- .\\\\t\).\\\\\t\\ CONFIDENTIAL

NORTHEAST. BRAZIL A . SUCCEEDING PROGRAM . · OF ._ .. REGIONAL _DEVELOPMENT · .

BRIEFING PAPER PREPARED FOR THE ROCKEFELLER VISIT · TO BRAZIL

RecHe, June 101· 1969 THE NORTHEAST REGION

me SOND

NOUG AIC I. THE NORTHEAST: A NATIONAL AND INTERNATIONAL DEVELOPMENT PRIORITY

In population terms, Northeast Brazil is'the third largest country" in Latin America--only the 'rest of Brazil' and Mexico are larger. And only Argentina and Mexico are larger in area. Its size and economic characteristics add up to the fact that Northeast Brazil is the largest homogeneous and contiguous area of mass poverty in the Western hemisphere. For this and other reasons, Brazil, the U.S., the IDB and more recently, the World Bank have come to regard it as a critical development priority.

A. The Northeast as a Brazilian Priority

The creation of SUDENE in 1959 signalled the initiation of the first large scale and systematic Brazilian development program for the Northeast.

Brazil's attention to the Northeast stems from many historical, socio-cultural and political factors, as well as from the obvious endemic poverty. For example:

Brazil, as a nation, had its origins in the Northeast. Patterns of land tenure and the monoculture economy which spread throughout the country originated in this region. Brazil's first national capital was located in the Northeast. The Portuguese ousted a Dutch military settlement, after 30 years, from Pernambuco, an important episode in the history of national integration. The slavery emancipation movement was largely focused in the Northeast. Many of the country's artists and writers who have brought national distinction to Brazil are Nordestinos. Several important military and political leaders have come from the region, the most recent outstanding figure being Castello Branco. Large numbers of Northeasterners have migrated to other parts of the country, bringing a personal awareness to many other sections of the nation of the contributions as well as the problems of the Northeast. Thus, Brazilians as a whole have strong ties and identification with the region and feel obliged, even if sometimes reluctantly, to help the Northeast, occasionally described as "the soul of Brazil. The importance of the region to Brazil reflects another combination of factors which may be described as the 'urgency of national integration'. This concept has been increas­ ingly elaborated and accepted by Brazilian leaders. Brazil will never achieve full national and world power status, which Brazilians accept as their destiny, until social inequities and political tensions in the Northeast which have made it vulnerable to subversion, peasant unrest and historically, a source of political dissent and protest are removed, and until the great income and employment gaps which set the region apart from Brazil's modern sector are reduced or eliminated. The Northeast's large market potential is also seen as an essential basis of further economic expansion of the Center-South and the nation as a whole.

Starting in the 1950's therefore, