence is of particular importance in certain spheres of agricultural production where due to natural processes, production time far exceeds working time (cereal grains are good examples). Capitalization of agriculture progresses most rapidly in those spheres where production time can successfully be reduced. In those spheres where it cannot, capital is not likely to find investment on a large scale profitable, and 52 thus this production will be left more or less in the hands of peasant producers, and in some instances, capitalist farmers.

In some spheres of agricultural production, production time is extremely lengthy, which means a relative slowness of capital turnover- 109 and thus a negative effect on the rate of profit. The excess of production time over labour time also creates inefficiencies in the use of constant capital. In contrast to manufacturing, constant capital lying idle during the excess production time finds its value wasted away by physical deterioration and social obsolescence rather than being transferred gradually to the value of the commodities produced. Thus, the introduction of technological innovations— high levels of organic composition of capital to increase relative surplus value— in some circumstances is not attractive to capital.

The relatively long production time of certain durable or non- perishable agricultural products requires that a certain amount of commodity capital be set aside to supply the entire period when no new production can take place. What this means is that a certain amount of capital must be invested in storage. This exacerbates the capital turnover problem, as it requires expenses which do not add to the value of the product, and are only a positive loss to the 110 producer. The high perishability of certain agricultural products sets absolute limits for the circuit of capital. Commodities which spoil lose their use-value and their exchange value. Entrance of capitalist production into these spheres is a high risk venture until technological improvements in transportation, refrigeration, etc., occur on such a scale as to make them profitable for capital 53

What all of this leads to are modifications of capitalist rela­ tions of production in contrast to the capital-wage labour form in industry, and especially in manufacturing. Owing to the difficulties associated with the "natural barriers" to capitalist rationalization in agriculture which translates to lower than average profit rates, a variety of forms of peasant production have developed at different times and places to supply products required by capital as a whole, or branches of capital, including both constant capital (raw materials) and variable capital (food).

Some examples of these modified forms were mentioned previously, and include arrangements between usury and merchant capital, state co-ops and marketing boards, and industrial capital and peasant producers wherein the former invest capital in agricultural production, but do not assume all the risks of cultivation which are relegated to the peasant. Various sharecropper and tenant regimes have been established where capitalist production of certain commodities was simply not feasible, e.g. below average profit rates. Relegating the production of commodities to peasants which do not render high profit rates is feasible since in contrast to capitalist entrepreneurs, peasants do not produce to accumulate.

Additional peculiarities of agriculture which determine the consequences of industrial capitalism in agriculture concern the nature of its principal means of production: soil is a naturally limited good. In contrast to other areas of production, production expansion in agriculture is limited in the sense that this means of production cannot be produced. The labour freed through mechanization and other capitalist processes in the agriarian sector— given the 54

condition that all agricultural land is being cultivated or is under

the control of landowners for other purposes, such as speculation— is

from the outset, absolutely superfluous labour. In the words of

Bennholdt-Thomsen, "[I]n contrast to the industrial sector, there is

no fluctuation between the repulsion of labour due to technological

innovations and its attraction through reinvestment at a given

IIO technological level."

The phenomenon of absolute ground rent then is to be attributed

to the natural limitation of the soil, its scarcity and the ease with

which agricultural produce can be monopolized. Because of this and

other peculiarities, the agrarian sector can represent a contradiction

to the capitalist mode of reproduction, e.g. non-capitalist landed

property versus capitalism. This sector is able to realize extra

non-capitalist profits at the expense of total social profit through

landowner monopoly pricing of agricultural products which can rise

above the social value of those commodities. Landed property's

ability to determine monopoly prices rests on its monopoly of the

land, possessing therefore the power to withdraw the land from 113 production. Historically, this problem has been regulated by state

Intervention, namely cheap food imports, nationalization of the soil

(the state realizes and redistributes ground rent), artificial

price reductions of foodstuffs, export taxes, etc. Results of such

practices are that capital is pulled out of the "unprofitable" sector

and reinvested in other sectors. The remaining producers are peasants, who do not require capitalist profit to continue production.

Once consolidated, the agrarian sector composed of peasant labour provides a surplus product appropriated by industrial capital as a 55 whole. The differentiation process continues, releasing labour for employment elsewhere, without necessarily producing increased prices of agricultural products. The important point here is that in the agrarian sector the "pure relationship" between capital and labour does not necessarily have to obtain; there are other means of capitalist development which have previously been interpreted as pre­ capitalist or transitory forms, but which are in fact, the result of capitalism.

In the center capitalist countries the "other means" have proved to be petty commodity producers, who use advanced technology suited to their needs and employ little or no wage labour. In contrast, peasant production in peripheral formations, because of its primitive development, often appears as pre-capitalist. However, as argued by

Bennholdt-Thomsen* this is the result of modern capitalism in its 115 advanced monopoly stage. Owing to the specific structure of capitalist reproduction in peripheral societies, labour freed and expelled from agriculture has become totally superfluous labour, not only in agriculture but for the total capital valorization process.

This is the population of the cities' slums, or having been thrown back in the agrarian sector, appears as a migrant labourer and/or impoverished peasant who has been able to snatch a piece of land or remain on the tiny parcel he has. The masses of uncapita'lized minifundistas in Latin America today are encountered in this situation.

As mentioned previously, agricultural labour freed fromthe agrarian sector through capitalist mechanisms from the outset belongs to the industrial reserve army, since only in the latter sector can this labour be absorbed. In peripheral societies, however, this 56 process has proven to be structurally blocked: non-agricultural production has not expanded sufficiently to absorb the entire agri­ cultural surplus population and shows no tendencies to develop in this direction. What this means is that the industrial reserve army

exists not only in urban environs but also in the peasant productive sector.

The persistence of masses of peasants, producing/existing at extremely primitive levels is thus not a delay in the transformation to capitalist production— an extension of the transitional phase— , but represents in fact a qualitative change. To paraphrase Bennholdt-

Thomsen, peasant survival can be understood as a conflation of

impoverishment on a pre-capitalist basis due to its dissolution

through capitalist penetration and the impoverishment of late capitalism where this labour is unnecessary to the capital valoriza­

tion process as a whole, and is reduced to a more primitive way of life. This miserable mass of humanity is on the same level as boot­ blacks, pencil and paper sellers, maids, etc., in the cities. Peasant production is just "another way in which this superfluous population 117 tries to create its own work to survive."

Outcomes of the processes discussed above represent certain complexities in the analysis of class relations and state intervention

in agriculture in peripheral societies. In a concrete social forma­

tion— say Brazil, or Mexico— industrial capitalist farming may have developed in some sectors, which would imply the existence of a modern agrarian bourgeoisie and proletariat, while in others peasant production exists at varying levels of pauperization and with diverse linkages to state agencies and/or private capitals. The peasant 57 productive sector may then include a wide range of degrees and types of subsumption to capital. Broad distinctions of class identification in agriculture according to modalities of subsumption to capital include the following:^®

(a) Agricultural proletarians who are employed on a steady basis, paid wages equivalent to reproduction costs performing skilled labour, such as machinery operation. They are instances of real subsumption to capital, or relative surplus extraction, and are usually employed in large-scale industrial capitalist operations in agriculture.

(b) Semi-proletarians who intermittently work under capital/ labour relations, while simultaneously performing subsistence produc­ tion on their own plots. These 'worker-peasauts' are marginally subsumed to capital, in that absolute surplus value extraction— prlongation of the working day, production speed-up (task or piece work) coupled with extremely low wages— characterizes their exploitation by capital. This regime is possible owing to at least partial self­ reproduction via subsistence production.

(c) Formal subsumption to capital or property-owning peasants who do not participate for the most part in wage labour, through appropriation of surplus value by buyers, merchants and banks. This subsumption is formal rather than real since the production process remains essentially the same, e.g. the immediate producer/peasant maintains formal ownership of the means of production and more or less regulates his/her work hours, although capital with minimal invest­ ment buys the right to surplus value. Similar conditions exist in contractual agriculture, but control over the labour process, 58 investment and/or means of production is more extensive. Proletari­ anization of the agricultural producer under these conditions of formal subsumption occurs to the extent that banks, buyers and merchants determine the type of product, its quantity, the amount of credit extended to the producer, and the labour process itself (use of seeds, fertilizers, chemicals, machinery, management techniques, etc.).

(d) Property-owning peasants without substantial ties to banks and merchants in the sense of the latter determining their produc­ tion (as in "c" above). These peasants are simple commodity producers in conditions for exchange which comply neither to use value or equivalent value, and are subsumed to capital through market mechanisms. In contrast to capitalist sellers of commodities, the peasant is subsumed via the market to capital because his/her labour­ time is counted in circulation as value-producing, but is not remuner­ ated. Exploitation results from unequal exchange of labour-time

(undervaluation of peasants' labour-time) and mechanisms of differ- liy ential rent. The major victims of this type of subsumption to capital are poor and medium-sized peasants since the "rich" peasants and small farmers are for the most part formally subsumed.

(e) Landless agricultural labourers, constantly seeking work in agriculture and in urban environs as well. These itinerant workers are classified in terms of greater or lesser real subsumption to capital, since they are paid wages, and do not possess alternative means to reproduce themselves. Both relative and absolute surplus labour extraction occurs. This fluctuating mass constitutes a large portion of the absolutely superfluous population, along with a determinant number of the semi-proletarianized peasantry (see "a" 59 above). In periods of unemployment, they subsist at the behest of friends and relatives, theft and charity.

The analytical distinction between agricultural migrant labourers and the ’worker-peasants' is difficult to maintain (or attain) in empirical research, especially as concerns evaluating their relative numbers. First, migrant workers include those continuously on the move, as well as many who migrate for varying periods of time from their own plots. Second, the danger of double-counting these workers (or missing them entirely) exists due to their usually less-than-stable residency status. Third, peasant family members may refer to a home base, or plot, while receiving little or nothing of subsistence needs from such plot. Some peasants in practice may.be full participants of the agricultural labour force due to the diminutive or non-existent capacity to produce subsistence on the plots they own.

B . The State's Role in Exploitation of Agricultural Producers

The peripheral state has' been involved in agriculture in all stages of the changing predominant forms of subsumption to capital in agriculture. Some traditional forms of intervention include taxa­ tion, tariffs, price and exchange rate controls, import and export quotas, all of which are indirect mechanisms of extracting surplus product from agricultural producers for capitalist industrialization.

Additional modes of intervention fall under the general rubrics of increasing the profitability of certain spheres of agricultural production, and protecting the minifund jo sector from further en­ croachments by capital, certain fractions of, or individual capitals. 60

State expenditures in the areas of transportation, storage facili­ ties, marketing organization, agricultural research and extension, and the infusion of cheap money-credit constitute means by which profitability of agricultural investment is enhanced. Due to the need for foreign exchange in maintaining or expanding import capacity for capital goods and intermediate industrial inputs, such efforts to a large extent have traditionally been directed toward production of export crops. Another related objective for state intervention in these forms concerns ensuring markets and suppliers for capitalist agribusiness (inputs, machinery, equipment and processing and marketing industries, respectively), whose markets may be external or domestic.

In terms of intervention toward preservation of peasant agri­ culture, the state is objectively prevented from carrying out or per­ mitting full expropriation of the peasantry to the extent that the following conditions hold true:

First, growing political instability resulting from high rates of migration from the countryside in the context of existing high levels of employment. Traditional production becomes a base of sup­ port for the temporary work force during periods of unemployment, and therefore acts as a type of social security, sparing the state large and increasing amounts of welfare payments to quiet the totally dispossessed. The state in this situation may intervene through subsidized purchases of agricultural products, or virtually free agricultural credit channeled to entire villages or regions. Certain capitalist projects in agriculture and land speculation may come under strict regulation by the state in order to forestall 'excessive1 expulsion of peasant families from the land. 61

Second, a type of symbiosis of large-scale commercial agricul­

ture and semi-proletarianized peasant labour. The minifundista

sector in many Latin American countries consists of pools of un­

occupied labour. To the degree that agricultural labourers have

access to plots of land where they can produce at least part of their

minimum subsistence needs, capitalist employers in commercial

agriculture enjoy extremely low wage costs. Interventions which

result in maintaining minimum access to land, and therefore food, by

the semi-proletarianized labour force devolve from the relative political

and economic force of certain capitals over others, which may be

attempting to exporpriate peasant lands in specific areas.

Third, maintenance of reduced food costs via reliance on peasant

agriculture producing at below cost. Due to the barriers to capitalist

rationalization discussed above and to the extremely low purchasing

power of the masses, capitalist production of foodstuffs has been

extremely limited. The profitability of urban industry— especially in

labour-intensive sectors— is highly related to minimization of repro­

ductive costs of labour. In Latin America, the peasantry has performed

in supporting capitalist industrialization through providing cheap

food for urban labour, as well as fully-proletarianized agricultural wage labour. In the process of increasing capitalization of

agricultural production— particularly for exports and high unit

profit products— peasant food production has declined or stagnated in many Latin American countries. In this situation, the state may in

certain conditions intervene to increase the productivity of existing peasant agriculture, or to expand the land base for peasant production

by organizing "agrarian reform" through which underutilized lands— 62

usually of low differential rent— are appropriated by the state for

distribution to landless peasants via sale or rent.

Implied throughout the previous discussion is the recognition

that "agriculture" consists not only of food and fibre production.

The nature of the peasantry and other agricultural producers'

linkages with agricultural input and finance firms and product

marketing interests effectively discriminates the level of capital

development in the non-farm economy, as well as modes of subsumption

to capital. 120 Through these means corporations extract surplus value

from the commodities produced by peasants and capitalist farmers.

Capitalist penetration in the non-farm sectors of agriculture under­

stood as a multi-faceted system, has occurred with greater facility

than in the food and fibre sector itself, an outcome in large part

due to the obstacles to capitalist rationalization reviewed above.

With the expansion of monopoly capital in the non-farm sectors of the agricultural system in both advanced and peripheral capitalist forma­

tions, the extraction of surplus value in agriculture becomes more

rooted in profits of agribusiness firms than in rent, interest and

profits accruing to capitalist landowners and tenants. Agribusiness

corporations extract surplus value from immediate agricultural

producers through the manipulation of markets and exchange value rather

than through control over the land itself.

In Latin America, extraction of surplus product from agricultural

producers was concentrated for decades in merchant capital, both foreign and domestic, the latter often vested in the direct involvement or

support of the state. This process was furthered by the actuation of the state in its capacity to create and maintain conditions for the 63

reproduction and expansion of a nascent industrial bourgeoisie, i.e.

promotion of and extraction of surplus from agro-export production.

The recent emergence and growth of agribusiness corporations in

Latin American formations signals in turn a greater or lesser transi­

tion from absolute to relative surplus production in agriculture.

The growth of this sector of capital signifies "modernization" of

agriculture which brings with it greater tendencies toward real and marginal subsumption of labour to capital, e.g. the dispossession and

pauperization of small-scale peasant producers, as well as intensify­

ing market subsumption to capital. Monopoly capital in agribusiness

tends to favor large(r) farm operators over smaller ones, since the

former constitute a better market for agricultural inputs and machinery, and in so far as they are easier to coordinate in marketing agreements. 122 However, as pointed out by Goss, et al., large (capitalist) farmers are still subject to the same manipulation through input and product markets that small-scale producers are. They are merely able to gain

greater returns than small producers under the same market conditions

through external economies of scale— purchase discounts, credit availability, marketing advantages— and in some cases, special advan­

tages contained in state agricultural policies to rapidly increase the markets for agribusiness.

Since the capitalist state serves capital in general, state policy

toward agriculture has primarily revolved around ensuring the profita­ bility of its inputs and product marketing components. In Latin

America, given the imperative toward ensuring increasing amounts of

foreign exchange for industrialization, this has translated into guaranteeing the profitability of (a) agro-industries linked to export 64

markets (processing and marketing industries), and (b) agricultural

input and machinery industries in order to enhance the competitiveness

of agro-based exports on the world market. Massive credit subsidies

and other facilities channeled toward agricultural producers in these

countries can be understood first and foremost as attempts to create and increase the markets for, and thus the profitability of agribusi­ ness corporations. FOOTNOTES TO CHAPTER 1

1Therborn, 1979:74.

2 Habermas' most widely known work on the state is Legitimation Crisis (1975). Offe's work is extensive; the most systematic and complete examples— while lacking empirical applications— are "Theses on the Theory of the State with Volker Range (1975), and "Structural Problems of the Capitalist State" (1974).

^See especially Poulantzas, 1978a, 1978b and 1980.

4 See Yaffee, 1973; Mueller and Neusuess, 1975 and Blanke, et al., 1976.

^Holloway and Picciotto's book State and Capital (1979) con­ sists of a collection of writings from this perspective. Included here are contributions by Holloway and Picciotto, Hirsch, and von Braunmuhl. See also Aumeeruddy, et al., 1978. £ Contemporary theorizing of dominant class political and ideo­ logical hegemony in this tradition derives for the most part from elaboration and rearticulation of Antonio Gramsci's Prison Notebooks (Sixth printing, 1980). For Poulantzas, see especially, 1978b:139- 141, 190-210 and 1980:127-131. See also Laclau, 1979 ("The Speci­ ficity of the Political," and "Towards a Theory of Populism"), and Nun, 1967. In Gramsci and Marxist Theory (ed. Chantal Mouffe, 1978), Mouffe, Texier and others define and critique Gramsci's concepts of hegemony, state, passive revolution, and war of position, .among others. This collection constitutes an excellent discussion of Gram- scian state theory and its potential utility toward understanding crisis conditions and how they develop in capitalist societies.

^Jessop, 1977; Wright and Perrone, 1973; Esping-Anderson, et^ al. , 1976; Bridges, 1974, and Gold, et al., 1975, review and critique diverse theorists and approaches to state theory. Jessop and Gold, et al., are the most comprehensive.

8 Treatment of the "transformative theory of the state" developed here closely follows Erik 0. Wright's class notes ("Theory of the State," University of Wisconsin-Madison, Spring 1980).

65 66

9Therborn, 1978:34.

^Specific contributions of the various schools of marxist theory of the state mentioned previously are incorporated within these new departures, according to their applicability in the study of a particu­ lar capitalist state during a specific historical period.

11 Therborn, op.cit., 37. (See also pp. 39-41 for the basic concep­ tualization of the elements of the structural processes constitutive of the state apparatus: input mechanisms, processes of transformation and output mechanisms).

12 Therborn, op.cit. , 37. Poulantzas' work is also representative of this conception of the state as a social relation. (See for instance, Poulantzas, 1980: 127-131.)

13 Therborn, op.cit.

14 Ibid., 34.

15Ibid., 35.

16Ibid.,145.

"^Poulantzas, 1978b:154.

18 In Wright's words (1979, class notes, "Historical Materialism") the structural capacity of a class consists of social relations within a class formed by the structural dynamics of the mode of production it­ self, and in articulation with non-class institutional mechanisms. Examples enumerated are the social relations among workers within pro­ duction, increasing interdependence of workers because of the complexity of the labour process (Marx's "collective worker"); social relations in neighborhoods, communities (workers are confined to certain residential areas in virtue of wage levels, ethnic and racial affinities, etc.), and relations between work and community (co-workers in the factory and field residing in close proximity). The organizational capacity of a class consists of social relations consciously formed for the pursuit of class interests, i.e. bounded social relations structured around practices. In the dialectic of interest formation referring to political practice, organizational capacities of classes are constitutive of interests. Structural capa­ cities are transformed into organizational capacities because class actors wish to struggle over interests. On the other hand, certain 67 non-class struggles such as those over sexism, race relations and ethnic discrimination represent attempts to remove structural incapa­ cities or ethnic and racial barriers which block intra-class relations.

19 Przeworski, 1980:33. (See also Przeworski, 1980b.)

2%wing to the significance of its outcomes in limiting the formation of class-based organizations and class-articulated demands, it bears reiterating that the form of bourgeois law which treats all people as equal citizens of the state, guaranteeing at least formal equal protection under the law contributes to the transformation of workers as class agents into citizens, subjects of a nation-state. In this situation, certain ideological effects follow, e.g. that "all the people" are in fact of the bourgeoisie, or at least potential bour­ geoisie ("equality of opportunity"). This is a special effect, and a determinant of legal codes in which all property and thus property- holders are considered equal and subject to equal protection under the law. The (class) difference in ownership of means of production and money-capital in contrast to consumer goods— automobiles, homes, furniture— is not recognized as such in legal terms, contributing to the opacity of capitalist class divisions. (See Bridges, 1974:174.)

^ See Poulantzas, 1979:323-325.

22 See Gramsci, 1980, especially pp. 57-61 and 180-185, for com­ mentary on how a dominant class achieves hegemony. Mouffe (1979, "Hegemony...") provides an interesting discussion on Gramsci's insights regarding the role of ideology in class domination.

23 This "guarantee" is imposed by the political and economic struggles of the dominated classes, but which are nonetheless compat­ ible with the political (fundamental) interests of the bourgeoisie, or the continuity of capitalist relations of production. Przeworski (1980a and 1980b) is quite explicit regarding the material bases of workers' consent to their own exploitation by capital. "Consent" will be con­ tinued— although varying according to the level of workers' militancy— as long as past exploitation results in maintenance and/or improvement of workers' welfare.

24 Poulantzas, 1978:191-192.

25Ibid., 283.

2^Poulantzas, 1979:313-319. 68

27Therbom, 1979:105-106.

28 However, as Therborn (op.cit. , 105) points out, a problem is not a contradiction, and something which can be resolved again and again without superseding the parameters of the military dictatorship form.

29 O'Connor (1973) discusses this type of constraint in terms of the state's "fiscal crisis" in the United States: state revenues are declining while expenditures continuously increase, both for allevia­ tion of corporate capitalism's negative effects on social welfare (unemployment, job disabilities, pollution, urban decay) and towards encouraging capitalist investment (R&D, direct investments in refur­ bishing productive capital, tax incentives and write-offs).

30 A clear case of such policy limits is observed in the so-called fiscal crisis of urban metropoles in the United States. City offi­ cials experience severe limitations in land use and tax policies due to fear of capital flight. If the state had productively generated revenues of its own, it would have less to fear from capital move­ ments. (Wright, class notes, "Historical Materialism," Spring 1980.)

31 In Offe's words (1974:38-39), "selectiveness is the non-acciden­ tal (i.e. systematic) restriction of a scope of possibility." He identifies selection mechanisms at four levels of the political sys­ tem: structural, ideology, process and repression. In different ways, these mechanisms determine, respectively, what matters a political sys­ tem will deal with, what is objectively open to state action and what is not, which policy contents are invested with greater or lesser chances of being implemented and certain matters which develop outside the "legitimate" scope of state action to be repressed (pp. 39-40).

32 In the words of Gold, et al. (1975:46), "The capitalist state must be conceived both as a structure constrained by the logic of the society within which it functions and as an organization manipulated behind the scenes by the ruling class and its representatives...There are periods in which the state can be reasonably understood as a self- producing structure which functions largely independently of any external manipulation, and other times when it is best viewed as a simple tool in the hands of the ruling class. Certain parts of the state apparatus may be highly manipulated by specific capitalist inter­ ests while other parts may have much more structural autonomy.

33Wright, 1978:19-20.

34 The argument in Wright's Class, Crisis and the State (1978) is similar, although the Lerm "stuctural contradiction" is taken from Wright's class notes ("State Tln-ory," Spring 1980). 69

35Wright, 1978:20.

36Stallings and Felnburg, 1975:88-125.

37 » Hamilton's study (1978, 1980) of the Cardenas administration (1930s) in Mexico is another example of the transformation of a state form, resulting from its unreproductive tendencies for capitalist expansion. She argues that the populist state is a transitional one which can lead to socialism, bureaucratic state capitalism or state- supported national capitalism with functional links to international capital. The Mexican state apparatus in its populist phase was directly linked to peasant and worker organizations. This form of state eventually proved unreproductive for the establishment and recre­ ation of labour control mechanisms required for extended reproduction of capitalism in Mexico. Consequently, a military dictatorship was installed; repressive and ideological control mechanisms, and state bureaucratic expansion were operative by 1958.

90 J Offe, 1975:127-133.

39Therborn, 1978:50-51.

40Ibid., 52.

4Hlarx, 1978:595.

42 Wright, class notes, Spring 1980. ! 3 An example of a structural legacy which may be transformed in the near future— and a topic of debate among marxists— is the national form of the state itself which is a legacy of the historical development of national forms of capital. This form becomes increas­ ingly problematic as capitalist relations of production and the divi­ sion of labour assume international dimensions. The structural limits it imposes on individual states' policy-making "may no longer corres­ pond to the accumulation requirements of global capitalist reproduc­ tion." (Wright, class notes, "Historical Materialism," Spring 1980.)

43See Poulantzas, 1978:245-250.

A 6 Therborn, op.cit., 158.

47Ibid., 155. 70 48 Ibid.

49 Ibid.

50 Ibid., 156.

51 Ibid.

52Ibid.r,

53Poulantzas, 1979:247-258.

^Poulantzas, 1978:243-244.

Such interventions do not produce a change in the subordinate positions of peasants and petty commodity producers. In fact, the continued reproduction of sectors of these classes serves the capital­ ist class in so far as capital itself cannot produce certain commodi­ ties derived from the primary sector. On the other hand, economic surplus can be easily extracted from these classes.

38Therborn, op.cit., 158.

57Ibid., 159.

58Ibid.

59Ibid.

Specifically, dependistas of this era opposed such theories as diffusionism, structural dualism, functionalism in all its forms, and desarrollistaapproaches, the latter associated with the Economic Commission of Latin America on questions of import substitution indus­ trialization as being the primary technique for overcoming underdevel­ opment. (See Cueva, 1976, and Fernandes and O'Campo, 1974.) According to Harding (1976) , dependency ideas were initially the defensive response of the Latin American national bourgeoisies, frustrated in their attempts to compete with international capital throughout import substitution industrialization occurring since the 1930s.

^Cueva, op.cit.

62 Among the early representatives of the dependency approach are dos Santos (1970), Cardoso and Faletto (1979; first publication, 1971); Sunkel and Paz (1970); Stavenhagen (1969) and Frank (1969). A later 71 version of dependency theses, but taking on a more sophisticated marxist explanatory framework (though basic theses are essentially sim­ ilar) is represented in the works of Amin (1976) , Emmanuel (1972) and Marini (1973). In somewhat crude terms dependency theorists affirm that underde­ velopment of dependent capitalist countries is the "other side" of the development of advanced capitalist countries. Poverty of the masses in dependent nations is viewed as a result of deformed economic develop­ ment. Underdevelopment is a state of things which is actively created and maintained, which in turn effectuates.development in the metropolis. Dependency and therefore underdevelopment is not due to lack of capital­ ist penetration, but rather to the lack of inward development. Capitalism penetrated first in the export sectors of dependent countries, and later into manufacturing sectors, now in the hands of imperialist capital in the form of multinational corporations. For the most part, industrialization is seen as a panacea, and not a solution to underdevelopment, at least as long as it is dominated and realized by foreign investment and multilateral aid of international organiza­ tions dominated by the imperialist powers. Noxious effects of dependent development or industry dominated by foreign capital include: (a) decapitalization of dependent countries in the benefit of imperialism; (b) dependence on imports of capital goods and technology from imperialist countries; (c) increasing income inequality in favor of local elites; (d) marginalization of masses of people condemned to under- or unemployment, living in extreme poverty in favelas (urban slums) surrounding large cities, and in rural areas as well, and (e) cultural and political dependence, all of which result in the widening of the income gap between the "rich" and the "poor" countries.

63 Marxist criticism of dependency theory is concerned with its conceptual vagueness, and subsequent methodological and theoretical weaknesses. For instance, dependency theorists criticize bourgeois theory from a perspective close to marxism, while criticizing marxist- leninist theory with concepts from bourgeois social science. Conceptual confusion of this nature has led Laclau (1979, "Feudalism and Capitalism in Latin America"), Cueva (op.cit.) and Foster-Carter (1978) among others to refute Frank's thesis that Latin America has been capitalist since the time of the conquest, a thesis that could only result from an ignorance of Marx's concept of capitalism. In brief, Frank and many other dependistas seemed to equate capitalism with money economy. Conceptual confusion has weakened criticism of bourgeois explana­ tions of development and underdevelopment. Examples here are Staven- hagen's (op.cit.) critique of structural dualism, wherein he restruc­ tures the concept, but continues to use it; and Frank's (1975) demon­ stration that Parsons' "universal values" are more characteristic of underdeveloped countries than developed countries, while overlooking the main problem which is that structural functionalism a la Parsons substitutes superficial effects for analysis of underlying structures of underdevelopment. 72 The principal error in dependista formulations lies in the absence or misrepresentation of relations of production. A conse­ quence of this is the inability to conceptualize class and class strug­ gle as determinant in the conditions of insertion into the capitalist world market, and even more important, as determinant in the forms, directions and crises of the local capital accumulation process in so- called underdeveloped societies. As put by Cueva (op.cit.) and Castaneda and Hett (1978), dependistas replace exploitation and class conflict with an indeterminate system of national and regional contra­ dictions: dependency itself becomes the primary relation of production. Capitalist exploitation for most dependistas is not production/appro­ priation of surplus value, but simple extraction of surplus. Distri­ bution of income among nations, regions and/or groups becomes the only important "social contradiction." Dependistas1 analysis, not being grounded in relations of production leads to the concentration on trade flows, balance of payments, external debt and the like (level of circulation) used in "proving" that dependent capitalism exists (as opposed to "classical capitalism"). This process leads to peculiar versions of economic and technological determinism, and theoretical determinism, as well as theoretical inconsistency. In discussions of financial "dependency," Castaneda and Hett affirm that capital where- ever it exists, is always accumulated surplus value; the fact that imperialist capital uses it for expanded reproduction is not a dis­ tinct problem. Foreign assistance and capital permit dominant classes in the periphery to extend capitalism and simultaneously to contain an internal class struggle. Dependistas seem to suggest that foreign capital imposes its own "laws." Castaneda and Hett ask, but isn't this simply the laws of capitalism? Decisions taken by MNCs cannot be less adequate or more pernicious than those taken by local capital. Moreover, dependency analysts tend to make external factors deter­ minant, overlooking important developments in the class struggle with­ in underdeveloped countries which conditioned how and when, and the nature of linkages with international capital.

^Poulantzas, 1978a:43. See also Poulantzas, 1979:22-23.

65 See Zieman and Lanzendorfer, 1977.

66See Therborn, 1979:99.

^Wright (1978:163-179) presents several stages of capitalist development for which structural solutions eventually emerged, includ­ ing distinctive forms of imperialism. In this version, Luxembourg (1964), Lenin (1948), Baran (1956), Magdoff (1969) and Sweezy (1970) are in effect synthesized and corrected in terms of new developments in the world system, as well as theoretical advances.

68 For an interesting discussion of these contributions in general terms, see O'Connor, 1973. 73 69 For a brief review of points of departure in the analysis of the MNCs' role in an international labour market, and implicit con­ flicts therein, see Martinelli and Somaini, 1973.

7<7As Poulantzas (op.cit., 62-66) points out, the major changes in the imperialist division of labour and accumulation of capital— in con­ trast to previous periods during which the export of capital was chiefly tied to control of raw materials and expansion of markets in the periphery— must be understood as a response to the need for imperi­ alist capital to take advantage of every relative gain in the direct exploitation of labour. The rate of exploitation is a result both of relative wage levels and labour productivity. The latter includes the degree of technological development, and the particular skills involved in the current development of the productive forces. A higher wage in money and real terms may correspond according to the development of the productive forces, to a smaller proportion of value produced and thus to a more intensive exploitation, than a lower wage in the context of lower labour productivity. Consequently, lower wages in peripheral societies are often not sufficient to entice international capital: certain infrastructural facilities, labour training, education and regimentation— not to mention technical and money management subsidies — when provided by the state in peripheral societies, all contribute to increasing the productivity of domestic labour, and thus its attractiveness to metropolitan capital.

^Fernandes and O'Campo, op.cit.

^Therborn, op.cit. , 103.

73Ibid., 101-102.

7^Laclau, 1979:81-142; Jessop, 1978:38, and Poulantzas, 1979: 71-77.

75 See Gramsci, 1980:260.

78Bowles and Gintis, 1979:1-2, and Jessop, 1978:21-23.

77Jessop, op.cit., 22.

78Cf. Therborn, 1977 and 1979.

7^See Therborn, 1979:101.

80Ibid.

81 Ibid. 74 82 See Zieman and Lanzendorfer, op.cit.

83 Therborn, op.cit., 100.

84Ibid.

85Ibid.

See Section III, pp. 84-86.

87 Therborn, op.cit. , 101-102.

88 These major explanations of ruling class division and instabil­ ity and its difficulties in attaining political nad ideological hege­ mony rooted in tendencies associated with dominated incorporation into the international capitalist system, of course do not explain the relative frequency of military coups from one Latin American social for­ mation to another, the particular modalities of ruling class representa­ tion within the state apparatuses, much less the "exceptions" where there have been long periods of non-despotic rule (Brazil, Chile, Uruguay, Costa Rica, Mexico). However, as Therborn (1979:103-104) indicates, these exceptions can be understood by examining the parti­ cular forms and degrees of dominated and/or peripheral incorporation in these countries, and by forces and circumstances bearing upon-— and compensating for— inherent tendencies of dominated incorporation. "The implication is that these exceptions have above all been charac­ terized by a relative unity of the local bourgeosie." What this means is that each social formation presents certain peculiarities of its own with regard to class composition and modes of class strug­ gle, requiring specific analysis in terms of how the former affect and are affected by incorporation by imperialist forces in different his­ torical periods. Therefore, in some circumstances the centrifugal tendencies of peripheral-style capitalism on the bourgeois state can be overcome.

89 In the words of Perez-Sainz (1980:61), historically, the consti­ tution of the world market and the development of generalized commodity exchange also developed as an internal market, its constitution and existence guaranteed by the state "defending its territorial integrity and delimiting this internal market vis-a-vis the world market through a customs and monetary system." The nation-state form then arose as an instrument of national capital in its struggle against other national capitals in the world market.

9°Munck, 1979:29.

9^See Martins, 1977:281-298. 75 93 As put by Munck .(1980:49), "Agriculture can be said to play the role of 'primitive accumulation1 shown by Marx, except in a struc­ tural sense and not only in the genesis of capitalism."

94 Bennholdt-Thomsen (1980) argues that reformulating class analy­ sis of the peasantry is essential due to politically disastrous mis-, understandings of their contribution to capitalist development, as well as capitalist mechanisms of extracting their surplus labour. James Scott (1977) provides an interesting discussion of the rea­ sons why the peasantry has constituted the primary agent of social revolution despite marxist claims that the proletariat is to be the bearer of revolutionary consciousness. Basically, he argues that the relative isolation of the peasantry from the cultural and institutional life of the state and its ruling elites has meant that it has been more immune than the proletariat from the political, social and moral hege­ mony of the dominant classes. Furthermore, this isolation does not necessarily imply the absence of a capacity for coordinated action in defense of class interests. The ambiguity and even hostility prevailing in marxist discourse until recently toward the peasantry as a significant, let alone pro­ gressive, social force in the struggle to transform capitalist society is in large part the historical legacy of Marx himself. In his article, "Marx on Peasants," Duggett (1975) reviews Marx's contradic­ tory position on the peasantry. Marx's earlier statements— the most quoted and well-known— usually portray the peasant as "the rural idiot, the barbarian egotist, the potato in a sack." Later, along- with his equal contempt for the bourgeosie, "comes a grudging admission that the former may be a useful ally for the proletarian against the latter, although only in the short term." (p. 179)

95 Contemporary marxists' initial claim is that the transformation of social relations introduced by capitalism in a non-capitalist forma­ tion occurs on the basis of those which historically preceded the Intrusion, as well as specific characteristics of the capitalism which penetrates. The great variety of forms of subsumption to capital are then understood as products of the equal variation in social relations encountered by capitalism. (See Morillo, 1977:113.) Morillo (p. 116- 117) gives as an example the roots of the broad differences in agrarian relations as they developed in the United States and Latin America. Settlers in the United States did not have to cope with vast indige­ nous populations to be submitted as was the case in many regions of South America. This situation was conducive to each settler using only the land that he and his family could exploit. Monopoly tendencies reached the agricultural sector as a whole only much later, after they had unfolded within industry. Conversely, in South America, landhold­ ings were large-scale from the beginning, and the indigenous popula­ tions were enforced to work their lands for the colonists.

^Mechanisms of initial penetration by capital of the lineage mode of production and other non-capitalist modes of production, such as feudalism and its changing forms during the transition to capitalism 76 and the breakdown of "natural economy" are not reviewed here. Examples of such discussions are Rey, 1979; Dupre and Rey, 1973; Bradby, 1975; Bernstein, 1977; Terray, 1979; Godelier, 1977 and Bana- ji, 1976.

96 Soil is a naturally limited good which cannot be produced or reproduced at will. Under capitalism, soil is something which is measured by economic standards, which like air, water, wind, etc., is not an economic quantity. This is the basis for a specific formulation of marxist theory of value related to the soil, or the theory of ground rent. (Marx's detailed discussion of ground rent appears in Capital, Vol. Ill, "Part IV. Transformation of Surplus-Profit into Ground Rent," 1977:614-813.)

97 The emergence of differential rent in contrast to absolute rent represents a singularly capitalist phenomenon, rooted in the develop­ ment of capitalist agricultural commodity markets. Agricultural commo­ dities are valued according to the average socially necessary labour­ time. Soil of greater than average fertility will render, then, wind­ fall profits. Soil improvements and technological innovations, which when applied to the land result in higher than average levels of pro­ ductivity represent attempts to capture such profits. Additional forms of differential rent derive from lower than average circulation costs. An example here is land in close proximity to markets which will require less-than-average circulation costs and therefore, produces greater-than-average profits. (See Marx, op.cit., pp. 640-648.) Whereas in industry a surplus profit is a transitory phenomena, the situation in agriculture is different in so far as surplus profit flows from the differential fertility of the soil. Distance from mar­ kets also constitutes another factor resulting in differential rents. Production on lands of equivalent fertility at a given level of tech­ nology will result in different profit levels according to greater or lesser transportation costs. Improvements in transportation, however, counteract the tendency for increasing ground rent differentials. In capitalist industry the price of the product is determined by the average socially necessary costs of production. Firms which pro­ duce at below this average cost realize a super-profit. In agricul­ ture, on the other hand, market prices are not determined by socially necessary costs of production on an average land. The market price of agricultural commodities is determined by the socially necessary costs of production on the land of worst quality.

98 This position is developed in different ways by Bartra, 1974; Amin, op.cit. , and Emmanuel, op.cit.

99 Appropriation of peasants' surplus labour takes the form of exchange, whereas appropriation has to be located first in terms of production. If peasants are being exploited by capital— regardless of its form— they must be wage labourers or wage labour equivalents, which is built into the very definition of capitalism as a mode of production. (See Clarke, 1977 and Bernstein, op.cit.) Moreover, 77 unequal exchange theorists often fail to distinguish between exchange of unequal values and unequal amounts of labour-time. In effect, in many instances peasant household labour-time is devalued in the produc­ tion of commodities sold in a market where peasants compete with capitalist commercial agriculture.

^■^Examples of empirical studies of this practice include Esteva (1980), consisting of a detailed documentation of the accommodations worked out between Mexican campesinos in varying stages of proletari­ anization and commercial agriculture as well as light urban industry. Burbach and Flynn (1980) document the central role of transnational cor­ porations in shaping agricultural systems and relations of production within the capitalist periphery. The book provides sytematic evidence of the exploitation of peasant labour in their capacity as undervalued wage labour. This system is made possible owing to cheap labour which is reproduced via subsistence plots and low food costs resulting from state price controls (state-managed appropriation of surplus from pea­ sant food producers).

'''^Following this perspective, Silva (1977) argues that the forms of accumulation in agriculture supported by peasant production (includ­ ing sharecroppers, tenants, owner-operators and squatters) are charac­ teristic of determinant stages or phases of capitalist development, and are not resultant of a relative abundance of certain "factors" (such as land). In other words, growth of agricultural production under the wage labour relation is the result of the development of capitalism itself in concrete forms assumed during particular histori­ cal periods. Silva emphasizes that the reproduction of the peasantry under the dominantion of capital is not a linear reproduction. Such relations are transformed by subordination to capital, representing transitional forms to fully developed capitalism, or real subsumption of agricultural labour to capital. Peasant reproduction then cannot exclude the development of capitalism, since this represents in a sense the very development of capitalism under specific historical conditions.

102 Specifically, some theorists have dealt with the problem of transition from one mode of production to another, or with the transi­ tion of the peasant 'form' of production into the classes of the capi­ talist mode of production through the concept of articulation. Exam­ ples here include Rey (op.cit.) and Dupre and Rey (op.cit.). Foster- Carter (op.cit.) provides an interesting review of this theoretical work as well as of its critiques. Other theorists such as Alavi (1975) have tried to develop "trans­ itional modes" or "colonial modes of production" in attempts to explain the varied forms through which pre-capitalist formations are penetrated by capital and stages passed through before realizing fully developed commodity relations. Critics' comments center around analytical difficulties associated with attempting to locate the beginning and the end of stages of transition, which stem from problems in moving back and forth from abstraction ("modes of production") to concrete economic systems. 78

Guidelines for the movement from abstraction to concrete reality in the study of agricultural relations of production are provided by Havens (1977).

103 See rural population figures in FAO, 1978.

^^Peasants' struggles to resist capitalist penetration take many forms such as refusal to adopt new cultivation practices; peasant movements against agents of capital and the capitalist state; strikes; attempts to withdraw from commodity relations and evasion of the market via contraband and barter (Havens and Canak, 1979).

105Marx, Capital, Vol. II, 1977:238.

^ ^Ibid., 239. See also Grundrisse, 1973:238.

'''^Mann and Dickinson, 1980:472.

108Ibid.

109 See Mann and Dickinson, op.cit. , 473-475, for detailed discus­ sion of the effects of long production time on the rate of profit. (From Marx, Vol. II, 1977:308-312.)

110Ibid., 476.

m ibid., 475. •

112 Bennholdt-Thomsen, 1981:105.

1 1 O In Vol. Ill of Capital, "Chapter XLV. Absolute Ground Rent," Marx discusses in detail the difference between absolute and differen­ tial ground rent. The first is grounded in the private ownership of the land and the opposition of interests between the landowner and society as a whole (capitalists and proletariat), whereas the second results from the capitalist character of production. Differential rents consist of surplus profits while absolute rent is an "extra" charge levied by the landowner on the existing mass of .values, hence a cut in profits or wages.

114 Bennholdt-Thomsen, op.cit., 105.

116Ibid., 107. 79

118 The following description of types of subsumption of agricul­ tural labour to capital is derived for the most part from Bennholdt- Thomsen, op.cit.

119 See Gutelman, 1976.

120 The role of land monopoly in retarding capitalist accumulation in agriculture in the advanced capitalist formations was diminished long before similar developments in some Latin American formations, testifying in the former case, to large-scale capitalist penetration of agriculture's input and marketing components which have been cen­ tralized within the monopoly sector of the economy.

121 See Frundt (1975) for a detailed account of controls exercised by agribusiness coporations within the advanced capitalist formations and in the world market.

122 Goss, et al., 1978:41. CHAPTER 2

A PROFILE OF THE BRAZILIAN POLITICAL ECONOMY

Introductory Remarks

It was suggested in Chapter 1 that the study of concrete state actions in a particular society should have as a general qualifying dimension the specific features and major trends of this society's historical pattern of development. This is the main purpose of the current chapter: to describe the Brazilian pattern of development and related political structures which are determinant in the analysis of specific state actions in the agricultural sector after the

1964 coup.

The following discussion does not represent an original contri­ bution to Brazilian historiography, nor a substitute for a more com­ plete analysis of the economic, social and political events that shaped this phase of the country's history. The main argument throughout the chapter will be that the state not only provides the

"conditions of existence" for the reproduction and expansion of monopoly capital, but is the major actor in the creation of monopoly capital in Brazil, via its capacity as productive capital, and as creator of a national accumulation fund. Moreover, state actuation towards serving the needs of monopoly capital in general is also determinant in its role as mediator of conflicts among the various

80 81 fractions of the ruling class alliance, and between the urban and

rural dominant and subordinate classes.

Section I consists of a brief historical sketch of the Brazilian

state in relation to transformations of the internal economy, prior to

and including the military dictatorship inaugurated in 1964. It is

argued that the pattern of contemporary development in Brazil is the

product of a general movement towards deepening capitalist industrial­

ization, beginning in the 1950s. In this general movement, distinct

phases of structural change can be distinguished, each contributing to

the full realization of the current pattern.

The first phase of this general movement occurs in the mid- to

late Fifties, corresponding to substantial transformations in the pro­

ductive structures of the Brazilian economy, the initiation of metro­ politan capital's direct involvement in domestic industrialization

(internationalization of the domestic market), and the adoption of systematic and institutionalized state planning. The second phase is marked by the reorganization of political structures following the

1964 coup, which effectively prevented possible changes in the direc­ tion of the pattern of development posed by the intense political mobilization of the early 1960s.

The third and current phase of establishing monopoly capitalism in Brazil alongside the redefinition of imperialist penetration in the local accumulation process began about 1968 when the accumulation crisis (1959-1967) is finally superceded. This phase is discussed in

Section II, focusing on features of capitalist accumulation in the post-coup era, and transformations and developments of state institu­ tions in line with the consolidation and maturation of dominated 82 monopoly capitalism in Brazil. The ruling class which was consoli­

dated in this phase is identified through verifying effects of the military dictatorship state form and the exercise of state power on the expansion and reproduction of three analytically distinct fractions of monopoly capital: state, metropolitan and big national private capital.

Section I. A Brief Historical Sketch of Brazilian Capitalism,

1945-1964

From the early years of the 1800s to the Great Depression, Brazil was predominantly an agro-export economy (coffee, sugar, cotton, cocoa). Its ties with imperialism were principally those of (a) provid­ ing raw materials to Western European industry, as well as cheap food­ stuffs towards reducing reproductive costs of labour, and (b) importing

European capitalism's manufactures, for the most part at consistently negative terms of trade.'*'

In this period, the state's activities revolved around support of the coffee sector. The state organized the "factors of production" for this type of economy, such as public works and construction of a trans­ port network linking productive sectors to ports; served as financial and commercial intermediary for the agricultural export economy as a whole vis-a-vis the international capitalist market, and developed 2 price supports and other subsidies for coffee producers.

The world economic crisis in 1929/33 initiated a new phase char­ acterized by the emergence and development of urban-industrial 3 productive structures. On the one hand, the gradual replacement of the dominant pre-capitalist latifundio by capitalist enterprise in urban 83

and rural production began when the Depression cut off foreign mar­

kets and imports, which exacerbated the over-production crisis in the „ _ 4,5 coffee sector.

Industrialization occurred at a rapid pace. Between 1933 and

1939, industrial growth averaged 11.2 percent per annum. Of the

49,418 establishments accounted for in the 1940 Industrial Census,

34,691 had been formed since 1930.^ This period is also characterized

by the production of absolute surplus value: industrial establishments

were labour-intensive, and small-scale. Employment growth in Sao Paulo

between 1929 and 1937, for instance, increased at a rate of 10.4 per­

cent per annum, which left a margin for productivity gains of less than

two percent.^ ' '

Participation of metropolitan productive and finance capital in

Brazilian industrialization in the 1940s to mid-1950s was rather limit­

ed, evidenced in the high proportion of national capital's ownership of

industrial assets. Major linkages with the international capitalist market were through the continuity of agro-exports and high levels of mineral exports (result of war-time production, including the Korean

conflict), and on the other hand, imports of capital goods, and indus­

trial inputs not available in the domestic market.

Beginning in approximately the mid-Fifties, another stage of

industrialization was initiated, characterized by the establishment of modern durable consumer goods and capital goods production in the domes­

tic market. In the 1956-1961 period, the state initiated a series of complementary investments toward "heavy industrialization," e.g. Brazil­

ian industrial production began to move away from "traditional" consumer goods (foods, beverages, timber, furniture, footwear, apparel, etc.)*

These investments completely transformed the productive system, con­ centrated in the "Plano de Metas" under the Kubitschek regime (1955-

1959). According to the political rhetoric of the era, the Plano was g to realize "50 years of development in five." Further, as pointed out by Munck, this period also marked the transition from extraction of absolute surplus value and from industries based on a relatively low organic composition of capital to those based on extraction of 9 relative surplus value and high organic composition of capital.

Some indicators of the increasing centralization of capital from the mid-Fifties to 1964 follow: (1) From 1950 to 1960, industrial output grew at a rate of 9.1 percent per annum and the industrial share of

GDP increased from 24 percent to 32 percent, while industrial labour remained at only eight percent of the total work force. (2) From 1959 to 1964 industrial value added rose by 30 percent, whereas industrial employment actually fell by two percent. (3) Installed horsepower per worker increased by almost 50 percent between 1949 and 1959."^

The wave of government investments between 1956 and 1960 was 11 directed mainly to steel and petroleum and transport-energy sectors.

By the early Sixties, a definite shift in industrial production had occurred, summarized in Table 1 below.

Changes in the industrial productive structure from "traditional" to "dynamic" sectors coincides with the re-orientation of imperialist investment of this period. After World War II metropolitan capital was directed primarily at the reconstruction of European capitalism.

Then, in the mid-Fifties, Latin America became a prime target for accumulated surplus in the metropolitan countries. Foreign capital 85 inflows (direct private investment) between 1955 and 1956 alone 12 increased from $79 to $139 million. By 1959, this rubric reached 13 $158 million. The Brazilian government also contracted huge foreign

loans to finance its infrastructural projects.

Foreign capital .was directed mainly to the "dynamic" industries,

e.g. consumer durables such as automobiles, chemicals and petro-chemi-

cals, machinery and heavy electrical equipment. Reproduced in Table

2 is Tavares and Serra's illustration of the organic complementarity

or division of tasks between the Brazilian state and foreign capital

which began to take shape in the late 1950s.

Table 1. Changes in Distribution of Industrial Output, Brazil, 1920-1968

1920 1940 1950 1960 1968

Metal Fabrication 4.3% 7.7% 9.9% 11.9% 11.4% Machinery 2.0 5.8 2.2 3.5 6.0 Electrical Equipment - - 1.7 3.9 6.3 Transportation Equipment -- 2.3 7.5 8.6 Chemicals, Pharmaceuticals; 6.0 10.4 9.4 13.4 17.6 Total Modern Industries 12.3 23.9 25.5 40.2 49.9

Food Beverage and Tobacco 32.0 29.6 25.5 21.2 17.0 Textiles Footwear and Apparel 37.2 27.6 24.4 15.6 12.9 Timber and Furniture 7.8 5.1 5.6 5.4 4.2 Leather Products 2.4 1.7 1.3 1.1 0.6 Total Traditional Industries 79.4 64.0 56.8 43.3 34.7

Paper and Paper Products 1.5 1.4 2.1 3.0 2.7 Rubber Products 0.2 0.7 2.1 2.3 2.0 Non-metallic Minerals 4.7 5.3 7.4 6.6 5.8 Printing and Publishing - 3.6 4.2 3.0 3.0 Miscellaneous 1.9 1.1 1.9 1.6 1.7 Total Other Industry 8.3 12.1 17.7 16.5 15.2 Source: Evan§, 1979:41.^ 86

TablA 2. Complementary and Intersectoral Relationships Between Foreign and State Capital

Sector Where Foreign Capital Associated Sector Where State Predominates______Capital is Concentrated______

Domestic Market

Transportation Equipment Land and Sea Transportation Program Mechanical Equipment Steel Industry Electrical Equipment Federal Construction Electric Energy Program Communications System Chemicals Petroleum Derivatives Financial Services Public Utilities

Foreign Market (Exports)

Cattle Coffee (Policies) Vegetable and Mineral Extractions Iron, Minerals Industrial Surplus Production

Source: Tavares and Serra, 1976:226,

A. Populism and Limited Democracy

In 1945 the corporativist Estado Novo dominated by the figure

of Getulio Vargas fell, inaugurating a new mode of political domination

usually known as "populist," or in Therborn's terms, "exclusivist

democracy. In the course of increasing industrialization, new

fractions of the bourgeoisie had been created, vying for greater poli­

tical and economic privileges, some tied to foreign capital, the

majority not. The process of (partial) democratization of 1945 was less

the result of pressure from below than one of 'opening from above'.

State officials were responding to internal political circumstances, 16 as well as to conditions created by the War. The defeat of the 87 fascist challenge to the prevailing world system also merged with nationalistic projects and democratic tendencies in Brazil and elsewhere. ^

A useful way of conceptualizing the Brazilian state between 1945 and 1964 is as an amalgam containing both democratic and corporativist institutions characteristic of the previous Estado Novo. In Weffort's words, "If the Estado Novo created the institutional instruments which would be conducive to the subordination of the unions to the state, it was democracy which offered the political premises on which these 18 instruments would function."

The corporativist structures inherited from the Estado Novo pro­ vided mechanisms of control by the state. "Parallel organizations"

(formed mainly by the left) outside the state apparatus, on the other hand, provided the necessary means for mobilization in favour of the government's political projects. The mobilization of labour was then controlled by the state apparatus and subordinated to the political objectives of fractions of the dominant classes articulated through the state apparatus. The interests of the dominant classes themselves were also embodied in a dual structure, through official corporativist organ­ izations within the state apparatus and civil organizations, e.g. employers organizations within economic sectors or branches of industry and^ commerce. 19

The 1945 to early 1960s period then represents the Brazilian his­ torical experience with the bourgeois democratic state form, albeit limited in scope. The franchise was limited to literate adult males; party organization and trade unions were heavily influenced by the state apparatus in form and function; the peasantry remained excluded from 88 channels of political expression, and there was a pre-defined range

of possible options within which electoral options were open,

although sections of the army were on the brink of intervention

several times.

This period also stands out as an instance of relative unity

among the local bourgeoisie. Urban-industrial capital attained leader­

ship in the ruling class alliance, and the populist front wherein cer­

tain sectors of the urban working class were assuaged with concessions

of cheap rates for public services, increasing real wages, bargaining

power with employers' organizations via the labour organizations which

had the state's legal protection.

The masses were a political presence for the elites rather than

"for themselves." In Brazilian populism, the urban working class did

not actually participate in a ruling class alliance, but rather was a

supporting class of the ruling class alliance in power, then made up of

dominant industrial bourgeois fractions and the still-prevailing agra­

rian dominant dlass. This particular structuring of political practice

resulted in a general fetishization of the state as being above class

struggle, or having an "autonomous accumulation potential, removed from ;20 the contradictions of the capitalist mode of production."

Throughout the Brazilian democratic period, the state was directly engaged in the mediation of the ruling class alliance, and in capital/ labour relations. Popular support was created and manipulated by the state in its attempts to create and consolidate a diversified indus­ trial capitalist class at the expense of the agrarian-based dominant class, and the peasantry, as well as foreign mercantile capital (hence, its nationalistic rhetoric). The state thus continued and extended its

"generating role" in the formation of industrial capital. 89

State intervention for this end took the form of investment in infrastructure, regulation of the price of labour power, imposition of the "confisco cambial" (government appropriation of foreign exchange earnings), reduction of the cost of capital through exchange subsidies for the import of industrial equipment, extension of credit and invest- 21 ment in production, and investment in agricultural storage facilities.

Illustrative of the state's substantial participation in the capi­ tal accumulation process was its growing role in total investment.

For example, between 1947/50 and 1960, state participation in fixed capital formation more than doubled, reaching almost 50 percent by 22 1960. Nevertheless, the high rate of economic failure among emerg­ ing local industrialists in the first phases of import substitution industrialization continued to prevent the consolidation of the indus­ trial capitalist class. Industrial capital shared wealth and power with pre-capitalist commercial and landed interests, but without imply- 23 ing a dynamic process of capital accumulation.

At no point in the 1945-1964 period was a firm basis laid for monopoly capitalist development in Brazil. Participation in the inter­ national capitalist order was an intrinsic part of the changing indus­ trialization pattern gaining momentum in this period, e.g. increasing world market demand for raw materials, the beginnings of large-scale financial imperialism and the establishment of imperialist productive capital in the local economy. The fracturing of the local bourgeoisie took on new(er) dimensions, with the development of an industrial cap­ italist monopoly fraction whose interests were tied to metropolitan capital, uncommitted to nationalist popular politics; emergence of fractions based on the domestic market but whose competitive strength 90 would lie in cheap(er) imports of capital goods and industrial inputs

and/or reducing variable capital. Meanwhile, the state was caught in

an increasingly contradictory position: committed to providing cheap

goods and services to numerous sectors of small national capital and

the urban working class to sustain nationalist popular politics, reve­

nues soon became inadequate to absorb increasing expenditures for food

imports, social welfare services, operating expenditures for infra­

structural and productive facilities, and growing foreign exchange needs

for industrial capital.

In summary, ISI was successful in sustaining a fragile, exclusiv-

ist democracy until the conjuncture of the early 1960s: increasingly

disadvantageous terms of trade during the Cold War and the post-Korean weakening of raw materials markets resulted in growing balance of pay­ ments deficits; and internal cyclical slowdown exacerbated the economic

difficulties of thousands of small capitals, existing at the behest of

cheap credit and state-provided services.

The economic crisis of the late 1950s and early 1960s was essen­

tially a capitalist accumulation crisis. Inter-industrial demand, the motor of the capital accumulation process since the mid-Fifties, began 24 to fall away already in 1959. The downward trend in profit rates from

the rising organic composition of capital is evident upon comparison of

average profit rates with the increasing cost of living in 1958 to 1964.

(See Table 3.) Deterioration of the conditions for production of sur­ plus value are manifested in the violent acceleration of inflation 25 during this phase, averaging over 90 percent by 1964. Tab jit: 3. Average Rate of Profit. Vis-a-vis Cost of Living, 1958-1964 '' (Percentage)

Year Average rate of profit Cost of living 1958 21.2 18.2 1959 22.6 52.1 1960 26.3 28.8 1961 28.2 43.2 1962 35.2 51.0 1963 35.0 80.7 1964 27.9 86.6 Source : Munck, 19 80:50.

Rising living costs and stagnation in the industrial sector led militants in urban-based political organizations towards organizing rural workers in efforts to force redistribution of productive wealth 26 which included agrarian reform. Class struggle in the countryside initiated by workers and small producers intensified, itself a product of contradictions produced by latifundistas in their efforts toward greater centralization and/or modernization.

Stagnant agricultural production combined with increasing domestic demand generated food price inflation, while export production was not keeping pace with rising import needs. This contributed to industrial capital's difficulties in maintaining or expanding the level of accumu-?- lation, owing to rising reproductive costs of labour and inadequate for­ eign exchange for industrial imports.

Moreover, the expansion of state spending combined with stagnant

government revenues in the Fifties produced severe inflation and a huge 27 fiscal debt which hampered the accumulation process. In the early

Sixties, state savings was only 20 percent of the national total, while

state investment approached 50 percent, a "deficit exacerbated by 92

operating losses in public enterprises and leading to inflationary 28 finance and external debt."

The state was critical in the transformation of the economic

crisis into a political crisis. Crudely, its accumulation functions

(as supporter of private capital, director of the capital/labour rela­

tion, and producer of surplus value in state enterprises) came into con­

tradiction with its function of mediation between the dominant and the dominated, based on co-optation, displacement of conflict and support of 29 the dominated. As expressed by Munck:

The nationalist component of the populist ideological system had become highly contradictory, as it stimulated a mass movement which developed bourgeois nationalism to its most radical consequence: an anti-imperialism with an objectively anti-capitalist dynamic. On the other hand, the coercive measures required bv the accumulation process were not forth­ coming from the late populist state, which was itself riven by class contradictions.

The increased actuation of the subordinate classes in ectra-legal forms usually initiated or reinforced by elements of the bourgeoisie and its functionaries marks the appearance of political crisis. How­ ever, at no time were the subordinate classes organized to the extent that they offered a replacement for the governing coalition; at no time was an ideology capable of replacing dominant established means of organizing production and social relations articulated and embraced by a large section of the proletariat and/or the peasantry. What this means is that the bourgeois dictatorship installed in 1964 was not the outcome of a revolutionary crisis, but rather of the failure of the bourgeoisie to establish its hegemony among the subordinate classes and to organize itself. Nevertheless, the discontent of the masses created a situation of profound instability wherein the bourgeoisie saw the capital/wage labour relation threatened. Further, subordinate classes' demands were directed at the state itself, imposing severe constraints in terms of carrying out recession policies which would infringe on wages, working conditions and stable employment. Eventually, all propertied classes

(read all fractions of the bourgeoisie and the remainder of the agri­ cultural dominant class) threw their weight beind the military coup in

1964. To paraphrase de Oliveira, the demise of populism occurred with the dissolution of the ambiguity of the state, determined by the contin­ uing centralization of capital. This dissolution revealed the hidden face of the state to the subordinate classes, especially to the urban working class: the state was then, producer of surplus value, and in a recessionary cycle its oppressive and repressive character could no longer be masked.

The mode of capital accumulation gaining momentum in the mid-

Fifties was based on highly concentrated metropolitan capital and an internationalized fraction of Brazilian capital, and eventually became incompatible with even the limited democratic state form, which in Bra­ zil had brought the urban working class and numerous conflicting sectors of national capital into the decision-making process. The authoritar­ ian regime installed by the coup was the expression of a new constitu­ tion of the Brazilian dominant class and its mode of rule.

Section II. Military Dictatorship and Monopoly Capitalism, 1964-?

The stability of the military dictatorship between 1964 and 1974/

75 was in large part a product of high rates of economic growth, which 94 worked to legitimate the regime among various branches of capital and

its functionaries. The impressive performance of the Brazilian economy

from 1967 to 1973 was highly influenced by extensive state intervention, which was in turn dependent on unusual circumstances, both in terms of the internal accumulation cycle and extremely favorable world market conditions. When the latter conditions began to change in the mid-

1970s, contradictions intrinsic to state policies— capitalist develop­ ment based on foreign-controlled consumer durables production and addi­ tional conflicts deriving from the strengthening of state capital— revealed themselves.

Reviewed in this section are major features of the state apparatus, the nature of state intervention and the maturation (deepening) of domestic industrial capital accumulation. It is argued that state actu­ ation was crucial not only in terms of recreating conditions for capital­ ist accumulation during the recessionary phase, but also throughout sub­ sequent economic expansion.

A. Constitution of the State Apparatus

As discussed previously, the pattern of accumulation established in the Kubitschek era was founded on consumer durables production and controlled by foreign capital, which in the latter 1960s entered into cyclical decline, exacerbated by unfavorable terms of trade. A peace­ ful transition to a new mode of political domination by the bourgeoisie

— a peaceful reconstitution of the capital accumulation process— was made impossible by first, the increased activities of the dominated, and second, the increased cleavages and conflicts within the dominant class. Eventually the former became an important element in uniting 95 all elements of the dominant classes behind the military coup. In this sense, the popular classes determined the constitution of the bourgeois state form and its mode of rule in 1964.

The new dominant fraction of capital emerging in the wake of the coup was an internationalized segment of Brazilian (monopoly) capital in close alliance with foreign capital. This new group in Cardoso's 31 view needed to eliminate all sources of working class and peasant political power in order to concentrate income for further capital accumulation and to ensure the stability required by foreign capital.

The transition from exclusivist democracy to military dictatorship represents a qualitative change in the form of bourgeois rule in Brazil.

Implied here are transformations in on the one hand, the predominant format of representation (the characteristic links between the ruling class and specialized political personnel) and on the other, the predom­ inant mode of mediation between the rulers and the ruled (material means by which the ruled classes both submit to the established social order 32 and contribute to its functioning).

In post-coup Brazil, the primary, although not exclusive format of representation is institutional as opposed to electoral: leadership is bestowed upon army personnel holding certain positions which they have achieved through promotion. "Civilians" are also appointed to high gov­ ernmental positions by the military executive, based on their technical and business experience.

The predominant-mode of mediation between the rulers and the ruled at least for the first ten years of the regime was repression.

However, additional modes of mediation can be identified in the Brazil­ ian dictatorship form of rule. For instance, becoming more important 96 in recent years as overt repression has declined, the working masses have been co-opted with promises of economic growth, and security via social services funds collected from employers. The post-64 wage reduc­ tions were imposed by force, but also implemented with appeals to work­ ers to "participate" in the re-establishment of order and efficiency, toward a future time of national prosperity when "all" workers would benefit.

Opposition to the regime was prohibited through several mechanisms.

First, the existence of independent political parties was made illegal.

The official government party, the National Revolutionary Alliance

(Alianqa Revolucionaria Nacional-ARENA) and its official opposition party, the Brazilian Democratic Movement (Movimento Brasileiro Demo- cratico-MDB) were created by the military men to provide a certain veneer of legitimacy to their rule, providing a forum where executive and administrative decisions could be "ratified."

The subordinate classes were banished from political life, treated as if they were not part of the 'people-nation'. Repression— the death squads, assassinations, abolishment of all working class organizations outside the state apparatus itself (the previous parallel organizations)

— performed this function. The elimination of the dominated from the political arena modified the political rules of the game among the dom­ inant classes. Dominant classes and fractions thereof could no longer cultivate support among the dominanted classes to gain support in poli­ tical decision-making.

After the coup, the state's base of support was supposedly all propertied classes, and this "commitment" was soon materialized in the militarization of society and techno-bureaucratization of the state, 97 particularly the administrative and legislative apparatuses. On the

one hand, efficiency and technical criterion were promoted as the basis of government decisions. Waves of bureaucratic reform, presented as means to streamline government activities, and reduce costs to the state and its clients, can also be seen as an expression of the inadequacies of bureaucracy in an era of monopoly capitalism.

The new regime brought about immediate changes in policy toward labour associations, later to be concretized in 1967. Labour leaders were arrested and charters of some unions revoked. Unions remaining in existence came under direct control by the state. Usually, a go-between from the Ministry of Labour was appointed, with control later ceded to

"loyal" union members. The subordinate classes, both urban and rural, were in this fashion integrated into the post-coup state apparatus.

The 1967 constitution prohibited strikes in essential activities, left undefined in the legal text. Strikes were also suppressed under the Institutional Act No. 5 (AI-5). Free bargaining between labour unions and employers' associations was suspended, and all wage agree­ ments were to be regulated by a wage formula dictated by the Planning 33 and Finance Ministries.

The AI-5 also codified several additional restrictions to civil liberties in force since 1964. Independent students organizations were abolished, coming under the direct tutelage of the government. Media censorship, and prohibition of the right of assembly (such as picketing) in any capacity outside those legitimated by government decree were also included. Police harrassment and violence, and surveillance of indivi­ duals and organizations also became routine, made possible by extensive upgrading in sophisticated repression techniques. 98

The politics of increased relative autonomy of the state to organ­ ize the dominant class alliance carried different implications for the diverse fractions of the dominant class. Martins points out that for international capital, it constituted an immense gain since populist and clientistic alliances were never its forte. The state bourgeoisie also gained, since it no longer required popular support for plans to expand and was liberated from the onus which the demagogic politics of previous governments had imposed on profit rates. Other sectors, those who were not vital to the ensuing economic growth founded on the reproduction and extension of monopoly capital, were compressed. The pattern of bourgeois domination which took shape in post-64 developments resulted in an absolute and relative loss in bargaining power by the national bourgeoisie as a whole. Of course, these losses were unevenly distributed, falling most heavily on small capitals in traditional and non-durable consumer goods sectors.^

The consequences of the new regime's relative autonomy for the popular classes and for weaker sections of capital were seen in the

1964-1967 period, or the re-establishment of conditions for capitalist accumulation. The regime's first task was to enforce traditional monetary and fiscal policies toward activating countertendencies to the decline in profit rates. Importantly, in this process accumulation based on consumer durables production was not substantially changed, only re-established. However, the basic pre-condition for the subse­ quent expansion (1968-1974) was the enormous increase in the absolute rate of exploitation through lengthening of the working day and wage compression ensured by the state repressive apparatus. 99 Abranches argues that wage compression fulfilled two basic

requirements of the capitalist development model of that period. First,

wage policies were instrumental in reducing the average global level of

wages, while redistributing income to the upper-middle and upper strata

of the income hierarchy,#thereby adequating the demand structure (con­

sumer durables, housing) to the new structure of supply supposed by the development pattern. Second, it allowed reduction of current opera­

tional costs of state enterprises and non-monopoly sectors of private

capital.^ , 35

Estimates of real minimum wage compression used by Suplicy and

Munck indicate that the overall decline between 1961 and 1973 came to 36 37 about 55 percent. ’ Per capita production in the same period rose 38 50 percent. The wage squeeze between 1964 and 1967 was especially severe: for example, the Rio de Janeiro cost of living index between

January 1964 and February 1967 increased 172 percent, while the gov­ ernment allowed minimum wage adjustments of only 109 percent. After

1967 the wage squeeze was reduced, but only in 1975 did legal minimum

readjustments begin to consistently surpass cost of living increases.

The intensified exploitation of labour had devastating effects 39 revealed in overall changes in income distribution, and welfare indi­ cators such as infant mortality. Between 1960 and 1970, the average income of the top five percent of the population almost doubled, while the 80 million on the bottom remained stagnant at incomes averaging 40 below US$ 200 per year. Table 4 succinctly describes basic welfare effects of post-coup economic policies and labour repression. Between

1960 and 1976 the portion of national income captured by the top five percent of all income earners grew from 27.7 percent to 39 percent, 100 while the share received by the bottom 50 percent fell from 17.7 per­

cent to 11.8 percent.

Table 4. Income Concentration, 1960-19 76 Percentage of Working I960 1970 1976 Population Lowest 50 percent 17.7% 14.9% 11.8% Next to lowest 30% 27.9 22.8 21.2 Next to highest 15% 26.7 27.4 28.0 Highest 15% 27.7 34.9 39.0 Source: Dias, E. (1979). "'Miracles' in chaine au Brasil," Le Monde Diplomatique. 41

In most Brazilian cities infant mortality rates between 1940 and 42 43 1960 had dropped substantially. Recent studies show a violent

reversal of these trends in the Seventies. In the city of Sao Paulo, 44 infant deaths per 1000 live births in 1973 had surpassed 93, compared 45 to 69.4 in 1965. In Belo Horizonte, the infant mortality rate in

1960 was 74.2, increasing to 107.3 by 1969 and 124.8 in 1974. Simi­

lar increases took place in Recife, Salvador, Vitoria, Rio de Janeiro

and Goiania since 1961/63.^

Cheapening of constant capital was realized through reconstruc­

tion of the economy, e.g. violent destruction of small/weak capitals,

and a sharp turn towards foreign capital. This process was encouraged

by the regime's policy of "positive insolvency" which consisted in

rapidly cutting off government credits to firms which failed to show an

adequate level of profitability. This capitalist rationalization saw 48 bankruptcies in Sao Paulo rise from 838 in 1964 to 3,589 in 1967.

Capital concentration or growth of monopoly capital occurring after

the coup can be seen in the changes in number, size of industrial 101 establishments and employment distribution in industry between 1960 and 1974. Between 1960 and 1970, the number of manufacturing establish- 49 ments counted by the F1BGE dropped from 108,593 to 70,048. By 1974, the number of manufacturing establishments increased slightly to 71,012.

This increase took place almost entirely in the large size categories, or firms employing 100-249 and 250 and more workers. Meanwhile, the smallest size category (under 10 employes) lost over 7,000 establishments.

Industrial Census figures show that between 1960 and 1969, small firms (less than 10 employes) declined from 91,000 to 16,000, and the number of workers they employed from ^18 percent to three percent of total industrial employment. Large firms (more than 250 employes) on the other hand, increased in number from 900 to 16,000, while the proportion of all workers they employed increased from 38 percent to

53« percent. * 51

1. Bourgeois representation in the post-coup regime

In contrast to the pre-coup situation, the political scene in

Brazil was notable for the physical absence of the local bourgeoisie in the state's central administrative machinery, traditionally repre­ sented through the so-called parallel organizations, e.g. employers associations. After 1964, the latter became mere spokespersons for 52 small- and medium-sized businesses. Intra-bourgeois discussion was limited to "small politics" at municipal and state levels.

Members of the dominant classes participated in the political arena in atomised forms as opposed to democratic-representative forms 53 and class organizations. As put by Faucher, decision-making was 102 totally centralized at the executive level, while implementation was split among sector bureaucracies and state enterprises. Capitalist entrepreneurs in those particular economic activities favored by the

Brazilian development model thus presented demands individually before 54 the appropriate sector bureaucracy. According to Cardoso, while economic policy decisions were "bureaucratic-centralized," the decision- 55 making system was accessible to entrepreneurs. He suggests that

"rings" of private capitalists provided information and pressure, con­ sisting of relatively temporary forms of co-optation for the purpose of 56 resolving specific problems of policy.

In this situation, each agency had a tendency to develop its own particular objectives, assessing directives from above according to the support it could mobilize among individual private corporations in order to realize its plans. This influence game was necessitated by the clos­ ing off of channels of bourgeois political participation. State enter­ prises were simultaneously directed to rationalize their operations in order to prevent inflationary public debt creation. The overall result of the increased autonomy of sector bureaucracies and state enterprises, however, was the atomisation of economic policy and the increasing incoherence of state intervention.

The increased autonomy of the state favored the manifestation of divergent interests not only among different sector agencies— whose policies were in part influenced by competitive interests of foreign and national private capitalists— but also between (economic) sector bureaucracies and state enterprises in these particular areas. The state of confusion implied here was hidden during the 1968-1973 growth period. Thereafter, in an environment of inflation and economic 103 decline, decision-splitting and the multiplication of unrelated pro­ grams among sector bureaucracies and state enterprises revealed the incoherence of state initiatives.

B. Major Forms of State Intervention

Following the coup, the state rapidly and decisively moved to the center of the capital accumulation process, freed both from the need for popular support and general ratification from the bourgeoisie as a whole for implementation of specific policies. Succinctly, economic growth was not only encouraged by the state at the regulatory level

(openings to foreign capital, fiscal and monetary policies supporting rising investment and consumption), but was also stimulated by a strong, direct participation by the state in financing and production. In fact, as argued by Reichstul and Coutinho and Martins the recovery from recession as well as the expansionary phase was led by the state productive sector.

In a broad sense, the state's functions were those of providing conditions for the growth of international capital and big Brazilian capital whose interests were intertwined, and the creation of an accum­ ulation fund closely related to further development of commodity produc­ tion. In accomplishing these related roles, two major areas of actua­ tion can be analytically distinguished. The state productive sector, which expanded at unprecedented rates, especially in the 1970s, con­ stitutes one area. State administrative functions which were streng­ thened qualitatively and quantitatively is the second major area.

These functions are broken down into more traditional activities of the capitalist state— its regulatory mechanisms— and the state's leading role in creating long term capital markets in the domestic economy. 104 1. The state productive sector

Several analysts of policy objectives regarding state enterprise argue that state productive activities were increased in scope and size to meet the needs of an expanding economy and to successfully provide goods and services in domestic and 'international markets in competition with large corporations. This has implied— at least overall— a transfer of surplus value to private capital in the form of low prices of state enterprises' goods and services, requiring in some cases debt financing to absorb losses, or recourse to (external and internal) debt financing for investment. Further, given that National Development Bank (BNDE) funds were channeled into the private sector, state enterprises' finan­ cial losses would have required inflationary public debt creation. Con­ sequently, profitability of state enterprises was encouraged. This required price liberation in order to cover production costs as well as accumulation toward re-investment. Price liberation did occur, although in a quite differentiated form, depending on specific conditions of each productive sector.

That state productive activities expanded and revealed tendencies of greater profitability in the post-coup era seems beyond question.

State investment in productive activities escalated after 1964, espe­ cially in the 1970s. In the 1966-1970 period, 79 state firms were cre­ ated, accounting for 22.6 percent of all state firms existing in 1976.

In 1971-1976, 131 firms were created, or 37.4 percent of all firms existing in 1976.^

Between 1966 and 1974, state capital's share of net assets among the 300 largest corporations in the manufacturing and petroleum sectors increased from 17 percent to 32 percent. (See Table 5.) In 1976, 19 105

out of the top 25 and 45 of the top 100 corporations were state-

controlled. Of the latter group, 34 were public utilities. The state

sector's proportion of the net assets of these 100 corporations grew 58 from 67 percent in 1970 to 74 percent in 1974.

Table 5. Evolution of Asset Ownership, State, National and Foreign Capital Manufacturing and Distribution of Net Assets Petroleum of Largest 300 Corporations 1966 19 72 19 74 State Enterprise 17% 30% 32% Private Brazilian Firms 36 28 28 Multinational Corporations 47 42 40

Source: Baer, W. iet al. (1976), "On State Capitalism in Brazil," Inter-American Affairs, Vol. 30, No. 3.-^

State capital's leading role in the economy is demonstrated by

state productive expansion relative to GDP and the manufacturing sec­

tor as a whole. Using 1966 as the index year, real value added

increased to 213 for Brazilian GDP, 257 for the manufacturing sector 60 and 371 for state enterprise.

Moreover, it is estimated that some 60 percent of all investment

f\ 1 AO during the 1967-1973 "boom" period was carried out by the state. ’

Investment by the state productive sector attained 27 percent of GDP

in 1968-1973, in contrast with stagnant behavior of private investment

and that of government non-productive expenditures. This situation contrasts with previous levels of state participation in investment: in

1956, state productive investment accounted for three percent of total 6 3 investment, and in 1961 was 14.5 percent. 106

State enterprises also came to dominate the stock market in the boom period. For example, between May 1974 and May 1976, new under­ writings of public stock increased 84 percent, almost three-fold that 64 of private stock.

Table 6 demonstrates that the evolution of profit rates for state enterprises revealed a sharp tendency toward growth, with the excep­ tions of railroads and basic sanitation. Taking state enterprises together, profitability in 1967 was 3.9 percent, rising to 9.7 percent in 1976. Profitability of state enterprise compared to transnational firms and Brazilian private firms among the 100 largest corporations operating in Brazil in 1974 was on the average lower: 9.0 percent, 15.8 percent and 12.5 percent, respectively. (See Table 7.) According to

Suzigan, Cipolla and Fox, lower profitability of state firms indicates that in some cases state production was undertaken in areas uninterest­ ing to private capital, whereas in others, state enterprises functioned in a capacity to "save" surplus value to be passed on to private capi­ tal. ^ In this sense, state productive activity is initiated in areas necessary to capital accumulation as a whole, but which may be rela­ tively unprofitable to private capital, or in order to preclude so-called predatory private capitals from limiting growth potential of

"capital in general." Table 6. Evolution of State Enterprise Profit Rates by Sector, 1967-19763 (Percentages)

Sector** VALE & Year STE CHEMELECPITSAN TRANS RRSTOR ADM R & D IND MISC PETR0. TOTAL

_ _ 1967 (7,6) 10,9C 7,3 1,7 9,3 2,2 (11,7) 0,5 ~ f 12,1 3,9 1968 1,1 (0,3) 7,7 1,8 10,5 6,2 (5,4) 3,0 - 13.6* - - 13,0 6,8 1969 3,9 (0,8) 8,8 2,4 4,5 3,1 (7,5) 0,4 - 14,4 1 97,5g - 12,5 7,2 1970 8,7 6,9 9,7 4,9 8,2 8,4 (6,5) 1,6 - (3,1) 42,5 - 17,2 9,5 1971 7,8 8,5 9,1 6,3 7,5 9,5 0,7^ 0,4 - 22,2 44,68 - 19,1 10,5 1972 8,9 7,8 10,3 7,0 9,4 15,4 (0,4) 2,9 - 9,7 21,7 25,2 17,9 10,3 1973 8,9 (4,7) 10,5 8,3 5,4 15,6 0,0 3,6 2,7 5,5 21,8 20,4 17,4 9,9 1974 11,7 9,- 11,3 6,2 3,6 25,7 0,2 (2,7) 9,1 3,5 22,5 17,2 24,5 11,6 1975 7,8 13,4 11,8 6,2 1,3 33,4 0,1 (1,9) 2,1 3,6 29,0 16,4 23,7 10,3 1976 2,4 22,2 10,5 6,7 0,8 15,7 (7,6) 3,7 4,8 (0,6) 21,9 18,9 26,0 9,7

aThese figures were calculated from a sample of 83 state enterprises grouped according to area of principal activity included among the the 200 largest Brazilian firms in 1977. (From Quern e Quem na Economia Brasileira. 8/22/77). Two groups escaped these criterion. They are Diverse Industries (IND) and Miscellaneous (MISC). IND includes Railroad Materials, Inc. (Marfesa), Brazilian Aeronautics Enterprise, Inc. (Embraer), Forestry Rio Doce, Inc. and Brazilian Cellulose, Inc. (Cenibra). MISC includes Petrobras Distributor, Inc. (Petrobras Distribuidora, S.A.), Anhembi, Inc., Special Projects Engineering and Construction (Ecex), Company Docas of Rio de Janeiro (Cdrj) and the Real Estate and Land Investments Company. STE=Steel; CHEM=Chemicals; ELEC=Electrical Services; PPT=Postal and Telecommunications Services; SAN=Basic Sanitation Services (water, sewage, gas); TRANS=Water and Air Transportation; RR=Railroads; ST0R= Storage; ADM=Administration and Participation; R & D=Research and Development (Embrapa); IND=Diverse Industries, MISC=Miscellaneous, and Vale + Petrob.=Cia. Vale do Rio Doce + Petrobras, Inc. °0nly Cia. Nacional de Alcalis; ^In 1973 Petroquimica Uniao was yet in its installation phase, and realized a loss; e0nly RFFSA; { a Only Banrio; Only Marfesa. Source: Quem e Quem na Economia Brasileira, 1968-1977. 108

Table 7. Profitability of 100 Largest Brazilian Corporations, 1968-1974

Corporations 1968 1969 1970 1971 1972 1973 1974 Average State 6.7% 7.7% 7.6% 9.3% 10.1% 10.0% 11.3% 9.0% National 8.0 5.5 10.4 14.1 15.5 15.8 18.4 12.5 Foreign 8.1 9.7 14.8 18.3 19.4 20.1 20.4 15.8 Source: Quem e Quem na Economia Brasileira, 1975.

A closer look at state enterprises by sector of industrial pro­ duction, however, illustrates that proscribing to state enterprises an assistential role to private capital oversimplifies what in reality is a complex situation. Table 8 shows that in 1974 state enterprises of highest profitability were those of the mining sector (Vale do Rio

Doce), Rubber, Airplanes and Other Vehicles (Embraer, etc.) and dis­ tribution of petroleum derivatives (Petrobras Distribuidora, S.A.).

In these areas, state enterprise profit rates surpassed those of 67 counterpart foreign and national private firms. In Fertilizer and

Soil Additives, and Office Machines, Motors and Industrial Equipment, state enterprises were more profitable than national private firms. 109 Table 8. Net Profit/Net Assets by Ownership (!roups and Sector of Activity in 1974

Sectors of Activity State Foreign National

Basic Inputs Mining 24.6 15.7 1.5 Metallurgy 8.0 36.8 28.0 Cellulose and Paper 1.6 31.8 28.4 Rubber 37.0 21.7 19.7 Chemicals and Petrochemicals 9.2 18.2 21.5 Fertilizers and Soil Additives 58.3 80.3 47.0 Petroleum (extraction and processing) 24.5 66.4 41.2 Mechanical and Electrical Industries Machines, Motors and Equipment for Office 13.6 19.4 10.9 Airplanes and Other Vehicles 31.1 12.2 24.5 Civil Construction and Engineering 2.1 9.4 26.8 Public Utilities Electrical energy . 11.3 17.2 -- Gas, Water ancf Sewage 3.6 -- 31.4 Other Services, Public Utilities 6.1 -- 4.7 Services Distribution of Petroleum Derivatives 29.3 26.2 22.3 Import and Export Commerce 1.7 34.0 18.2 Storage 10.9 18.8 19.9 Railroad Transport 0.1 -- -- Automotive Transport 105.9 -- 28.4 Sea Transport 25.3 52.5 45.1 Air Transport 14.1 129.2 19.8 Communications 7.7 -- Miscellaneous Services 16.0 25.9 13.7

Source: Chapter III, Aspectos da Participacao do Governo na Economia, IPEA/INPES, Serie Monografica, no. 26, 1976 , p. 103 yS8""" 110

As Cipolla points out, state enterprises' lower profitability in

basic input and services sectors (civil construction and engineering,

cellulose and paper, chemicals and petrochemicals, etc.) is explained

in part, by constant investments to adequate the infrastructure to the

needs of an expanding economy. Nevertheless, even in most of these

sectors, the tendency during the 1970s was toward increasing profits.

(See Table 7.)

In the electrical services sector, for instance, subsidized rates

were applied to industry, while subsidization was absorbed by higher

rates applied to private residence and commercial customers. Price

increases in the 1964-1972 period for both types of users were by far

greater than inflation.

In the case of steel production, even though profits have risen

since the early Sixties, accumulation capacity has been compromised.

Its important place in manufactures' direct production costs, or their

recourse to cheaper imports and pressure for low prices, were con­

straints which precluded larger profit margins. Consequently, the steel

sector, alongwith other rapidly expanding state enterprises relied hea- 69 vily on debt finance, especially external loans and financing.

Despite a distinctly lower profit rate, the growth of state enter­ prises and the steady increase in the profitability of public enter­ prises "serving the general interests" of (private) capital, state enterprises were transformed into fractions of capital itself. As a

fraction of capital they must generate their own resources, and there­

fore they must be lucrative. As capitalist enterprises, they follow

capitalist rationality in terms of investment decisions (and therefore, Ill

decisions to contract finance capital), pricing and production

policies•

On the other hand, state enterprises have benefitted from access

to earmarked taxes, compulsory loans and general government funds for

investment, enabling them in turn to grow at a much more rapid pace than

private counterparts.^ What this means is an added impetus over pri­

vate (especially national) capital toward concentration and centraliza­

tion, e.g. establishing monopoly markets. In fact, state enterprises

are capitalist competitors not only in product markets, but also in cap­

ital markets, contributing to elevation of money-capital costs.^

The line of demarcation between, on the one hand, state activities

functioning as "infrastructure", adding to total social capital and thus

to the profitability of capital as a whole, and on the other, as a specific fraction of capital is ambiguous. In the Brazilian case, in­ vestments in transportation (railroads, road construction), basic sani­ tation, and steel qualify as infrastructural services in the traditional sense. State productive activities in the areas of civil construction and engineering, a variety of industrial inputs and airplane manufacture were also crucial toward stimulating economic growth, making viable the creation of numerous national firms by providing inputs and commercial­ ization, not to mention the profitability of monopoly firms in consumer durables manufacture. In this sense, state productive enterprises pro­ vided both markets and competitively-priced inputs for capitalist enter­ prise in the internal market. In brief, the growth of state productive structures was not tantamount to a denial of a "privatist conviction."

Rather, the pattern of accumulation based on consumer durables 112 expansion, largely controlled by foreign capital was unviable without heavy state investments in traditional infrastructure, industrial in­ puts and capital goods manufacture. According to Tavares and Serra, the crucial element guaranteeing the economic dynamism of the 1967-1973 period was the "organic solidarity between state capital and foreign capital: the state supplied the domestic market with basic inputs and external economies which the MNCs used to expand in both domestic and export markets.

The rationale underlying state productive activities was in part that of guaranteeing high profit rates for international capital and thus providing conditions for capital accumulation, while at the same time attempting to produce in the domestic market items which would in their absence be imported. The latter objective was only partially achieved for reasons which will be discussed below.

State enterprises had to become profitable owing to the state administration's fiscal constraints discussed previously. However, because of the expansionary impetus of the "boom" period and insuffi­ cient accumulation funds available in domestic capital markets, state enterprises sought financial resources in the international money mar­ ket which contributed to the tremendous increase in external debt accum- lated during the 1968-1973 growth phase and thereafter. In 1975, for example, total external debt for that year was US$ 20,264 million. Of 73 this total, more than half (US$ 10,789 million) was public debt.

Following profit maximization criterion, state enterprises were increasingly organized into holding companies, representing a form of conglomerate common to monopoly capitalism. Examples here are

Petrobras, Eletrobras, Telebras, Siderbras and Portobras at the national 113 74 *- level; Fepasa, Sabesp and Telesp at the level of the state of Sao

Paulo, and Camig, Casemg, Cemig, Frimisa and Usiminas at the level of

the state of Minas Gerais.^

Several studies have pointed out the policy and execution dis-

juncture between centralized administration (ministerial/executive

levels) and state productive enterprises under parastatal agencies.

General state policy directives at the executive level such as sup­

port of national private capital in capital goods and intermediate

inputs sectors and limiting external debt have entered into contradic­

tion with the profit-maximizing initiatives of so-called state capital.

In the course of obtaining financing from organizations such as the

World Bank and Chase Manhattan for investment towards production expan­ sion (which includes exports), parastatal agencies or holding companies under their jurisdiction are large-scale importers of capital goods,

frequently required as terms to obtain finance capital. Moreover,

state enterprises will import rather than "buy domestic" according to

cost criterion of capitalist efficiency. As mentioned above, the growth of the 1967-1973 period hid the incoherence of state policies as a whole. State enterprises, adopting the logic of expansion and conforming to laws of the marketplace had the tendency to develop pro­ duction plans while ignoring regulations regarding rising prices, import limitations and debt constraints, directed at harmonizing growth.

There is no organic articulation between state firms which act virtually as isolated oligopolies.

Evidence of the consequences of this confusion arising from state capital acting at cross-purposes to the general functions of the 114 capitalist state toward maintaining and reproducing conditions for

"capital in general" (read monopoly capital) is the dramatic continual growth of external debt from 1976 to the present. Economic intervention being split among bureaucracies and state enterprises and under the influence of competitive and contradictory interests of foreign finance and productive capital has produced continuing massive imports of both capital and commodities (capital goods, technology) at a time of econo­ mic decline, unfavorable international market conditions and accelerat­ ing inflation.

2. State administration: the state's role in financing of

accumulation

In the post-coup period, the state developed a battery of subsi­ dies and fiscal incentives towards financing accumulation via exports, established a vast and multifarious system to finance particular econ­ omic activities (bank reform), as well as executing traditional expan­ sionist monetary and fiscal policies which maintained high levels in real terms of consumption and investment expenditures.

Fiscal reforms'greatly increased state revenues which were in large part channeled back into the private sector at favorable interest rates. Included here are personal and business income tax reform, sales taxes (ICM, IPI) , the expansion of forced savings funds (FGTS, PIS and

PASEP), and export tariffs.

Reforms of the banking structure allowed specialized diversifica­ tion of credit and concentration of banking capital, such as in non­ bank financial institutions devoted to provision of consumer credit.

Later, the "national housing finance system" was established, based on the state-controlled National Housing Bank (Banco Nacional de 115 Habitacao-BNH) and the Caixa Economica Federal, having as its main

financial source the compulsory redundancy payments fund (FGTS).^

In the first years of the dictatorship, the Central Bank and the Na­

tional Monetary Council were also created, and price indexation was 77 established. Public debt instruments (ORTNs and LTNs) came to play a crucial role in the establishment of long term financial markets, along with deposits of forced savings in the commercial banking system.

By the mid-Seventies, the state administration collected 64 per- 78 cent of total (voluntary and involuntary) savings. Compulsory savings alone accounted for nearly 20 percent of all investment funds (gross 79 internal financial savings) by 1977. Moreover, in the 1966-1974 per­ iod, the state through the National Development Bank (Banco Nacional de Desenvolvimento-BNDE), BNH, regional investment banks and special 80 funds detained 50 percent of all loans to the private sector. The state thus came to exercise a leading role not only in devising mech­ anisms to capture accumulated surplus value for investment, but also exercised a determining role in distributing these funds towards activi­ ties given priority under Finance Ministry directives. This observa­ tion becomes particularly important in the case of agricultural credit and specially marked funds to agribusiness. (See Chapter 3, Section I.)

Since the first years of the dictatorship, FGTS funds were depos­ ited in the BNH towards funding private residential and commercial con­ struction. Between 1972 and 1977, ORTN and FGTS deposits comprised 82.9 and 66.9 percent of total BNH financial resources, ORTNs representing eight to 16 percent of the total, and FGTS funds, 65 to 70 percent of 81 the total. Alongside extensive state enterprise activity in this area, the BNH was a primary stimulus to high growth rates in gross fixed capital formation during the 1966-1974 period. Expenditures for 116 construction represented close to 25 percent of total fixed capital 82 formation in those years. The civil construction sector alone expanded at an annual average rate of nearly 12.4 percent.

In 1974, the coveted social security funds PIS and PASEP came under the jurisdiction of the BNDE, and its subsidary funds, FINAME and

FIPEME. Subsidiary financial enterprises created in the mid-1970s for spceial projects include EMBRAMEC, IBRASA and FIBASE.

Indexed public bonds (ORTNs) and treasury certificates (LTNs) were increased throughout the post-coup period, and came to play an important part in capturing accumulated surplus value for investment. As a por­ tion of total money supply in 1977, these public debt notes comprised 83 24.4 percent of the total. ORTNs in 1965 came to Cr$ 430 million and

Cr$ 9,412 million in 1970. By 1975, they had expanded more than six­ fold (Cr$ 60,112 million). LTNs were introduced in 1970, beginning 84 with Cr$ 699 million, and increasing to Cr$ 37,400 million by 1975.

Principal buyers of both types of public debt were commercial public and private banks.

Additional measures undertaken to guarantee profitability of con­ sumer durables and construction manufactures production concern the expansion of consumer credit and facilities for financing the building and purchase of residential construction, which led to an unprecedented rise in household debt. The spectacular growth rates of consumer dur­ ables production in the boom period, averaging 23.8 percent annually demonstrate the effectiveness of consumer credit policy. (See Table

10.) In comparison, total manufactures growth averaged 14.7 percent 85 annually for the same period. Construction growth rates reached 86 all-time record highs from 1967 to 1974. 117 The boom in industrial output was further reinforced by a wide

range of export incentives (subsidies, fiscal incentives), particu­

larly in the so-called traditional industries, e.g. footwear, clothing,

textiles and food. The main objective for these financial incentives

and subsidies was to expand foreign exchange towards absorbing increas­

ing imports and finance charges on the external debt.

It is generally agreed that these policies, while applicable to

non-manufactured products and raw materials as well, had the greatest

impact on manufactures. Moreover, due to compression of real wages and

thus of the domestic market for wage goods, these industries turned to

exports as a means to increase profitability through market expansion.

As can be expected, the most important beneficiaries of such schemes

to encourage exports were monopoly firms, listed among the top 100 in 87 their respective sectors of principal production.

According to Malan and Bonelli's estimates for the 1968-1972 per­

iod, nearly eight percent of the increase in sales of manufactures 88 was due to export growth. From 1973 to the present, the importance of export manufactures has declined, attributable to the decline in

international market demand, result of recession in the advanced

capitalist countries.

Section III. Characteristics of Capital Accumulation, 1967 and After

In Sections I and II modifications of the state structure and the nature of state intervention were characterized in terms of adequating political and economic structures to the maturation of monopoly capi­ talism in Brazil. This Section consists of an investigation of the effects of the capitalist dictatorship's intervention in the economy 118 after the recessionary cycle is superseded in 1967. First, the econ­ omic expansionary cycle is reviewed, followed by a brief discussion of the recessionary phase beginning in the mid-1970s and continuing into the 1980s.

A. The "Boom Period", 1967-1974

1. Table 9 shows that GDP grew at an average rate of 9.8 percent per year between 1967 and 1973, one of the highest sustained growth rates in the capitalist world at that time. General price level infla­ tion in the same period averaged 20 percent annually, a definite decline 89 from an average of over 60 percent for the previous five years. Indus­ try grew at rates never before attained: 14.7 percent annually between

1967 and 1973, compared with 5.9 percent of the 1959-1965 period.

Consumer durables production led in the expansionary phase: 23.8 percent annually, compared to 20.5 percent for capital goods, 15.3 percent for intermediate goods and 11.8 percent for non-durable consumer goods. (See Table 10.) These exceptional growth rates were made possi­ ble by existing high levels of idle capacity— estimated at 25 percent— 90 in the manufacturing sector at the beginning of the expansionary cycle.

In brief, the cheapening of constant capital effectuated by the recession and complementary state policies from 1964 to 1967 increased the average rate of profit. Excess capacity made the "boom" relatively costless in the initial years; production thus grew at a faster rate than did total fixed capital until the early 1970s. 119

Table 9. Brazilian Economy, Selected Indicators, Annual Rates of Change, 1965-1974 Rates of Inflation Real output growth rate Year (A)a (B)a (C) GDP Agric. Industry (%) (%) (%)______(%) (%)______(%) 1965 34.5 31.4 55.4 2.7 13.8 - 4.7 1966 38.8 42.1 38.8 5.1 - 3.1 11.7 1967 24.3 21.2 27.1 4.8 5.7 3.0 1968 25.4 24.8 27.8 9.3 1.4 15.5 1969 20.2 18.7 22.3 9.0 6.0 10.8 1970 19.2 18.7 19.8 9.5 5.6 11.1 1971 19.8 21.3 20.4 11.3 11.4 11.2 1972 15.5 16.1 17.0 10.4 4.5 13.8 1973 15.7 15.6 15.1 11.4 3.5 15.0 1974 34.5 35.4 28.7 9.6 8.5 8.2 0 December to December changes. (A) General price index, Conjuntura Economica, column 2. (B) Wholesale price index, Conjuntura Economica, column 12. (C) GDP implicit deflation. Sources: Central Bank, Conjuntura Economica, FGV. 91

2. Economic growth strategies in the post-1966 period relied heavily on foreign capital. Legislation regarding foreign capital was revised, encouraging immense inflows of Eurodollar loans in addition to renewed inflows of direct investments and official loans. Table 11 shows that between 1968 and 1975, gross loans increased from US$ 963 million to US$ 6,800 million.

The de-nationalization of Brazilian industry can be understood in both relative and absolute terms. In the first sense, the proportion of total industrial (mining and manufacturing) capital under control of metropolitan capital was increased. In the second sense, foreign capi­ tal gained increasing control over certain industrial sectors through substituting local capital (through take-overs and mergers). In order to compete with foreign capital, whether in product markets or financial markets, it was necessary for private national capital and state capital Table 10. Indices and Real Growth Rates of Manufacturing Output: Major User Groups, 1959 and 1965-75 (1970=100 and %)

Capital Goods Intermediate Goods Consumer Goods Total Durable Non-Durable Year Index % Index % Index % Index % Index %

1959 32.7 — 39.2 — 25.3 — 52.3 — 42.7 — 1965 56.1 — 53.5 — 41.1 — 70.7 — 60.1 — 1966 66.5 18.5 65.3 22.0 46.2 12.4 71.8 1.6 67.5 12.3 1967 63.8 -4.0 66.0 1.1 50.3 8.9 73.7 12.7 68.6 1.7 1968 81.4 27.5 79.8 20.8 60.9 21.1 82.7 12.1 80.2 16.9 1969 87.5 7.6 87.5 9.6 81.4 33.8 90.4 9.4 88.6 10.4 1970 100.0 14.3 100.0 14.3 100.0 22.8 100.0 11.1 100.0 12.9 1971 115.5 15.5 117.0 17.0 125.4 25.4 110.7 10.7 114.2 14.2 1972 149.5 29.4 136.1 16.3 149.2 19.0 129.0 16.5 135.0 18.2 1973 195.8 31.0 155.4 14.2 180.6 21.0 144.2 11.8 156.3 15.8 1974 222.1 13.4 165.8 6.7 211.7 17.3 151.7 5.2 168.2 7.6 1975 235.2 5.9 172.6 4.1 218.2 3.1 155.4 2.4 174.5 3.7

Sources: Basic data from FIBGE, DECEN and DEICOM. ^2 Table 11. Brazil: Balance of Payments, 1968-75 (Million dollars)

Non-factor Factor Direct External Net debt Net external Exports Imports services, Interest services Loans investment Foreign debt, service over debt over FOB FOB net net and others Amortization Gross net reserves gross exports exports Year (1) (2) (3)a W (5)b (6) (7)c (8) (9) (10) (U) (12)

1968 1,881 1,855 193 144 197 484 963 61 257 3,780 .33 1.87 1969 2,311 1,993 235 180 184 533 1,239 124 656 4,303 .31 1.62 1970 2,739 2,507 328 234 232 672 1,825 132 1,187 5,295 .33 1.50 1971 2,904 3,245 405 302 259 850 2,519 168 1,746 6,622 .40 1.68 1972 3,991 4,235 503 359 357 1,202 4,812 314 4,183 9,521 .39 1.34 1973 6,199 6,192 842 515 372 1,673 4,850 940 6,417 12,571 .35 0.99 1974 7,968 12,531 1,176 637 500 1,925 6,504 883 5,252 17,166 .32 1.50 1975 8,650 12,170 1,194 1,360 646 2,000 6,800 800 4,132 21,966 .39 2.06

8 Travel, Transportation and Insurance k Profits, Dividends, Government Transactions, Other services c Including error and omissions 95 Source: Banco Central do Brasil, Relatdrio Anual, various issues, except for 1975 data which are derived from government press releases. 122 to "rationalize" their undertakings, e.g. concentration and centraliza­ tion of capital.

Between 1965 and 1975, for example, the proportion of foreign capital in total manufacturing capital increased from 18.9 percent to 28.6 per­ cent. Total foreign investment and re-investment were US$ 1.7 billion in 1969, increasing to US$ 3 billion in 1971, to attain US$ 5 billion 94 -• 95 in 1974. As pointed out by Malan and Bonelli, most foreign invest­ ment was represented as re-investment of capital stock. Notably, profit remittances under the rubric of profits and dividends came to only three percent of capital stock per year during the 1968-1972 period. A large part of this accumulated surplus value (which in 1975 was equivalent to

$1.5 billion) was reinvested in the form of take-overs. Whereas in the

1956-1960 period, close to 33 percent of all new subsidiaries in Brazil were established via purchase of existing firms, in 1970-1975, this figure had risen to 61 percent.^

As shown in Table 12 below the leading sectors of industrial growth in the 1967-1974 period— those at the forefront of the accumulation pro­ cess— reveal the concentration of foreign capital. MNC participation in asset ownership of the six leading sectors follows: transport equipment,

61%; mechanical industry, 46%; rubber, 61%; chemicals, 23%, and non- metallic minerals, 35%. The chemicals sector grew at the impulse of

Petrobras, the state petroleum company, whereas non-metallic minerals benefitted from the unprecedented boom in construction activity promoted by the National Housing Bank, and later financed by low-interest loans 97 from the Eurodollar market.

Foreign capital's stature as monopoly capital is indicated by concen­ tration among the largest industrial firms. In 1974, MNCs1 share of 123

Table 12. Patterns of Asset Ownership of the 5,113 Largest Nonfinancial Enterprise, 1974

Percentage share Total net assets National (millions Public Foreign private Sector of cruzeiros) enterprises enterprises enterprises

Mining 9,637 62 12 26 Manufacturing 161,571 20 29 51 Nonmetallic 7,551 2 35 64 Metallic 27,711 34 12 54 Mechanical 8,293 1 46 53 Electrical 6,476 0 61 39 Transport equipment 15,155 4 63 33 Wood 8,782 0 9 91 Furniture 577 0 0 100 Rubber 1,834 6 61 33 Leather 685 0 11 89 Chemicals 40,162 55 23 22 Textiles 12,411 0 13 87 Food 16,910 1 31 68 Beverages 3,571 0 14 86 Tobacco 2,095 0 99 1 Printing 2,143 0 2 98 Miscellaneous 8,211 0 47 53 Agriculture, forestry 4,825 1 3 96 Construction 18,317 15 3 82 Public utilities 97,836 88 7 6 Transport 19,052 78 1 21 Other 78,784 90 8 2 Commerce 30,735 1 5 95 Services 84,656 27 4 69 Total 407,557 37 15 48

Note: Percentages may not add to 100 because of rounding.

Source: "Quem e Quem na Economia Brasileira," Visao, August 31, 1975, p. 29.100 124 total assets was 40 percent among the largst 318 industrial firms, com- 98 pared to 15 percent among the 5,113 largest non-financial enterprises.

Metropolitan capital led or determined growth patterns in the post-

64 period in the sense that private national capital in many sectors expanded passively to the growth of MNCs' markets, and in terms of state intervention geared to facilitating the profitability of foreign capital 99 within the domestic economy. An example provided by Bacha illustrates how MNCs' bigness, technological dynamism, access to credit sources, asset concentration and market dominance conditions the "milieu in which they operate."

The extraordinary growth of the foreign-owned car industry stimulated the expansion of private Brazilian and foreign firms producing spare parts and metallic products; determined the thythm of oil imports, refinery construction, and road-build­ ing; conditioned the style of urban planning; and channeled a large share of private savings to finance purchase of cars.

3. Brazilian exports in the 1968 to 1974 period expanded at an average 27.0 percent per year (see Table 11), facilitated by favorable terms of trade and the state's monetary and fiscal incentives.100 As shown in Table 13, while export composition continued to be heavily agricultural, non-agricultural manufactures increased steadily, accounting for nearly a quarter of total exports by 1977. 125

Table 13. Brazilian Exports by Sector, Selected Years, 1964/68-1978 (Percentages) Export Category 1964/68 1969 1973 1974 1975 1976 1977 1978 Total agricul­ tural exports 72.5 82.9 76.1 71.2 63.7 66.7 67.7 59.1 -In natura 60.0 68.1 50.5 44.3 39.4 41.1 39.4 29.9 -Semi-processed agricultural products 9.1 10.2 15.6 15.0 13.8 14.5 16.2 15.0 -Manufactured agricultural products 3.4 4.6 10.0 11.9 10.5 11.1 12.1 14.2 Unprocessed mining products 7.6 7.7 9.4 8.4 12.7 11.0 8.0 8.6 Non-agricultur- ally based manufactures 7.4 9.7 14.5 20.4 23.7 22.2 24.3 32.2

Source: Appendix, Table 69.

These changes in export composition reflect several interrelated changes in Brazil's insertion in the international capitalist market.

First, a large part of both agricultural and non-agricultural manufac­ tures were marketed under the control of transnational corporations.

Processing of agricultural products and the manufacture of consumer goods (electrical appliances and components, automobiles and automotive parts, for example), formerly realized in center economies were moved to Brazil. This phenomena refers to "capital flight" in response to increasing state regulation and labour costs in center countries. The increasing participation of textiles, clothing, footwear and processed foods among Brazilian exports was also a response to the stagnation of domestic wage goods markets, product of post-64 wage compression."^^ 126

Another interesting development is the growth of state firms'

exports, principally petroleum derivatives and oil exploration services,

aircraft, and other military hardware. Throughout the Seventies, Petro­

bras expanded its activities on the exterior, competing with other oil

conglomerates for oil exploration and processing contracts, principally

in Africa and the Middle East. In addition, within the last decade, Bra­

zil became one of the top ten arms exporting countries in the world.

Expanding sales of competitively-priced sophisticated military hardware

on the world market explain state firms' high profit rates in the "air- 102 craft and other vehicles" category. (See Tables 6 and 8.)

These characteristics of Brazilian export trade during and follow­

ing the boom period highlight the natural outcome of state enterprises'

role in providing basic goods and services in an industrializing econ­

omy. Such firms are forced to "rationalize", e.g. become as efficient

as possible in order to forestall continuing and rising imports (of

equivalent goods and services) which negatively affect the overall

capital accumulation fund and thus the growth of domestic capital. In

the current phase of monopoly capitalism, "competitiveness" means mod­

ern forms of conglomerate arrangements and large-scale manufacturing and commerce. However, due to the restricted size of most peripheral

societies' internal markets, and/or recurrent economic instability, external outlets eventually become necessary for purposes of maintain­

ing full capacity production, not to mention creating conditions for an expanding accumulation fund. The "logic" of capitalism leads to the conglomerate transnational corporation. While the same logic applies to large national private capital, state enterprises more frequently arrive at this stage, owing to their usually superior financial resources 127

under the aegis of the state's revenue-collecting capacity, and/or

ability to contract large loans in the international money market.

4. On the other hand, total imports for the 1968-1974 period grew

at an average 28.9 percent annually. (See Table 11.) Imports expanded

markedly after 1967, reaching US$ 7.845 billion by 1974, a 280 percent 103 increase over the 1967 figure (US$ 2,065 billion). Meanwhile, the

industrial sector became increasingly dependent on external supplies for

continued growth: between 1965 and 1972, for example, the share of

imports in total domestic industrial supply increased from 7.8 percent 104 to 15.2 percent. This type of dependence is especially marked with

respect to capital goods. In 1965, participation of imports in total

supply of capital goods was 14.5 percent, increasing to 27.1 percent

in 1972.105

As pointed out by Malan and Bonelli, Bacha, and Martins, soaring

levels of capital goods imports did not necessarily mean stagnation of domestic production. In real terms, domestic production of capital

goods increased at an average annual rate of 16.2 percent between 1966 and 1974.^^’^ ^ Domestic production was simply insufficient to keep pace with industrial growth, especially the import-intensive consumer durables sector.

Increasing levels of imports after 1967 were compensated by two

related features within the international market. First, terms of trade 108 for Brazilian exports improved by some 22 percent until 1973. World

trade grew at a high 18 percent annually between 1967 and 1973, compared 109 to ten percent per year between 1959/61 and 1969/71. Second, from

1969 to 1974, world reserves increased almost three-fold (when gross 128

reserves readied US? 217.9 billion), or 22.7 percent p e r year. The peculiarity of this period stands out when compared to the previous ‘20 years (1949-1969): world reserves increased at an average rate of only

2.75 percent annually.

5. The massive influx of foreign loans and imports in the 1967-1973 period in the context of booming export markets and extremely favorable liquidity conditions resulted in a prodigious upsurge of Brazilian indebtedness to the international capitalist system. From 1968, gross external debt increased nearly seven-fold, reaching $21,966 billion in

1975. (See Table 11.)

D. Accumulation slowdown, 1974-?

Economic decline became apparent in 1974 as Brazilian industry reached full capacity production, and inflationary pressures began to mount. Expansion was maintained via heavy indebtedness to international capital undertaken to finance large public projects and to pay for pri­ vate sector imports. Tables 14 and 15 show the evolution of Brazil's external trade accounts and foreign debt between 1973 and 1979. In both

1974 and 1975, the current account deficit reached the impressive mark of US$ 7 billion, up from US$ 1.7 billion in 1973. The deficit dropped i slightly in 1976-1978, to rise again to US$ 10.5 billion in 1979. Total foreign debt doubled between 1975 and 1979 alone, and the ratio of net foreign debt to exports had climbed to 2.6, compared to .99 in 1973.^^^ 129

Table 14. Current Account Balance, 1973-1979 (US$ million) £ Year Commercial Balance______Services______Current Transactions 1973 + 7.0 -1,722.1 -1,688.0

1974 -4,690.3 -2,432.6 -7,122.4

1975 -3,540.4 -3,162.0 -6,700.2

1976 -2,254.7 -3,763.0 -6,013.3

1977 + 96.8 -4,134.3 -4,037.3

1978 -1,024.2 -4,975.4 -5,927.4

19 79b -2,716.6 -7.780.0 -10,449.5

Medium and long term. Estimates by Con.iuntura Economicsi. Source: Bulletins, Banco Central, in Con.iuntura Economica, 34:2 (February 1980), 35. Table 15. External Debt and Debt Service Payments, 1973-1979 (US$ million)

External Debt Debt Service Amorti­ % Gross Reserves Net Interest zation3 Total service Net debt Year (A) (B) (C=A-B) (D) (E) (F=D+E) exports (C)/exports

1973 12,571.5 6,415.8 6,155.7 514.0 1,672.5 2,186.5 35.3 .99 1974 17,165.7 5,269.1 11,896.6 652.4 1,920.2 2,572.6 32.4 1.50 1975 21,171,4 4,040.5 17,130.9 1,463.5 2,119.6 3,583.1 41.3 1.98 1976 25,985.4 6,543.9 19,441.5 1,809.5 2,992.2 4,801.7 47.4 1.92 1977 32,037.2 7,256.1 24,781.1 2,103.5 4,060.4 6,163.9 50.9 2.04 1978 43,510.7 11,895.1 31,615.6 2,695.0 5,170.2 7,865.2 62.1 2.50 1979b 49,440.0 9,700.0 39,740.0 4,047.7 6,219.6 10,267.3 67.4 2.61

g Medium and long term ^Estimates by Conjuntura Economica.

Source: Bulletins, Banco Central, in Conjuntura Economica, 34:2 (February 1980), 35. 131

Decline of domestic output growth in the mid-1970s and after can be appreciated in comparison with boom period averages. Real GDP growth

in 1975 was four percent, down from the 10 percent annual 1967-1973 aver­ age of 14.7 percent. General price level inflation began to accelerate

in the mid-1970s: 35 percent in 1974, and 30 percent in 1975, up from the

1970-1973 average of 17 percent.

The internal economic situation did not improve substantially during the late Seventies. GDP growth rates between 1976 and 1979 averaged 6.0 112 percent per annum, still well below the 1967-1973 average. Inflation reached spectacular proportions by the end of the decade: the consumer price index for Rio de Janeiro, for example, rose 79 percent in 1979 113 alone.

By the late Seventies, bankruptcies were reaching levels reminiscent of the 1964-1967 recessionary cycle of small capital destruction. Table

16 shows business failures for the municfpio of Sao Paulo from 1975 to

1980. The municfpio is in the heart of Brazil’s largest industrial city.

The greater portion of industrial production, however, takes place in the four surrounding townships (Santo Andre, Sao Bernardo, Sao Caetano and

Diadema), which together with the central municfpio constitute Greater

Sao Paulo. Industrial trends for the municfpio then, can be extrapolated 114 to Greater Sao Paulo, and in the case of manufacturing, tendencies evident in the municfpio are likely magnified in the surrounding indus­ trial park. Applications for bankruptcy status ("requested") increased at an average of 16.2 percent annually, while officially sanctioned bankruptcies ("decreed") averaged 14.7 percent. Manufacturing and ser­ vices exhibited the highest rates of decreed bankruptcies among the five categories shown in the table below. Table 16. Sectoral Distribution, Number of Requested and Decreed Bankruptcies, Municfpio of Sao Paulo, 1975-1980

org 1975 1976 1977 1978 1979 1980 R D R D R D R D R D R D Manufacturing 698 130 770 190 1,163 223 1,335 259 1,403 283 1,444 328 Commerce 1,181 235 1,193 234 1,655 283 2,405 404 2,771 476 2,694 565 Confections3 187 75 177 78 97 37 157 39 206 56 131 22 Services 278 45 362 66 507 79 667 100 766 125 631 118 Unclassified 160 49 205 39 292 57 329 51 336 43 157 18 Total 2,504 534 2,707 607 3,714 679 4,893 853 5,482 983 5,057 1,051 Q Textiles industry and commerce. Note: R = "Requested". D = "Decreed". A Source: Instituto de Economia, Fundaqao de Getulio Vargas. 133

With international capital becoming both more expensive and less

available, the Brazilian state was faced with a declining rate of growth

and intensifying political unrest. The latter became evident in Novem­

ber 1974 when the poorly organized MDB easily won in 16 out of 21 sena­

torial races. At the same time, questions were being raised about the

"excessive" participation of both MNCs and state enterprises in the

national economy. These concerns materialized in an investigation of

MNCs' actuation undertaken by the House of Representatives at the request 115 of the MDB in late 1974, and the eventual launching of a public

debate in the country's most prestigious newspapers (Jornal do Brasil,

Estado de Sao Paulo) and news magazines (Isto El, Veja).

Until the 1980s, the conflicting interests of the fractions of the

bourgeoisie— their different structural bases— militated against the

emergence of a class-conscious bourgeoisie (or bourgeois fraction) to

lead in the restructuring of the state apparatus necessary to rapidly

implement economic policies toward diminishing inflation and balance of

payments deficits.

The distensao or gradual liberalization of the military regime,

beginning in 1976 was an outcome primarily of the local bourgeoisie's

understanding of the coalition of interests (foreign capital and state

capital) which excluded them, or at least relegated them to secondary

importance in terms of present and future growth potential. This year

also marks the end of the stability of the ruling class alliance repre­

sented in the post-64 regime, and ushered onto the political scene the

social forces (workers, students, intellectuals) who had previously been restrained by the repressive apparatus.'*''*'^ 134

Thus, in the closing years of the Seventies, the regime was sub­

jected to open criticism regarding its economic policies and its mode of

political domination. No attempt will be made here or in subsequent

chapters to investigate the economic and political conjuncture in Brazil

obtaining since 1976 to the present. Given that potential changes in the

mode of rule have not yet been stabilized, any conclusions regarding

medium and long term effects on inter- and intra-class relations in non-

agricultural or agricultural sectors would be tentative at best. Only

certain modifications in state intervention ensuing from related economic

and political difficulties in the agricultural sector since the mid-

Seventies are briefly examined in this dissertation. Chapters 4 and 5

include brief discussions of their effects on the maintenance and growth

of certain production relations in agriculture, as well as of the mode

in which they were implemented.

Concluding Remarks

In this chapter, it was argued that the state form established in

1964 and developed in later years was a form compatible with mature

industrial capitalism in Brazil. Subordinate classes were virtually

excluded from national political life in order to enhance national mar­

kets for modern consumer durables, and in the interest of creating a

large(r) accumulation fund for big capital via wage reductions, albeit

channeled for the most part through state bureaucracies. Sectors of national capital, on the other hand, were also prevented from taking a direct participatory role in economic and political decision-making.

The isolation of the majority of the Brazilian capitalist class from 135 central policy formation was also advantageous to big capital, as it allowed greater freedom of maneuver by the state on its behalf.

The review of state intervention in the form of state productive enterprise and administrative and bureaucratic activities demonstrated the class nature of state power: the ruling class alliance in post-coup

Brazil was thus identified as constituted by state, metropolitan and private national monopoly capital fractions. State actuation since 1964 has had the effect of consolidating and strengthening the alliance as a whole.

The agricultural productive sector, as implied in the previous dis­ cussion continued to play a crucial role in the expansion and reproduc­ tion of Brazilian capitalism following the coup through exports of both raw materials and processed/manufactured products. Mechanisms instituted by the state through which export expansion took place, as well as those producing transformations of agricultural production and distribution in the internal market are the specific subject matter of Chapter 3. Chap­ ters 3 and 4 together are essentially continuations of Chapter 2 as investigation of state intervention in agriculture proceeds in similar fashion. Examination of agricultural policies focuses on determining their class content. In this way, the ruling class (alliance) in Brazil is also "discovered" in the effects of post-coup agricultural policy. FOOTNOTES TO CHAPTER 2

^See Sodr£, 1967:147-169 and Prado Junior, 1945.

2 Munck, 1979:16. See Suzigan, 1976:82-91 for a brief history of state intervention in Brazil.

3 Between 1933 and 1938 alone, industrial production grew 44.3%. (Baklanoff, 1971:193, and Arraes, 1972:48.)

4 New York prices for Brazilian coffee fell from 22.5 cents per lb. in September, 1929 to 8 cents by September 1931. (Baklanoff, op.cit., 195.)

"*See also Singer, 1977, and da Silva, 1977, for similar interpreta­ tions of this phase of economic development. g Munck, op.cit., 43.

7Fishlow, 1972:340.

g For detailed discussion of the Kubitschek administration's develop­ ment strategies, see Lafer, 1970 and Lessa, 1975.

9Munck, 1980:47.

10Ibid., 50.

■^See Munck, op.cit., 46, for details of investment flows.

12 See also in Munck, op.cit., 46.

13 Ibid., 47.

14 Ibid.

15Therbom, 1979:89.

16Weffort, 1979:12.

136 137

See Therbom, 1977, for an account of how defeat in foreign wars and/or defeat of powerful (real or potential) allies has affected the timing of the emergence of democratic institutions in capitalist societies.

18 Weffort, op.cit., 12.

19Ibid., 13.

20 Munck, 1979:13.

21 Castro, et al., 1979:13; Munck, op.cit., 44; Faucher, 1980a:13, and Fox, 1980:70-71

22 Munck, op.cit., 21, and 1980:47.

^Bamat, 1977:77. See also Ianni, 1971.

24 Growth of real GDP and real industrial product was erratic throughout the 1950s. (See Appendix, Table 66.) Price level inflation began to accelerate in 1959 and 1960, reaching its highest point in 1964. By 1967, inflation had declined to the 1959/60 level. (See Appendix, Table 67.)

25 See Appendix, Table 67.

Sorj, 1979, and Castro, et al., 1979.

^ S e e de Oliveira, 1978:85-89.

28 Fox, op.cit., 77.

29 Munck, op.cit., 51.

30 De Oliveira, op.cit., 88-92.

"^Cardoso, 1973:147, 163-164. See O'Brien, 1976:47-55 for a criti­ cal review of Cardoso's work on the Brazilian "authoritarian" state.

32 General contours of the bourgeois democratic state form are estab­ lished on the electoral principle as the leading format of representation. Forms of mediation cover the gamut from repression, displacement of con­ tradictions, extraction (of surplus labour and surplus product via public underwriting of private capital accumulation), cooptation, judicature 138 and support of the ruled by the state, although co-optation and support seem to be the most important modes of mediation in contemporary bour­ geois democracies. (See Therborn, 1978:180-240, on formats of represen­ tation and processes of mediation.)

33 The formula was made up of three components. The first was designed to compensate for past inflation, re-establishing the average real wage observed in the previous 24 months. The second anticipated future inflation, attempting to maintain during the following 12 months the same average real wage as in the preceding period. A productivity adjustment factor was the third component of the formula. In theory, these rules not only guaranteed the purchasing power of wages, but also maintained constant the wage share of output. In practice, expected future inflation was consistently underestimated until the late 1960s, whereas the allowance for productivity increases was much smaller than the observed growth of GDP per capita through the mid-1970s (Bacha, 1980:22-24).

34Martins, 1977:213.

33Abranches, 1978:124-125.

O (L See Munck, op.cit. , 51. Suplicy (1977:86,100) uses data compiled by the FGV showing real wage decline of 35% from 1961 to 1970. Indus­ trial real wages fared better on the whole, but did not accompany real product growth (Suplicy, op.cit., 65). In Belo Horizonte, Brazil's third largest city, real wages declined from 1966 to 1971, increased slightly for the next two years, to drop again in 1974 and after (Wood, 1977:58). Real wages earned by Brazil's most skilled workers in the "miracle" per­ iod were not much better. For example, autoworkers' average real wages in 1974 had not surpassed 1966 levels (de Oliveira, op.cit., 101).

Average wages received by agricultural workers are on the whole lower than industrial workers' salaries. A recent government study showed that 70% of all agricultural salaried labourers earn wages equal to or below the official minimum wage (Latin America Regional Report, 1/4/80:6. See also Bacha, 1976).

37 For three alternative measures of real minimum wages between 1959 and 1978, see Appendix, Table 68.

38 Munck, op.cit., 51. FGV statistics show a 51.4% increase in real per capita GDP (Suplicy, op.cit.).

39 Since about 1972 with the dissemination of published results of the 1970 income profile, the debate in Brazil has raged on the "causes" of income inequality, on its dimensions and characteristics, and the role played by state policies. This is not the place for a review of the num­ erous positions and conclusions in this debate. For a fairly 139

comprehensive discussion and critique of several common positions on these issues, see Bacha and Taylor (1980). Brazilian economist Edmar Bacha's arguments represent those of the "enlightened intellectuals" employed in both public and private sectors. His arguments are summar­ ized in his book, Mitos de uma decada (1976, especially, pp. 57-134). One provocative example of a neo-classical economist's interpretation is Morley (1978). Bacha (1978) provides a penetrating critique of Morley's work, based on the former's invalid assumptions and use of statistics. To my knowledge, a fully-developed marxist analysis of income determina­ tion in Brazil is not available. An analysis of this nature would be predicated first on the marxist assumption that classes are defined in relational terms rather than gradational. Therefore, income distribution is ultimately rooted in the basic features of social relations of produc­ tion. In Wright's words (1979:64-65), the location within exchange rela­ tions and technical relations of production, as well as individual char­ acteristics (class background, education, intelligence, wealth) are important, but are effective only in and through location within the structure of class relations.

^Evans, 1979:76.

41 In Munck, op.cit., 15.

42 See Lewin, et al., 1977:15.

43 Some examples are Wood, 1977; Singer, 1974; Cupertino, 1977; Sup­ licy, op.cit.

44 Munck, 1980:51.

45 Cupertino, op.cit., 36.

46 Wood, op.cit., 58.

47 Cupertino, op.cit. In the state of Sao Paulo, almost 50 percent of the deaths occurring between birth and one year of age are caused by infectious diseases and bronchial pneumonia, outcomes of inadequate nutri­ tion and poor sanitary conditions prevailing among over a third of the city's population. Further, incidence of diseases such as meningitis, goiter, tracoma and tuberculosis throughout Brazil increased during the Seventies (Cupertino, op.cit., 36).

48 Munck, op.cit., 52.

49 Anuario Estatlstico, FIBGE, 1976:179, and 1978:400. These data are collected from firms of five or more employes and/or with an annual value of production equal to or greater than 640 times the current mini­ mum salary. 140

~^Anu3rio Estatistico, 1978:400-401.

^Censo Industrial, 1960 and 1970, in Munck, op.cit., 52.

"^Faucher, 1980a:11.

53 For detailed discussion of post-coup forms of bourgeois represen­ tation in the state apparatuses, refer to Faucher, 1980a and 1980b; Car­ doso, 1973, and Dye and de Souza e Silva, 1979.

54 According to Faucher (1980a:ll), with the increasing rationaliza­ tion of world production, accompanied by a strong concentration of pro­ ductive units characteristic of monopoly capitalism, the hierarchy be­ tween them in each industry widens. The capacity of employers' associa­ tions to represent the interests of capitalists in a specific industry is thus affected. The large corporations leave these organizations to negotiate directly with political officials.

55Cardoso, 1973:173-174.

56 Dye and de Souza e Silva (op.cit., 88-89) in contrast, argue that participation of private capital within bureaucratic centers attained a certain durability and that it was not "marginalized" in the sense that several political analysts have attempted to verify. "...Capital is not marginalized from the decision-making centers of the state but rather its relations to those centers is to be restructured in a 'technocratic' manner. The state, personified by the technocracy, is opened to influ­ ence from those economic sectors that can interact with it in a deci­ sion-making mode, which is considered modern and efficient and which al­ lows the state to plan for a longer time span than that to which many Brazilian enterprises have historically been accustomed. However, to the extent that private enterprise is able to meet the technocracy's require­ ments for entry into the decision-making arena, it is able to deal with the state apparatus on a more and more equal footing. The extent to which that 'equality' will be reflected in policy outputs, however, will vary depending on how central a given sector is for the government's overall strategy."

57Munck, 1979:24, from Visao, 8/31/76.

CO Fox, 1980:72.

59In Munck, 1980:53.

6°Soares, 1978:280. 141

61Munck, 1979:24.

62 Growth of state electrical energy and telecommunications and pos­ tal sectors between 1967 and 1976 illustrates the rapid expansion of the state productive sector. Net assets in these sectors increased at aver­ ages of over 100 percent annually. (See Cipolla, 1978:42-46.)

^Martins, op.cit. , 250-251.

C.r From Jornal do Brasil, 22/vii/1975:16, in Soares, op.cit. , 280.

65 Cipolla, op.cit., 44.

66 In Cipolla, op.cit., 42.

*^7An example of rapidly expanding state expenditures for infrastruc­ ture is road construction. Between 1963 and 1976, the road network in Brazil more than doubled, from 111,757 km to 226,998 km. Moreover, the growth of paved roads was three times greater than for non-paved roads (Cipolla, op.cit., 46).

68 Summarized in Cipolla, op.cit., 43.

^ I n the 1967-1973 period, 50% of state enterprises' investment in the steel sector was contracted in external financial markets, whereas the electrical energy sector showed only 20% of external financing (ibid., 40).

70Bacha, 1977:58.

71See de Oliveira, 1978:95.

72 Tavares and Serra, op.cit., 226. See Table 2.

73 Cipolla, op.cit., 40.

7^Bacha, 1980:30.

75Ibid., n. 13.

7^See Abranches, op.cit., 127-128. 142

78Faucher, 1980a:17.

79 Cipolla, op.cit., 31.

8°Ibid.

81Ibid., 34.

QO Bonelli and Malan, 1976:372.

QO Cipolla, op.cit., 34.

84Ibid.

85Mal£n and Bonelli, 1977:41, n. 14.

86Ibid., n. 16.

87Cipolla, op.cit., 47-51.

88Mal5n and Bonelli, op.cit., 23.

89 See Appendix, Table 67.

90 Malan and Bonelli, op.cit., 23.

91 Ibid., 36.

92Ibid., 38.

93 Bacha, 1977:63, and Malan and Bonelli, op.cit., 34.

94 Martins, op.cit., 265.

9^Bonelli and Malan, op.cit., 396-397.

96 , . , Ibid.

97Bacha, 1980:27-28.

98Ibid., 28. 143

99 Ibid.

100 Ibid.

101 Ibid., 27-28.

102 By 1980, the arms industry earned over US$ 800 million in for­ eign exchange, then constituting the fifth-largest category of Brazil's manufactures exports. According to InfoBrazil (2:4, April 1981:5-6), the origin of the armaments industry can be traced to Brazil's former depen­ dence on the United States for most of its military hardware. With the escalation of the Vietnam War, U.S. exports were cut back. Consequently, in 1968, the military began an ambitious import substitution program for armaments. Brazilian companies produce a wide variety of weapons, including sub-machine guns, missile launchers, amphibious vehicles, and jets. State-owned Embraer manufactures a fighter-trainer jet under an Ital­ ian license and a small military reconnaissance aircraft.

103 Bacha, 1977:60. See Appendix, Table 70 for Import composition between 1965 and 1975.

104 Bacha, op.cit., 59.

■^■*Bonelli and Malan, op.cit., 387.

106Ibid., 386.

■^^Meanwhile, capital goods imports increased at an average annual rate of 22% in the 1967-1973 period (ibid.).

108Bacha, 1977:60.

109 Malan and Bonelli, op.cit. , 23.

110Ibid.

Deterioration of international market conditions became evident beginning in the mid-1970s. Combined with the effects of oil price increases, recession in the advanced capitalist countries saw a steady worsening of Brazil's terms of trade. In 1974, for example, Brazilian imports increased 102% in value terms. General price increases came to 51%, as opposed to a 34% increase in quantum. In that year, the rate of real GDP growth was minus 2.1% for OECD countries. Export prices declined as advanced capitalist countries attempted to expand their exports to absorb increased import prices. Excluding oil, the quantum increase was 144 higher than price increments (Malan and Bonelli, op.cit., 26). Increased competition in the world market combined with declining demand for Brazilian imports resulted in larger trade deficits.

112 ,s Conjuntura Economica, various issues. See Appendix, Table 71 for industrial growth rates for 1978 and 1979.

113 Conjuntura Economica, 34:2 (February 1980), viii. See Tables 62 and 63.

114 In 1970-1979, industrial output for the state of Sao Paulo aver­ aged 48.9% of national industrial production (IBGE, FGV). Throughout the same period, Sao Paulo's industrial exports accounted for around half of the national total (CACEX, Banco do Brasil).

'*''*''’se e dos Santos, 1980, and Bacha, 1977.

1 1 f i See Pereira, 1978:120-125, and Faucher, 1980a and 1980b for accounts of conflicts within the dominant class alliance since the mid- Seventies. Chapter 3

DESCRIPTIVE ANALYSIS OF AGRARIAN POLICY, 1966-1979

Introductory Remarks

In this chapter, major characteristics of selected policies

aimed at diverse components of the agricultural productive system are

examined. Discussion is focused for the most part on the 1967-1978/79

period for two reasons. First, statistics regarding credit availability

for the pre-1967 period are incomplete and inconsistent. Second, 1964

to 1967 was a transition period during which the regime continued pre­

coup policies, while also, engaged in a process of bureaucratic restruc­

turing required for the type of policies which took form beginning in

about 1967.

The restructuring of bureaucratic organs linked to agriculture

reflected the reorganization and reorientation of other state apparatuses discussed previously. Small capital, including capitalist farmers, enjoyed extremely limited access to governmental machinery. The subordi­ nate classes in agriculture continued to be excluded from the nation's political life as before.

The formation and execution of agricultural policies were organized in modes equivalent to those examined in Chapter 2. Policy formation was centralized in the Ministry of Agriculture and the National Monetary

Council, while implementation was the mandate of numerous bureacracies

145 146

charged with particular functions within the agricultural economy.

The Ministry of Agriculture presides over several organs which will be

investigated in the following, as well as exercising supervision and coordinating the activities of other state and regional level institu­ tions not directly dependent on federal revenues.

In turn, functional linkages between these organs and the Ministry of Planning and the Ministry of Finance determine the scope and direc­ tion of their various activities. In a broad sense, the Ministry of

Agriculture is subordinate to the Ministries of Planning and Finance, which determine monetary and fiscal policies related to on-farm produc­ tion activities, export production and commercialization, and activities of agricultural input and machinery, processing and marketing industries.

Specifically, the National Monetary Council establishes agricultural credit policies, minimum prices for agricultural products, exchange rate policy, fiscal policies toward encouraging production of specific agri­ cultural commodities, as well as many interventions directed toward agri­ business. The execution of monetary policy functions through the Central

Bank, under whose direction the Bank of Brazil, federal and state finan­ cial institutions, private commercial banks, and CACEX (the export divi­ sion of the Bank of Brazil), distribute funds to special programs. At the next level of policy implementation, sector organs supervise the distribu­ tion of these funds according to conditions faced by each respective agency.

As "rationalization" of state productive enterprises meant reducing access to government coffers for working capital and investment funds, a somewhat similar process took place in agricultural sector agencies. The

Brazilian Rural Extension and Technical Assistance Enterprise (Empresa 147

Brasileira de Extensao Rural e Assistencia Tecnica-EMBRATER), the

National Colonization and Agrarian Reform Institute (Instituto Nacional de Colonizacao e Reforma Agraria-INCRA), the Brazilian Agricultural

Research Enterprise (Empresa Brasileira de Pesquisa Agropecuaria-

EMBRAPA), and government warehouse companies, for example, were required to partially finance themselves, which in practice led them to serve the needs of profitable enterprises in the private sector; linkages with other state agencies were also instrumental in reducing resources and personnel toward serving the needs of politically powerless potential client groups.'*'

The remainder of this chapter is organized into discussion of five agricultural policy sets; policies are grouped together in this fashion according to traditional economic criterion for the sake of convenience.

Rural credit policies investigated in Section I are defined as those which involve channeling specially-marked funds through the commercial banking system to encourage production of selected agricultural products. Cover­ age extends from direct producers to the first stages of processing and marketing. Money-credit is here understood as liquid capital, employed in the purchase of fixed and variable capital.

Section II is effectively an extension of the first section, consist­ ing of an examination of the minimum price program and related storage policies. In Brazil, market prices have usually exceeded established min­ imum prices; therefore, this policy set has influenced agricultural pro­ duction primarily through provision of cheap credit extended to producers using the program to keep their produce off the market during periods of relative abundance. These policies have had the overall effect of atten­ uating the capital turnover problem in agriculture by reducing (storage) 148

costs which do not add to value of the product. Section III is dedi­

cated to description and evaluation of fiscal incentives applied princi­

pally to agro-industrial concerns. As discussed in Chapter 2, these poli­

cies represent an indirect means through which the state controls economic

activities, or in other words, supports certain classes and class frac­

tions over others.

Section IV contains investigation of price control mechanisms and

other interventions in marketing. These policies also represent indirect

state control over economic production. In contrast to rural credit and

fiscal incentives focused primarily at the level of production (creation

of value) these policies are concerned with the sphere of capital realiza­

tion. Price controls are usually envisaged as having a negative impact on producers and/or merchants. The reality is not so clear-cut: the state has utilized price controls in a relatively unsystematic manner to further certain sectors of the dominant class at the expense of others, and as a means to maintain low reproductive costs for urban capital. Marketing

interventions— provision of storage facilities, commercialization and packing services, etc.— in contrast, have generally worked to reduce capital realization risks in a variety of product markets.

Finally, Section V consists of a brief discussion of the expansion of agricultural research and extension institutions during the 1970s.

The growth of these activities represents a growing interest toward enhancing production of relative surplus value by Increasing average profitability of agricultural investment on several fronts. Improvement of seed varieties, harvesting and cultivation techniques may reduce planting risk resulting from weather changes, and/or enhance productivity 149 per unit of investment. Research concerned with livestock raising and crop rotation techniques reduces the gap between production time and work time.

Section I. Rural Credit

As mentioned above, agricultural credit policy is formulated at the highest echelons of the state hierarchy, specifically the National Mone­ tary Council. The Central Bank controls policy execution via direction of earmarked funds to the Bank of Brazil, other federal and state finan­ cial institutions and private commercial banks. The Bank of Brazil, as demonstrated in Table 17 is by far the most important institution distri­ buting agricultural credit, its share of total credit rising from 47 per­ cent in 1969 to 63 percent in 1977. The gradual concentration of agricul­ tural credit funds in the federal Bank of Brazil system is symptomatic of the increasing tendency for centralized control and supervision of the dispersion and use of these credits.

Included under the rubric "rural credit" are three types of credit: production credit (short term operating costs); investment credit (long or medium term, applied to farm improvements, machinery and processing equipment), and marketing credit. (Marketing credit, or credits distri­ buted through the minimum price program and related storage policies are discussed in Section II.)

Rural credit increased about 4% times in real terms between 1969 and 1976. (See Tables 17 and 18.) The number of production loans, for 2 3 example, increased from 6,176 in 1969 to 1,896,000 in 1978. Total agri­ cultural loans as a proportion of net agricultural output increased from 4 45 percent in 1969 to 102 percent in 1975. (See Table 18.) 150

Table 17 shows that approximately 45 percent of total rural credit

was channeled toward short term production costs. Investment credit

accounts for about 29 percent of the total, contracted by agricultural

producers and other entrepreneurs for building construction, and mach­

inery for cultivation, harvesting or processing. The remaining 26

percent of the total are marketing credits, and are for the most part

associated with the minimum price program.

The number of loans contracted in the Seventies averaged around 1.8 million per year, or slightly more than one third of the five million

farm enterprises enumerated in the 1975 Agricultural Census."* Given

that some agricultural producers or processors receive more than one

loan per year, the actual proportion of farmers receiving agricultural credit in the 1970s is estimated at 20 to 25 percent. ** This subset of all Brazilian agricultural producers is characterized by production of priority crops, usually of large- to medium-scale operations, and is con­ centrated in the Center-South. It is noteworthy that the increment in

the flow of agricultural credit from 1969 to 1976 absorbed by this group of producers was approximately equal in absolute magnitude to the incre­ ment of agricultural sectoral income in the same period. Moreover, 7 according to Delgado, the major beneficiaries within this subset of privileged agricultural producers was further concentrated throughout the 1966-1976 period with the consistent decline in the participation of small borrowers in total credit received. 151

Table 17. Total Agricultural Credit, By Function, 1969-1978 (Millions of cruzeiros) (1) (2) (3) (4) (5) Production Investment Subtotal Marketing Total Credits______Credits______(l)4-(2)______Credits______(3)+(4)

Constant Prices (1965/67) 1969 1570 949 2519 860 3380 1970 1793 1091 2884 1136 4021 1971 2022 1371 3392 1254 4646 1972 2399 1906 4305 1457 5762 1973 3473 2691 6164 1969 8132 1974 4528 3044 7572 2485 10057 1975 6435 4588 11023 3659 14681 1976 6346 4875 11221 3817 15038 1977 6345 3255 9601 3818 13419 1978 6509 3409 9918 3731 13649

Indice 1969 100 100 100 100 100 1970 114 115 114 132 119 1971 129 144 135 146 137 1972 153 201 171 169 170 1973 . 221 284 245 229 241 1974 288 321 301 289 298 1975 410 483 438 425 434 1976 404 514 445 444 445 1977 404 343 381 444 397 1978 415 359 394 434 404

Source: Central Bank. Table 18. Net Value of Agricultural Output and Total Credit to Agriculture, 1969-1978 (Millions of cruzeiros)

1969 1970 1971 1972 1973 1974 1975 1976 1977 1978

Current Prices: Net Value of Agricultural Output 14366 17127 23973 30560 44271 65657 87821 137703 236849 320670

Volume of Rural Credit 6489 9248 12869 18669 30334 48273 89997 130226 165859 233942

Credit as % of Net Output 45 54 54 61 69 74 102 95 70 73

Bank of Brazil Credits to Agriculture 3032 4306 6506 10282 15780 26415 53623 79148 105089

BB as % Total Agricultural Credit 47 47 51 55 52 55 60 61 63

Constant prices of 1965-67:

Net Value of Agricultural Output 7482 7447 8655 9432 11869 13679 14326 15901 19163 18709 Index (1969=100) 100 100 116 126 159 183 191 213 256 250

Volume of Rural Credit 3380 4021 4646 5762 8132 10057 14681 15038 13419 13649 Index (1969=100) 100 119 137 170 241 298 434 445 397 404

Bank of Brazil Credit to Agriculture 1579 1872 2349 3173 3426 5503 8748 9139 8502 Index (1969=100) 100 119 149 201 217 349 554 579 538

Source: Central Bank; Bank of Brazil; FGV. 152 153

While comprehensive national data for credit use according to farm

8 -v. size are not available, the figures for Sao Paulo shown in Table 19 are likely demonstrative of the pattern prevailing elsewhere. Thus, 15.7 percent of the largest farms (50 ha. and above) received 72.3 percent of total production and investment credit between 1974 and 1977.

Table 19. Agricultural Credit Use According to Farm Size, Sao Paulo, 1974/77 Farm Size % of Farms % Farm % of Credit % of Total (ha.)______Land______Users______Credit Used

3-20 42.4 4.9 31.7 9.4 20 - 50 28.8 10.4 32.2 18.3 50 - 500 12.9 29.8 32.5 53.2 500 and over 2.8 42.5 3.6 19.1

Average 1974/77 production and investment credit.

^ A Source: Instituto de Economia Agricola, Informacoes Economicas, maio de 1979.

The largest size class, 500 ha. and over, while accounting for 42.5 percent of total area, received only 19.1 percent of total agricultural credit. This datum belies a high proportion of idle land on the larger 9 estates in Sao Paulo, a pattern observed throughout the country.

Interest charges on all types of rural credit were heavily subsi­ dized, as nominal interest rates were fixed, and below general price level inflation throughout the 1966-1979 period. Examples are the 13 to 15 percent interest rates on ordinary production credits in the 1976-

1978 period, with even lower rates available for fertilizer, agricultural chemicals and other modern inputs. Ordinary investment credits were charged at nominal rates of 13 to 23 percent with lower rates available through many special programs. Compare these interest rates with 154

Inflation of around 40 percent during 1976 to 1978, accelerating to

77 percent in 1979.

Following 1977, credit levels show decided fluctuations, owing to state policy changes in a situation of rising inflation. Credit restric­ tions in 1977 and 1978 were_imposed as part of general recession policy to combat inflation. (See Table 21.) Combined with climactic disasters, the decline in credit availability generated immediate negative effects on the commercial trade balance, as well as declining demand for modern inputs and machinery.^ Thus, for crop year 1979, credit was again expanded, in real terms equivalent to pre-1978 levels.^ In December

1979, credit policy once more underwent a reversal: subsidizing of the agricultural sector was seen to be a leading contributor to the 73.7 12 percent expansion of the money supply during 1979. For crop year 1980, farm subsidies were drastically cut back, and taxes of up to 30 percent 13 were placed on raw agricultural exports.

Outstanding crop loans in 1979 with the Bank of Brazil were equiva­ lent to 1978 levels in real terms while livestock credits declined 34 14 percent from 1978. Investment and marketing credits were, however, increased over 1978 levels.

Credit restrictions in 1979 were again influential in exacerbating the trade deficit and domestic food price inflation. Thus, in December

1980, yet another policy reversal was issued from the Finance Ministry: credit to the export sector was projected to increase 134 percent (cur­ rent prices) over 1980, while rural credit was to rise 91.6 percent over

1980 levels. ^ With nominal interest rates fixed at 45 percent (and with real market interest rates of 90 percent and above), total subsidies in 16 agriculture in 1981 were estimated to reach $7 billion. 155

Accounts of the distribution of production credit among major crops in the Seventies show concentration among export crops and/or those counting as principal raw materials for important sectors of domestic processing industries. As shown in Table 20, in 1975-1977, soybean pro­ ducers, for instance, alone absorbed about 20 percent of the value of all crop-specific production loans. Another 60 percent went to wheat, rice, corn, coffee and sugarcane producers. Black beans and manioc pro­ ducers, on the other hand, received one and three percent of these cre­ dits, respectively. These two products are the purvey of uncapitalized small-scale, widely dispersed peasant producers.^

Table 20. Distribution of Production Credits By Crop, 1975-1977 (Percentages) Crop 1975 1976 1977 Percent of Gross Value of Crop Sales

Wheat 13 13 11 3 Rice 18 16 16 8 Corn 11 11 8 10 Manioc 0 1 1 11 Black beans 1 2 3 6 Soybeans 18 20 20 17 Cocoa 1 1 1 4 Coffee 10 11 13 13 Sugarcane 11 10 9 9 Cotton 5 7 8 5 Other 10 9 11 14 Si Total 100 100 100 100

aExcludes noncrop -specific credits.

Source: Appendix, Table 77,»

The distribution of crop credit by region as shown in Table 21 reveals concentration equivalent to that of product type, seen that export and livestock production is located for the most part in the Table 21. Agricultural Credit by Type, Subsector and Region, 1977 (Millions of cruzeiros)

— Crop Credits------Livestock Credits— -Total Credit---- Produc­ Invest­ Market­ Produc­ Invest­ Market­ Produc­ Invest­ Market­ Region tion ment ing Total tion ment ing Total tion ment ing Total

North 737 785 506 2028 204 875 27 1106 941 1660 533 3134 Northeast 8332 4530 3335 16197 1178 3633 122 4933 9510 8163 3457 21130 Southeast 22308 8655 12406 43369 4597 4725 7574 16897 26905 13380 19980 60266 (Of which: Sao Paulo) (14944) (4825) (10445) (30214) (2336) (2061) (3723) (8121) (17280) (6886) (14168) (38335) South 30259 9353 17406 57018 2904 2321 3133 8357 33163 11674 20539 65375 Center-West 6576 2505 1503 10584 1333 2855 1181 5369 7909 5360 2684 15953

Total 68213 25827 35157 129197 10216 14409 12037 36661 78429 40236 47194 165859

Regional distribution - %

North 1.1 3.0 1.4 1.6 2.0 6.1 0.2 3.0 1.2 4.1 1.1 1.9 Northeast 12.2 17.5 9.5 12.5 11.5 25.2 1.0 13.5 12.1 20.3 7.3 12.7 Southeast 32.7 33.5 35.3 33.6 45.0 32.8 62.9 46.1 34.3 33.3 42.3 36.3 (Of which: Sao Paulo) (21.9) (18.7) (29.7) (23.4) (22.9) (14.3) (30.9) (22.2) (22.0) (17.1) (30.0) (23.1) South 44.4 36.2 49.5 44.1 28.4 16.1 26.0 22.8 42.3 29.0 43.5 39.4 Center-West 9.6 9.7 4.3 8.2 13.0 19.8 9.8 14.6 10.1 13.3 5.7 9.6

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Central Bank.

Ln O' 157

Southeast and South. In 1977, these regions alone accounted by 78 per­

cent of total crop-specific credit (34 and 44 percent, respectively).

Adding credits for livestock production, the relative share of the South­

east and Cente^West are increased, while that of the South is reduced:

36.3 percent (Southeast), 9.6 percent (Center-West) and 39.4 percent

(South). The distribution of crop credit per hectare of cropland

(according to the 1975 Agricultural Census) in 1977 reveals the regional

disparities. In the North, Cr$ 1,449 per ha. were contracted; North­

east, Cr$ 1,392; Southeast, Cr$ 4,020; South, Cr$ 4,114 and Center-West,

Cr$ 2,338.18

Section II. The Minimum Price Program and Storage Policies

As mentioned above, the bulk of rural credit in the category "mar­

keting credit" falls under the jurisdiction of the minimum price program and related crop storage programs. The executive agency of the minimum

price program is the Commission for Production Financing (Comissao de

Financiamento da Produqao-CFP) which currently falls under the supervi­

sion of the Ministry of Agriculture. Policies are determined, however, 19 by the National Monetary Council chaired by the Minister of Finance.

By the late 1970s, the minimum price program covered some 42 agri­

cultural commodities, ranging from products of national importance such as corn, black beans, soybeans, peanuts, etc., to localized items like 20 guarana (native to curtain areas of the North). ' The Bank of Brazil

(see Table 18) is also the. exclusive financial agent of the CFP in the ? 1 distribution ul lauds lor these programs.

Producers, i mi keiand processors participated in the program

throughout tin I : he latter being required to pay at least the 158

minimum price to the direct producer. Operations under which crops

are sold directly to the government are referred to as the Federal Gov­

ernment Acquisitions program (Aquisiqoes do Governo Federal-AGF). The

Federal Government Loan program (Emprestimo do Governo Federal-EGF), how­

ever, is the most heavily used option, which consists of borrowing from

the CFP the minimum price value of the crop in question. The crops are

then stored in government warehouses or in privately-owned facilities

approved by the Ministry of Agriculture. The producer, trucker or pro­

cessor is charged interest on the loan as well as storage charges. 22 Crops under this program may be sold on the market or to the government.

A variant of the EGF program is the "higher reference value" (maior

valor de referencia-MVR), which allows for credit in excess of the mini­

mum price and requires that repayments be made during the loan period.

The purpose of this scheme was to provide financing at a level closer to

market values. Soybean growers and processors have apparently been among

the major users of the MVR.

Crop storage under the minimum price program as a whole experienced

tremendous expansion in the 1970s, growing from 0.9 million metric tons

(MT) in 1968/69 to 7.9 million MT in 1975/76, before declining to 5.8 23 million MT in 1977/78. As shown in Table 22, real value of crop

financing increased from Cr$ 96.7 million in 1967/68 to Cr$ 1,338.8 mil­

lion in 1976/77, later falling off to Cr$ 1,056 million in 1977/78, result

of general credit restrictions.

Similar to other categories of rural credit, financing under the minimum price program was highly concentrated, geographically and accord­

ing to products covered. Total EGF and AGF financing was concentrated

in the Center-South. (See bottom row, Table 22.) Soybeans, cotton, Table 22* Real Financing Under Minimum Price Program, By Region and Major Crop, 1967/68 - 1977/78* (Millions of 1965-67 cruzeiros)

CROP YEARS Crop and Keglon 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/76 1976/75 1975/76 1976/77 1977/78

Cotton 38.6 33.5 61.6 75.6 61.3 121.6 230.1 128.5 286.6 309.2 Center-South 26.2 22.6 22.0 36.0 65.9 38.6 105.9 173.5 97.9 221.1 209.6 North-Northeast 16.2 11.5 5.6 9.5 22.7 15.5 56.6 30.6 65.3 99.6 Rice 59.7 79.5 60.7 91.7 119.5 106.7 191.7 365.8 262.6 162.6 Center-South 62.2 56.7 76.5 57.6 88.6 116.3 101.3 188.7 366.8 223.6 169.2 North-Northeast 5.0 5.0 3.1 3.3 3.2 5.6 3.0 19.0 19.0 13.2 Manioc 0.3 0.3 0.2 0.7 12.6 6.0 2.3 0.8 6-5 8.3 . Center-South 0.6 0.3 0.3 0.2 0.7 12.6 6.0 2.3 0.8 6.5 7.5 North-Northeast 0.0 0.0 - - 0.0 0.0 0.0 0.0 0.8 Black Beans 0.6 1.1 3.7 7.0 0.9 7.9 20.7 2.6 5^0 67.1 Center-South 1.6 0.5 1.1 3.5 6.8 0.8 7.9 20.6 2.3 5.0 66.7 North-Northeast 0.1 0.0 0.2 0.2 0.1 0.0 0.3 0.1 0.0 0.6 Corn 7.320.6 10.6 19.0 32.0 81.5 96.3 156.9 166.2 52.6 Center-South 13.7 7.0 20.2 10.1 16.6 30.5 81.1 92.3 153.0 162.6 68.3 North-Northeast 0.3 0.2 0.3 2.6 1.5 0.6 6.0 3.9 1.6 6.1 Soybeans 7.7 11.6 20.6 68.8 82.0 0.7 185.8 569.6 536.3 596.2 607.0 Center-South 7.7 11.6 20.6 68.8 82.0 0.7 185.8 569.6 536.3 596.2 607.0 Other 16.2 17.9 21.3 13.2 10.7 26.2 168.3 126.7 59.9 69.6 Center-South 7.1 10.0 10.6 16.0 10.0 5.7 19.6 27.0 36.5 28.5 39.7 North-Northeast 6.2 7.3 7.3 3.2 5.0 6.6 121.1 92.2 31.6 29.9 Total 136.3 I 173.1 Z 186.5 Z 289.0 Z 237.7 Z 533.5 Z 1239.0 Z 1315.6 Z 1338.8 Z 1056.0 Z Center-South 96.7 106.5 (79 169.1 69 170.2 0 0 270.6 0 9 205.2 00 505.6091053.8031169.6091221.501) 908.0 09 North-Northeast 27.8(20 26.0 09 16.3 6) 18.6(6) 32.5 09 27.9 8 185.209 165.801) 117.308) 168.0 09

^Deflated by F6V Index number 2 for year of harvest.

Source: CFP. 159 160

Table 23. Allocation of EGF Loans by Crop, 1968/69-1977/78 (Millions of 1965/67 cruzeiros)

Crop Cotton Rice Corn Soybeans Other Total Year Value % Value % Value % Value % Value % Value

1968/69 39 29 60 44 7 5 12 9 16 13 134

1969/70 34 19 80 46 20 12 20 12 19 11 173

19 70/71 41 22 61 33 10 6 49 26 25 13 186

1971/72 75 26 92 32 19 7 82 28 21 7 289

1972/73 61 26 120 50 32 13 1 0 24 11 238

1973/74 121 23 107 20 82 15 186 35 38 7 534

1974/75 230 19 192 15 96 8 550 44 171 14 1239

1975/76 128 10 366 28 157 12 534 41 130 9 1315

1976/77 286 21 243 18 144 11 596 45 70 5 1339

1977/78 309 29 162 15 52 5 407 39 126 12 1056

Totals 1324 20 1483 23 619 10 2437 37 640 10 6503

Source: EGF, Ministry of Agriculture. 161

corn and rice financing absorbed some 90 percent of total EGF resources

A t between 1968/69 and 1977/78. (See Table 23.) Further, Table 24 shows

that a large proportion of EGF resources are used by processors, more so

in the North and Northeast, than in the Center-South where large rice and soybean cooperatives are common.

The crop storage loan program is also similar to other aspects of rural credit policy in that producers of food staples, black beans and manior have derived relatively little benefit from the program. As shown in Table 25, financing under the minimum price program for manioc aver­ aged less than one percent in the 1968/69 to 1977/78 period. Black beans received on the average about two percent.

For the most part, minimum prices for basic foodstuffs— where produc- 25 tion of minifundistas is concentrated— have been below market prices.

In addition, little effort was made to enhance the accessibility of the program to these small-scale producers, characteristically located far from market centers. Minifundistas typically do not possess the means of transportation; transport is costly, and the bureaucratic procedures are usually intimidating for these largely illiterate peasants. Notably, as seen in Table 26 manioc and black beans are subject to the greatest price instability, hence involving the greatest production risk (and are there­ fore likely to be the most benefitted by guaranteed minimum prices).

The ineffectiveness of the minimum price program per se in diminish­ ing planting risks can be measured in terms of the consistent gap between minimum price levels and real market prices throughout the 1968/69 to

1978/79 period as shown in Table 27. The program's virtual inoccuousness is revealed by the low levels of government crop acquisitions resulting either from the direct application of the AGF program, or from unpaid Table 24. Distribution of EGF Loans by Types of Beneficiary, 1968/69 - 1977/78 (Percent)

Center - South North - Northeast T 0 T A L Crop Producers and Producers and Producers and Year Cooperatives Processors Cooperatives Processors Cooperatives Processors

1968/69 54 46 9 91 45 55 1969/70 67 33 17 83 59 41 1970/71 52 48 21 89 50 50 1971/72 53 47 15 85 51 49 1972/73 56 44 9 91 50 50 1973/74 52 48 13 87 50 50 1974/75 67 33 34 66 62 38 1975/76 68 32 36 64 65 35

Source: CFP.

o> ro Table 25. Proportion of Financing According to Major Products Under Minimum Price Program (AGF and EGF payments), 1968/69-1977/78 (Percentages)

Product 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 • 1976/77 1977/78

Cotton 28.74 19.46 22.20 26.10 25.80 18.57 9.77 9.77 21.39 29.30

Rice 44.50 45.90 32.55 31.70 50.30 20.00 15.47 27.80 18.10 15.38

Manioc 0.20 0.20 0.10 0.24- 5.30 0.70 0.20 0.06 0.30 0.78

Black Beans 0.40 0.60 2.00 2.40 0.37 1.48 0.20 0.18 0.34 0.78

C o m 5.40 11.80 5.58 6.60 13.46 15.28 7.80 11.93 10.77 4.96

Soybeans 8.64 11.80 26.17 28.40 0.30 34.80 44.36 40.62 44.50 38.50

Other 12.10 10.30 11.40 4.57 4.50 4.90 11.97 9.63 4.47 6.59

Source: Table 22. 163 164

Table ?6. Maximum Price Fluctuations oi Major Domestic Foodstuffs, from 1968 (Percentages of variation over 1968 prices, in constant cruzeiros)

Product % of variation Period

Beef 104 68-74 Black Beans 327 68-74 Rice 65 68-75 Corn 110 68-75 Manioc 390 68-76 White Potatoes 243 68-73

Source: F. Homem de Melo, 1979 a.

Table 27. Average Annual Rates of Real Increase of Minimum Prices and Producer Prices , During Harvest Months, Selected Crops, 1967/68 to 1978/79 (Constant cruzeiros)

Crop Minimum Price Producer Price

Cotton 7.7 8.5 Rice 4.9 4.3 Corn 5.5 7.1 Manioc Flour 11.9 8.5 Soybeans 4.8 8.0 Peanuts 5.9 7.1 Black Beans 6.0 9.5

Source: Appendix, Tables 83 and 84. 165

loans under the EGF program. In the five-year period 1974-1978, total

real crop purchases under the AGF program (see Table 28) were equivalent

to about 13 percent of the loans made under the EGF program (see Table

22).26

However, the importance of government acquisitions varies consider­

ably according to region and commodity. For example, in 1974/75, the

Northeast accounted for 80 percent of government crop acquisitions (see

Table 29 below), as compared to an average 14 percent of EGF credits in

the 1969 to 1978 period (see Table 22). Almost 80 percent of AGF opera­

tions in the North and Northeast in recent years have gone to support

the income of producers of sisal and carnauba wax (see Tables 29 and 30),

and can be regarded largely as welfare payments. As in the case of EGF

payments, producers of the two principal food crops, black beans and

manioc, have derived relatively little benefit from this program. Prac­

tically none of the AGF resources have gone to producers of these commodi­

ties, even in the North and Northeast.

It is the availability of credit at negative realinterest rates and

the expectation that market prices will increase in the immediate future

that induced producers and processors to withhold crops from the market at

harvest time, rather than minimum prices guaranteed by the CFP. This is

especially probable in the case of soybean producers who have enjoyed

access to the previously mentioned MVR option under the EGF program, making available significantly larger amounts of subsidized credit. 166

Table 28. AGF Operations By Regions, 1973/74-1977/78 (Millions of 1965/67 cruzeiros)

Value of Operations Center-South Crop Year Center-South North-Northeast Total % of Total

1973/74 76 2 78 97

1974/75 26 121 147 18

1975/76 198 90 289 69

1976/77 225 34 259 87

197 7/7 8a 35 31 66 53

TOTALS 561 278 839 67

Does not include EGF purchases of imported corn.

Source: EGF, Ministry of Agriculture. 167

Table 29. Real Value of Crop Acquisitions) Under Minimum Price Program by Region, 1973/74-1977/78a (Millions of 1965-67 Cruzeiros)

Crop/Region 1973/74 1974/75 1975/76 1976/77 1977/78

Cotton 56.2 3.8 - 1.5 9.1

Center-South 54.6 1.4 - 1.3 0.0 North-Northeast 1.6 2.5 - 0.2 9.1 Rice 0.7 0.7 160.4 105.1 19.0 Center-South 0.6 0.2 155.1 88.6 12.7 North-Northeast 0.0 0.5 5.3 16.5 6.3 Manioc Flour 0.1 - - 1.2 3.1

Center-South --- 1.2 0.8

North-Northeast 0.1 - - - 2.3

31ack beans 0.5 10.4 - 0.2 18.3

Center-South 0.5 10.4 - 0.2 18.0

North-Northeast - - - - 0.4 Corn 20.1 12.9 40.5 126.6 2.8b Center-South 20.1 12.9 40.4 126.5 2.5

North-Northeast - 0.0 0.0 0.0 0.2 Sisal 108.5 66.3 4.4 4.5

Center-South — — — - 0.2 North-Northeast 108.5 66.3 4.4 4.2

Jute and Malva - - 3.1 4.3 1.6

Center-South _ _ _ .. 0.2

North-Northeast -- 3.1 4.3 1.4 Carnauba Wax 9.3 11.8 8.3 7.0

Center-South — — —- 0.0

North-Northeast - 9.3 11.8 8.3 7.0 Other 0.5 1.4 6.5 7.5 0.4 Center-South 0.2 1.4 2.9 7.5 0.4

North-Northeast 0.3 0.0 3.6 - 0.1 Total 78.0 147.1 288.6 259.0 65.8b Center-South 76.0 26.2 198.4 225.3 34.7 North-Northeast 2.0 120.8 90.2 33.8 31.0

Deflation by FGV index No. 2 for year of harvest. bDoes not include imported corn purchased by EGF.

Source: CFP. 168

Table 30. Distribution of AGF Purchases by Crop, 1973/74-1977/78 (Millions of 1965-67 Cruzeiros)

Crop Year Cotton Rice Corn Sisal Other Total

1973/74 56 1 20 — 1 78 1974/75 4 1 13 109 20 147 1975/76 - 160 40 66 23 289 1976/77 2 105 127 .4 21 259 1977/78 9 19 3a 5 30 66

Totals 71 286 203 184 95 839

■Percent

1973/74 72 1 26 - 1 100 1974/75 3 0 9 74 14 100 1975/76 - 56 14 23 7 100 1976/77 1 41 49 2 7 100 1977/78 14 29 4a 7 46 100

Totals 8 34 24 22 12 100 a Does not include purchases of imported corn charged to the AGF account.

Source: EGF, Ministry of Agriculture.

Table 31. Proportion of Crop Stored Under Minimum Price Program, Selected Crops, 1968/69-1978/79 (Percent)

Crop Year Cotton Rice Corn Soybeans Black Beans

1968/69 2.9 7.5 1.1 11.4 0.2 1969/70 3.0 7.8 2.5 13.5 0.3 1970/71 2.7 6.7 1.3 20.0 1.0 1971/72 8.3 2.0 19.7 1.2 1972/73 3.4 9.9 2.9 0.1 0.2 1973/74 6.8 9.3 4.7 19.0 1.3 1974/75 21.0 10.9 5.4 33.3 3.4 1975/76 15.1 20.5 9.3 32.1 0.5 1976/77 . 19.9 15.8 8.1 33.2 0.8 1977/78 24.9 13.7 4.5 33.8 8.2

Source: Appendix, Tables 85 and 86. 169

In the case of black beans, the market price at harvest time has

averaged 33 percent above the minimum price established by the CFP, with

a variability in this relationship second only to manioc. Even when the

market price has fallen below the minimum price, however, as occurred in

1974/75 and again in 1977/78, only a small proportion of the crop

received EGF support (see Table 31), suggesting again the relatively more

difficult access of bean producers to the program. The low degree to

which corn producers have taken advantage of the program (see Table 31),

despite comparatively favorable price ratios and stability of these

ratios, also reflects difficulties of access, resulting from the wide

dispersion of corn growers and limited storage facilities for this crop.

In summary, storage credit under the minimum price program (EGF),

has like other rural credit policies, grown extremely rapidly in recent

years, as have interest rate subsidies associated with it. Despite the

widening of product coverage over time, the program's beneficiaries are

similar to those receiving the lion's share of production and investment

credits in addition to processors of cotton and other products important

in export markets and local processing industries.

Section IV. Fiscal Incentives and Special Subsidies

Fiscal incentives such as tax write-offs and rebates, and special

funds created for promotion of selected activities were channeled to all

components of the agricultural productive system, although concentrated

in agribusiness. These policies were applied largely with the objective

of increasing export production (particularly of semi-processed and man­

ufactured items) and towards encouraging growth of modern input and machinery industries. 170

Exchange rate policy was also instrumental in encouraging export

production, as well as domestic production of agricultural inputs and

machinery. The crawling peg as the system of exchange rate adjustment

was introduced in August 1968, considerably diminishing the previous

implicit tax on exports. In the early Sixties special exchange rates

for fertilizers and agricultural machinery were withdrawn, while tax

exemptions on these imports were maintained. However, Bacha (1980),

Homem de Melo (1979d) and Pas tore agree that fiscal incentives at the

levels of production and processing per se were the most important

determinants of the observed expansion of export production during the

Seventies.

Rural land taxes in Brazil are levied annually and are collected by INCRA. Until 1979, this system was administered according to terms laid out in the Brazilian Land Statute of 1964 which established instru­ ments for regularization of titles, colonization, expropriation, and the rural land tax. The land tax was based on the unimproved value of the land as declared by the landowner, subject to spot verification by

INCRA.

The tax rate was a complex function of farm size, distance from consuming centers, social conditions on the land (defined as the nature of land tenure and adherence to proper labour contracts) and the level of productivity as compared to specified norms. The tax thus collected could be reduced by half, if the producer had a farm development program approved by INCRA. Exempted were farms of 25 ha. or less, cultivated by the producer and family members, provided the household did not own other property. Eighty percent of taxes collected were earmarked for local municipio governments, the remainder for INCRA. 171

In practice the land tax was revealed to be regressive: the average tax per hectare per taxpaying landowner in 1978, for example, came to

Cr$ 1.60 (about US$ .09). The smallest propertyholders (25 to 100 ha.) paid Cr$ 1.70, the average dropping to Cr$ 1.51 and Cr$ 1.47 through the next two size classes before rising to Cr$ 1.75 per ha. for the largest landowners (1,000 ha. and over).

The patrimonial nature of INCRA, combined with its limited resources and personnel worked in favor of large landowning interests. Tax evasion through understatement of land values, for instance, was a common prac­ tice. Given that the agency was dependent on fees from land surveying and sale of public lands, "title regularization" for powerful private interests became a relatively lucrative activity for INCRA; politically powerless smallholders without legal titles (a primary requisite for obtaining agricultural credit) were consequently relegated to a secon­ dary level.^

The state also used income tax on agricultural income as a system of incentives to agricultural investment. In the Seventies, an indi­ vidual producer's net taxable income could be reduced by up to 80 per­ cent, with a three-year carry-forward provision for investments exceed­ ing this limit. Taxable net income was calculated at 50 percent of net income, less incentives. Producers in conditions to take full benefit of these incentives then paid taxes on only 10 percent of total net income from agriculture. In the case of crops, agricultural net income was taxed at a flat rate of six percent, compared to an average 30 per­ cent in other economic sectors. This particular incentive probably contributed to the observed trend towards increasing export crop production. 172

In 1978, the total tax levied in agriculture came to Cr$ 208.4 mil­

lion, equivalent to less than 0.1 percent of agricultural value-added,

or 14.8 percent of declared net taxable income. Considering that over

half of Brazil's nearly five million agricultural producers are estab­

lishments of zero to 10 ha. (and thus unlikely to show taxable agricul­

tural income), and the tax incentives enumerated above, the low tax col­

lection figure is not surprising.

Agricultural products, excluding basic foodstuffs, are subject to

a state-levied value-added tax (Imposto sobre Operaqoes Relativas a

Circulacao de Mercadorias-ICM), and the federal value-added tax (Imposto

sobre Produtos Industrializados-IPI). Products moving within intra-

and inter-state commerce, as well as exports were subject to these taxes.

In the Seventies, only processed agricultural exports were eligible for

ICM and IPI tax rehates, providing one element of a series of incentives

toward encouraging agro-processing industries.

These policies together with subsidized financing provided the basis

for the enormous growth rates in agricultural exports, particularly semi­

processed and manufactured agricultural products. Cotton and textile pro­

ducts and livestock-based manufactures (shoes, processed meats, etc.) are

especially outstanding (see Table 32). The rapid expansion of soybean

bran and cakes was the major element in the high growth of the crop-based,

semi-processed category. In the more recent period (1973-1977) , average

growth rates declined and were more volatile, owing to the general decline

in world market demand (recession in the advanced capitalist countries), bad crop years in 1975, 1977 and 1978, as well as the general policy

reversals following 1976. 173

Table 32. Average Annual Rates of Growth of Exports, 1969-1978 (Percentages) Export Category Average Annual Growth Rate 1969 to 1973 1973 to 1977 I. Total Exports 28.0 18.2 II. Total Agricultural Exports 25.2 14.8 1. Agricultural Raw Materials 18.8 11.1 2. Processed Agricultural Products 46.8 21.2 A. Semi-processed Products 42.3. 19.4

1. Crop-based 56.6 22.1 2. Livestock-based 36.1 23.4 3. Extraction-based 8.5 - 8.3 B. Manufactured Agricultural Products 55.7 24.0 1. Crop-based 41.6 38.3 2. Cotton Textile and Wool Products 1000+ 10.7 3. Livestock-based 77.3 17.7 4. Extraction-based 24.7 24.2 III. Unprocessed Mining Products 34.5 13.5 IV. Nonagricultural Manufactured Products 41.6 34.6

Source: Table 50.

Another dimension of Brazil's export growth, important in terms of characterizing the movement of big capital into agribusiness industries, is the notable export product diversification occurring in the Seventies.

As shown in Table 33 below, in 1977, 16 products earned more than

US$ 100 million, compared to only two in 1964/68. Further, by 1977, the

11 largest agricultural export earners accounted for 50 percent of total agricultural exports, compared to only two in 1964/68.

Attempts to measure the effects of the various fiscal incentives and subsidized credit earmarked for export production and commerce are com­ plicated by difficulties in determining the relative effects of other incentives at the producer level (such as subsidized credit), and the 174

wide range of product-specific government sponsored market interven­

tions, including taxes, quotas, quality controls and prohibitions;

market guarantees for local input manufacturers, and supply guarantees

for local agro-industries. Nevertheless, examining product-specific

tax exemptions, rebates, and credit subsidies illustrates state inter­

vention supporting the consolidation and growth of agro-industry. Table

34 shows the differential net effects on agricultural-based products of

the ICM, the IPI and credit subsidies available under the Central Bank

Resolutions 71 and 296.

Net taxation occurred in the case of raw agricultural export crops

(in natura) resulting from the application of the ICM. Net subsidies were received by processed farm products, and the more sophisticated the

final product, the greater the subsidy. In other words, the greater the

involvement of agro-industries, the greater the favor received by the

state.

Evidence of these types of subsidies in terms of value relative to

total exports, and the magnitude of exports affected is demonstrated

in Table 35. Thus, in 1975, export incentives came to Cr$ 18,081 million

or 27.9 percent of total export value. An estimated 85.1 percent of all

exports received one or more types of fiscal credits. 175

Table 33. The Diversification of Agriculture-based Exports, 1964-1977

A. Number of Agricultural Export Products Earning More than US$ 100 Million 1964-68 1973 1977 No. of Products 2 10 16 B . Number of Agricultural Export Products (by rank size) Comprising 50 Percent of Total Exports 1964-68 1973 1977 No. of Products 2 5 11 C. Number of Agricultural Products Comprising at least One Percent of Total Exports 1964-68 1973 1977 No. of Products 12 17 19

Source: CACEX.

Table 34. Structure of Subsidies and Taxes Affecting Agriculture-Based Exports in 1975 ______Subsidy (+) or Tax (-) Agricultural Raw Materials in natura -13.0 Semi-processed Products (a) Hides and skins 9.2 (b) Lumber products 10.4 (c) Refined sugar 10.5 (d) Brans, cakes and flour 15.0 (e) Preparations of fruits, vegetables, etc. 23.8 (f) Fats, oils and waxes 25.1 Manufactured Agricultural Products (a) Rubber products 29.4 (b) Footwear 30.6 (c) Furniture products 30.9 (d) Manufactured leather products 31.0 (e) Preparations of meats, fish products 31.6 (f) Paper and paper products 36.9 (g) Cotton textile products 45.0 to 50.0 Source: A.C. Pastore, et al., 1978:51-55. 176

Table 35. Estimated Value of Incentives Conceded to Agricultural Based Exports, 1971 and 1975 (Millions of cruzeiros) Incentive Categories For All Products ______Receiving Incentives3 1971 1975 Exemptions 1460 12611 (a) ICM 930 9757 (b) IPI 340 1733 (c) Income Tax 127 700 (d) Draw-back 63 421 Fiscal Credits 668 4549 (a) ICM 322 2088 (b) IPI 346 2461 Subsidized Financing 16 1641 (a) Resolution 71 BACEN 16 1380 (b) Resolution 68 CONCEX n.a. 261 Total (A + B + C) 2144 18801 Exports Affected by Incentives 5622 57396 Total Exports 14904 67480 D/F % 14.4 27.9 E/F % 37.7 85.1

Exports affected by incentives include those which receive fiscal cre­ dit, e.g., manufactured products and some raw materials. Source: Avaliacao do Sistema de Incentivos Fiscais a Exportagao, Ser^g vico de Estatfstica de Produgao (SEP), Hidrobrasileira, 1978. 177

In a recent study, Cipolla demonstrates the class nature of state intervention in the form of fiscal incentives and credit subsidies for exports by examining the operations of the Superintendency for Develop­ ment of the Amazon (Superintendencia do Desenvolvimento da Amazonia-

SUDAM), and the Superintendency for Development of the Northeast (Super­ intendencia do Desenvolvimento do Nordeste-SUDENE). Table 36 shows the growth of fiscal incentives controlled by SUDAM from 1965 to 1978. The importance of these fiscal incentives in the regional economy is demon­ strated in comparison with the agricultural income of the region. In

1970, for example, the gross agricultural regional product for the 29 Northern region was Cr$ 614 million, while in the same year fiscal incentives toward agriculture attained Cr$ 166 million, or 27 percent of 30 the regional agricultural product.

Table 36. Fiscal Incentives Distributed by SUDAM to Agricultural and Agro-Industrial Sectors, 1966 to July, 19 78 (Millions of cruzeiros, current prices) Year Agricultural sector Agro-industrial sector______Total 1966 1170 1967 10494 1968 29891 1969 74824 210 75034 1970 166230 1088 167318 1971 161058 6040 167098 1972 177587 2494 180081 1973 166755 8701 175456 1974 222849 13896 236745 1975 431399 33019 464418 1976 532399 18229 550628 1977 757522 2984 760506 1978 431843 18857 450700 Source: Superintendencia do Desenvolvimento da Amazonia, SuperintendSn- cia Adjunta de Opera<;oes, Departamento de Administracao de Incentivos (DAI). 178

A similar analysis of projects approved by SUDAM and SUDENE in 1972 revealed that resources conceded by both agencies were highly concen­

trated among the largest firms operating in Brazil (including foreign and national capital). In the case of SUDENE, the 26 projects in excess of Cr$ 25 million approved in 1973 accounted for nearly 72 percent of total fiscal incentive and credit resources administered by the agency in that year, all of them received by corporations listed among the top 32 200 in respective sectors of principal activity.

Outstanding examples of special programs created for agribusiness are those related to national production of fertilizers and agricultural chemicals. The National Fertilizer and Lime Program (Programa Nacional de Fertilizantes e Calcario Agrfcola-PNFCA) went into effect in 1974, with the objective of substituting at least 50 percent of fertilizer imports by 1980. One measure utilized to increase domestic production was the promotion in 1975 and 1976 of fertilizer consumption via a 40 percent direct subsidy to producers toward the purchase of fertilizers; six months credit was applied to the remaining 60 percent of the fertili- 33 34 zer bill. This particular subsidy came to Cr$ 5.2 billion. Direct payments by the Bank of Brazil to fertilizer suppliers were made on the basis of sales receipts to producers. At the end of 1976, however, this program was discontinued, due to apparent proliferation of fraudulent sales receipts.• . 35

The elimination of the 40 percent direct subsidy was replaced in

January 1977 with the removal of all interest charges on production cre­ dit destined for purchase of fertilizers. The subsidy element for this type of credit in 1977-1979 alone is evident upon consideration of . 179

inflation averaging around 55 percent annually. In 1979, for example,

the subsidy accruing to fertilizer users was estimated at nearly 50 per­

cent: for a volume of credit of Cr$ 75 billion, the subsidy was approxi- 36 mately Cr$ 37 billion. In the same year, special subsidized funds

extended to fertilizer manufacturers located in the port areas of Sao 37 3ft Paulo came to Cr$ 150 million. *.

The National Agricultural Chemical Program (Programa Nacional de

Defensivos Agricolas-PNDA) was created in 1975 with the objective of

reducing external dependency from 80 to 50 percent by 1980. In four

years total credit subsidies to national and foreign capitals reached 39 US$ 140 million. By February 1978, 14 projects requiring extensive

credit subsidies had been approved under PNDA, of which eight were mul- 40 41 tinational subsidiaries and government joint ventures. *

Section IV. Price Controls and Other Interventions in Marketing

As in other areas of agricultural policy, state organs establishing and supervising price control mechanisms and marketing systems for agri­

cultural commodities have undergone constant changes in policy emphasis, as well as a tendency toward greater centralization. The National Super­

intendency of Supply (Superintendencia Nacional de Abastecimento-SUNAB) was established in 1962, with the authority to set prices at the retail and wholesale levels, establish import and export quotas for government stockpiles, as well as encourage private firms in the commercialization and transport of agricultural commodities. In the 1970s SUNAB fell under the jurisdiction of the Ministry of Agriculture. Agencies subordinate to SUNAB concerned with the supply of agricultural commodities included the Brazilian Food Company (Companhia Brasileira de Alimentacao-COBAL), 180

the Brazilian Storage Company (Companhia Brasileira de Armazenagem-

CIBRAZEM), and the Commission for Production Financing (Comissao de

Financiamento da Producao-CFP). Since late 1979, however, with the

mounting pressures of food price inflation and general political insta­

bility, SUNAB's price determination authority was transferred to the Spe­

cial Secretariat for Supply and Prices (Secretaria Especial de Abasteci- mento e Precos-SEAP), a branch of the Ministry of Planning. SUNAB's role

then was reduced to one of supervision, technical studies and inspection, and the formerly subordinate agencies CIBRAZEM, COBAL and CFP were henceforth independent of SUNAB administration.

From 1964 to 1979, however, SUNAB issued policies for price controls applied to agricultural commodities. While price fixing according to product shifted continuously, two major groups of commodities can be distinguished. The first concerns raw materials for important domestic industries: price ceilings from time to time were applied to soybeans

(for processing of cooking oils, and as animal rations), corn (animal rations), jute (twine, sacking), and so on. The second includes food­ stuffs important in the diets of the urban working class, such as fluid 42 milk, black beans, rice, some tubers and vegetables.

From the mid-Sixties to the late Seventies, SUNAB's price control mechanisms included specific price determination and the setting of ceil­ ings on prices, and wholesale and retail profit margins. Operationaliza­ tion of these mechanisms was accomplished through incentives such as offering various tax and credit rebates or write-offs, special discounts on food products wholesaled by public sector agencies in compensation for voluntary adherence to its price guidelines. 181

The effects of price controls on the supply of products such as

black beans, corn, manioc and rice were somewhat circumvented since (1) a

large portion of the first three crops are produced by small-scale pea­

sants, who do not produce to accumulate and (2) credit and marketing pol­

icies compensated for losses through price fixing experienced by medium- 43 and large-scale petty commodity producers of corn and rice. However,

the overall effect of price controls and other agricultural policies led

to diminishing supplies of these and other basic foodstuffs. (See Chap­ ter 4, Section III for discussion.)

The cases of fluid milk and beef are instances apart from the four major food crops to the extent that both are principal inputs for process­ ing and manufacturing industries serving high-income consumer markets.

In the Seventies, fluid milk prices were fixed at the retail level, and milk distributors were paid a subsidy equivalent to about 10 percent of the retail price. The Seventies also saw the rapid growth of industries associated with processed milk products, e.g. powdered milk, cheese, but­ ter and yoghurt. Eventually, a substantial portion of total milk produc­ tion was diverted to these industries: in 1975, 50 percent was marketed as fluid milk, falling to 33 percent by 1978. Negative effects of this diversion have fallen on the urban poor and small milk producers. Milk shortages occur to the extent that low-grade milk (type "C") is scarce, while the more available higher-quality milk (type "B”) averaged at 40 percent higher prices. Small-scale milk producers in the Seventies under­ went continual decapitalization, as production costs (inputs, land and transportation) increased, while product prices did not keep pace. In this situation, they were prevented from upgrading their facilities to 182

move Into the more lucrative production of type "B" milk or as suppliers 44 to milk product processors.

Beef prices are also fixed at the retail level. Government inter­

vention in the late Seventies was the most decisive, however, in its sup­

port of the meat packaging industry, and cattle producers through supply­

ing freezing and storage facilities for off-season beef. This program

was inaugurated in 1975 under the administration of COBAL. Under this

program, COBAL purchased half-carcasses from processors, subsequently

freezing and storing them for later re-sale, usually back to the original

processors. Frozen beef is used to supply Rio de Janeiro, Sao Paulo and

Brasilia. By law, no fresh meat is allowed to be sold off-season in

the three cities.

Until 1979 COBAL sold the meat at the same nominal price at which it

earlier bought the same. A simple calculation of the financial loss

caused by inflation between 1975 and 1978, when some 180 MT carcass weight were bought by COBAL, indicates that the cost of the program was equivalent to about US$ 25 million per year. Adding operating costs of storing, freezing and defreezing of about US$ 115/MT, the program cost 45 an average of about US$ 40 million per year.

SUNAB's efforts in supervising and subsidizing marketing and stor­ age facilities were directed at eliminating speculative activities among the vast network of intermediaries between the producers of foodstuffs and raw materials encouraged by credit and fiscal incentive policies, and urban high-income consumers and urban-based processors (particularly of fruits and vegetables, meat and poultry).

For instance, in the Seventies COBAL's emphasis was on support of small private operators in the commercialization of agricultural 183

commodities. However, its direct involvement in this area was not negli-

ble: by fiscal year July 1978-June 1979, COBAL operated 176 fixed and 43

mobile retail outlets with sales totalling Cr$ 3.5 billion (about US$ 163

million).

Another activity under COBAL's jurisdiction was the establishment and

coordination of a National System of Supply Centers (Sistema Nacional de

Centrais de Abastecimento-SINAC). By 1979, this system consisted of 20

state-level Supply Centers (Centros de Abastecimento, Sociedade Anonima-

CEASAs), non-profit corporations jointly owned by COBAL and parallel agen­

cies of the state and municipal governments. As of June 1979 the CEASAs

were operating 31 fruit and vegetable marketing centers, which provide

stalls, weighing and grading services, packing materials, and price

information from other markets. The CEASAs did not enter directly into

sales transactions. Private wholesalers and retailers paid a fee cover­

ing most of the current costs of the services provided, while the over­ head was absorbed by government funds.

The large wholesale and retail marketing centers were linked to 20 rural producer markets located in horticultural areas. Technical assis­

tance was provided to producers regarding the grading and packaging of products, and price information was transmitted from nearby towns and cities.

Finally, many of the CEASAs assist retailers in poor neighborhoods by providing small community markets with low cost foodstuffs purchased below cost from the CFP. Some of these are marketed under COBAL's own brand name, SOMAR. The cost of the subsidy is divided between federal and state governments. 184

CIBRAZEM was founded in 1963, but it was only in the mid-1970s that this agency took on a directing and financing role in the area of storage facilities for agricultural products. Since 1974, CIBRAZEM was respon­ sible for planning and financing all but a fraction of public investment in new storage capacity, in addition to owning a network of units which are rented to agricultural producers. Aside from rents, CIBRAZEM received funding from the Central Bank, and state and federal governments.

Table 37 shows that in 1979, total storage capacity in Brazil was

50.3 million MT, plus 650,000 MT of cold storage for meats and fish.

Capacity increased an estimated 300 percent since 1965. In the 1975 to

1979 period, more than a third of the increment was accounted for by

CIBRAZEM. State participation in storage capacity also increased: in

1965, public sector facilities comprised one-third of the total;^ in

1979, slightly over half.

Almost 60 percent of storage capacity is located in the South, with an additional 28 percent in the Southeast. Severe shortages, by compari­ son, exist in the Northeast and the Center-West (see Table 38). 185

Table 37. National Static Storage Capacity, by Type of Unit, 1975-1979 (Thousands of metric tons)

Type 1975 1976 1977 1978 1979

Silos 2,933.3 3,140.0 3,558.1 3,180.2 3,223.4

Baterias 271.9 , 273.8 315.1 740.1 874.4

Granary 7,554.7 9,249.4 10,438.4 13,655.0 14,462.3

Sack Storage 21,568.7 22,758.2 24,418.5 24,357.8 25,872.0

Deposits 2,846.9 3,086.7 3,242.2 4,978.9 5,849.9

Total 35,175.4 38,508.1 41,972.4 46,912.0 50,282.0

Source: CIBRAZEM.

Table 38. Regional Distribution of Storage Capacity 1975-May 1979 (Thousands of metric tons)

Region 1975 1976 1977 1978 1979

North 209.2 230.5 228.6 273.4 347.6

Northeast 2,942.9 2,025.5 2,258.5 2,581.6 2,977.5

Southeast 11,031.0 11,778.7 12,719.2 13,503.7 14,503.4

South 19,435.7 22,827.2 24,298.7 27,516.9 28,906.8

Center-West 1,556.6 1,646.2 2,466.3 3,036.4 3,546.7

Total 35,175.4 38,508.1 41,972.4 46,912.0 50,282.0

Source: CIBRAZEM . 186

Section V . Agricultural Research and Extension

Prior to the early 1970s, agricultural research was accorded little

priority in state activities. However, in the course of the rapid expan­

sion of financial subsidies following 1968, constant reports of misuse of

fertilizers and agricultural machinery, persistent relatively low levels

of modern input useage outside of cotton, coffee, soybean and wheat pro­

duction, combined with the apparent application of agricultural credit in

non-agricultural investments produced social forces demanding the instal­

lation of agricultural research and extension networks more appropriate

to special needs of Brazilian soils, climactic and marketing conditions,

e.g. towards enhancing capitalist rationalization of specific elements of

the agricultural productive system.

Beginning in late 1972 the federal bureaucracy launched a massive

restructuring and expansion of the country's agricultural research and

rural extension organs. The Brazilian Agricultural Research Enterprise

(EMBRAPA) was approved by the national congress on December 7, 1972, while the Brazilian Enterprise for Technical Assistance and Rural Exten­

sion (EMBRATER) was formed in late 1974. EMBRAPA's activities began in mid-1973; EMBRATER, in February 1975. The patrimonial nature of these

two state agencies can be seen in their organizational structure: both were organized as "public enterprises", carrying out specified activities under federal-level administration, and supervising and coordinating ■ state-level agencies in respective areas of actuation, while providing services much in the manner of private firms to clients in both formally private and public sectors. 387

Existing research activities under the jurisdiction of state-level governments were instructed to form enterprises according to the EMBRAPA model. These research institutions work directly with the National Re- 47 search Centers, EMBRAPA's own research organs. EMBRAPA became the cen­ tral coordinating agency of a system comprising both federal and state research institutions, the universities and private entities. Research directly carried out by EMBRAPA employes occurs in 11 National Research 48 Centers for product-specific research, three regional research centers 49 dedicated to regional-specific agricultural conditions, the National

Center of Genetic Resources, the National Service for Soil Testing and

Conservation, the Service for the Production of Basic Seeds, and the

Regional Unit for Forestry Research in the Center-South. This expansion of research activities is substantial: in 1970, for example, the Ministry of Agriculture directed only eight regional research institutes, while expenditures and research personnel of Sao Paulo's Secretariat of Agri­ culture alone were nearly equivalent to those distributed by the federal bureaucracy to serve the entire country.^

EMBRAPA's coordinating functions are directed toward facilitating contacts among industrialists and research institutions at all levels.

Most important among state-level research institutions is the Secretariat of Agriculture of the state of Sao Paulo. Several specialized agencies, financed for the most part via taxes of respective growers include the

Sugar and Alochol Institute (Instituto de Alcool e A^ucar-IAA), the Bra­ zilian Coffee Institute (Instituto Brasileiro de Cafe-IBC) and the Exec­ utive Commission of the Plan for Cocoa Cultivation (Comissao Executivo do

Plano da Lavoura de Cacau-CEPLAC). The most notable— in terms of 188

financial resources and scope of research activities— among private com­

panies is Anderson Clayton.

State-level agricultural extension systems were organized under

EMBRATER through the federal Brazilian System of Technical Assistance and

Rural Extension (Sistema Brasileiro de Assistencia Tecnica e Extensao

Rural-SIBRATER), and under the supervision of the Operational System of

Agriculture, Livestock and Supply (.Sistema Operacional de Agropecuaria e

Abastecimento-SOAPA), all of which fall under the administration of the

Ministry of Agriculture. Prior to January 1977 (when EMBRATER was final­ ly installed at all levels), rural extension in Brazil occurred under the direction of the Brazilian Association of Rural Credit and Extension

(Associaqao Brasileira de Credito e Assistencia Rural-'ABCAR) . This :system was characteristically concentrated in the Center-South, and ill-equipped to serve the needs of the majority of agricultural producers, including 52 in some cases producers most adept for adopting modern technology. In the 1966-1975 period, agricultural extension services were focused almost exclusively on serving the needs of capitalist agricultural oper­ ations, mainly through the supervision of agricultural credit use. For all practical purposes, an estimated 85 percent of Brazilian agricultural 53 producers were ignored. Beginning in 1975, the emphasis of agricul­ tural extension was formally changed, henceforth to encourage wealthier, technologically sophisticated agricultural producers to seek assistance from private or specialized product agencies, and to re-direct efforts 54 toward subsistence/commercial producers.

While official edicts since the mid-Seventies continuously emphasized its "re-direction", little evidence exists to the present regarding the agency's success in reaching the-masses of undercapitalized, land-poor 189 minifundIstas, at least in terms of enhancing the latter's conditions for production and marketing. EMBRATER, like its forerunner ABCAR, continued to be a major force in promoting modernization of agriculture, e.g. the use of modern equipment and inputs. The Social Welfare Branch (Bem-Estar

Social) of EMBRATER, on the other hand, redoubled its efforts to inspire self-help schemes in smallholder communities, but usually under the super­ vision of extensionists and local religious and political leaders.

Table 39 shows an estimate of state expenditures on research and extension between 1974 and 1978. Growth rates in this period were impres­ sive, averaging 23 percent annually. In 1978, state research expenditures were equivalent to about one percent of agricultural income, up from .2 55 percent in 1970. The rapid growth in the Seventies is due largely to the expansion of EMBRAPA, whose share of the total rose from 41 to 64 percent.

EMBRAPA dedicated about half its budget to commodity-specific research. Distribution of these funds is shown in Table 40. The alloca­ tions to basic food crops manioc, black beans and corn have grown con­ siderably , reflecting increasing concern regarding supplies for urban centers. While data are not available describing the commodity breakdown of total agricultural research in Brazil, research published between 1970 and 1977 illustrate the continuing emphasis on major export crops and w h e a t 28 percent of research publications dealt with coffee; wheat and soybeans, 13 percent each, and sugarcane, corn, rice and black beans each represented 8 percent. 190

Table 39. Expenditures on Agricultural Research and Extension, 1974-1978 (Millions of 1965/67 cruzeiros)

19 74 1975 19 76 1977 1978 A. Total Country

Research 80 122 158 178 223 Extension 141 141 229 250 285 Total 221 263 388 428 508

B. EMBRAPA and SIBRATER Research 33 67 100 117 143 Extension 62 58 158 182 213 Total 95 125 258 299 356 C. Secretariat of Agriculture, S. Paulo______Research 24 25 24 21 33 Extension 54 61 50 45 45 Total 78 86 74 66 78 D. Other Agencies Research 23 30 34 39 47 Extension 25 22 21 23 27 Total 48 52 55 62 74

Source: Adapted from G.L.S.P. da Silva, et^ al., 1979.

Table 40. Distribution of EMBRAPA Commodity-Specific Research, By Crop, Average 1975-1977 (Percentages) Crop______%______Rice 17.5 Potatoes 2.8 Black beans 13.3 Manioc 6.7 Corn 18.8 Soybeans 22.2 Wheat 18.7

Source: EMBRAPA, FGV. 191 Table 41 shows the regional distribution of EMBRAPA research expen­

ditures channeled through state-level organs. (Expenditures via these

channels account for less than 60 percent of EMBRAPA resources.) Between

1975 and 1979, allocations for the North and Northeast increased from 10.2

percent to 30.3 percent, suggesting a distinct effort to direct resources

in favor of the northern regions.

Table 41. Regional Distribution of Expenditures By EMBRAPA State Units, 19 75-1979 (Percentages) Year South and Northeast North Center-West Total Southeas t

1975 62.7 5.3 4.9 27.1 100.0 1976 49.1 15.3 12.4 23.2 100.0 1977 45.0 17.7 14.5 22.8 100.0 1978 44.1 20.2 22.2 23.5 100.0 19 79 40.2 18.2 12.1 29.5 100.0

Source: EMBRAPA. FOOTNOTES TO CHAPTER 3

1See Bunker, 1981:95-101.

3Sorj, 1980b:87.

3 See Appendix, Table 72.

4 See also Sorj, 1979, 11.

"*See Appendix, Table 73. £ Appendix, Tables 74 and 75 show de Castro's (1980) estimates of beneficiaries receiving rural credit by region (Table 74) and according to size class (Table 75).

^Classifying enterprises according to value of credit contract, cre­ dit data show a systematic reduction in the participation of small and medium borrowers/producers. "Small borrowers" fall from a participation rate of 34.3% in total value of credit in 1966 to 11.38% in 1976. In the same period, large borrowers that in 1966 received 20.27% of rural credit, increased their participation rate to 53.5% in 1976, and account­ ing for only 3.3% of the total number of contracts (Delgado, 1979:115).

8 Comprehensive data are not available in terms of information col­ lected and made available for public use by banks, which issue loan con­ tracts. 1970 and 1975 Agricultural Census data, however, contain data regarding production and investment financing as reported by agricul­ tural producers. See Appendix, Table 75.

9 See da Silva, 1980, for a discussion of land use based on INCRA's 1972 Cadastral Survey.

^ d e Castro, 1980:36.

^ Latin America Regional Reports (LARR), 2/8/80:6, 8.

13Ibid., 6.

192 193

14 See Appendix, Table 76.

^Jornal do Brasil, 12/18/80:18.

1 fi Folha de Sao Paulo, 12/18/80:23; Jornal do Brasil, op.cit., 18.

■^See pp. 232-237on the location and class category of producers of black beans, manioc and other basic foodstuffs.

18 Calculations based on Table 22, and 1975 Agricultural Census data.

19 See Duran, 1978, for a brief history of the minimum price program in Brazil.

20 See Homem de Melo, 1979c.

21 Beginning in 1980, private commercial banks were also permitted to participate in the program's operations.

22 There are two types of EGF loans, depending on whether the borrow­ er retains a subsequent option to sell the crop to the government. In the first case, the farmer or other owner of the crop, e.g. a cooperative or processor, is eligible for a loan equivalent to 100 percent of the minimum price for a variable period of time, usually four to six months depending on the crop. If market prices are above the minimum price during the period of the loan, the borrower can sell the crop in the mar­ ket and repay the loan plus interest and storage costs. If, alterna­ tively, the market price remains below the minimum, the borrower cancels his obligation by "selling" the crop to the CFP at the minimum price. In this particular instance, neither interest nor storage costs are paid. The second type of EGF loan provides the borrower 80 percent of the mini­ mum price. The commodity being financed is not classified and is stored by the producer, who at the end of the loan period, must repay principal plus interest even if the market price is below the minimum.

2 "^Appendix, Table 78.

24 For detailed information on the distribution of crop credits con­ ceded under the minimum price program by region, see Appendix, Tables 79, 80, 81 and 82.

25Smith, 1978.

26 See Appendix, Table 91 for volume of crops acquired under the min­ imum price program. 194

27See Bunker, op.cit.

28In Clpolla, 1978:50.

29 Conjuntura Econ&mica, July 1977, p. 102, in Cipolla, op.cit. , 49.

30 See Cipolla, op.cit., 51-52.

31In ibid., 48.

32 Ibid.

33 Agroanalysis, January 1980:14.

34Ibid.

35 , . , Ibid.

36Ibid., 16.

37 Ibid. This subsidy in practice absorbs freight costs between Sao Paulo and Minas Gerais (where phosphate rock deposits are located).

38 Distribution of fertilizer use reflects the pattern prevailing in other areas of agricultural policy. Geographically, fertilizer use between 1970 and 1979 was concentrated in the Southeast and Center-West (62%), and the South (29%), with the North and Northeast together account­ ing for only 9% (Agroanalysis, op.cit., 7).

39 Ibid., 12.

4°Sorj, 1980b:37, 39.

41 Additional special funds directed to agricultural machinery and input manufacturers were operationalized through subsidized credits to direct producers. Outstanding examples are four- and five-year credits introduced for financing of tractors and other agricultural implements. For instance, a five-year credit grant in 1975, at an annual interest rate of 15% and due in five payments of equal value, resulted in a subsidy equivalent to around 75% of its original value. Similar financing arrange­ ments were made available for purchases of improved seeds and veterinary products. The stimulus for domestic agribusiness resulting from these and other measures discussed above is evident in the rapid growth of these industries. See Chapter 4, Section II. Wheat prices were also controlled, but this commodity represents special case in Brazil. Wheat was the only commodity produced for domes tic consumption which was heavily subsidized from planting to final consumption.

43 Efficient fiscalization represents a task of enormous dimensions. Various means .of circumventing price control regulation are common, such as differentiation of quality, and mixing with inferior ingredients. Further, as expected, black market transactions flourished during the inflationary market situation of the Seventies.

44 See Sorj, op.cit., 57-63.

45 See Appendix, Table 87.

46Nicholls, 1975:80.

4^Pastore and Alves, 1975:126-127.

48 The 11 Product Centers and their locations are: Cotton, Campina Grande, Pernambuco; Rice and black beans, Goiania, Goias; Goats, Sobral, Ceara; Beef cattle, Campo Grande, Mato Grosso do Sul; Dairy cattle, Cor- onel Pacheco, Minas Gerais; Manioc and fruit, Cruz das Almas, Bahia; Corn and sorghum, Sete Lagoas, Minas Gerais; Rubber, Manaus, Amazonia; Soybeans, Londrina, Parana; Swine and poultry, Concordia, Santa Catar­ ina, and Wheat, Passo Fundo, Rio Grande do Sul.

49 The three regional centers by location and specialization are: Brasilia, Federal District, Agriculture of the cerrado; Belem, Para, Humid, tropical agriculture, and Petrolina, Pernambuco and Juazeiro, Bahia, Semi-arid, tropical agriculture.

"^Nicholls, op.cit., 69.

51Ibid., 70.

52 The same is admitted by the rural extension bureaucracy. See, for example, EMBRATER, March 1975.

~*^Ibid., and Pereira (ed.), 1977. 196

"^Nicholls, op.cit., 69.

"^Cf. G.L.S. da Silva, et al., 1979. CHAPTER 4

EFFECTS OF AGRICULTURAL POLICY: TRANSFORMATION OF CLASS RELATIONS

AND ITS CONTRADICTIONS

Introductory Remarks

In Chapter 1, the state was defined in terms of a relationship of social forces which expresses the dominance of one class or class alli­ ance. The capitalist class as ruling class is identified through deter­ mining that the structure of the state apparatus(es) and effects of state policies furthers or maintains (reproduces) capitalist relations of production. The promotion of certain types of agricultural produc­ tion processes by the state is then interpreted as an expression of the political power of fractions of the bourgeoisie whose interests are directly or indirectly linked to specific markets within the agricultural system.

In contrast to state actuation in urban-based sectors, the state did not for the most part engage in direct production of commodities in the food and fiber sector. The exercise of state power— read creation and reproduction of capitalist social relations— in the agricultural pro­ ductive system as a whole was nonetheless pervasive: an important effect of state policies was the expansion of modern agribusiness. The major difference, then, between state intervention in non-agricultural vis-a-vis agricultural sectors in the post-coup era is one of "style", or more

197 198

precisely, form. The class, content of state intervention and control in

the two (analytically distinct) areas is more nearly equivalent: repro­ duction and growth of monopoly capital was the result. However, owing

to the obstacles toward capital.rationalization in certain spheres of agricultural production discussed in Chapter 1, as well as to the growth of modern monopoly capitalism in Brazil, a peripheral capitalist society, state actuation led to the growth of classes of producers which do not fall under the two major classes of capitalist social relations as tra­ ditionally conceptualized. In addition to the expansion of large-scale capitalist agriculture, the Seventies saw the consolidation and growth of a neo-peasant sector or family labour farm sector, and the multipli­ cation of a fluctuating mass of semi-proletarianized agricultural workers.

In Brazil as in other capitalist societies, capitalist rationaliza­ tion occurred more readily and on a much larger scale in the input and marketing components of the agricultural system. Large- to small-scale capitalist farmers in close proximity to urban markets, and/or specializ­ ing in export production were benefitted by state policies, not because of their autonomous political power, but rather because their interests

(cheap credit, marketing and transportation costs; reduced planting risks) coincided with the interests of agribusiness corporations. Subsi­ dized credit created markets for the purchase of agricultural machinery and modern inputs, while credit channeled toward commercialization and storage enhanced the profitability of capital in processing and marketing industries. In brief, post-agricultural policy, especially since 1967 was beneficial to large industrial capital in general in terms of acquir­ ing an expanding accumulation fund (foreign exchange and foreign invest­ ment), while also linked to specific interests of monopoly capital in 199 agribusiness industries. The minority of direct agricultural producers who benefitted from post-coup policies is not conceived as a participant in the ruling class alliance, but rather as a supporting class(es).

In practice, the effects of the various policy sets examined in

Chapter 3 are not distinct; in many cases, the desired objective- increased foreign exchange via rising soybean exports, for example— was not feasible without the simultaneous execution of appropriate credit, storage, research and extension policies. Therefore, determining the relative weight of a particular policy or policy set in the observed changes in agrarian class relations during the past decade is an extremely complex exercise. In addition, each policy set underwent modifications in the course of the period under study, which are con­ ceived as expressions of conflicting inter- and intra-class interests coming to bear within respective state bureaucracies. However, due to time and space constraints, no detailed attempt is made to evaluate dif­ ferential contributions of the policy sets, or of the modifications and changes in direction of specific policies or policy sets. An adequate treatment of the special class nature of determinate state apparatuses, and thus of procedures of policy formation and implementation would require detailed on-site historical research of intra- and inter-agency relations, coupled with content analysis of documents (the "effluvia" of bureaucracies), which are beyond the scope of this study.

However, all policy sets— or certain sets among them— can be analyzed within the context of their overall contributions toward the fur­ therance of monopoly capital in Brazil. As a first approximation, the effects of post-coup policies can be examined in terms of fulfulling three major objectives of agriculture in the Brazilian economy: first, 200

its important position in the external market, or its role in providing

financing for imports crucial to industrial capital accumulation;

second, provision of raw materials to domestic industry,, and third, sup­ plying foodstuffs for urban and rural workers. These objectives are not basically different from agriculture's role in the industrial-capital dominated pattern of development prevailing since the 1930s. However, a major transformation in the mode of surplus value extraction or transfer of surplus product from agriculture to industry occurred, taking shape in about 1967. Since that time, industrial and commercial oligopolies have continued to capture surplus value from agriculture, but on an increasingly new basis, grounded in the production and transfer of sur­ plus value. These transformations in the production and transfer of sur­ plus product in Brazilian agriculture also correspond to modifications of Brazil's position in the international division of labour discussed in Chapter 2.

The importance of all three objectives did not prevent the emer­ gence of contradictions, e.g. fulfillment of one objective at the expense of another. This type of contradiction is conceptualized in terms of conflicting class interests or differential degrees of capitalist pro­ fitability among product sectors and industries within the components of the agricultural productive system. State policies encouraging increased semi-processed and manufactures exports, and horizontal and vertical integration within the agricultural productive system in the course of the Seventies resulted in the deterioration of internal food supplies which are produced in large part by smallholder peasants.

Two general movements of capital within the agricultural economy are thus identified in the course of this chapter as major outcomes of 201

state policy: the first, capital's expansion in agribusiness, and

second, the related marginalization of food production, e.g. capital's

evident disinterest in the production of these commodities. In the fol­

lowing, aspects of these movements are examined through analyzing the

effects of agricultural policies outlined in Chapter 3. Section I con­

sists of analysis of changes in land tenure and labour relations, focus­

ing on rural credit and fiscal incentives, e.g. mechanisms of capitalist rationalization at the level of production. Next, the growth of agro­ industry and its linkages with particular groups of producers is inves­ tigated. Finally, conditions underlying the food crisis in Brazil are examined in order to subsequently focus on social contradictions develop­ ing as a result of state actuation in agriculture.

Section I. Land Tenure and Labour Relations

Immediate effects of credit policies center on the concentration of previously unknown quantities of cheap money-capital in the hands of a minority possessing vast tracts of land, and/or lands of high differential rent. The rural credit system thus became a powerful instrument toward the sanctioning and reproduction of the prevailing land tenure struc­ ture, as well as intensifying tendencies in the transformation of labour relations from traditional forms of marginal and formal subsumption to capital, towards real subsumption to capital.

The fiscal incentive and credit subsidization programs for increased export production were additional forces encouraging large- to medium- scale capitalized operations at the level of production in order to meet the requirements of sophisticated processing and marketing firms. 202

Regional development agencies such as SUDENE and SUDAM are exemplary of

state organs offering low-risk opportunities to attract big productive

and finance capitals (national- and foreign-based) to occupy frontier

lands with large-scale cattle and export ventures.

In combination with the repression of smallholders in litigation

zones and the near-exhaustion of the agricultural frontier, the influx of money-credit and the concession of fiscal incentives to large capi­

tals resulted in the increasing marginalization of smallholders in com­ petition with capitalist agriculture for land. It is well-known that the vertiginous rise in land values shown in Table 42 was in large part a product of credit policies alongside general monetary inflation which enhanced the speculative nature of land ownership. Further, land costs received an unestimated further boost as landowners used cheap credit to purchase lands in order to establish eligibility for still more credit.

In Table 43 larger landowners' advantage in terms of maintaining and acquiring lands of high(er) differential rent is evidenced in higher annual growth rates in land values vis-a-vis the three smallest size classes. The table also shows the outcome of policies favoring invest­ ments on larger holdings. The average annual growth rate in value of farm implements and other rural investments for the three largest size classes is 29.26 percent, in contrast to 15.3 percent for the zero to

10 ha. class, and an average 19.4 percent for the 10 to 100 ha. size groupings. 203

Table 42. indices of Sales Prices and Rents for Crop Land in Selected States, 1969-19763 (1969=100) State ______Sales Prices______Rents 1969 1976 1969 1976 Pernambuco 100 128 100 224 Minas Gerais 100 346 100 165 Sao Paulo 100 476 100 180 Parana 100 349 100 189 Rio Grande do Sul 100 447 100 217 Mato Grosso 100 323 100 160 deflated by FGV Index it2. Source: FGV.'*'

Table 43. Declared Value of Farm Assets By Size Class, Brazil, 1970--1975 (Percentages) Annual growth , Growth rate rate, 1970-1975 of land value Other assets / minus growth Size Class Year Land Land Other rate in land (ha.) Assets use 0-10 1970 23.5 25.46 15.30 25.68 1975 15.4 10 - 20 1970 24.0 28.33 17.12 29.27 1975 15.2 20 - 50 1970 24.8 30.68 19.56 30.90 1975 15.9 50-100 1970 22.9 33.18 21.63 32.45 1975 14.6 100-1000 1970 19.3 35.88 24.53 34.59 1975 12.5 1000-10000 1970 15.6 37.79 30.47 35.45 1975 • 11.8 10000 and 1970 14.9 42.89 32.47 36.66 over 1975 10.3

"Other assets": buildings, waterways, fences, farm and processing machinery, tools and vehicles. ^Constant prices. 2 Source: Censo Agropecuario, 1970 and 1975. 204

The result of these assorted pressures was not only the preserva­ tion of the land tenure structure, but a tendency for still further con­ centration, shown in Tables 44 and 45. In contrast to the Fifties and

Sixties when the number of smallholdings (0-10 ha.) increased, beginning in the early Seventies this trend was reversed: the 1975 Agricultural

Census reveals that the number of small holdings grew only at the margin in the expanding frontier regions. (See Table 46.) On the other extreme, the census shows unprecedented growth rates in numbers and area occupied by the 1,000 ha. and over size classes.

Comprising approximately 52.1 percent of all agricultural holdings in 1975, minifundios of zero to 10 ha. occupied less than 2.7 percent of all agricultural land area in Brazil. (See Table 44.) Holdings of 1,000 ha. and over (.8 percent of all holdings) occupied approximately 42.9 per­ cent of all arable land.

Table 44. Annual Growth Rates of Total Area and Number of Establishments By Size Class, Brazil, 1950-1975 1950 to 1960 I960 to 1970 1970 to 1975 Size Class (ha.) Area Estab. Area Estab. Area Estab.

0-10 7.00 7.72 4.32 5.36 -0.22 0.64 10 - 100 2.95 3.55 2.36 2.63 0.03 -0.37 100 - 1000 1.31 1.62 2.37 2.79 1.29 1.47 1000 - 10000 -0.23 -0.04 1.15 1.06 2.34 2.28 10000 and over -1.45 -0.09 -0.72 -0.92 6.23 4.66 Undeclared — 27.16 — 16.41 23.53

Total 0,74 4.92 1.65 3.96 1.95 0.28

Source: Censo Agropecuario, IBGE, 1975.^ Table 45. Number of Agricultural Establishments and Area By Size Class, Brazil, 1970 and 1975

No. of Number of Establishments Area (ha.) Establishments(%) Area (%) Size Class 1970 1975 1970 1975 1970 1975 1970 1975

0 to 10 2,519,630 2,601,860 9,083,495 8,982,646 51.2 52.1 3.1 2.7 10 to 100 1,934,392 1,898,949 60,069,704 60,171,637 39.3 38.0 20.4 18.6 100 to 1000 414,746 446,170 108,742,676 115,923,043 8.4 9.0 37.0 35.8 1000 to 10000 35,425 39,648 80,059,162 89,866,944 0.7 0.8 27.2 27.8 10000 and over 1,449 1,820 36,190,429 48,951,812 0.0 0.0 12.3 15.1

4 Source: Censo Agropecuario, IBGE, 1970 and 1975. 205 206

Table 46. Number of Minifundios (Under 10 ha.). By Region, 1970 and 1975

Region Minifundios 1970 19 75

North 108,125 150,913 Northeast 1,503,280 1,651,325 Southeast 311,862 280,235 South 537,803 462,448 Center-West 63,912 71,654 BRAZIL 2,524,982 2,616,575

Source: FIBGE, 1977.5

In the Sixties, the population occupied in the minifundio sector

experienced an increase of more than two million persons, representing 6 7 a growth rate of 51 percent. Thus, in 1970 over seven million persons

occupied a reduced area of nine million ha., or less than 1.25 ha. per person. By 1975, this situation had deteriorated still further, a pro­

duct of an increasing population on a stagnant or decreasing land base:

8.3 million persons occupied 8.98 million ha., or slightly more than

one hectare per person.

The compression and disappearance of small properties occurred

principally in established agricultural regions where the modernization process unleashed by agrarian policies was concentrated. (See Table 46.)

In the frontier regions of the Center-West and middle North as well as a g part of the region known as the cerrado, the principal movements were

those of large properties being established in the wake of fiscal incen­ tives and the multiplication of "squatters", e.g. the spontaneous occu­ pation of land without legal title. 207

The expansion of money-capital in agriculture occurring through rural credit and fiscal incentive channels also had profound effects on labour forms. In brief, these policies above all others encouraged the substitution of labour payments in kind and usufruct of land with money wages.

Two related movements explain this substitution. First, owing to favorable international market conditions, and high levels of state subsidization, soybean and wheat production replaced coffee cultivation on a large scale. Table 47 shows that area harvested for soybeans rose from 490 thousand ha. in 1966 to 7,778 thousand ha. in 1978; in the case of wheat, from 717 thousand ha. to a high of 3,450 thousand ha. in 1976, before declining in 1977 and 1978. Land area dedicated to coffee, how­ ever, fell from a high of 3,058 thousand ha. in 1966 to an average

1,837 thousand ha. in 1975/78.

The capital turnover problem in coffee cultivation is especially severe: the trees require three to five years of individual care before maturity. Consequently, capital is tied up for a long period of time with little or no return. Given these conditions, coffee production in Bra­ zil has traditionally been the purvey of peasants, whether in a share­ holder, tenant or freeholder status. In the South and Southeast, common arrangements were those wherein usufruct of land for subsistence crops was extended to peasants in return for care of young coffee trees. 9 Second, as Gonzales and Bastos point out, money-capital in Brazil­ ian agriculture prior to the late Sixties was scarce, and particularly in product areas with long growing seasons, and/or lengthy maturation per­ iods, such as coffee. With the influx of subsidized credit, and high international soybean prices, this situation changed. Replacement of Table 47. Area Harvested,Major Crops, 1966-1978 (Thousands of hectares)

Crop 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978®

Wheat 717 831 970 1407 1895 2269 2320 1839 2471 2932 3540 3153 2802 Rice 4005 4291 4459 4621 4979 4764 4821 4795 4665 5306 6656 5992 5551 Corn 8703 9256 9585 9654 9858 10550 10500 9924 10672 10855 11118 11797 11083 Manioc 1780 1914 1998 2029 2025 2071 2053 2104 2006 2041 2094 2176 2136 White Potatoes 199 217 227 221 214 208 n.a. 189 192 191 200 196 209 Sweet Potatoes 175 185 182 185 181 183 n.a. 159 148 153 138 117 n.a. Peanuts 644 694 606 613 670 726 n.a. 506 374 345 372 229 251 Black beans 3325 3651 3663 3633 3485 3936 3971 3816 4289 4146 4059 4551 4593 Pineapples 28 30 27 31 32 34 n.a. 34 30 28 26 26 25 Oranges 165 167 173 183 202 212 n.a. 449 350 403 414 422 ‘ 451 Bananas 250 256 268 273 278 264 n.a. 310 310 314 312 352 316 Tomatoes 39 41 44 41 45 49 n.a. 42 53 47 47 52 55 Onions 50 48 51 51 52 52 n.a. 49 53 52 58 61 56 Soybeans 491 612 722 906 1319 1716 2191 3615 5143 5824 6417 7070 7778 Cocoa 456 473 433 438 444 448 n.a. 416 515 451 407 413 444 Coffee 3058 2792 2623 2571 2403 2390 n.a. 2080 2155 2217 1121 1942 2067 Tobacco 265 261 276 258 245 241 n.a. 235 241 254 280 311 320 Sisal 331 333 345 311 288 273 n.a. 248 ■ 264 327 281 296 269 Sugarcane 1636 1681 1687 1672 1725 1728 n.a. 1959 2057 1969 2094 2270 2388 Cotton 3898 3720 3902 4195 4299 4374 n.a. 4319 3845 3876 3409 4097 3945 Coconut 101 109 114 116 117 116 n.a. 133 149 157 159 160 162

Preliminary and Incomplete. Source: FIBGE. 208 209

old coffee trees with new seedlings declined, and much coffee land was

transferred to production of more lucrative crops. Moreover, in the

ensuing inflationary market situation of the Seventies, large landowners

with access to cheap money-credit found day wage labour less costly rela­

tive to payments in kind and/or usufruct of land: in contrast to land

and agricultural products, currency rapidly declined in real value.

The changes in labour force composition implied above are evi­

denced in comparison between the 1970 and 1975 agricultural censuses as

shown in Table 48. On a national level, positive growth rates for pro­

prietorships occurred, while negative growth rates were recorded for ten­

ant and sharecropper categories. The squatter category (posseiros)

declined precipitously in the Southeast and South, as well as in most

states of the Northeast. However, as mentioned previously, squatter

arrangements increased in number in several frontier areas, e.g. the

North, Alagoas and Sergipe in the Northeast, and the Center-West.^

The 1975 Agricultural Census also reveals a slight expansion in the

number of permanent and temporary wage labourers in the first half of the

Seventies. The number of permanent employes increased 6.10 percent, and

temporary employes, 2.66 percent.'*''*' However, even this small increase in wage labour stands in marked contrast to the 1960s. Comparison bf the

1960 and 1970 censuses shows a decline in both permanent employes and

temporary labour.^

/ 210

Tab]i.' 48. Changes in Land Tenure Status, brazil and Regions, 19 70— 1975 (Percentages) Proprietorship Tenant Sharecropper Squatter Region______Estab. Area____ Estab. Area Estab. Area____ Estab . Area North 33.7 69.7 -42.6 -56.3 -13.4 -74.2 46.7 47.8 Northeas t 5.8 8.5 2.8 -18.9 - 9.3 -38.1 15.3 -12.1 Southeast 1.4 8.1 -35.6 -22.1 -29.1 -38.9 -16.5 -40.5 South - 2.0 6.1 -30.5 -22.5 -28.5 -23.3 -10.8 -24.1 Center-West 3.1 16.5 3.2 -13.5 39.2 9.8 14.2 6.3 BRAZIL 3.4 13.5 -10.5 -29.4 -21.3 -34.8 13.9 5.2

Source: Appendix, Table 90.

The appearance of increasing numbers of permanent and temporary wage workers in the 1975 census is not surprising, considering the observed dislocation of peasants from small properties and subsequent relocation of this labour wholly or partially to larger properties, but as rural wage labour. The small increment in wage labour in 1975 relative to 1970 represents the "purification" of a small part of capitalist labour rela­ tions in agriculture. Some former tenants and sharecroppers came under real subsumption; others were phased out entirely, result of increasing mechanization.

Agricultural census data, however, do not reveal the considerable incidence of minlfundistas who engage in part-time wage labour, nor are these statistics reliable measures of the increasing number of migrant workers (the so-called boias frias) who live on the periphery of cities and towns, and are in constant motion, working in a variety of agricul- 13 tural tasks, as well as urban-based occupations.

Alternative data sources demonstrate the growth of temporary wage labour, usually employed under a piece rate or task labour regime. 211

INCRA reports show that alongside the reduction of permanent labourers, sharecroppers and smallholders, the number of temporary or seasonal 1 4 labourers grew from 3.9 million in 1967 to 6.8 million in 1972. In

Sao Paulo, where the capitalization process in Brazil was the most inten­ sified in post-coup years, the overall rural population declined by one- third, while the absolute number of non-resident rural workers increased by nearly 44 percent. Consequently, the proportion of temporary wage lablurers in the agricultural labour force expanded from 16 to 36 _ 15 percent.

Overall, by the late Seventies, permanent or full-time wage labour predominated on the largest holdings, especially those of 500 ha. and over. The relative proportion of temporary wage labourers in total labour employed increases along with holding size. On holdings of 100 ha. or larger, part-time wage labour represented over half of all labour utilized during periods of peak labour demand.^

While the approximately 2.6 million minifundistas (1975) occupy an important place in the production of basic food crops (see discussion below), they are increasingly transformed into pools of unoccupied labour, capable of producing their basic subsistence, and for whom wage labour is a necessary supplement to agricultural income. Recent research of rural families in the Northeast (1979/80) verifies the diverse combina­ tions of labour arrangements engaged in by the rural masses in their struggle for survival. Eighty percent of all families have access to land as direct producers, leaving only 20 percent of the families wholly dependent on wages for subsistence. Of the first group, only 31 percent of the families derive subsistence exclusively from production on their 212

own plots. In 42 percent of these families, one or more family members

perform wage labour in agriculture to contribute to household income.

The remaining 27 percent contain instances of income contributions

derived from wage work in urban occupations.1^ While equivalent data

are not available for other regions, there is little reason to doubt

that high proportions of minifundistas and their families elsewhere are 18 also dependent on wage labour occupations.

Regional variations in patterns of labour forms developing during

the Seventies can be summarized as follows: in the Northeast, small pau­

perized producers predominate, while in the South, small capitalized pro­

ducers prevail. In the’ Center-South, particularly in the state of Sao

Paulo, large capitalist enterprises, as well as extensive livestock

holdings dominate the landscape. Consolidation of large livestock enter­

prises as well as extensive production of certain export crops such as eucalyptus and other forestry products, alongside small producer sectors

(extremely low productivity, fairly large areas) was an emerging pattern 19 in the Center-West and the Amazonas.

Considering the food and fiber production sector as a whole, the most profound modification in labour relations during the Seventies is the emergence and strengthening of the sector of highly capitalized "indepen­ dent" producers, who hire little or no labour and control land areas in the 50 to 500 ha. range, depending on the product of principal activity.

Compared to large landholdings (1,000 ha. and over) this class of land­ owners and tenants did not experience rapid growth rates since the mid-

Sixties. Rather, this sector was consolidated and stabilized during the

Seventies through a process of capitalization encouraged by credit and commercialization policies discussed earlier. These "neo-peasant" or 213 capital accumulating farmers predominate in Brazil's important grain crops (soybeans, wheat, rice) and in vegetables and fruit production near the large urban centers. Cooperatives are common among such pro­ ducers in the South and Southeast, and represent a form of combatting extraction of surplus product by commercial and industrial capital.

The concentration of highly-capitalized family labour operations in grain production in Brazil is not unusual from the standpoint of characteristic capital turnover problems, associated risks and high

"unproductive" (storage) costs in grain production. Nor is the "suc­ cess" of this class of producers over big capital unexpected in the pro­ duction of certain fresh fruit and vegetables (table fruits, carrots, onions, potatoes, lettuce, squash, etc.) for the domestic urban market.

Risks— spoilage and transportation difficulties— in this area commonly discourage big capital.

However, while these and other crops do not appeal to big capital in the sense of attracting involvement in their direct production, they are the raw materials for processing and marketing industries, as well as potentially heavy users of modern machinery and inputs. Thus, similar to state intervention in other capitalist societies, the Brazilian state's activities in providing subsidized credit, marketing services and juridi­ cal procedures for cooperative forms of organization represents its sup­ port for capitalist farmers which ultimately serves the interests of mon­ opoly capital in the input, processing, and marketing components of the agricultural system. 214

Section II. Agro-Industry: Major Characteristics, 1967-197%

An important stimulus toward the direct incorporation of agriculture

into industrial capitalism in Brazil was the decline in the economic via­

bility of frontier expansion toward increasing agricultural production

in the late Sixties and early Seventies. Expansion of cultivated area 20 accounted for 84 percent of product growth in the 1950s and 1960s.

Agro-industry in Brazil, then, came to occupy a central place in agricul­

ture in order not to penalize industrial import capacity. Further, in

so far as Brazil needs to import modern agricultural inputs (such as

agricultural chemicals and fertilizers), import capacity for capital

goods is penalized.

However, as Sorj emphasizes, the development of the agribusiness

complex in Brazil is not a simple outcome or reflex to the limits of

traditional agriculture. On the contrary, the movement of capital into

agribusiness is above all the expression of the growth and maturation

of industrial capital in Brazil which began to seek in agribusiness new 21 areas for capital valorization.

Subsidized rural credit expansion and fiscal incentives programs at

the food and fiber production level were extremely important in providing markets for agricultural machinery and inputs manufactures, and towards

developing suppliers for processing and marketing industries. Additional

subsidies applied directly to input and marketing firms (PNFCA, PNDA,

fiscal incentives) also encouraged the growth of agro-industries.

The participation of agro-industry and thus the importance of

increasing production and relative surplus value can be seen in changing

export composition after 1967: processed and manufactured agricultural products increased from only 12 percent of total exports in the mid-

Sixties to approximately 28-29 percent by 1977/78. (See Table 49.)

The major relative shift in agricultural export composition occurred dur­

ing the "boom period" (1967-1973). Total agricultural exports grew between 25 and 15 percent annually during the period 1969-1973 and 1973-

1977, respectively. While agricultural exports declined in relative

terms to total exports from the mid-Sixties to the mid-Seventies, in 1977 agriculture continued as the base of nearly 70 percent of total Brazilian exports. (1978 was an extremely poor crop year; consequently, statistics

for 1977 are more representative of the time period.)

Table-49. Relative Change and Growth of Total Agricultural Exports and Selected Categories, Brazil, 1964/68-1978 Average Annual Period Growth Rates Relative Distribution (%) 1969-1973 1973-1977 Export in U.S. Dollar Value Value Qty. Value Qty. Categories 1964/68 1973 1977 1978 (US$) (tons) (US$) (tons) Total Agricul­ tural Exports 85.0 76.1 67.7 59.1 25.2 14.2 14.8 9.6 Agric. raw materials (in natura) 72.5 50.5 39.4 29.9 18.8 9.5 11.1 2.7 Processed and Mfgd. Agric. Products 12.5 25.6 28.3 29.2 Semi­ processed agric. products 9.1 15.6 16.2 15.0 42.3 22.2 19.4 17.3 Manuf. Agric. Products 3.4 10.0 12.1 14.2 55.7 51.8 24.0 26.0

Sources: Derived from original export data in dollar value and quantity (in tons) in selected annual volumes of CACEX, Relatorios Annuals - 1964-19 78. 216

Tables 50, 51 and 52 provide more detailed versions of the develop­ ment of agricultural-based exports from the mid-Sixties to the late Sev­ enties. The largest export earners in the 1970s were vegetable products and processed foods, beverages and tobacco. These categories alongwith footwear also experienced the largest growth rates relative to pre-1970 levels. (See Table 50.) Table 51 shows the individual export product breakdown following 1967: processed soybean products, for instance, increased from US$ 10.2 million in 1967 to US$ 1,344.8 million in 1978, far surpassing raw bean exports. Cocoa preparations increased steadily, although bean exports continued to be the largest single category.

Orange juice concentrate and cotton processed items are additional pro­ ducts experiencing high growth rates.

Table 52 shows that in 1964-1968, 12 agricultural-based products comprised one percent or more of total exports; of these 12, only three were processed or manufactured products. By 1977, this group of products had grown to 17, processed and manufactured products accounting for all but eight items included in this group. Table 50. Exports of Agricultural Origin, by Customs Category, 1965-1977 (FOB) (Millions of U.S. dollars)

Custom. Categories 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977

37.6 29.9 21.7 47.8 83.4 107.8 151.4 252.1 260.1 140.6 127.6 174.0 232.0 Products II. Vegetable Prod. 824.0 899.2 807.0 911.2 951.5 1.132.2 962.5 1.214.7 1.864.1 1.774.5 1.906.7 3.228.8 3.418.1 Coffee and tea 721.3 778.3 718.1 787.2 829.1 955.1 797.3 1,008.8 1,269.2 903.2 898.9 2,223.4 2,361.7 Oil seeds and oleogenous fruits 13.4 17.5 34.7 9.2 37.2 41.6 34.9 142.6 514.8 615.8 718.7 803.5 781.1 89.3 103.4 54.2 114.8 85.2 135.5 130.3 63.3 80.1 255.5 290.0 261.9 325.3 III. Fats and Oils (animal and vegetable) 46.8 38.3 37.0 52.0 62.7 67.5 78.8 111.5 194.3 235.1 267.2 360.3 400.0 IV. Processed foods, ' Beverages 6 trfcacco 171.8 245.1 270.9 290.4 403.6 436.1 561.3 941.4 1.541.1 2.501.9 2.429.9 2.240.5 3.398.1 Sugar and sugar confections 56.7 80.5 84.2 106.3 121.9 134.5 162.1 417.8 502.3 1,385.8 1,155.6 359.7 519.2 Cocoa and cocoa preparations 41.1 71.7 84.4 72.3 136.4 106.3 91.9 100.1 148.3 338.1 326.9 357.1 773.8 Other 74.0 92.9 102.3 111.8 145.3 195.3 307.3 423.5 800.5 778.0 947.4 1,524.7 2,105.1 VIII.Hides, Skins and leather goodB (except footwear) 24.0 30.4 25.6 23.4 44.7 41.9 37.5 76.3 80.5 80.5 98.6 130.1 143.4 IX. Hood & Hood Products 69.1 76.5 70.6 97.0 112.7 109.1 114.7 120.1 188.9 185.3 140.8 136.4 157.7 X. Pulp, paper 6 paper products 6.7 3.2 1.7 1.6 4.7 8.7 19.2 35.S 59.8 84.9 76.2 71.5 78.9

XI. Textiles (except synthetics)8 155.6 179.4 142.8 184.3 263.0 231.1 225.6 353.5 591.3 628.1 506.8 432.5 563.1 Cotton 105.9 123.3 97.4 137.5 207.4 173.9 158.5 239.7 318.4 219.8 217.6 132.4 231.6 Other 49.7 56.1 45.4 46.8 55.6 57.2 57.1 113.8 272.9 408.3 289.2 300.1 331.5 b XII. Footwear 0.3 0.2 0.3 0.5 1.9 8.4 29.5 54.9 93.7 121.9 168.0 179.5 182.0 Subtotal 1,335.9 1,502.2 1,377.6 1,608.2 1,928.2 2,142.8 2,180.5 3,160.0 4,873.8 5,752.8 5,721.8 7,022.6 8,624.2 Total Exports 1,595.5 1,741.4 1,654.0 1,881.3 2,311.2 2,738.9 2,903.9 3,991.2 6,199.2 7,951.0 8,669.9 10,128.3 12,120.2

^Excludes Chapters 51 and 56. ^Section XII, Chapter 64«

Source: Bank of Brazil, CACBX. Table 51, Principal Crop-Based Export Products, FOB, 1967-1978 (Millions of US dollars)

1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978

Coffee 733.0 797.3 845.7 981.8 822.2 1057.1 1344.2 980.4 934.2 2398.1 2624.1 2294.7 Beans 704.7 774.5 813.0 939.2 772.5 989.2 1244.3 864.3 854.5 2172.7 2298.9 1946.5 Soluble 28.3 22.8 32.7 42.5 49.7 67.9 99.9 116.1 79.7 225.4 325.8 348.2 Soybeans 39.4 25.2 52.6 71.5 108.0 294.9 949.4 891.2 1304.3 1779.9 2142.4 1514.7 Beans 29.2 6.3 29.2 27.1 24.3 127.9 494.2 586.3 684.9 788.5 709.6 169.9 Oil, bulk and refined - - - 0.8 2.2 14.7 32.6 1.9 153.6 196.4 2B2.6 294.9 Meal and cake 10.2 18.9 23.4 43.6 81.5 152.3 422.6 303.0 465.8 795.0 1150.2 1049.9 Cocos 84.3 72.2 136.4 106.2 91.7 100.1 148.1 337.2 321.6 359.3 770.7 833.0 Beans 59.2 46.1 105.5 77.7 61.7 59.2 88.5 210.0 220.4 218.8 435.5 453.8 Paste - --- 5.4 7.8 6.7 11.6 11.9 20.7 68.8 278.0 Butter 25.1 25.9 30.6 28.0 24.3 33.1 47.6 100.0 60.2 70.0 96.8 83.0 Powder 0.1 0.2 0.3 0.5 0.6 1.3 1.0 2.7 3.5 13.5 Chocolate - - - - 0.3 4.7 14.3 28.1 47.1 166.1 4.7 Oranges 10.2 14.7 14.5 17.2 40.0 46.2 67.7 65.0 93.4 106.2 182.3 339.9 Fresh 3.5 3.1 3.6 2.5 4.1 4.7 4.1 5.8 11.2 5.3 5.3 7.3 Juice concentrate 6.7 11.6 10.9 14.7 35.9 41.5 63.6 59.2 82.2 100.9 177.0 332.6 C o m 23.2 58.8 35.3 82.0 77.0 10.9 7.7 144.4 157.5 174.3 149.6 2.5 Grain 22.1 57.0 33.3 80.6 75.4 9.6 3.1 139.0 150.9 164.7 135.7 2.2 Flour 1.1 1.8 2.0 1.4 1.6 1.3 4.6 5.4 6.6 9.6 13.9 0.3 Sugar 84.2 106.3 121.9 134.3 161.9 417.0 589.7 1380.7 1145.2 347.5 508.9 383.8 Crystal --- 0.1 6.4 89.4 97.8 283.3 204.3 52.4 55.9 32.8 Denersrs * .4 101.6 115.0 126.5 146.6 314.1 454.9 978.3 769.9 152.5 276.5 195.9 Refined ------6.0 60.3 125.5 101.6 130.2 121.4 Molasses, inedible 3.8 2.4 6.8 7.7 8.6 13.5 31.0 58.8 45.5 41.0 46.3 33.7 Tobacco 19.5 28.5 32.6 38.7 49.5 62.4 103.3 148.8 168.5 194.2 249.3 Leaf 20.3 18.9 26.5 31.2 36.6 46.7 58.5 99.0 142.0 161.2 186.3 238.9 Residue 0.2 0.1 1.1 0.3 0.3 0.4 0.5 0.5 1.4 2.0 2.7 3.5 Cigars and cigarettes 0.5 0.9 1.1 1.8 2.4 3.4 3.8 5.4 5.3 5.2 6.9 Cotton 99.2 141.7 216.7 183.6 166.4 250.9 331.7 227.3 224.8 139.4 247.6 249.3 Uncarded and uncoebed 92.6 133.7 200.0 159.1 139.9 190.6 219.6 92.3 99.7 8.7 42.1 52.8 (lncl. residues) Y a m s 2.5 1.7 3.1 5.8 6.8 22.8 45.0 66.4 67.8 81.2 120.3 117.1 Cloths 1.9 1.8 4.1 9.0 11.1 25.8 52.6 59.4 49.7 42.1 68.8 67.4 Oil aeel and coke 2.2 4.5 9.5 9.7 8.6 11.7 14.5 9.2 7.6 7.4 16.4 12.0 Sisal 17.3 17.6 19.1 18.1 18.3 27.1 69.4 154.2 51.5 59.6 78.2 72.1 Bulk 15.5 16.0 16.9 15.4 15.3 22.5 59.4 114.1 30.1 36.0 45.7 34.7 Cord 1.8 V.6 2.2 2.7 3.0 4.6 10.0 40.1 22.7 24.5 33.9 37.4

Source: CACEX. 218 Table 52. Agriculture-based Exports Comprising at Least One Percent of Total Exports By Rank, Order and Percent for Selected Years, 1964-68 to 1977

1964-68 1973 1977 Exports % Total Exports % Total Exports % Total

1. Coffee beans 44.7 1. Coffee beans 21.7 1. Coffee 21.7 2. Cotton 6.5 2. Sugar 9.6 2. Soybran and cake 9.5* 3. Sugar 4.2 3. Soybeans 8.0 3. Soybeans 5.9 4. Lumber and wood products 3.5* 4. Soybran and cake 6.8* 4. Cocoa beans 3.6 5. Cocoa beans 2.6 5. Raw meat products 3.8 5. Cotton textile products 3.3* 6. Corn 1.7 6. Lumber and wood products 3.6* 6. Instant coffee 2.7* 7. Castor oil 1.6* 7. Cotton 3.5 7. Soy oil 2.3* 8. Sisal 1.4 8. Cotton textile goods 3.1* 8. Sugar 2.3 9. Tobacco 1.4 9. Castor oil 2.0* 9. Processed sugar 2.0* 10. Wool 1.2 10. Shoes 1.5 10. Tobacco 1.6 11. Cocoa paste 1.2* 11. Cocoa beans 1.4 11. Orange concentrate 1.5* 12. Rice 1.0 12. Processed meats 1.1* 12. Lumber and wood products 1.5* 13. Skins and hides 1.0 13. Shoes 1.4* 14. Processed cocoa 1.0* 14. Raw meat products 1.4 15. Tobacco 1.0 15. Processed cocoa paste 1.4* 16. Orange juice concentrate 1.0* 16. Processed cocoa liquor 1.4* 17. Sisal 1.0 17. Corn 1.1 18. Processed meats 1.0* 19. Skins and hides 1.0

k Processed or manufactured products. 219 220

A. Agricultural Inputs and machinery

The agro-industrial complex which developed after 1967 resembles other industrial sectors in Brazil, characterized by a high degree of concentration, oligopolistic market structures and substantial foreign capital participation. (See Table 53 below.) Oligopoly in the domestic tractor market is evident in that only seven manufacturers existed in

1977. Of these seven, five were foreign subsidiaries (Massey Ferguson,

Valmet, Ford, Case, Brasitalia), dominating 84 percent of the national market, while national firms CBT and Agrale controlled the remaining 16 22 percent. The domestic market for mechanical self-propelled harvesters was also highly concentrated: of the seven firms in this sector, three were foreign subsidiaries with 45 percent of the market. The remainder of the domestic market is clearly dominated by the Brazilian firm Schei- 23 der Logemann, accounting for 37.1 percent of the market alone.

Production of other agricultural machines and implements, however, was dominated by national capital. Market concentration is evidenced in that of 86 manufacturers in existence in 1977, only 17 accounted for 80 percent of the national market. The U.S. subsidiary Massey Ferguson was the largest single producer in this sector (soil preparation implements), 24 accounting for 10 percent of total value added.

In the equipment industry for livestock production, foreign capital also predominated. Sorj provides the example of the domestic market for milking machines: the Swiss firm, Alfa-Laval dominated nearly 80 percent of the market, followed by Westphalia (German) and the national firm 25 Trilho-Otero, which used a patent controlled by Alfa-Laval. 221

Table 53. Participation of National, Foreign and State Capital in Net Assets of the 200 Largest Firms in Sectors Linked to Agriculture, 1976 (Percentages) Sector National Foreign State Livestock 93.30 4.67 Foodstuffs 54.47 35.32 10.01 Beverages and tobacco 36.17 63.83 Paper and cellulose 79.17 20.83 Machinery and equipment 40.63 59.37 Pharmaceuticals 100.00 Wholesale commerce 46.35 50.08 3.57 26 Source: Exame, September 1977.

In 1974, agro-industry was responsible for 20-30 percent of total 27 foreign investment and re-investment in Brazil. From 1930 to 1960 for­ eign capital participation occurred principally in agro-industry related to exports. With the major transfer of interest to the domestic market emphasized by post-64 regimes, foreign capital penetrated into other areas, many vertically integrated with commercialization to the exterior

(such as in foodstuffs, beverages and tobacco, paper and cellulose).

However, foreign capital continued to exercise major influence in export marketing: in 1979, four of the largest seven export companies operating in Brazil were foreign-based transnationals (Sanbra, Intercontinental de

Cafe, Cargill Agricultura S/A, Anderson Clayton). The remaining three corporations Instituto de Alcool e A

Production expansion of agricultural input and machinery industries in the 1970s proceeded at a rapid pace: by mid-decade, Brazil was vir­ tually self-sufficient in agricultural machinery. Tractor production was 222 29 almost stagnant between 1964 and 1969, averaging 9,000 units per year.

Thereafter,until 1976, production grew at a spectacular annual average of 30 31.0 percent, reaching 63,418 units in that year. Production of mech­ anical harvesters began to pick up in 1970 also, averaging 130 percent 31 per year, attaining 7,286 units in 1976.

Area harvested per tractor fell from 520 ha. in 1960 to 130 in 1977, 32 the latter only slightly above that of Australia and Argentina. As expected, most tractors in the 1970s were in use in the Center-South. In

1970 Sao Paulo and Rio Grande do Sul alone accounted for 65 percent of all tractors in Brazil. This share was reduced to 50 percent in 1977, while the combined share of Parana and Minas Gerais increased from 18 to

29 percent.

After 1976, however, production began to fall off, primarily a result 3A of credit restrictions applied to agriculture. Considerable excess capacity was in evidence by 1979: 50 percent in the tractor industry

(installed capacity was equivalent to 100,000 units) and 60 percent in the 35 case of harvesters.

As shown in Table 54, growth rates of national fertilizer production between 1970 and 1976 were also impressive: nitrogen, nearly forty-fold, and phosphates, five-fold. Total fertilizer consumption, however, increased throughout the period at high rates, averaging about 16 percent 36 per annum. Fertilizers thus continued to rank among Brazil’s largest 37 single imports, averaging around US$ 500 million in 1973/74.

Table 55 shows that by the late Seventies, the proportion of imported fertilizer to total consumption declined somewhat, reaching 60 percent of nitrogen fertilizers (down from 90 percent in 1970) and 30 per­ cent of phosphoric components (down from 60 percent in 1970). This 223 reduction of relative imports occurring after 1971 was the result of rising international market prices in 1973, and the subsequent creation 38 of PNFCA to encourage domestic production.

Table 54. Domestic Fertilizer Production, Brazil, 1970-1978 (Thousands of metric tons) Year Nitrogen Phosphorous ( p ^ )

19 70 20.4 160.4 19 71 69 .2 232.5 1972 88.5 277.6 19 73 114.3 320.3 1974 150.3 371.0 19 75 160.8 493.1 19 76 200.3 846.4 1977 231.4 1019.8 1978a 277.0 1101.0

Preliminary. Source: Appendix, Table 92.

Table 55. Domestically Produced Fertilizer as Proportion of Total Consumption, 1969-1977 (Percentages) Year Nitrogen Phosphates Total3

1969 4 45 20 1970 7 39 18 1971 25 43 26 1972 21 32 21 19 73 33 40 26 19 74 38 41 29 1975 40 49 33 1976 40 65 41 1977 34 66 40 3 Includes potassium. Source: Appendix, Table 92 . 224

Domestic production of herbicides, fungicides and insecticides lagged far behind consumption until the mid-1970s. With the creation of PNDA in 1975 toward reducing external dependency, production of agricultural chemicals experienced rapid growth. (See Table 56.) - 39 Domestic production of herbicides in 1970 was less than one metric ton; by 1970, production had risen to 9.6 metric tons. Fungicide production grew nearly ten-fold, representing two-thirds of apparent consumption by 40 1979. Production of insecticides grew at a slower rate of 47 percent over the decade.

Accelerated growth was also observed for domestic production of improved seeds, animal rations and veterinary products. Between 1965 and 1975 the most spectacular growth rates were observed for the fol­ lowing seed types: soybeans (3,559 to 557,027 tons), wheat (31,183 to

633,090 tons), rice (9,862 to 219,967 tons), white potato (4,528 to

31,078 tons), cotton (47,457 to 64,827 tons), and corn (45,562 to 41 111,466 tons). Production of animal rations increased from 168 mil- 42 lion tons in 1968 to 11,328 billion tons in 1978, while that of vet- 43 erinary products grew more than six-fold in the 1965-1975 period. Table 56. Apparent Consumption of Insecticides, Fungicides and Herbicides, 1970-1979 (Thousands of metric tons)

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

Insecticides 28.3 27.2 33.9 37.9 45.2 41.8 28.5 33.8 42.8 43.6 Domestic 13.2 11.0 14.0 16.3 14.5 15.6 7.7 10.1 19.9 19.4 Imported 15.1 16.3 19.9 21.6 30.8 26.2 20.8 23.8 22.8 24.2 Fungicides 7.7 11.5 24.7 37.1 40.5 14.2 16.6 24.6 22.9 23.2 Domestic 1.6 2.9 4.3 6.2 7.6 9.2 9.3 11.9 15.2 15.7 Imported 6.1 8.6 20.4 30.9 32.9 5.0 7.3 12.7 7.8 7.5 Herbicides 3.4 5.0 4.9 9.5 14.9 22.4 24.3 19.9 22.9 19.5 Domestic - - - 0.5 0.8 1.7 1.5 4.3 5.5 9.0 Imported 3.4 5.0 4.9 9.0 14.1 20.7 22.8 15.6 17.3 10.5

Source: FGV. 225 226

B. Food Processing and Marketing

The principal characteristic of the food processing industry in the

Seventies was product diversification. Sorj elaborates on the case of

Nestle, a food processing multinational subsidiary with a long history in Brazil, as representative of the trend. Nestle's career in Brazil began in 1921 with the introduction of condensed milk in the national market. In the next 38 years, only five additional products were intro­ duced by Nestle: powdered milk, soluble chocolate, powdered milk for infants, instant coffee and chocolate confections. Then, between 1962 and 1975, nine separate product lines were launched, ranging from frozen fish, ice cream and yoghurt to mineral water.^

In contrast to agricultural machinery and inputs, the food processing industry is marked by high levels of direct integration with farm produc­ tion. Integration— or oligopolistic control of product markets— is motivated by the necessity of assuring stable supplies and prices of raw materials. In the last decade, the growth of vertically integrated enterprises has generally been associated with large supermarkets located in metropolitan areas, and export processing industries. In fact, according to da Silva and Queda, a "dual market" constitutes the internal food distribution system, wherein two different groups of pro­ ducers are linked to final consumers through separate marketing sys- 45 terns. On the one hand, widely-scattered minifundistas' products are marketed through a complex network of intermediaries, eventually sold in urban open air markets, emporiums and roadside stands. Their final con­ sumers are the urban poor. On the other, larger peasant and capitalist producers, by virtue of larger quantities, greater product uniformity and 227

higher quality are the suppliers of modern food processing and marketing

firms. Final consumers for these producers are high-income families

concentrated in the country's largest cities. Table 57 illustrates the

results of a survey conducted in Sao Paulo (1975) of household food

expenditures, according to locale of purchase and income group. It was

found that the higher the family income, the greater the likelihood that

food purchases took place in modern supermarkets. Conversely, the lower

the income, the greater the proportion of food purchases in open air

markets, emporiums and roadside stands.

Table 57. Percentage of Food Expenditures According to Locale of Purchase By Income Group, Greater Sao Paulo, 1975 (Percentages) a Locale of Purchase Income Group High Medium Low

Open air markets and peddlers 19 25 28 Supermarkets 51 29 9 Emporiums, roadside stands, etc. 6 19 43 Bakeries 6 10 8 Butcheries 12 12 10

High=top 25% of income-receiving households; Medium=middle 25%; Low= bottom 50%. Source: "Abastecimento na Grande Sao Paulo— Diagnostico 75." Coordenacao de Persio Junqueira, cited in 0 Estado de Sao Paulo, 2 /1 8 /7 6 :4 0 . ^ 6

The-expansion of food processing companies then represents a signi­ ficant departure from traditional mercantile capital as the mechanism for extracting surplus product from certain classes of food and fiber produc­ ers. In some areas, vertically-integrated operations were established, principally in poultry, some fruits and vegetables, large-scale beef 228 production, and giant cellulose production complexes. State-provided subsidies and incentive programs were important in all the above areas. ^

Semi-integration between on-farm production, and processing industries was also ohserved in some areas with the development of contract produc­ tion. These arrangements occurred principally in swine, poultry, and tobacco, and in the Northeast, especially in certain fruits and vegeta- 48 bles (such as tomatoes for Campbell Soup Co.). In these instances, direct agricultural producers were formally subsumed to capital, to the extent that banks and food processing firms determined the use of means of production, investment in productive activities and the labour process 49 on the farm.

Several aspects of state policies in the Seventies facilitated the strengthening of the link between medium-scale to large capitalist produc­ ers and capitalist agribusiness firms, Agricultural credit policies were directed at production of specific commodities, and towards increased production, standardization and quality control. The latter two features were in large part operationalized through rural extension's application of agricultural research under credit supervision activities. Storage policies and other marketing Interventions under CIBRAZEM and COBAL effectively reduced the network of intermediaries between highly- capitalized producers and modern food processing and marketing firms.

Section III. Outcome of Capitalist Rationalization in Agriculture; Food

Cost Inflation and Supply Shortages

In Chapter 3 the review of post-coup agricultural policies clearly demonstrates preference given to food and fiber producers possessing the 229

means to capitalize themselves, and to large capitals with interests in

export and industrial crops. In the previous sections of this chapter,

the link between these policies, the expansion of monopoly capital in

agribusiness, and shifts in agrarian labour relations were examined.

However, another side to this "success story" is seen in the growing

incidence of violence in the countryside and shortfalls in basic food

supplies in the Seventies.

Land invasions and shootings began to occur in the mid-1970s, espe­

cially in frontier regions and less densely populated agricultural

regions of the North and Center-West. Local and state police frequently

intervened, resulting in violence against peasants. These outbursts did

not result from organized class action on the part of the peasantry.

State control of rural worker organizations and the repressive apparatus

successfully precluded the development of class-based organizations until

1979. Therefore, sporadic peasant violence did not represent a serious

threat to the prevailing social order: repression combined with co-opta­

tion (via period food distribution, rural community development pro­

grams, scattered attempts to channel credit to small producers, for

example) are well-known tactics employed in Latin American dictatorships

in the past decade, and are likely to continue in the case of Brazil into

the 1980s.

In contrast, shortfalls in domestic food supplies constitute the most troublesome outcome of post-coup capitalist development in agricul­

ture. Food cost inflation erodes the profit potential of capital, par­

ticularly urban-based capital. Certain segments of metropolitan capital

are attracted to Brazil owing to low wage costs and the "political sta­ bility" imposed by the military regime. The economic viability of small 230 capital and the attraction of Brazilian labour to metropolitan capital have been in part sustainable in virtue of low-cost wage goods (food).

The increasing capitalization of agriculture within the context of pre­ vailing land use patterns and repression of peasants has worked to under­ mine this precarious situation on two fronts. First, real wages of urban workers are subject to great fluctuations and are declining, a product of ballooning inflation, and especially of food costs. Second, the sheer physical survival of the masses of the surplus population and a large number of- the employed poor is becoming increasingly precarious. This volatile mass, while not a direct threat to the political domination of monopoly capital, represents potential "bodies" for more organized seg­ ments of the working class, and conceivably for manipulation by discon­ tented fractions of the bourgeoisie, to use toward fomenting foci of dissent to state rule.

In this Section, outcomes of the competition between food and agro­ export and industrial crops are examined. First, data regarding physical production and productivity by crop demonstrate characteristics of the reduction in food supplies occurring in the post-coup era. Second, results of declining food production— increasing food imports and rising food prices— are analyzed in terms of representing a salient point of conflict between "capital in general" and specific capitalists and branches of capitalist industry which took shape in the late 1970s.

A. Characteristics of the Decline in Food Production

Table 58 shows an important outcome of agricultural policies oriented to encourage the production and processing of selected export and indus­ trial crops. Thus, soybean production increased at an average 29.7 231 percent annually between 1967 and 1978, followed by wheat, 10.64 per­ cent, oranges, 11.88 percent and cocoa, 7.38 percent. Area harvested for the first three crops expanded at annual averages of 97.6 percent,

19.8 percent, and 14.2 percent, respectively. (See Table 47.)

In contrast, the average annual growth rate for the staple food crop rice barely accompanied demographic growth rates; averages for potatoes and corn were lower but positive, and those for black beans, manioc and peanuts were negative. (Average negative growth rates for cotton and coffee crops reflect substitution with more profitable export and indus­ trial crops.) Area harvested for rice and corn grew at average rates of

2.45 and 1.64 percent per annum, respectively, while area harvested in the case of potatoes declined. Average annual growth rates of area harvested for black beans (2.15%) and manioc (.97%) over the period combined with declining production reflect the increasing concentration of these crops on lands of low differential rent. (See Table 59.)

Table 58. Average Product Growth Rates, 14 Major Crops, Brazil, 1967-1978 (Percentages) Rice 3.21 Wheat 10.66 Black beans -1.60 Soybeans 29.78 Manioc -1.63 Coffee - 3.91 Potatoes 1.73 Sugarcane 5.69 Onions 5.91 Cotton - 2.30 Peanuts -9.29 Oranges 11.88 Cocoa 7.38 Corn 2.47

Refers to crop years 1966/67 to 1975/76. Growth rate calculated from production data in Anuario Estatistico do Cacau, 1978, pp. 30, 130. Source: Basic data for all products, excepting cocoa from FIBGE.

Changes in productivity among crops throughout the 1967-1978 period also reflect in different ways the effects of discriminatory state policies. Table 59 provides a summary of productivity changes for 232

Brazil's major crops between 1967 and 1978. In the cases of cocoa, cof­ fee and sugarcane, higher productivity is the result of redoubled efforts on the part of parastatal agencies' research activities (CEPLAC, IBC, and

IAA, respectively) toward increasing competitiveness in the international market, as well as these growers' access to high productivity inputs.

Moreover, as older coffee trees were abandoned or destroyed under the stimulus to substitute with more lucrative crops, the remaining younger trees were in large part newer high-productivity varieties, and thus contributed to higher average productivity rates.

Export crops cotton, oranges, and tobacco also experienced produc­ tivity gains in the period, concentrated between 1972 and 1978. Rela­ tively large productivity gains were also observed for domestic market crops white potatoes and onions. The explanation for improvement for the latter two crops lies in the rationalization of high-income urban markets. Producers of these crops are usually small- to medium-scale operations, located on lands of high(er) differential rent in close prox­ imity to urban markets, and are major users of advanced technology.

COBAL's activities in providing marketing services were directed at this producer category.

The 26.3 percent productivity gain recorded for wheat between 1972 and 1978 is the outcome of favorable credit and input policies directed to wheat growers, as well as continued and increasing research efforts throughout the Seventies. Since the government is the sole buyer of wheat in Brazil, grower incomes are highly related to government- established prices. Between 1967 and 1974, real prices paid to growers declined steadily. Declining productivity between 1967 and 1972 was the 233

result, as high risks associated with this crop led to substitution with

less risk-prone ventures on the best lands, and declining use of ferti­

lizers and other modern inputs. In 1975, prices paid to growers were

raised significantly, and thus the application of high-productivity

inputs and the use of modern agricultural equipment produced the observed

productivity gains.

Soybean productivity gains, in contrast, were insignificant. After

an average initial improvement of 5.25 percent annually in 1967-1972, pro­ productivity fell between 1972 and 1978, resulting in an average annual

increase of 1.85 percent for the entire 12-year period. Soybean produc­

tivity-similar to wheat— is highly variable according to region in Brazil.

The decline in average overall productivity is likely the outcome of the extremely rapid expansion of soybean production occurring throughout the

Seventies, encouraged by high international market prices and the battery of state subsidies and incentives discussed in Chapter 3. Soybean crop­ ping was consequently initiated on lands of less differential rent in the drive to expand soybean and soybean derivatives exports.

As implied previously, deterioration of productivity levels for black beans, manioc, corn and rice followed from competition with soy­ beans, wheat and other priority crops. Producers of black beans and manioc were increasingly relegated to lands of lowest fertility and at greater distance from markets. A substantial number of small producers were observed to decrease bean, manioc or corn production in order to make use of subsidized credit extended for production of alternative crops. Further, the virtual shrinking of the agricultural frontier resulted in the additional pressures toward overuse of available land.

Similar tendencies can be observed in the cases of corn and rice, 234

although to a lesser extent, since a significant proportion of these

producers are not subsistence small-scale peasant producers. Rather,

the best lands (and greater applications of modern inputs) on many

medium- and large-scale holdings were transferred to (mainly) soybean

and wheat production.

Table 59. Changes in Productivity-Major Crops, Brazil, 1967-19783 (Percentages) Average annual Average annual growth rate growth rate 1967-72 1972-78 1967-78 1967-72 19 72-78 1967-78

Corn .12 26.30 19.00 Oranges 4.10° 2.83 •44b Manioc .35 - 1.10 -2.20 Onions 1.50 6.80C 4.99 Rice .85 - 1.10 -2.20 Soybeans 5.25 - 1.30 1.85 Peanuts 4.06 .19° 1.80 Cocoa 14.30C 12.10 14’90b Wheat -5.70 26.30 19.00 Tobacco 1.70 3.90c 3.20 Cotton . 76 2.90° 2.18 White H Black potato 2.40 4.00C 3.60 beans - .50 - 6.20 - 3.90 Coffee 16.80 3.90C 10.10 Sugar­ h n cane 0.26 2.20 1.40

Productivity is measured according to kilograms per hectare harvested. ^Average is for 1967-1971. 1972 figure is not available. CAverage is for 19 73-1978. 1972 figure is not available. Source: Appendix, Table 93.

The principal substitution-effeet between export crops and food

crops took place in Rio Grande do Sul and Parana, and on a lesser

scale, in Santa Catarina, Sao Paulo and Mato Grosso do Sul. In the

states of Sao Paulo, Parana, and Rio Grande do Sul, the crops

replaced by soybean cultivation were corn, black beans, manioc, cot­

ton and rice. 235

As discussed previously, the substitution of food crops with export

crops is the product of discriminatory policies which have resulted in

the removal of peasants from the land, their relocation to lands of low

differential rent, and an overall decline in physical product available

for marketing and/or household consumption. Table 60 shows that in 1975

the bulk of basic grains was produced by small-scale enterprises: 46.51 percent of rice, 61.36 percent of potatoes, 59.72 percent of corn and

85.25 percent of black beans are produced on landholdings with zero to 10 hectares under cultivation. As expected, total contribution according to value of production by the smaller size classes has declined. As shown in

Table 61, holdings of zero to 10 hectares displayed a three percent decline in the proportion of total production value between 1970 and 1975. Table 60. Cumulative Percentage of Production, By Size Class (Eight Major Crops), 1975, Brazil

Total Area Size Class Cotton Rice Potatoes Sugar Cane Corn Soybeans Black Beans Coffee3

0 - 5 6.51 13.22 4.18 1.18 8.28 1.77 19.05 3.28 5-10 16.80 19.32 12.05 2.77 18.49 6.81 33.96 9.63 10 - 50 51.85 39.39 64.36 11.79 60.04 42.49 72.36 39.11 50 - 100 64.04 49.45 78.06 17.51 71.92 55.42 82.74 53.43 100 - 500 87.27 75.59 94.46 45.80 90.54 83.25 95.71 82.99 500 and over 99.97 100.00 99.99 100.00 100.00 100.00 100.00 100.00 Undeclared 0.03 0.0 0.01 0.0 0.0 0.0 0.0 0.0

Area Harvested

Size Class Cotton Rice Potatoes Sugar Cane Corn Soybeans Black Beans Coffee3

-0-5 19.42 36.11 45.21 5.23 37.26 9.92 71.67 8.28 5-10 35.69 46.51 61.36 . 8.08 59.72 21.18 85.25 22.20 10 - 50 70.22 65.00 88.51 18.47 87.46 51.48 97.20 63.61 50 - 100 80.99 73.72 96.08 26.16 92.94 64.00 98.66 76.75 100 - 500 96.69 93.42 100.00 64.96 99.10 92.59 99.81 95.85 500 and over 100.00 100.00 -- 100.00 100.00 100.00 100.00 100.00

£

Data for coffee are from 1970 Agricultural Census. 236

Source: 1975 Agricultural Census, Brazil, 1975, IBGE. 237

Table 61. Value of Production By Size Class, 1970 and 1975 (Thousands of current cruzeiros) Size Class Value of Production % % Cumulative 1970 1975 1970 1975 1970 1975

0-10 4,442,269 20,538,436 18 15 18 15 10 - 50 7,447,413 38,672,742 30 28 48 43 50 - 100 2,550,117 14,882,514 10 11 58 54 100-1000 7,319,532 45,769,434 29 33 87 87 1000-10000 2,680,522 17,023,701 11 12 98 99 10000 and 460,718 1,833,516 2 1 100 100 over

Source: Censo Agropecuario, IBGE, 1970 and 1975."^

B. Welfare Effects and Balance of Payments Problems

As expected, declining or stagnant food production generated sub­

stantial cost of living increases in the 1970s, despite state interven­

tion toward controlling prices of basic foodstuffs. Food cost inflation

was a major contributor to overall rising living costs, more than doubl­

ing in the last four years of the decade. Table 62 shows that of all com­

ponents of the general price index calculated by Conjuntura Economica for

Rio de Janeiro in the 1969-1979 period, food costs presented the most

consistent price inflation, as well as the largest increase over the

decade. Food cost inflation in the five Brazilian capital cities shown

in Table 63 surpassed general consumer price increases in the 1972 to 1978

period, with the exception of Curitiba in 1977. In 1977 and 1978 the gap between the two indices widened further as food costs climbed at still

higher rates than in the previous five years. In 1979 alone, food costs 238 food costs rose 84.3 percent in Sao Paulo, 62.2 percent in Curitiba and 62.6 percent in Brasilia, averaging around 10 percent higher than general price inflation in all cases.

Welfare effects of rising food costs are disproportionately borne

by the country's poor, both urban and rural. Results of the nationwide

household survey (Pesquisa Nacional de Domicilio) , sponsored by the offi­

cial statistical agency FIBGE in 1974/75 shown in Table 64 below demon­

strate that food expenditures represented between 63 and 49 percent—

depending on region and city— of household expenditures for the lowest

income group (zero to two minimum salaries), or about 50 percent of all

households.

Galloping inflation in recent years has undoubtedly increased these

percentages somewhat at the margin, meaning reductions in other essential

goods and services. More likely, however, is the substitution of more

costly food items (vegetables, milk products, meats) with even greater quantities of fats and cereals, and/or the simple reduction in food con­ sumption. Deterioration of already low nutritional standards is an obvious result.

Included in the lower income groupings (zero to five minimum sal­ aries) are large sectors of the Brazilian proletariat, as well as vast numbers of the working population who subsist virtually outside the mod­ ern labour market, e.g. the economically superfluous population. Exten­ sive food cost inflation exacerbates the stagnant and/or declining real incomes of millions of the dominated classes. As pointed out by dos 57 • Santos, Brazilian workers have become restive after many years of

"belt tightening" and no substantial prospects for improvement of their 239

Table 52. Cost of Living Indice and Components, Rio de Janeiro, 1969-1979

Furnish­ Health Ceneral ings & & Personal Public Year Indice Food Clothing Housing utensils Hygiene Services Services

1969 100 100 100 100 100 100 100 100 1970 121 125 115 120 114 124 121 129 1971 147 152 135 140 132 151 146 160 1972 172 180 . 151 . 155 144 177 177 199 1973 193 207 162 167 157 197 204 225 1974 247 283 167 198 199 241 252 267 1975 319 355 208 275 242 318 341 364 1976 452 505 266 433 321 429 484 490 1977 649 737 368 631 463 626 687 656 1978 901 1035 447 873 634 868 939 940 1979 1517 1909 640 1325 956 1391 1560 1561

Source: Conjuntura Economica, various :Issues.

Table 63. Cost of Living Indlce, Total and Food Costs, Five Brazilian Capital Cities, 1972-1978 (Base 1965/67)

Curitiba Sao :Paulo Porto Alegre Recife0 Brio Horizonte Year Total Food Total Food Total Food Total Food Total Food

1972 450 444 324 334 462 605 1972 571 584 392 400 380 408 529 728 1974 800 860 491 513 486 531 659 884 1975 1130 1174 639 663 637 706 891 1198 1976 1533 1540 866 891 859 930 149.8 160.8 n.a. n.a. 1977 2233 2200 1216 1239 1234 1280 221.1 245.2 2535° 3348 1978 3197 3257 1682 1742 1708 1776 342.3 422.8 3866“ 5620

aBase » 1975 ^Base ■ December 1965 cDecember 1977 ^December 1978

Source: Conjuntura Economica, 33:7, (July 1979), 157-162. 240

Table 64. Food Costs as a Proportion of Total Household Kxpenditures By Income Groups and Regions, 1974/75 (Percentages) £ Region Income Groups According to Minimum Salaries per Household 0/2 2/3.5 3.5/5 5/7 7/10 10/15 15/20 20/30 30+ Sao Paulo 50.9 45.3 38.4 32.4 26.2' 20.4 15.1 12.0 6.1 Rio de Janeiro 49.0 43.3 38.7 34.8 28.9 23.3 14.1 6.5 Northeast 63.0 54.0 44.0 37.5 16 .9 South 58.5 50.6 42.5 35.2 28.8 20.8 13.8 5.6 In some cases, percentages are approximations for continguous classes.

Source: ENDEF - Estudo Nacional de Despesa Familiar, FIBGE. 58

economic situation. Middle income families are also affected by the inconvenience and costs of periodic scarcity of certain food items.

The state's response to popular unrest stemming from rising food costs and scarcities can be described as a "stop-gap" approach; in other words, blundering through. As noted in Chapter 3, recent years have seen efforts to increase research expenditures for "traditional" crops, enhance credit accessibility to producers of basic food crops, provide minimum price support and storage for a limited number of smallholders in the

Northeast, and distribution of cheap food commodities in low-income bairros of Sao Paulo under COBAL. However, the outreach of all these efforts, whether taken together or as separate instances have not yet begun to resolve the problem of stagnant and unstable food supplies. They are characteristically incomplete, limited in scope and effectiveness, and are constrained by low fiscal priority and continual change in minis­ terial directives. 241

Ratther than engage in major transformations in the credit and mar­ keting systems the state relied upon food imports to meet production shortfalls. Table 65 shows a breakdown of agricultural imports. Between

1965 and 1976, cereal imports alone increased an average 27 percent annually. Between 1965 and 1970, this average was about 12 percent, ris­ ing to 30 percent in the following five years. Other major categories showing large increments in the last years of the Seventies were animals and animal products (mainly powdered milk), and "other" vegetable pro­ ducts, which includes legumes and tubers.

Total food imports in the next three years (1975-1978) increased

48.6 percent, from US$ 387.5 to US$ 575.8 million (FOB)."^ This growth rate surpassed those of all other import categories, the second highest being fuels and lubricants at 48.0 percent. Wheat imports continued to be the largest single food import throughout the decade, and was second only to petroleum in overall import composition. Other major items were black beans, rice, corn, cod and processed milk products.^ Table 65. Imports of Agricultural Origin, by Customs Category, 1965-1976 (CIF) (Millions of U.S. dollars)

Custom Categories 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976

I. Animals and Animal Prods. 17.6 29.1 38.6 38.7 34.6 48.7 54.1 52.0 113.8 184.7 113.3 131.1

I. Vegetable Prods. 151.9 195.3 226.3 230.2 213.4 188.8 241.6 272.1 582.6 780.2 665.1 899.5 Cereals 119.0 149.3 161.1 162.3 143.9 111.7 132.7 152.6 392.8 542.3 401.9 578.8 Other 32.9 46.0 65.2 67.9 69.5 77.1 108.9 119.5 189.8 237.9 263.2 320.7 Fats and Oils (animal and vegetable) 13.0 14.9 15.5 19.9 14.8 20.3 24.8 27.7 46.4 84.1 44.0 33.9

Processed foods, beverages and tobacco 1.4 2.6 8.8 13.2 8.4 11.8 19.3 24.0 37.5 60.0 39.4 42.5 Bides, skins and leather goods (except footwear) 0.7 0.7 0.8 1.3 1.2 2.1 3.0 5.2 13.6 14.5 12.7 13.5 Wood & wood 3.4 .J 20.5 products 1.0 ' *-° 1.2 j_.6 1.6 3.9 6 11.9 19 a 14.5 Pulp, Paper 6 paper products . 23.6 33.7 43.7 57.0 52.3 63.9 98.2 127.1 157.0 346.1 235.8 232.1

Textiles (ex­ cept synthetics) * 3.6 3.0 6.4 12.4 10.5 18.7 20.6 23.3 35 a 67 .j 59.5 49._7 Footwear - - 0.0 0.1 0.0 0.1 0.1 0.2 0.3 0.4 0.5 0.7 Subtotal 212.8 280.3 341.3 374.4 336.6 357.8 465.6 538.3 998.2 1,566.4 1,184.8 1,423.5 Total Imports 940.6 1,3014 1,441.3 1,855.1 1,993.2 2,506.9 3,701.4 4,783.0 6,999.0 14,168.0 13,592.5 13,703.9 Ag-based Imports Z of Total Imports 22.6 21.5 23.7 20.2 16.9 14.3 12.6 11.3 14.3 11.0 8.7 10.4 242 "Excludes Chapters 51 and 56. Some synthetics Included In finished goods. ^Section XII, Chapter 66.

Source: Banco do Brasil, CACEX. FOOTNOTES TO CHAPTER 4

■^Cited in Ribeiro, 1979.

^In de Castro, 1980:95.

3 In de Castro, op.cit., 95. 4 In de Castro, op.cit., 62.

5In Sorj, 1979:33.

^De Castro, op.cit., 91.

^See Appendix, Table 88.

g "Cerrado" denotes the arid, sandy soils of southern Minas Gerais, Goias and Mato Grosso.

9 Gonzales and Bastos, 1977:36-42.

■^In 1975, 64.1% of all landholdings were proprietorships, accounting for 89.1% of all land under cultivation. Appendix Tables 73 and 89 clearly demonstrate that most agricultural production in Brazil occurs under the direction of proprietors, as opposed to tenants, sharecroppers and squat­ ters. Non-proprietorships are concentrated in the smaller size classes: 96.4% of all tenancies, 99.1% of all sharecroppers and 95.2% of all squat­ ters are found in the zero to 100 size groupings. 54.5% of all landhold­ ings in the zero to 10 ha. category are non-proprietorships in contrast to only 10% within the larger size categories.

11 From de Castro, op.cit., 92.

12 See "Tabela 23. Brasil - Pessoal Ocupado no Setor Rural, Taxas de Crescimento Anual por Classes de Area (.1960-1970)", in de Castro, op.cit., 91.

13 "Trabalho volante" (itinerant labour) has received attention by num­ erous Brazilian scholars in recent years. D'Incao e Mello's study (1976) represents a detailed account of the work and hiring practices under which these agricultural labourers are subjected, and of structural conditions

243 244

existing in specific regions of Brazilian agriculture which have given rise to this phenomenon. The Secretariat of Economics and Planning for the state of Sao Paulo initiated several inquiries into labour relations and welfare con­ ditions of migrant agricultural workers in the late 1970s, inspired by public concern surrounding problems of inadequate public services and housing in Sao Paulo's already overcrowded city slums occurring with the influx of landless agricultural workers and their families. Due to the usually temporary nature of residence, public administration, policing functions, rent controls, housing projects, normalization of waste dis­ posal, water treatment and supply, among other things, are problematic. Examples of studies distributed by the Secretariat are Trabalho volante na agricultura paulista (September 1978) and Agricultura paulista e alteracoes nas relacoes de trabalho (May 1978). Additional critical works on the subject of itinerant labour in Brazilian agriculture include Ianni (1976), da Silva, editor (1978), Silva (1977), and Singer (1975 and 1976).

14 Cited in Latin America Regional Reports (LARR), 1/4/80:6. See also Gasquez, 1980:13.

15Saint, 1979:5.

■^In 1972, only 8.4% of all landholdings employed full-time wage labour; these holdings accounted for 36.4% of all arable land.

■^Preliminary research results appear in C.C. Silveira, et al., Relatorio Resumo das Atividades do Grupo de Pesquisas de Cidncias Sociais em NutricAo, Rio de Janeiro, May 1980 (mimeo.), cited in de Castro, op.cit., 89-90.

18 Increasing rates of female labour participation in the minifundio sector shown in the 1975 census indicate migration of the adult males to urban or rural wage labour occupations to supplement household income; women assume agricultural tasks in their absence. Growing female parti­ cipation in permanent and temporary labour categories is also an indica­ tion of low wage rates prevailing in agriculture. (See n. 12.)

19Sorj, 1979, and 1980b; da Silva, 1977.

20 See Homem de Melo, 1978:203. According to Patrick (1975), only 30% of production growth in the South during the 1948-1969 period can be attributed to productivity gains, and were concentrated in export crops.

21Sorj, 1980b:27.

22 Agroanalysis, 3:6 (July 1979), 17. 245

23 , . , Ibid.

24Ibid., 16-17.

25 Sorj, op.cit., 41.

26In Sorj, 1979:17.

27 Ibid., 18.

28 ~ 0 Estado de Sao Paulo, Estudo Especial, 9/12/79:30.

29 From Agroanalysis, op.cit., "Mercado Brasileiro de Tratores Agrfcolas, 1961-1976", pp. 22-23.

30,,.. Ibid.

31Ibid., 17.

32 FAO, 1978. Such figures have to be taken with some caution, how­ ever, given the aggregate nature of the data. In addition, a tractor's life in Brazil may be shorter than in other areas because of the relative lack of skilled labour for driving and maintenance, and the heavy use of machinery for opening up new lands.

33 Figures from IICA/SUPLAN, Ministry of Agriculture.

34 See Agroanalysis, op.cit., about misuse of agricultural equipment, and lack of quality control within machinery and implement manufacturing industries.

35Ibid., 16.

36 On fertilizer production and consumption, see also Agroanalysis, 4:1 (January 1980), pp. 5, 13.

37 Agroanalysis, op.cit., 12.

38 See Chapter 3, p. 178, about PNFCA.

39 Sorj, op.cit., 22.

40 See also Agroanalysis, op.cit. 246

41Sorj, 1980b:37.

42 Ibid., 39.

43 Ibid., 40.

44 Ibid. , 43.

4^da Silva and Queda, 1977:141.

46 Ibid., 134.

47 See Sorj, op.cit., 44-50.

48 Ibid., 50-51.

49 da Silva and Queda, op.cit.. 142.

50 In Homem de Melo, 1979a and 1979b. These figures also appear in Gazeta Mercantil, LX-16:833 (4/29/80), 40.

"^Wheat is an off-season (winter) crop in Brazil, and thus conflicts little with the land, labour, machinery and other input needs of the more traditional summer crops. Soybean-wheat double-cropping provides the pat­ tern of year-round production in most wheat areas.

52 In de Castro, op.cit., 58.

53 In de Castro, op.cit., 61.

54 See Appendix, Table 94, for a detailed account of household expen­ ditures, Sao Paulo, 1974/75.

■^Calculated from data in Conjuntura Economica. 34:3 (March 1980), 113.

56In Homem de Melo, 1980:76.

57 dos Santos, Spring 1980.

CO In Homem de Melo, 1980:76.

59 Appendix, Table 95. 247

Until the mid-1970s, Brazil exported rice, albeit not in large quantities. (See Appendix, Table 96.) Declining productivity and deple­ tion of stocks led to imports in 1973, 1975 and 1976. In 1979, an esti­ mated 450,000 MT were imported, result of scarcities in the major cities. This situation is a product of substitution of wheat flour with rice, as the government attempted to curb wheat consumption and thus wheat imports and costly subsidies to wheat producers. In the case of corn, exports averaged around 900,000 MT between 1970 and 1977. Then, in 1978. and 1979, exports were discontinued; imports came to an estimated 1.5 million MT in 1978 and 1.2 million MT in 1979. (See Appendix, Table 97.) Black beans have never been an important product in foreign trade. 1973 marked the first year of sizeable imports. (See Appendix, Table 98.) Beginning in 1977, the government began to import beans for distri­ bution in Sao Paulo and Rio de Janeiro, both cities where shortages and price inflation of this product have inspired considerable popular unrest. CHAPTER 5

STATE, CAPITALISM AND AGRICULTURE:

SOME CONCLUDING REMARKS

This study analyzes some relationships between the state and agri­ culture in Brazil in the context of a specific pattern of capitalist development consolidated and strengthened following the military coup in

1964. The effects of state intervention in agriculture during the 1964-

1979 period are investigated in order to determine the class nature of state agricultural policies.

1. It was argued in Chapter 1 that state actions are the result of complex historical processes which are themselves structural components of the movement of capitalism in a specific social formation. In turn, the capitalist class as ruling class (and certain fractions thereof) in that formation can be identified through determining the effects of state action.

It was also argued that the mode or form of state intervention towards the (re)production and furtherance of capitalist social organiza­ tion varies among specific social formations, depending upon particular internal conditions in the development of the productive forces (stages of capitalist development), class struggle, and modes of insertion within the international capitalist market. Thus, modes of state actuation between center and peripheral formations in the current monopoly capital stage, while similar in terms of providing and enhancing conditions for

248 249 accumulation, are broadly different. The peripheral capitalist state tends to perform in numerous ways the traditional role of capital itself in order to create conditions for accumulation on a monopoly capitalist basis, in contrast to the state in center economies which acts in response to over-accumulation and crisis. Moreover, the peripheral soci­ ety's position as subordinated to the needs of metropolitan capital was pointed out as a major historical determinant of the "underdevelopment" and internal hetereogeneity (and even non-existence) of the capitalist class in Latin American formations, resulting in the state's major role in organizing and supporting the development of local capital.

In addition to these overall differences in state actuation among social formations, it was argued that state intervention also assumes distinctly different forms in food and fiber production vis-a-vis non- agricultural industrial and service sectors. Determinants of the peri­ pheral state's actuation in agriculture are certain peculiarities of that productive sphere which constitute obstacles to capitalist ration­ alization of the labour process; the existence of landed interests (both dominant classes and peasants) which inhibit to a large extent, the state's direct control in the production of agricultural commodities; maintenance of low reproductive costs of urban labour based on a peasantry producing at below cost, and political instability, product of the deter­ ioration of traditional (peasant) production.

2. In Chapter 2 the present stage of Brazilian capitalist develop­ ment was studied as a necessary background for the analysis of concrete state actions in agriculture. The continuities and discontinuities in the process of development since the mid-1950s suggest that the prevailing 250

pattern of development in the period under study was the historical result

of a general movement towards deepening industrial capitalist growth that

had three different phases. The first phase of this process (1954-1963) was characterized by changes in the productive structure, e.g. a movement

toward large-scale industrial capital in the production of consumer dur­

ables and basic industrial inputs (steel, electricity, chemicals, etc.).

The furtherance of industrial capitalism in this era occurred in close association with the world capitalist center, manifested in the interna­

tionalization of the domestic market. The establishment and development of new productive units allowed the emergence of new segments of the national private bourgeoisie in association with or dependent on foreign capital and the state.

State productive enterprise in this period expanded, giving rise to new state productive activities in association with complementary produc­ tive activities on the part of foreign and national private capital. As industrial growth was realized under renewed relations of subordination to metropolitan capital, the direction and pace of capital accumulation were given by the internationalized sectors of the economy.

Politically this moment in the rise and development of monopoly capitalism in Brazil was characterized by the dominance of a populist coalition ("exclusivist democracy") which precluded or overshadowed inter- and intra-class conflicts from jeopardizing the implementation of the state's plans for rapid industrial growth. At this point in Brazilian socio-economic history, almost every social force (with the notable exception of the subordinate rural masses per se) had something to gain from increased industrial development, be it higher profits and increased investment opportunities, or rising incomes and job opportunities. 251

However, despite the initial developmentalist prospects of continued growth and prosperity, the new pattern would soon require higher income concentration and develop structural heterogeneity and inequalities between economic sectors, and thus among newer and more traditional ele­ ments of the dominant classes. The delicate balance of class forces which made up the populist coalition inhibited the implementation of institutional and political reforms required for superceding the accumu­ lation slowdown of the early 1960s, and thus for the continuity and expansion of monopoly capital.

The second phase of advanced industrial capitalism in Brazil was characterized by overall changes in the political structure with the establishment of the military dictatorship state form in 1964. Politi­ cal and economic reforms were forceably implemented, resulting in vio­ lent restructuring of the economy to re-establish conditions for accumu­ lation, the exclusion of the subordinate classes from any meaningful participation in national political life and the closing off of the cen­ tral executive and administrative bureaucracies from direct representation by the majority of the bourgeoisie.

The third phase of this process corresponds to a new cycle of accel­ erated industrial capitalist growth, and the final consolidation of authoritarian rule. Economic recovery was characterized by a new wave of internationalization of the local economy and aggressive inter-oligopolis- tic competition which took place under the guidance of, or with the support of the state through its rapidly increasing levels of productive invest­ ment, creation of a national accumulation fund, and repressive control of the urban and rural subordinate classes. 252

The ruling class whose dominance was stabilized and furthered since

the coup was identified as a type of alliance composed of state, private

national and metropolitan monopoly capital. Beginning in the mid-Seven-

ties conflicts among fractions of the ruling alliance began to surface,

rooted in shifts in respective economic and social power bases, result of

capitalist growth in the 1967-1974 period, and intensified by unfavorable

international market conditions and internal cyclical decline in the capi­

talist accumulation process. Another element of the political and econo­ mic instability of the late Seventies was the emergence of food short­ ages, leading to popular unrest in Brazil's major urban centers.

3. Review of concrete state interventions in the agricultural pro­ ductive system following the 1964 coup in Chapter 3 reveals the heavy

flow of state resources toward the production, processing and marketing of selected export and industrial commodities. The lion's share of state- subsidized rural credit was channeled to medium- and large-scale producers and processors of soybeans, wheat, rice, coffee, sugarcane, cotton and corn concentrated in the Center-South, and to. livestock producers in the

Center-West and Center-South. Storage credits associated with the mini­ mum price program were also heavily subsidized. Beneficiaries of this program were similarly concentrated in the Center-South, with cotton, rice, corn and soybean producers and processors receiving the bulk of these credits.

Multiple fiscal incentives and specially-marked credit funds created in the 1970s were applied to all components of the agricultural produc­ tive system, although concentrated in agro-industrial activities. Major beneficiaries of these policies were large national and foreign capitals with the objectives of encouraging domestic production of agricultural 253 inputs and machinery, and stimulating the establishment and growth of export and livestock production and processing complexes.

Price controls and other market interventions were implemented with the objectives of maintaining low reproductive costs of urban labour, and towards reducing the appropriation of economic surplus by commercial intermediaries, respectively. Price controls generally worked to rein­ force low returns received by smallholder producers of black beans, manioc, corn and rice, and resulted in the decapitalization of small and medium-scale milk producers.

State-organized and supervised marketing services were concentrated in close proximity to large urban centers and were directed in large part towards enhancing the profitability of capitalist farmers serving high- income urban markets and supplying processing and marketing firms. Elim­ inating intermediaries (e.g. reducing non-productive expenditures which do not add value) in transportation, packaging and marketing served this objective.

The Seventies also saw an unprecedented expansion in state-funded and/or directed agricultural research and rural extension. State actua­ tion in this sphere was directed at reducing the gap between production time and work time, diminishing crop failure and perishability risks and increasing productivity in diverse product areas, although concentrated in export and industrial crops.

4. The heavy influx of subsidized credit and the concession of fis­ cal incentives to large capitals alongside the exhaustion of the agricul­ tural frontier resulted in the increasing marginalization of smallholders in competition with capitalist agriculture. In contrast to the previous 254

two decades, the Seventies saw the rapid growth of large landholdings and

the diminution of minifundios. The compression and disappearance of small

properties occurred principally in the established agricultural regions

where the modernization process unleashed by agricultural policies was

concentrated.

Certain tendencies in the transformation of labour forms were

observed in this period, devolving from the above mechanisms of state

intervention in agriculture. The expansion of money-credit and the imple­

mentation of the battery of fiscal incentives occurring in the context of

an inflationary economy and rising international market prices of crops

amenable to mechanization above all other policies encouraged the substi­

tution of traditional modes of incomplete subsumption of agricultural

labour to capital (especially sharecropping and tenancy) with real and

marginal real subsumption to capital (permanent wage labour and peasant/ workers, respectively).

The growth of the food processing industry in some areas led to ver­

tical integration with on-farm production. Such linkages were princi­

pally associated with large supermarkets located in metropolitan areas

and export processing industries and were motivated by the necessity of

assuring stable supplies and low prices for raw materials. Food and

fiber producers involved in such arrangements came under varying degrees of formal subsumption to capital. These producers were proletarianized

to the extent that banks, processing and marketing companies determined

investment decisions, the use of modern inputs and their labour process.

However, integration in the above sense was minor compared to the strengthening, consolidation and growth of the family labour-based

"independent" producer sector, a large number of whom took on 255

characteristics of capitalist farmers as agricultural policies made

possible high levels of capitalization. These producers were concentrated

in grain farming (soybeans, wheat, corn, rice), and in production of

fruits and vegetables for high-income urban markets, and for supplying

large processing and marketing firms. Formal subsumption to capital char­

acterizes the mode of surplus extraction in operation here since food and

fiber producers maintained formal ownership of the means of production,

and their labour process. State credit policies operationalized through

the commercial banking system constituted the channel through which agro­

industrial capital appropriated surplus value from "independent" produc­

ers with minimal investment. On the one hand, production credits were

extended for use in the production of specific commodities for which

inputs (fertilizer, agricultural chemicals, seeds, veterinary products,

animal rations), processing and commercialization were dominated by big

capital, both national- and foreign-based. On the other, investment cre­

dits were tied to the purchase of agricultural machinery and processing

equipment, another arena of monopoly capital in agribusiness.

The agribusiness complex in Brazil experienced rapid growth in post­

coup years, particularly in the Seventies. Included here are modern

input, machinery, food and non-food processing, and product marketing

industries. The development of agro-industry resembled that of other

industries: high levels of concentration, oligopolistic markets and sub­

stantial foreign capital participation. The agricultural policies

analyzed previously were highly influential in determining the viability

and/or growth prospects for big capital in these industries. As suggested

above, rural credit policies provided markets for input and machinery manufacturers. Alongwith market stabilization and streamlining policies, 256 rural credit flows also provided I.lie mechanisms for assuring large and relatively stable supplies of raw materials for processing and marketing f irms.

Numerous fiscal incentives and special funds were created under the federal state apparatus with the objective of producing domestically 80 to 100 percent of national consumption of agricultural inputs, such as agricultural chemicals, fertilizer, and improved seeds. These initia­ tives were directed almost with exception to the largest capitals in respective areas of principal activity in Brazil, and to foreign-based companies (without substantial previous investments in Brazil) possess­ ing desired technological and marketing expertise.

Price controls generally worked to maintain or intensify decapitali­ zation of peasant producers of basic foodstuffs, while also constituting an arena of "permanent confrontation" between on one side, capitalist food and fiber producers, processing and marketing interests, and on the other, industrial non-agricultural capital. The latter class of agri­ cultural producers and related elements of agro-industry, however, were compensated to a greater or lesser extent via other policies (such as cheap credit, fiscal incentives, and elimination of intermediaries), while the former was not.

Agricultural research was directed toward further rationalization of production, processing and marketing of export and priority domestic crops. Concentration in the Center-South of the country continued, although distinct efforts were made to direct federal (EMBRAPA) resources to the North and Northeast. Moreover, beginning in the mid-Seventies, research expenditures for peasant-produced crops such as black beans and manioc were increased. Rising EMBRAPA expenditures channeled to 257 the North and Northeast were part of a broad effort to attract big capi­ tal in (mainly) export and livestock ventures in those regions. Added interest in research focused on black beans cultivation stemmed from rising concern with declining productivity and thus with shortages of this domestic food crop important in the diets of the urban and rural poor. Manioc, in contrast, as an object of research interest likely devolves not so much from concern over basic food supplies and low incomes of its producers, but from high-level planning to substitute petroleum imports with locally-produced alcohol from sugarcane and manioc.

The expansion of rural extension activities was yet another important link in the general movement toward greater capitalization of on-farm production, and the related growth of agribusiness. Rural extension in

Brazil continued to be a major force promoting and overseeing moderniza­ tion of agriculture, performing in many ways as public relations and advertising agency for the agro-industrial complex. With this set of objectives, rural extension's relative negligence of the majority of

Brazilian food and fiber producers is not surprising.

The competition between high-return capitalized agriculture and peasant production of foodstuffs resulted in two broadly-defined con­ flicts. First, the rising incidence of violence in the countryside beginning in the mid-Seventies was a product of state repression and agricultural policies which reduced the viability of traditional forms of agricultural production while encouraging the implantation of large agribusiness enterprises in areas formerly considered "frontier lands." 258

Second, the Seventies saw the emergence of shortfalls in the pro­

duction of several basic foodstuffs, result of high demographic growth

rates and stagnant or declining peasant production of food crops. State

agricultural policies which worked to discriminate against peasant pro­

ducers resulted in their relegation to a reduced land base overall, and

to lands of low differential rent. Consequently, the state bureaucracy

turned to food imports as its principal means to (a) forestall popular

unrest in major cities as food prices soared and (b) maintain low repro­

duction costs of urban labour, crucial to the profitability, and thus

reproduction of large sectors of urban industrial capital.

5. Throughout this dissertation the state is characterized as an

institution where social power is concentrated and exercised. The capi­

talist class or fraction of that class "holds" state power when it is

determined that state action (re)produces and/or furthers capitalist rela­

tions of domination above all other relations. It bears reiterating that

the precise forms of state action which produce the effect of capitalist

domination, however, are diverse, changing from one social formation to

another, or according to different stages of capitalist development, con­

ditions of capitalist rationalization, and conditions of class struggle.

The emergence of rapid growth of a diversified agribusiness complex

in post-coup years was part of the maturation of big industrial capital

inasmuch as state intervention served to create or enhance investment

opportunities for big industrial capital in search of new areas of capital valorization in agricultural-related activities. The growth of state

enterprises in the areas of transportation, steel, electricity and commun­

ications, petro-chemicals, investment companies and the like was crucial 259

to the viability and self-expansion of capital in agribusiness sectors in much the same ways as in non-agricultural industries.

In contrast, the food and fiber sector of the agricultural productive system did not see the establishment of state productive capital in the post-coup period as occurred in other economic sectors. The relative absence of state productive enterprise in this sector is understandable in light of the political difficulties implied by state ownership of sig­ nificant quantities of land. In contrast to urban-industrial sectors, the control of land and production thereon is the sphere of long-estab­ lished entrenched landed interests. Moreover, numerous mechanisms for appropriating economic surplus from agriculture by the state were insti­ tutionalized long before the 1964 change in state form (export quotas, tariffs and taxes, for example), and have continued as part of the state's arsenal of policy tools.

State intervention in food and fiber production was concentrated in forms which led to the strengthening of a class of family labour-based producers and to the further decline of peasant production. Owing to the disincentives to capitalist investment characteristic of this produc­ tive sector, the state's involvement in partially subsidizing the former class of producers provided on the one hand, raw materials for agribusi­ ness processing and marketing firms, and on the other, markets for input and machinery industries. The simultaneous compression and impoverishment of peasant-based agriculture follows from the inadequacies of these pro­ ducers as markets or suppliers for modern agro-industries.

In the final analysis, then, state action which had the effect of stabilizing and reproducing the sector of "independent" producers, was crucial towards furthering the expansion of monopoly capital in 260 agribusiness. This class did not achieve dominance— it was not part of the ruling class alliance— since its fortunres were subordinated to the needs of monopoly capital. Input and machinery and product markets remained under the control of agribusiness oligopolies, whose activities were directed by and assisted by the state.

The deterioration of peasant-based agriculture also had positive effects for some segments of capital in the sense that it provided extremely cheap wage labour in agriculture and urban-based industries, and in so far as peasant relocation made available land area for produc­ tion of commodities linked to capitalist agribusiness.

The growth and consolidation of a sector of highly-capitalized family labour production units in Brazil, however, represents a contradiction inasmuch as these producers struggle to maintain control over land and their labour process in opposition to big capital. This struggle will intensify to the extent that improvements in agricultural technology, transportation and communications infrastructure (usually initiated by the state) diminish obstacles to capitalist rationalization of the agri­ cultural productive process, and thus enhance potential capitalist profitability.

Further, state intervention which has rendered the unviability of ~ peasant agriculture also carries contradictory implications. First, in so far as the economically superfluous population in agriculture cannot reproduce itself via its own subsistence production, it represents a potential source of rebellion, requiring politically costly repression or financially burdensome welfare expenditures for their minimal needs on the part of the state. Finally, in the context of balance of payments crisis in the late

Seventies, imports constitute a costly solution to domestic food short­ ages since they imply additional constraints on the import capacity of industrial capital. However, since alternative strategies require redis­ tribution of state funds and material productive resources, they impinge on the interests of powerful segments of private capital. Therefore, it was unlikely that state officials would concentrate their efforts on any one of several policy options. Rather, the observed tendency as men­ tioned previously was for a scattered and incomplete approach toward meeting the demands of diverse groups among the dominant class, while also attempting to fulfill minimal reproductive needs of the working class.

The effects on the relative positions of fractions of capital, and the working classes in Brazil of rising research expenditures for traditional crops, attempts to increase peasant access to credit, provision of cheap foods in low-income bairros by state companies, and redoubled efforts toward rural development in smallholder communities initiated in the late

Seventies remain to be seen.' APPENDIX 263

Table 66. Real GDP and Industrial Growth Rates, Brazil, 1948-1967

Una .1 hiduL.Lri.al Year Real GDP % Product %

1948 7.4 11.0 1949 6.6 10.3 1950 6.5 11.3 1951 6.0 6.4 1952 8.7 5.0 1953 2.5 8.7 1954 10.1 8.7 1955 6.9 10.6 1956 3.2 6.9 1957 8.1 5.7 1958 7.7 16.2 1959 5.6 11.9 1960 9.7 9.6 1961 10.3 10.6 1962 5.3 7.8 1963 1.5 1.9 1964 2.9 5.2 1965 2.7 -4.7 1966 5.1 11.7 1967 4.8 3.0

Source: Conluntura Economica, 25:9 (1971), 92, 98. Table 67. Inflation Measures, Brazil, 1960-1967 (1965/67=100)

Year General Price Index Cost of Living, Guanabara (RJ) Index % change Index % change 1960 6.64 ------1961 9.10 37.0 8.58 --- 1962 13.80 51.6 13.0 51.5 1963 24.2 75.4 22.2 70.8 1964 46.1 90.5 42.5 91.4 1965 72.3 56.8 70.5 65.9 1966 99.7 37.9 99.6 41.3 1967 128.0 28.4 130.0 30.5

Source: Conjuntura Econftmica, 25:9 (1971), 122, 150. 264 Table 68. Evolution of Real Minimum Salary, Sao Paulo and Rio de Janeiro, 1959-1978 (1963=100)

Rio de Janeiro Sao Paulo Anos FGV Bolsa - FIPE DIEESE

1959 117.5 127.4 133.2 1960 104.5 108.8 116.2 1961 120.1 120.8 127.2 1962 109.3 109.0 114.2 1963 100.0 100.0 100.0 1964 100.4 102.7 108.9 1965 93.4 98.0 101.6 1966 86.2 86.9 86.1 1967 82.8 84.0 81.5 1968 83.7 83.9 80.8 1969 80.6 ' 79.9 76.8 1970 78.9 80.7 78.1 1971 79.0 80.2 75.8 1972 81.1 81.2 74.6 1973 84.2 82.4 69.2 1974 78.8 78.6 63.2 1975 82.9 82.0 65.5 1976 83.9 86.8 66.7 1977 84.1 89.0 68.4 1978 86.0 91.3 69.8

aColumn 1 is the consumer price index for Rio de Janeiro calculated by the FGV. Column 2 is a time series of data on the consumer price index in Sao Paulo, constructed by the Sao Paulo Stock Exchange and the Fundacao Instituto de Pesquisas Economicas de Sao Paulo (FIFE). Column 3 is an indice deflated according to average cost of living for the working class, calculated by DIESSE.

Source: Con.luntura Economica, 34:4 (April 1980), 65. 266

fable 69. Brasilian liporti by lector aod Degree el Procaealng, 1964/48-1978 (Millions ol US dolUcs)

1964-48 1969 1973______1974______1973 1976 1977______1971 laport C e f aery Value 1 Value t~ Value X Value I Value % " Value t Value I Value 1 I. Total Uootta 81.660.4 >00.0 2.311.2 100,0 6.199.2 100.0 7.931.0 100.0 8.449.9 100.0 10.118.3 100.0 12.U P . 7 >00.0 12.638.9 100,0 II. Total Aarlcultural Isporta 1.412.1 >3.0 1.913.7 82.4 4.716.9 74.1 S.SS5.7 7f.2 3.320.0 47.7 4.754.4 44.7 ».I01.7 47.7 7.487.4 59.1 1. Agricultural tew Matarlela (Id nature) • 1,204.1 72.5 1,574.4 48.1 5,132.0 50.5 3,324.4 44.3 3,413.2 39.4 4,143.7 41.1 4,778.8 39.4 3,787.7 39.9 2. Processed aod industrialised A«. Product. 207.9 12.3 341.3 14.8 1,344.9 23.4 2,141.1 24.9 2,106.8 24.3 2,392.8 23.4 3,422.8 21.3 3,495.1 29.2 A. >seI-proeesaed Aa. Product. 131.7 9.1 233.9 10.2 964.3 13.6 1.193.6 13.0 1.196.4 13.8 1.472.1 14.3 1.962.2 16.2 1.898.0 13.0 a. Crop baaed (ollB'braoe, cakee,cocoa, butter,"cry- ocalnsugar, ■olaaeee) 73.3 4.3 132.8 3.7 799.4 12.9 1,008.1 12.7 1,023.4 11.8 1,288.1 12.7 1,799.4 14.7 1,477.8 13.3 b. Livestock baaed (cured leather aad efcloa) 4.0 0.4 11.7 0.3 40.1 0.4 37.8 0.3 48.2 0.4 88.3 0.9 92.8 0.8 99.3 0.8 c. Extractive baaed (wood products, vaa.pulp) 70.4 4.2 91.4 4.0 126.8 2.0 147.4 1.9 123.0 1.4 95*5 0.9 09.9 0.7 120.8 0.9 8. Manufactured Aa. Product. 36.2 3.4 105.3 4.4 418.6 10.0 947.4 11.9 910.2 10.5 1,120.8 II.1 1,460.7 12.1 1,797.2 14.2 a. Crop baaed (refined sugar,to- ecant col- fee.pro- caaead (rule Juice, concen­ trate,re­ fined eoy- baao oil) 17.7 1.1 43.9 1.9 176.3 2.8 241.6 3.0 292.3 3.4 453.4 4.3 443.4 3.3 827.6 4.3 b. Cotton tex­ tiles 6 wool pro­ ducts (iscl. clothing; axel. synthetics) 6.0 0.4 7.2 0.3 179.2 2.9 233.7 3.2 212.7 2.4 208.2 2.1 268.9 2.2 282.1 2.2 c. Uveetock baaad (pro- casaed •eats, ■cat ex­ tracts, leather pre- ducts, 6 aboae) 11.8 0.7 1 7.7 0.8 174.8 2.8 242.2 3.0 264.7 3.1 317.9 3.1 336.0 2.8 423.0 3.4 d. txtractlva baaad (wood products, furniture, rubber pro­ ducts, alaal, aa sent lei* oils aod paper pro.) 20.7 1.2 36.5 1.6 88.2 1.4 207.8 2.7 138.3 1.6 141.4 1.4 210.2 1.7 262.4 2.1 111. Paprocasead Hlolnt Products 127.0 7.6 178.9 7.7 383.0 9.4 670.9 8.4 1.096.9 12.7 1.118.2 11.0 470.7 8.0 1.093.0 8,6

IV. Moaatrlcultursllv >aaed Manufactured Products 123.0 7.4 223.3 4.7 >97.3 14.3 1.614.4 20.4 2.033.0 23.7 2.233.3 22.2 2.947.1 24.3 4.081.1 32,2

lourceet Annual Boports of the>Cartelre do CoiMrcio interior (CACSX), Banco do Braail, and B m c o Central de Braoil. Table 70. Imports by Major Groups, 1965-1975 (In US$ millions and %)

Capital goods Raw materials Consumer goods Oil products Value % of Value % of Value % of Value % of US? total US? total US? total US? total Year million imports million imports million imports million imports

1965 237 25.2 429 45.6 107 11.4 168 17.8 1966 366 28.1 594 45.6 157 12.0 186 14.3 1967 459 31.9 594 41.2 216 15.0 172 11.9 1968 625 33.7 771 41.6 253 13.8 206 10.9 1969 738 37.0 766 38.4 259 13.0 230 11.6 1970 946 37.7 927 37.0 360 14.4 274 10.9 1971 1,339 41.3 1,314 40.5 256 7.9 336 10.3 1972 1,734 41.0 1,614 38.1 463 10.9 420 10.0 1973 2,143 34.6 2,606 42.1 716 11.6 727 11.7 1974 3,108 24.8 5,661 45.2 949 7.6 2,812 22.4 1975 3,932 32.3 4,501 37.0 828 6.8 2,908 23.9

Source: CIEF, Ministerio da Fazenda. In Malan and Bonelli, 1977:19. 267 268

Table 71. Real Production Indices, Brazil, 1978 and 1979

Growth Rates Sectors and Sub-sectors 1978 1979

General 7.5% 7.1% Mineral extraction 6.1 9.9 Manufacturing 7.6 7.0 Non-metallic minerals 5.6 5.5 Metallurgy 5.7 10.9 Mechanical 4.8 7.1 Electrical materials and communications 9.4 8.0 Transport material 14.2 5.1 Paper and cardboard 11.7 12.9 Rubber 6.7 6.6 Chemicals 9.0 7.5 Pharmaceuticals 10.2 7.4 Perfume, soap and candles 12.6 13.6 Plastic materials products 25.3 25.3 Textiles 5.1 5.9 Clothing, shoes and cloth artifacts 8.0 4.0 Food products 3.3 2.3 Beverages 7.1 5.0 Tobacco 5.8 4.1

Source: Fundacao IBGE-DESD-GIE, In Conluntura Economica. 34:2 (February 1980), 62. 269

Table 72. Number of Loans to Agriculture, 1975-1978 (Thousands)

Crop Livestock Year Contracts Contracts Total

1975 1,290 566 .1,856

1976 1,320 512 1,832

1977 1,267 455 1,722

1978 1,332 564 1,896

Source: Central Bank. Table 73. Percentages of Producers According to Land Tenure Status By Number of Agricultural Establishments, Land Area, and Size Class, 19753

Total Producers % Proprietors % Tenants % Sharecroppers % Squatters Size Class (ha.) Estab. Land area (ha.) Estab. Land area Estab Land area Estab. Land area Estab. Land area 0-10 2,601,865 8,982,722 45.5 55.9 18.5 12.5 8.9 10.3 27.1 21.3 10 - 20 733,004 10,245,084 79.2 80.0 4.6 4.5 5.8 5.6 10.4 9.9 20 - 50 811,895 25,143,838 86.3 86.7 2.9 2.9 2.2 2.0 8.6 8.4 50 - 100 354,050 24,782,715 88.0 87.7 3.2 3.2 0.9 0.9 7.9 8.2 100 - 1000 446,170 115,923,043 86.6 87.9 4.3 3.6 0.6 0.5 8.6 8.0 1000 - 10000 39,648 89,866,945 91.7 92.2 2.2 2.1 0.3 0.3 5.8 5.4 10000 and over 1,820 48,951,812 95.2 96.2 1.6 1.2 0.2 0.1 3.0 2.5 Undeclared 4,805 - 5.3 - 8.8 - 3.2 - 82.7 - Total 4,993,247 323,896,005 64.1 89.1 11.4 3.0 6.0 1.0 18.5 6.9

aGeneral totals and sub-totals may not equal vertical sums due to rounding error.

Source: Censo Agropecuario, FIBGE, 1975. (In de Castro, 1980:66.) 270 271

Table 74. Estimates of Agricultural Credit Beneficiaries (Working Capital) as Percentage of Total Rural Establishments, By Region and Selected States, 1970/1972a

Agricultural Cadastral Census, IBGE, Survey, INCRA, Region*’ 1970 1972

Amazonia 7.4% 28.0% Northeast 10.5 20.3 East 25.3 31.8 Center 29.7 27.7

Sao Paulo 56.7 65.8 Parana 44.3 49.3 Rio Grande do Sul 34.7 34.6

BRAZIL 23.6 34.3

aThe number of contracts was adjusted upward taking account of credits conceded to cooperatives which are passed on to numerous individual producers. On the other hand, calculations were not adjusted to take into account beneficiaries who receive multiple credit contracts in the course of the agricultural year. For such adjustments, a factor of ,7 has been suggested.

*>Amazonia=Roraima, Amapa, Para, Maranhao, Acre, Amazonas, Mato Grosso; Northeast=Piauf,Ceara, Rio Grande do Norte, Paraiba, Pernambuco, Alagoss, Sergipe, Bahia; East“Esp£rito Santo, Rio de Janeiro; CentersGoias, Distrito Federal, Minas Gerais.

Source: Banco Central, IBGE and INCRA. (In de Castro, 1980:31.) Table 75. Agricultural Credit Beneficiaries, By Size Class, 1970 and 1975

Size % of Farm % of Total % of Credit 7. of Total Category Estabs. area Users Value of Credit (ha) 70 75 70 75 70 75 70 75

0-10 51.2 52.1 3.1 2.7 27.4 17.3 5.5 3.2 10 - 50 32.4 30.9 12.3 11.9 46.7 47.8 21.3 17.6 50 - 100 • 6.9 7.1 8.1 7.7 11.9 13.5 11.7 11.1 00 100 - 1000 8.4 9.0 37.0 35.8 16.9 19.3 -cr 44.6 1000 - 10000 .7 .8 27.2 27.8 15.6 19.7 19.6 23.5 10000 and over 0.0 0.0 12.3 15.1 .1 .1 4.0 3.8

Source: Censo Agropecuario, IBGE, 1970 and 1975. (In de Castro, 1980: 34 and 62 .) Table 76. Bank of Brazil and Private Conercial Bank Loana Outstanding to Agriculture, End-of-Year, 1971-1979 (Millions of cruzeiros)

Bank of Brazil Private Conmerclal Banks Total Crop Livestock Crop Livestock Crop Livestock Year-end credits credits Total credits credits Total credits credits Total Current prices: 1971 8564 2584 11148 4141 2267 6408 12705 4851 17556 1972 11584 4033 15617 5666 3155 8821 17250 7188 24438 1973 17017 6186 23203 8301 5178 13479 25318 11364 36682 1974 32504 9837 42341 12919 7658 20577 45423 17495 62918 1975 51549 20399 71948 20311 12829 33140 71860 33228 105088 1976 83265 31488 114753 25347 18911 44258 108612 50399 159011 1977 130501 39136 34268 23381 57649 164769 62517 227286 1978 171336 54711 226047 41465 30711 72176 212801 85422 298223 1979 301452 86525 390677 n.a. n.a. n.a. n.a. n.a. n.a. Constant prices: 1971 2883 870 3752 1394 763 2157 4276 1633 5909 1972 3370 1173 4544 1649 918 2566 5019 2091 7110 1973 4286 1558 5845 2091 1304 3395 6377 2862 9240 1974 6088 1842 7931 2420 1434 3854 8508 3277 11785 1975 7461 2953 10414 2940 1857 4797 10401 4809 15210 1976 8238 3115 11353 2508 1871 4379 . 10745 4986 15731 1977 9302 2789 12091 2442 1667 4109 11744 4456 16200 1978 8673 2769 11443 2099 1555 3654 10772 4324 15096 1979 8689 2472 11161 n.a. n.a. n.a. n.a. n.a. n.a. Indices of real credit outstanding (1971«100) 1971 100 100 100 100 100 100 100 100 100 1972 117 135 121 118 120 119 117 128 120 1973 149 179 156 150 171 157 149 175 156 1974 211 212 211 174 188 179 199 201 199 1975 259 339 278 211 243 222 243 294 257 1976 286 358 303 180 245 203 251 305 266 1977 323 321 322 175 218 190 275 273 274 1978 301 318 305 151 204 169 252 265 255 1979 301 284 297 n.a. n.a. n.a. n.a. n.a. n.a.

Source: Central Bank. Table 77. Crop Credits to Producers and Cooperatives, National System of Rural Credit, By Crop, 1975-1977 (Millions of cruzeiros)

i m e ...... i m e i mi Produc­ Market­ Invest­ Produc­ Market- Invest­ Produc­ Market­ Invest­ tion ing ment tion ine ment tion ing ment Crop credit credit credit Totalb • credit credit credit Totalb credit credit credit Totalb Wheat 3810 6 3816 5674 15 5689 6854 31 6885 Rice 5377 1724 7101 7047 3859 10906 10332 3621 13953 Corn 3292 1033 4325 4738 2037 6775 5205 2348 7553 Manioc 128 14 142 389 7 396 607 65 672 White potato 431 431 720 ' 720 1136 1136 Peanuts 224 45 269 172 90 262 272 105 377 Black beans 431 130 561 872 19 891 2182 195 2377 Fruits 832 90 722 1006 151 1157 1784 224 2008 Soybeans 5325 6014 11339 9018 7823 16841 13042 11833 24875 Cocoa 280 187 467 430 287 717 760 690 1450 Coffee 2941 2033 1226 6200 5059 2357 2267 9683 8345 2075 3274 13694 Tobacco 457 457 664 664 938 938 Sugarcane 3282 3282 4553 4553 5645 5645 102 5228 6036 11147 Cotton 1443 2204 33» 3680 3076 3050 4949 l62a Other cropB 1112 3451® 854® 5417® 1563 4528 1110® 7201® 2722 7876® 1742 12340 Noncrop-specific credits 1447 472 13337 15256 2014 471 17786 20271 3440 972 19735 24147 TOTAL 30610 17125 15727 63462 46994 24256 21703 92953 68213 35157 25927 129197

*Kay include credits to some crops specified above. bSome specific crop totals may be understood for lack of sufficient disaggregation of marketing and Investment credits. Source: Central Bank; Bank of Brazil. 274 Table 78. Volumes of Major Crops Financed Under Minimum Price Credit Program, 1968/69-1977/78 (Thousand metric tons)

CROP CROP YEARS 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78

Rice 481.2 591.6 444.4 648.5 709.1 625.7 842.2 2000.4 1419.1 991.6 Corn 134.6 352.6 178.5 291.0 415.4 763.2 884.8 1650.2 1569.0 612.1 Manioc 6.1 4.8 2.5 7.7 89.3 25.0 17.6 7.5 30.6 52.8 Peanuts 67.0 60.9 85.0 59.2 21.3 39.5 28.4 45.7 42.4 39.4 Black beans 3.8 6.4 27.3 32.1 4.8 28.8 77.2 9.5 18.3 178.6 Soybeans 120.6 203.9 416.4 636.0 4.9 1495.2 3294.5 3602.6 4153.8 3222.0 Sisal 12.5 27.0 16.1 -- - 187.4 167.7 17.8 28.6 Cotton 61.4 58.0 60.4 96.4 76.7 130.6 367.6 190.0 377.7 391.2 Castor beans 16.8 27.3 16.3 6.7 6.4 95.5 113.4 58.5 37.4 79.9 Jute and Malva 10.6 15.9 11.8 6.8 10.3 4.3 7.6 24.7 28.2 20.5 Camauba wax and wax dust 1.8 0.2 1.2 0.8 0.0 5.5 7.0 7.8 7.2

Source: CFP. 275 Table 79. Credits Conceded Under Minimum Price Program, Center-South? By Crop and Type of Beneficiary, 1967/68*1977/78 (Hillloos of cruzeiros)

Crop and Type, of CROP YEAR S Beneficiary 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 Cotton (sinned and un&lnned) 38.5 43.0 50.5 99.8 213.5 144.2 508.4 1063.4 847.7 2733.1 3593.4 Producers and Cooperatlvea 19.5 12.5 17.0 33.2 65.3 36.7 150.9 268.5 149.4 Processors 19.0 30.4 33.6 66.6 148.2 107.5 357.5 794.9 698.3 Peanuca 11.4 15.3 18.0 33.6 30.6 14.4 40.2 43.3 90.0 116.6 134.5 Producers and Cooperatives 0.2 0.3 0.7 1.1 3.2 0.2 1.1 3.1 6.7 Processors 11.1 15.0 17.3 32.5 27.3 14.2 39.0 40.3 83.3 Bice 67.1 105.0 171.2 159.5 286.5 433.8 486.4 1156.6 3003.1 2764.1 2558.1 Producers and Cooperatives 43.5 78.3 133.8 104.8 193.7 289.2 321.2 766.4 2385.9 Processors 23.6 26.8 37.4 54.7 92.7 144.6 165.2 390.2 617.2 Kanloc (flour and Paste) 0.6 0.6 0.6 0.4 2.3 46.9 19.0 13.9 7.0 56.1 129.4 Producers and Cooperatives 0.5 0.4 0.6 0.3 1.5 27.1 1.3 0.1 0.3 Processors 0.1 0.2 0.0 0.2 0.8 19.7 17.8 13.9 6.7 Black Beans 2.2 1.0 2.4 9.7 22.0 3.0 37.9 125.0 20.1 61.3 801.1 Producers and Cooperatives 2.2 1.0 2.4 9.7 22.0 3.0 37.9 125.0 20.1 Processors - -- 0.1 - - -- - Com 21.8 13.5 46.4 28.0 53.8 113.9 389.4 565.8 1325.2 1762.0 827.5 Producers and Cooperatives 19.4 10.3 43.4 23.4 41.3 69.8 334.6 485.7 990.7 Processors 2.4 3.2 3.0 4.5 12.5 44.1 54.8 80.1 334.5 Soybeans 12.3 22.3 46.8 135.2 265.7 2.5 892.0 3369.3 4626.7 7369.2 ■ 6975.3 Producers and Cooperatives 2.1 7.9 20.1 73.6 139.8 0.9 387.2 2635.6 3246.4 Processors 10.1 14.4 26.7 61.6 125.9 1.6 504.7 733.7 1380.3 Other 0.0 3.9 6.9 5.3 1.8 7.0 53.6 122.3 20B.8 234.8 543.5 Producers and Cooperatives 0.0 0.0 0.0 0.0 0.4 4.4 26.1 37.2 102.4 Processors - 3.9 6.9 5.2 1.4 3.7 27.4 85.1 106.6 TOTAL 1 S3. 8 204.5 342.9 471.5 876.1 765.5 2426.8 6459.8 10,128.6 15,097.2 15.562.8 * Producers and Cooperatlvea 87.4 110.6 217.9 246.1 467.3 430.1 1260.4 4321.6 6901.7 Processors 66.3 93.9 125.0 225.4 408.8 335.4 1160.4 2138.2 3227.0

^Includes Southeast, South and Center-tfest. 276 Source: CFP. Table 80. Distribution of Credits Under Minimum Price Program, Center-South^ 1967/68-1977/78 (Percentage)

Crop and Type of C R 0 P Y E A R S Beneficiary 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 Cotton 25.0 21.0 14.7 21.2 24.4 18.8 20.9 16.5 8.4 18.1 23.1 Producers and Cooperatives (50.7) (29.1) (33.6) (33.3) (30.6) (25.4) (29.7) (25.3) (17.6) Processors (49.3) (70.9) (66.4) (66.7) (69.4) (74.6) (70.3) (74.7) (82.4) Peanuts 7.4 7.5 5.2 7.1 3.5 1.9 1.7 0.7 0.9 0.8 0.9 Producers and Cooperatives (2.0) (2.2) (3.8) (3.3) (10.6) (1.2) (2.8) (7.1) (7.4) Processors (98.0) (97.8) (96.2) (96.7) (89.4) (98.8) (97.2) (92.9) (92.6) Rice 43.6 51.3 49.9 33.8 32.7 56.7 20.0 17.9 29.6 18.3 16.4 Producers and Cooperatives (64.8) (74.5) (78.1) (65.7) (67.6) (66.7) (66.0) (66.3) (79.4) Processors (35.2) (25.5) (21.9) (34.3) (32.4) (33.3) (34.0) (33.7) (20.6) Manioc 0.4 0.3 0.2 0.1 0.3 6.1 0.8 0.2 0.1 0.4 0.8 Producers and Cooperatives (88.0) (61.2) (91.7) (64.6) (66.8) (57.9) (6.6) (0.6) (4.5) Processors (12.0) (38.8) (8.3) (35.4) (33.2) (42.1) (93.4) (99.4) (95.5) Black Beans 1.4 0.5 0.7 2.1 2.5 0.4 1.6 1.9 0.2 0.4 5.1 Producers and Cooperatives (100.0) (100.0) (100.0) (99.2) (100.0) (100.0) (100.0) (100.0) (100.0) Processors (-) (-) (-) (0.8) (-) (-) (-) (-) (-) C o m 14.2 6.6 13.5 5.9 6.1 14.9 16.0 8.8 13.1 11.7 5.3 Producers and Cooperatives (89.0) (76.2) (93.5) (83.8) (76.7) (61.3) (85.9) (85.8) (74.8) Processors (11.0) (23.8) (6.5) (16.2) (23.3) (38.7) (14.1) (14.2) (25.2) Soybeans 8.0 10.9 13.6 28.7 30.3 0.3 36.8 52.2 45.7 48.8 44.8 Producers and Cooperatives (17.5) (35.4) (43.0) (54.4) (52.6) (36.6) (43.4) (78.2) (70.2) Processors (82.5) (64.6) (57.0) (45.6) (47.4) (63.4) (56.6) (21.8) (29.8) Other 0.0 1.9 2.0 1.1 0.2 0.9 2.2 1.9 2.1 1.6 3.5 Producers and Cooperatives (100.0) (1.1) (0.0) (0.4) (20.7) (47.6) (48.8) (30.4) (48.9) Processors (-) (98.9) (100.0) (99.6) (79.3) (52.4) (51.2) (69.6) (51.1) TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Producers and Cooperatives (56.9) (54.1) (63.6) (52.2) (53.3) (56.2) (51.9) (66.9) (68.1) Processors (43.1) (45.9) (36.4) (47.8) (46.7) (43.8) (48.1) (33.1) (31.9) 277 alncludes Southeast, South and Center-West.

Source: CFP. Table 81. Credits Coaceeded Under Minimum Price Program, North-Northeast, By Crop and Type of Beneficiaty, 1968/69-1977/78 (Millions of cruzeiros)

Crop and Type of CROP YEARS Beneficiary 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78

Cotton (ginned and ungtnned) 31.1 26.5 15.1 30.8 84.8 74.5 346.7 265.0 806.7 1707.9 Producers and Cooperatives 0.9 0.8 0.7 1.4 4.0 7.7 23.2 21.3 Processors 30.2 25.7 14.4 29.4 80.9 66.9 323.5 243.7 Rice 9.6 11.4 8.5 10.7 12.0 26.2 18.4 164.9 235.9 225.9 Producers and Cooperatives 1.4 2.7 1.6 1.4 2.0 5.4 3.7 60.4 Processors 8.2 8.8 6.9 9.4 10.0 20.8 14.7 104.5

Manioc Flour 0.0 0.0 - _ 0.1 0.2 0.0 _ 0.0 14.3 Producers and Cooperatives 0.0 0.0 - - 0.1 0.2 0.0 - Processors -- - - 0.0 - - - Black Beans 0.1 0.1 0.7 0.6 0.5 0.2 2.1 0.6 0.0 7.7 Producers and Cooperatives 0.1 0.1 0.7 0.6 0.5 0.2 2.1 0.6 Processors ------Corn 0.5 0.4 0.7 7.8 5.6 1.7 24.3 34.1 19.6 70.5 Producers and Cooperatives 0.4 0.3 0.6 5.6 3.7 1.6 14.4 24.2 Processors 0.1 0.0 0.2 2.1 1.9 0.1 9.9 9.9 Sisal 3.6 8.4 5.1 -- - 607.3 551.0 61.3 115.1 Producers and Cooperatives 1.8 6.7 5.0 -- - 313.6 290.4 Processors 1.8 1.7 0.1 - -- 293.7 260.6 Jute and Malva 7.3 10.5 9.0 7.3 15.6 8.0 21.8 103.9 170.2 147.9 Producers and Cooperatives -- - - 0.3 -- 1.2 Processors 7.3 10.5 9.0 7.3 15.3 8.0 21.8 102.7 Other 1.1 4.6 1.6 3.5 2.8 23.2 114.8 142.6 155.4 247.5 Producers and Cooperatives 0.0 0.1 0.1 0.4 0.7 1.7 33.0 59.8 Processors 1.1 4.5 1.5 3.1 2.0 21.5 81.8 82.8 TOTAL 53.3 61.9 40.7 60.7 121.4 134.0 1135.5 1262.2 1449.3 2537.1 Producers 'and Cooperatives 4.6 10.7 8.7 9.4 11.3 16.8 390.0 457.9 Processors 48.7 51.2 32.0 51.3 110.1 117.3 745.4 . 804.2

Source: CFP. 278 279

Table 62, Distribution of Credits Under Hlnlmoa Price Proft ran, North-Northeast, 1968/69-1977/78 (Percentage)

Crop and type o( CROP YEARS Baneflclarles 1966/69 1969/70 1970/71 1971/72 1972/73 1973/76 1976/75 1975/76 1976/77 1977/78

Cotton UJ 62.8 22x1. 50.7 ILL iiJi. 3Q.5 21.0 55.7 67.3 Producers and Cooperatives (2.9) (3.2) (6.6) (6.5) (6.7) (10.3) (6.7) (8.0) Processors (97.1) (96.8) (95.6) (95.5) (95.3) (89.7) (93.3) (92.0)

Rice 1B.0 18.6 20.9 17.6 9.9 19.6 1.6 13.1 16.3 Producers and Cooperatlves (16.9) (23.3) (18.7) (12.8) (16.8) (20.6) (20.0) (36.6) Processors (96.1) (76.7) (81.3) (87.2) (83.2) (79.6) (80.0) (63.6)

Han l o - 0.0 0.0 -- 0.1 - - ♦ i__ 0.0 • "* 0.0 0.6 Producers and Cooperatives (100.0) (100.0) - - (92.7) (100.0) (100.0) - Processors (-) (-) - - (7.3) (-) (-) -

Black Beans 0.2 0.2 1.7 1.0 0.6 0.1 0.2 0.0 0.0 J L i i Producers and Cooperatives (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0)

Processors (-)(:)(-) (-) (-) (-) (-) (-)

Corn 0.9 0.6 1.7 12.9 6.6 1.3 -1x1. -1x1 - I x L - 2 x 1 Producers and Cooperatives (76.3) (93.6) (78.5) (72.5) (66.9) (96.1) (59.3) (71.0) Processors (23.7) (6.6) (21.5) (27.5) (33.1) (5.9) (60. 7) (29.0)

Sisal 6.8 13.6 12.5 -- - 53.5 4?,7 JL1 - 4 * 5 . Producers and Cooperatives (69.8) (79.5) (98.2) -- - (51.6) (52.7) Processors (50.2) (20.5) (1.8) - - - (68.6) (67.3)

•lute and Halva 1 2 x 1 17.0 . 2 2 x 1 12.0 12.9 6.0 -1x3. 8.2 11.7 5.8 Producers and Cooperatives (-) (-) (-) (-) (0.2) (-) (-) (1.2) Processors (100.0) (100.0) (100.0) (100.0) (99.8) (100.0) (100.0) (98.8)

Other I x l ML - 5 * i . i i 19.3 10.1 M x l 10.7 Producers and Cooperatives (0.2) (1.9) (6.0) (12.6) (27.0) (7.6) (28.7) (61.9) Processors (99.8) (98.1) (96.0) (87.6) (73.0) (92.6) (71.3) (58.1)

T2JAL 100.0 100.0 100.0 )0p,p 100.0 100.0 100.0 100.0 100.0 100.0 Producers and Cooperaclves (8.6) (17.3) (21.6) (15.5) (9.3) (12.5) (36.3) (36.3) Processors (91.6) (82.7) (78.6) (86.5) (90.7) (87.5) (65.7) (63.7)

Source: CPP. Table 83. Real Minima Prices for Selected Crops, Crop Years 1967/66-1979/60* (1967 Cruzeiros)

Crop Unit 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80

Cotton, ginned (15 kg) 17.51 16.67 15.08 17.11 20.37 19.82 31.23 27.52 29.03 34.30 33.12 31.95 Cotton, unglnned (15 kg) 6.00 5.64 5.80 5.83 6.97 6.76 10.92 9.36 9.49 11.52 10.37 Rice (50 kg) 9.18 9.52 10.01 9.21 10.24 11.86 12.71 15.20 14.82 14.99 13.46 13.59 15.52 Manioc flour (50 kg) 3.07 3.77. 3.94 3.77 5.66 8.30 7.56 5.20 7.72 11.23 9.68 C o m (60 kg) 5.01 5.89 5.91 5.95 6.06 6.74 9.98 9.41 9.87 9.35 8.11 8.16 8.99 Soybeans (60 kg) 8.17 8.24 8.55 9.51 11.48 11.86 12.37 16.00 15.66 14%18 11.61 11.20 15.26 Peanuts (25 kg) 5.17 5.14 5.33 5.54 6.02 6.72 8.25 9.27 9.39 9.31 7.92 8.07 8.73 Black beans (60 kg) 15.91 16.51 16.67 22.13 20.83 19.45 25.77 26.08 25.55 31.73 28.57 27.56 29.68 a Nominal prlcea deflated by General Price Index, Domestic (F.G.V. #2) Source: GFV aod CFP.

Rates of growth 1967/68-1978/79 (Z) 1979/80 over 1978/79 (I) Cotton, ginned 7.9 (.92) Cotton, unglnned 7.7 (.90) Rice 4.9 (.88) 14.2 Manioc flour 11.9 (.90) C o m 5.5 (.81) 10.2 Soybeans 4.8 (.73) 36.4 Peanuts 5.9 (.87) 8.2 Black beans 6.0 (.92) 7.7 280 Table 84. Average Real Producer Prices During Harvest Period for_Selected Crops, Crop Years 1967/66-1977/78 (1967 Cruzeiros)

Crop/Unit 1967/68 .1968/691969/70 1970/71 197W72 1972/73 mj/74 1974/75 1975/76 1976/771977/78 Cotton unginned (IS kg) 6.95 6.76 6.55 8.07 8.33 9.26 14.65 9.04 15.14 14.66 12.49 Rice (SO kg) 13.50 10.87 10.33 10.42 12.96 10.98 15.52 21.11 17.12 13.74 15.35 Hanloc flour (SO kg) 12.50 10.14 7.80 14.00 16.02 13.12 11.34 12.37 38.27 26.20 16.33 Corn (60 kg) 5.20 5.80 5.60 1 6.33 7.13 7.22 10.08 9.62 9.56 8.36 10.60 Soybeans (60 kg) 12.92 11.76 11.42 12.64 14.47 26.88 17.61 18.80 18.11 31.52 21.38 Peanuts (2S kg) 6.74 7.48 6.93 7.64 7.05 8.73 10.75 11.59 10.10 12.23 13.36 Blsck beano (60 kg) 13.00 15.82 34.49 22.78 21.68 24S51 50.51 25.12 38.75 65.86 25.32 a Noainal prices deflated by General Price Index, Domestic (F.G.V. #2) Source: FCV and CF7

Rates of growth 1967/79-1978/79 (I) Cotton, unglnoed 8.5 (.86) Rice 4.3(.62) Hanloc flour 8.5 (.64) Com 7.1 (.92) Soybeans 8.0 (.79) Peanuts 7.1 (.93) Black beans 9.5 (.66) Table 85. Production of Major Cropa. 1960-1979 (Thousands of Metric Tons)

Black Year Wheat Rice Corn Manioc D Peanuts Potatoes Potatoes Beana

1960 713 4795 8672 17613 1113 1283 408 1731 1961 545 5392 9036 18407 1080 1356 581 1745 1962 706 5557 9587 19843 1134 1448 648 1709 1963 392 5 740 10418 22249 1168 1546 604 1942 1964 643 6345 9408 24356 1264 1598 470 1951 1965 585 7580 12112 24993 1246 1721 743 2290 1966 615 5802 11372 24710 1329 1913 895 2148 1967 629 6792 12824 27268 1466 2226 751 2554 1968 856 6652 12814 29203 1606 2120 754 2420 1969 1374 6394 12693 30074 1506 2175 754 2200 1970 1844 7533 14216 29464 1584 2134 928 2211 1971 2011 6593 14130 30299 1580 2156 945 2688 1972 684 7824 14500 29836 1589 n.a. 956 2676 1973 2031 7160 14186 26527 1337 1828 590 2332 1974 2858 6764 16273 24798 16 72 1595 453 2238 1975 1788 7782 16334 26118 1655 1600 442 2282 1976 3216 9757 17751 25443 1898 1370 510 1840 1977 2066 8994 19256 25930 1896 1074 321 2290 1978 2677 7242 13533 25358 2015 n.a. 325 2188 1979 2924 7589 16309 24935 2149 462 2187 Table 85. continued. Production of Major Crops, 1960-1979 (Thousands of Metric Tons)

Year Cocoa Coffee Toba-co Sisal Sugarcane Cot ton Coconut8

1960 163 4170 161 164 56927 1609 436 1961 156 4457 168 170 59377 1818 418 1962 140 4381 187 174 62534 1902 429 1963 144 3301 207 199 63723 1957 494 1966 154 2084 210 229 66399 1770 503 1965 161 3664 248 242 75853 1986 529 1966 170 2731 228 287 75788 1865 692 1967 195 3015 243 319 77086 1692 824 1968 149 2116 258 328 76610 2000 690 1969 211 2567 250 311 75247 2111 656 1970 197 1510 244 263 79753 1955 657 1971 219 3103 244 278 80380 2271 671 1972 200 1410 263 n.a. 85106 2511 n.a. 1973 196 1746 234 261 91994 2273 547 1974 165 3231 296 290 95624 1917 498 1975 282 2545 286 314 91525 1748 482 1976 232 752 299 168 103173 1262 465 1977 250 1951 357 225 120082 1900 473 1978 245 2535 409 202 129145 1571 480 1979 318 2589 423 228 138325 1636

a Millions of fruits, b Millions of bunches.

Source: F1BGE Table 85, continued. Production of Major Crops. 1960-1979 (Thousands of Metric Tons)

Year Pineapple0 Oranges0 Bananas Tomatoes Onions Soybeans

1960 178 8360 256 397 210 206 1961 183 8832 266 388 191 272 1962 184 9254 301 486 227 345 1963 183 10532 313 496 195 323 1964 194 10275 338 553 241 305 1965 195 11428 348 580 226 523 1966 197 11767 356 679 277 595 1967 225 12523 403 745 250 716 196B 225 13587 422 775 273 654 1969 260 14484 463 700 275 1057 1970 283 15497 493 764 285 1508 1971 333 16284 505 820 288 2077 1972 n.a. 18856 563 895 n.a. 3223 1973 326 24652 354 810 307 5012 1974 329 29595 353 1144 336 7876 1975 351 31566 364 1050 346 9893 1976 346 35841 382 1167 431 11223 1977 366 35824 410 1294 488 12513 1978 379 39091 416 1452 490 9535 1979 49408 409 1500 691 9059 Table 86. Real Financing Under Minimum Price Program, by Region and Major Crop, 1967/68-1977/78a (Millions of 1965-67 Cruzeiros)

C R O P YEARS Crop and Region 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78

Cotton 38.6 33.5 41.4 75.4 61.3 121.4 230.1 128.5 286.4 309.2 Center-South 24.2 22.4 22.0 36.0 65.9 38.6 105.9 173.5 97.9 221.1 209.6 North-Northeast 16.2 11.5 5.4 9.5 22.7 15.5 56.6 30.6 65.3 99.6

Rice 59.7 79.5 60.7 91.7 119.5 106.7 191.7 365.8 242.6 162.4 Center-South 42.2 54.7 74.5 57.6 88.4 116.3 101.3 188.7 346.8 223.6 149.2 North-Northeast 5.0 5.0 3.1 3.3 3.2 5.4 3.0 19.0 19.0 13.2

Hanloc 0.3 0.3 0.2 0.7 12.6 4.0 2.3 0.8 4.5 8.3 Center-South 0.4 0.3 0.3 0.2 0.7 12.6 4.0 2.3 0.8 4.5 7.5 North-Northeast 0.0 0.0 -- 0.0 0.0 0.0 - 0.0 0.8

Black Beans 0.6 1.1 3.7 7.0 0.9 7.9 20.7 2.4 5.0 47.1 Center-South 1.4 0.5 1.1 3.5 6.8 0.8 7.9 20.4 2.3 5.0 46.7 North-Northeast 0.1 0.0 0.2 0.2 0.1 0.0 0.3 0.1 0.0 0.4

Corn 7.3 20.4 10.4 19.0 32.0 81.5 96.3 156.9 144.2 52.4 Center-South 13.7 7.0 20.2 10.1 16.6 30.5 81.1 92.3 153.0 142.6 48.3 North-Northeast 0.3 0.2 0.3 2.4 1.5 0.4 4.0 3.9 1.6 4.1

Soybeans 7.7 11.6 20.4 48.8 82.0 0a 7 185.8 549.6 534.3 596.2 407.0 Center-South 7.7 11.6 20.4 48.8 82.0 0.7 185.8 549.6 534.3 596.2 407.0

Other 16.2 17.9 21.3 13.2 10.7 26.2 148.3 126.7 59.9 69.6 Center-South 7.1 10.0 10.6 14.0 10.0 5.7 19.6 27.0 34.5 2B.5 39.7 North-Northeast 6.2 7.3 7.3 3.2 5.0 6.6 121.3 92.2 31.4 29.9

Total 134.3 173.1 186.5 269.0 237.7 533.5 1239.0 1315.4 1338.8 1056.0 Center-South 96.7 106.5 149.1 170.2 270.4 205.2 505.6 1053.8 1169.6 1221.5 908.0 North-Northeast 77.8 74.0 16.3 18.6 32.5 27.9 186.7 146.8 117.3 148.0 a Deflated by FGV index nuatber 2 for year of harvest* 285 Source: CFP. Table 87. Estimated Costs of the Beef Storage Program. 1975-1979

i o t a l Buying Change in Financial Exchange Cost of Program Year Quantity Price Total Value Prices3 Subsidy^ rate Subsidy Storage Cost ('000 MT) (Cr$/kg) (million Cr$) (million Cr$) (Cr$/US$) (US$ million)(US? million)

1975 159 8.90 1415 28 132 8.10 16 17 33

1976 209 10.90 2278 41 311 10.70 29 22 51

1977 208 13.20 2745 43 393 14.15 28 22 50

1978 149 26.00 3874 39 503 18.00 28 16 44

1979 190 43.80 8322 70 - 30.00 20 20 a The annual change of FGV price index no. 2. b The subsidy was estimated for 4 months and considering that the selling price was equal to the buying price in nominal terms for all years except 1979. c Freezing, defreezing and operating costs for four months estimated at US$115/MT.

Source: COBAL. 286 Table 88. Agricultural Labour Force, By Occupational Classification

and Size Class. 1970 and 1975

(thousands of persons) (percentages in parentheses)

Permanent Temporary Size Class Total RNRFM3 Employees Employees Sharecroppers Other (ha)______1970 1975 1970 1975 1970 1975 1970 1975 1970 1975 1970 1975

0-10 7129 8343 6717 7904 74 72 261 311 43 30 32 23 (X) (40.6) (41.0) (47.6) (48.2) (6.5) (4.7) (17.5) (18.3) (7.2) (5.5) (14.3) (14.7)

10-20 2686 2992 2387 2673 62 70 163 185 50 47 23 15 (%) (15.3) (14.7) (16.9) (16.3) (5.4) (4.5) (11.0) (10.9) (8.4) (8.5) (10.1) (10.0)

20-100 4745 5432 3719 4282 255 338 458 549 230 260 81 54 (%) (27.0) (26.7) (26.4) (26.2) (22.2) (21.8) (30.8) (32.4) (38.1) (36.8) (35.4) (34.1)

100-500 2038 2451 1035 1255 383 545 365 421 194 187 59 41 (X) (11.6) (12.0) (7.3) (7.7) (33.2) (35.0) (24.6) (24.9) (32.3) (33.4) (25.8) (26.0)

500-1000 441 515 121 142 158 214 106 106 41 41 13 10 (Z) (2.5) (2.5) (0.9) (0.9) (13.7) (13.8) (7.1) (6.3) (6.9) (7.5) (5.9) (6.7)

1000 and over 500 600 87 109 218 309 132 121 41 46 19 13 (X) (2.8) (3.0) (0.6) (0.7) (18.9) (20.0) (8.9) (7.1) (7.0) (8.3) (8.5) (8.5)

Undeclared 39 10 36 6 1 2 0.8 1 0.4 0.1 0.1 0.0 (X) (0.2) (0.1) (0.3) (0.0) (0.1) (0.2) (0.1) (0.1) (0.1) (0.0) (0.1) (0.0)

Total 17582 20345 14106 16374 1155 1553 1488 1696 602 561 229 159 (X) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100)

a Responsible plus non-remunerated family members.

Source: Censo Agropecuario, IBGE, 1970 and 1975. (In de Castro, 1980:77.) 287 Table 89. Agricultural Producers According to Land Tenure Status by Size Class, 1975

(Percentages)

Size Class Proprietor Tenant Sharecropper Squatter (ha.) Land Estab. Land Land Land Estab. area Estab. area Estab. area Estab. area

0-10 36.9 1.7 84.5 11.5 77.8 29.7 76.4 8.6

10-20 18.1 2.8 5.8 4.7 14.3 18.4 8.2 4.6

20-50 21.9 7.6 4.1 7.4 5.9 16.4 7.6 9.3

50-100 9.7 7.5 2.0 8.2 1.1 7.0 3.0 9.1

100-1000 12.1 35.4 3.3 42.9 0.9 18.4 4.1 41.4

1000-10000 1.1 28.7 0.2 19.2 0.0a 8.5 0.3 21.6

1000 and over 0.1 16.3 0.0 6.0 0.0a 1.6 0.0 5.4

Undeclared 0.0 - 0.1 - - - 0.4 -

TOTAL 100.0 100.0 100,0 100,0 100.0 100.0 100,0 100.0

a Percentages inferior to 0.05. 288 Source: Censo Agropecuario, IBGE, 1975. (In de Castro, 1980:67.) 289

Table 90. Changes In Producer Types, By State and ReRlon, 1970 to 1975.

(Percentages)

Proprietors Tenants Sharecroppers Squatters States and Land Land Land Land Regions Estab. area Estab. area Estab. area Estab. area

BRAZIL 3.A 13.5 -10.5 -29.A -21.3 -3A.8 13.9 5.2

NORTH 33.7 69.7 -A2.6 -56.3 -13.A -7A.2 A6.7 A7.8 Rondonia 790.3 275.5 -A A. A -96.8 -32.7 -9A.5 135.2 36.7 Acre 17.6 161.9 5.6 -25.8 11.6 2A7.6 6.7 -17.0 Amazonas -6.1 239.5 -76.1 -8A.A 203.2 120.3 5A.2 -20.6 Roraima 89.9 -76.9 -25.0 -99.6 -80.8 -5A.2 550.2 1876.8 Pard 33.6 AA.8 -19.3 29.3 -16.2 -61.9 39.0 86.2 Amapa -5.0 15.3 A1.0 -93.7 -100.0 -100.0 17A.1 207.0

NORTHEAST 5.8 8.5 2.8 -18.9 -9.3 -38.1 15.3 -12.1 Maranhao 55.0 18.3 26.2 -13.9 -35.8 10.0 20.2 -2.8 Piaui 7.A 12.8 7.6 -29.2 -1A.9 -20.1 -7.9 -30.6 Ceard 0.3 -6.9 9.A -15.3 -5.A -A7.5 13.9 -12.7 Rio Grande do Norte -1.1 -2.2 -28.1 -13.8 125.8 -25.9 18.3 -17.7 Paraiba 6.5 5.6 1.9 -31.2 65.1 28.1 85.0 -12.6 Pernambuco ■ 3.9 0.A -3A.6 -17.9 -26.9 -37.0 0.6 -6.1 Alagoas -0.A 1.6 1.6 A.6 115.3 109.A 75.A 1.5 Serglpe 7.2 A.8 -29.6 6.3 78.1 -56. A 33.9 67.7 Bahia A.6 15.6 -32.6 -A0.0 -59.0 -63. A -5.9 -1A.6

SOUTHEAST l.A 8.1 -35.6 -22.1 -29.1 -38.9 -16.5 -A0.5 Minas Gerais 7.1 11.A -32.8 -32.5 -16.7 -53.9 -26.7 -51.2 Esplrito Santo -11.9 A. 1 -A2.5 -16.5 -62.2 -6A .A -35. A -36.3 Rio de Janeiro 1.9 A.A -1.7 10.3 9.A -11.3 25.6 16.6 Sao Paulo A.2 2.6 -39.6 -11.3 -36.9 -31.5 -7.5 -10.8

SOUTH -2.0 6.1 -30.5 -22.5 -28.5 -23.3 -10.8 -2A.1 Parana -2.2 13.5 -29.5 -10.A -35.0 -35.7 -11.3 -2A.5 Santa Caterlna -1.1 -1.0 -7.8 -26.8 -A. A -A.l 17.6 -8.0 Rio Grando do Sul -2.2 A .0 -38.9 -25.3 -17.9 -7.5 -19.1 -28.5

CENTER-WEST 3.1 16.5 3.2 -13.5 39.2 9.8 1A.2 6.3 Mato Grosso 6.5 1A.A -5.5 -19.3 3.7 -1A.0 2A.A -38.7 Goias 1.9 19.6 25.9 -1.5 2A2.5 61.2 5.6 29.2 Distrito Federal -35. A -11.9 1251.7 2056.3 200.0 1A2.A 15.3 2A.2

Source: Censo Agropecuario, IBGE, 1975. (In de Castro, 1980:96.) Table 91. Volume of Crops Acquired Under Minimum Price Program, 1973/74-1978/78

(Thousands of Metric Tons)

Crop 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79

Rice 3.1 2.3 978.3 860.5 162.7 Black Beans 1.8 38.5 - 0.6 76.2 Manioc flour and paste 0.8 __ 8.4 _ Oats - - - 0.6 C o m 174.0 102.1 432.6 1476.2 39.4a Sorghum 1.9 0.4 28.6 77.4 4.3 Peanuts - 0.0 0.2 - - Castor Beans 1.7 0.1 - -- Mint Oil - - 0.0 -- Soybeans - 2.6 0.2 - - Cotton 53.2 3.6 - 1.6 6.2 Jute and Malva - - 6.3 10.1 4.7 Silk - 0.0 - 0.1 - Sisal - 189.3 170.9 16.2 22.0 Brazil nuts - - 3.9 - - Camauba wax and wax dust — 4.9 8.3 6.7 6.6

Guarana - -- - - Totals 236.5 344.0 1629.3 2456.5 1620.9

a Does not include 1,273 MT of imported com. 290

Source: EGF. 291

Table 92. Apparent Consumption of Fertilizers, 1969-1978 (Thousands of Metric Tons)

1970 1971 1972 1973 197-4 1975 1976 1977 1978p

Nitrogen 275.9 278.3 All.6 3A6.1 389.2 A06.2 A98.3 688.A 768.2 Domestic 20.A 69.2 88.5 11A.3 150.2 160.8 200.3 231.A z77.0 Imported 255.6 209.2 323.1 231.8 239.0 2A5.A 281.A A57.0 A2A.0 Other® ------16.6 - 67.2

Phosphorus (P„0r) 415.9 535.9 87A.9 80A.5 91A.2 1013.8 1308.3 1538.5 17A7.8 Domestic 160.A 232.5 277.6 320.3 371.0 A93.1 8A6.A 1019.8 1101.0 Imported 2A6.5 292.2 585.7 A71.8 526.8 500.0 A10.2 A78.0 326.0 Other8 9.0 11.2 11.6 12.A 16.A 20.7 51.7 A0.7 320.8

Potassium (K^O) 306.7 350.8 A60.0 528.5 521.3 557.6 721.5 927.2 1036.8 Domestic ------Imported 306.7 350.8 A60.0 528.5 521.3 557.6 698.0 927.2 972.0 Other8 ------23.5 - 6A.8

Total 998.6 1165.0 17A6.5 1679.1 182A.6 1977.7 2528.1 315A.1 3552.8 Domestic - 180.8 301.7 366.1 A3A.6 521.2 653.9 10A6.7 1251.2 1378.0 Imported 808.8 852.2 1368.8 1232.1 1287.1 1303.0 1389.6 1862.2 1722.0 Other8 9.0 11.2 11.6 12.A 16.A 20.7 91.8 A0.7 A52.8

Indices (1969 » 100)

Nitrogen 168 169 250 210 237 2A7 303 A19 A67 Domestic 315 1071 1370' 1770 2325 2A89' 3100 3582 A 288 Imported 162 132 205 1A7 151 155 178 289 268

Phosphorus 157 202 329 303 3AA 382 A92 579 '658 Domestic TIE 196 TJ3 271 313" A17 715 862 930 Imported

Potassium 153 175 230 26A 260 278 360 A63 518

Total 158 185 277 266 289 31A A01 500 56A Domestic 1A5 2A2 293 3A8 A17 52A 838 1002 1103 Imported 163 172 276 2A8 259 263 280 375 397 a Donations, stock adjustments, etc. p Preliminary.

Sources FAO, Fertilizer Programme In Brazil, 1969-1979. Rome 1980. Table 93. Average Yields - Major Crops, 1966-1978.

(Kilograms per hectare harvested)

Category/Crop 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978P

Cereals 857 757 883 976 973 886 424 1104 1156 610 908 655 955 Wheat 857 757 883 976 973 886 424 1104 1156 610 908 655 955 Rice 1649 1583 1492 1384 1517 1384 1623 1493 1449 1466 1465 1500 1305 Corn 1307 1385 1337 1315 1442 1339 1381 1430 1524 1504 1596 1632 1221

Root Crops Manioc 13884 14243 14615 14819 14553 14594 14530 12609 12360 12793 12153 11918 11872 White potatoes 6667 6745 7085 6815 7394 7594 n.a. 7087 8696 8653 9504 9686 9641 Sweet potatoes 10906 12029 11636 11751 11804 11772 n.a. 11487 10796 10428 9984 9810 n.a. Peanuts 1391 1082 1243 1229 1386 1300 n.a. 1166 1211 1280 1372 1402 1295

Black Beans 646 700 661 606 635 683 674 585 521 550 453 503 476

Fruits and Vegetables Pineapples8 6979 7377 8219 8487 8776 9840 n.a. 9605 11159 12461 13195 13954 15160 Oranges8 71157 75143 78459 79123 76705 76776 n.a. 54871 84655 78289 86636 84948 86676 Bananas*5 1424 1576 1571 1696 1775 1910 n.a. 1141 1137 1159 1225 1216 1316 Tomatoes 17495 18031 17541 17251 16980 16637 n.a. 19047 21585, 22382 24722 24894 26400 Onions 5491 5169 5335 5415 5505 5563 n.a. 6219 6367 6625 7479 7982 8750

Export and Industrial Crops Soybeans 1213 1169 907 1166 1144 1210 1471 1386 1531 1698 1749 1769 1226 Cocoa 374 412 345 483 444 488 n.a. 471 319 624 569 605 552 Coffee 893 1080 807 998 628 770 n.a. 839 1499 1148 670 1004 1226 Tobacco 862 931 936 969 995 1012 n.a. 996 1229 1126 1065 1146 1278 Sisal 869 959 953 1001 916 1018 n.a. 1050 1102 961 600 761 751 Sugarcane 46339 45864 45420 45002 46230 46516 n.a. 46965 46493 46477 49283 52898 54081 Cotton 479 455 512 503 455 519 n.a. 526 499 . 451 370 464 398 Coconut® 6853 7581 6036 5655 5604 5764 n.a. 4112 3353 3067 2917 2959 2963

a Fruit8 per hectare harvested, b Bunches per hectare harvested, p Preliminary.

Source: FIBGE. 292 293

Table 94. Percentage Distribution of Household Expenses by Type of Expenditure, Sao Paulo, 1974/75 txpenaicure Item 0/2 2/3.5 3.5/5 5/7 7/10 10/15 15/20 20/30

Food 50.9 45.3 38.4 32.4 26.2 15.1 12.0 12.0 Cereals 13.7 ' 11.3 8.8 6.7 4.7 3.2 2.1 1.6 Tubers 1.4 1.1 0.9 0.7 0.6 0.4 0.3 0.2 Sugars 2.3 1.7 1.2 1.0 0.7 0.5 0.4 0.3 Legumes 5.2 3.7 2.5 1.8 1.2 0.8 0.5 0.3 Vegetables 3.1.. 2.9 2.5 2.1 1.8 1.4 1.1 0.8 Fruit 0.6 0.9 1.1 1.0 1.0 0.9 0.7 0.6 Meat 7.9 9.5 9.5 8.6 7.1 5.8 4.2 3.3 Eggs, Milk 3.4 3.7 3.4 3.0 2.5 2.0 1.6 1.4 Fats 5.4 4.2 3.1 2.5 1.8 1.2 0.8 0.6 Beverages 4.4 3.2 2.5 2.1 1.8 1.3 1.0 0.7 Meals outside home 3.4 3.1 3.0 3.0 3.2 2.9 2.5 2.1 Clothing 5.3 5.9 6.4 7.0 7.1 6.2 5.5 5.1 Housing 28.9 29.5 29.5 29.2 28.0 25.0 25.2 24.0 Hygiene 4.8 5.0 5.4 5.5 5.3 5.1 4.6 4.5 Transportation!.8 2.5 3.2 4.3 5.4 7.3 8.4 6.6 Education 0.3 0.7 1.1 1.4 1.9 2.0 2.6 2.3 Recreation 0.4 0.5 0.8 0.9 1.1 1.4 1.3 1.6 Tobacco 2.7 2.6 2.8 2.5 2.1 1.6 1.2 0.8 Miscellaneousi 1.2 1.6 2.3 2.6 2.6 2.9 3.0 3.0

Source: FIBGE, Estudo Nacional da Despesa Familiar - ENDEF 9 Dados Preliminares, Despesas das Famflias, Sao Paulo; Rio de Janeiro, 1978. (In Homem de Melo, 1980:74.) 294

Tahle 95. Imports by Economic Destination, 1975-1978.

(In millions of US dollars)

1975 1976 1977 1978 FOB GIF FOB CIF FOB C1F FOB CIF

Consumer non-durables 387.5 A31.5 A25.9 A80.1 A79.0 5A2.8 575.8 6A7.9 1. Foods 268.A 296.2 293.A 333.3 360.3 All .A A3A.8 A91.7 a) Primary products (119.8) (135.A) (170.5) (200.7) (209.5) (2A9.6) (208.3) (250.8) b) Processed foods (1A6.6) (160.8) (123.1) (132.6) (150.8) (161.8) (226.5) (2A0.9) 2. Beverages and tobacco 13.2 16.2 10.A 12.6 7.1 8.3 11.A 13.A 3. Pharmaceuticals 23.2 26.1 23.0 25.9 22.1 25.0 22.5 25.2 A. Clothes and textiles 5.9 6.6 10.5 11.2 6.5 7.1 5.0 5.7 5. Ocher consumer non**durables 76.8 86.A 88.A 96.9 83.0 91.0 102.1 111.9 Consumer durables 18A.0 200.0 162.3 173.7 1A5.8 157.2 199.8 21A .9 1. Domestic utensils and appliances 67.8 7A.2 60.5 65.7 57.5 63.0 76.3 83.A 2. Furniture and equipment 16.3 17.8 19.6 21.0 19.5 20.8 2A.7 26.9 3. Private vehicles 1A.6 16.7 3.8 A.3 0.7 0.9 1.6 1.9 A. Military arms and equipment 2.7 2.9 10.2 11.1 1A.8 15.5 29.6 30.6 5. Musical Instruments 82.A 88.A 66.2 71.6 53.3 57.0 67.6 72.1 Fuels and Lubricants 2987.2 3A31.0 3689.9 A171.6 3997.3 AA11.3 AA22.0 A877.9 Raw Materials and Intermediate Goods for Agriculture A65.3 535.5 383.7 A55.6 A65.8 552.9 618.7 728.0 1. Animal feed 10.A 12.3 8.A 9.8 6.1 7.2 1AA.8 170.0 a) Primary (A.5) (5.3) (A.7) (5.5) (3.5) (A.2) (1A1.1) (165.8) b) Processed feed (5.9) (7.0) (3.7) (A.3) (2.6) (3.0) (3.7) (A.2) 2. Other A5A.9 523.2 375.3 AA5.8 A 59.7 5A5.7 A73.9 558.0 a) Primary goods (9.5) (10.6) (13.2) (1A.8) (11.8) (13.3) (1A.2) (15.9) b) Processed goods (AA5.A) (512.6) (362.1) (A31.0) (AA7.9) (532.A) (A59.7) (5A2.1) Raw Materials and Intermediate Goods for Industry 3995.0 AA7A.0 A0A1.1 AA92.0 38A3.6 A275.3 A306.0 A79A.2 1. Food products AA5.7 A89.6 6A6.0 707.8 AOS.A A52.6 718.8 803.A 2. Non-food agricultural products 3A5.6 396.3 33A.5 380.3 33A.2 380.5 38A.7 A36.A 3. Mineral products 2U11.6 22A6.8 1591.8 1A7A.7 17A6.8 1911.0 1652.9 1809.1 A. Chemicals and pharmaceuticals 1192.1 13A1.3 1A68.6 1656.2 1357.2 1531.2 15A9.6 17A5.3 Construction materials 298.5 3A3.0 399.7 223.0 172.0 19A.0 16A.7 183.0 Capital goods for agriculture 2A7.7 267.7 122.6 131.7 66.6 71.3 A5.7 A8.9 1. Machinery and cools 5A.3 60.5 17.A 19.3 8.0 9.0 8.A 9.3 2. Other equipment 7.6 8.2 3.2 3.A 2.A 2.A 0.6 0.6 3. Transport and tractor material 185.8 199.0 102.0 109.0 56.2 59.9 36.7 39.0 Capital tools for industry 2886.8 3103.A 26A9.0 2828.3 2156.3 2296.8 2A72.0 2623.0 1. Machinery and apparatus for office and laboratory A07.5 A31.8 327.7 3A7.0 330.0 3A7.5 392.2 A13.9 2. Tools 62.1 66.A A9.A 52.A A1 * 9 AA.7 A2.A A5.1 3. Parts and accessories for industrial machines 260.A 277.3 281.A 297.1 269.5 28A.A 278.9 29A.5 A. Industrial machines 1662.3 1803.5 1A96.6 1609.A 1133.9 1218.8 1385.0 1A63.2 5. Other fixed equipment A9A.5 52A.A A93.9 522.A 381.0 A01.A 373.5 395.3 Transport equipment 758.3 806.A 708.7 770.0 697.0 755.5 676.A 927.5 1. Parts and accessories 351.8 373.6 389.2 All.2 37A.O 39A.7 371.5 392.7 2. Mobile equipment 297.8 307.9 2AA.8 271.6 261.6 290.0 393.6 AQ9.3 3, Fixed equipment 83.3 98.6 60.5 72.6 A7.5 56.7 7A.5 86.3 A. Miscellaneous 25.A 26.3 1A.2 1A.6 13.9 1A.1 38.8 39.2 Total Imports 12210.3 13592.9 12382.9 13726.0 12023.A 113257.1 13683.1 1505A.3

Source; Ministeriu da Fazenda, Comercio Exterior do Brasil. Table 96. Black Beans - Area, Production, Average Yields, and Trade, 1970-1979

Area Average Year harvested Production Yield Imports Exports (000 ha) (000 MT) (kg/ha) - - (000 MT) ----

1970 3485 2211 635 2 -

1971 3936 2688 683 2 -

1972 3971 2676 674 1 6

1973 3816 2332 585 14 -

1974 4289 2238 521 - 2

1975 4146 2282 550 3 55

1976 4059 1840 453 53 1

1977 4551 2290 503 75 -

1978 4593 2188 476 10

1979 n.a. 2187 n.a. 295 Source: CACEX and FIBGE. 296

Table 97. Corn Area, Production, Yields and Trade, 1970-1979

Area Average Year harvested Production Yield Imports Exports (000 ha) (000 MT) (kg/ha) - - (000 MT) ----

1970 9858 14216 1442 2 1470

1971 10550 14130 1339 1 1280

1972 10500 14500 1381 2 172

1973 9924 14186 1430 4 41

1974 10672 16273 1524 3 1109

1975 10855 16334 1504 3 1200

1976 11118 17751 1596 1 1317

1977 11797 19256 1632 1 135

1978 11196 13533 1209 1500P 15

1979 n.a. 16309 n.a. 1200P 15 p Preliminary.

Source: FIBGE, CACEX. Table 98. Rice Area, Production, Yields, Imports and Exports, 1970-1978.

Area Year harvested Production3 Yield Exports*3 Imports*3 (000 ha) (000 MT) (kg/ha) (000 MT ) -----

1970 4979 7553 1517 95

1971 4764 6593 1384 149

1972 4821 7824 1623 2

1973 4795 7160 1493 33 11

1974 4665 6764 1449 57 -

1975 5306 7702 1466 2 63

1976 6656 9757 1465 76 15

1977 5992 '8994 1500 408

1978 5551 7242 1305 137

1979 n.a. 7589 n.a. 450p a Paddy rice, b Milled rice. p Preliminary. 297 Source: FIBGE, CACEX LIST OF REFERENCES

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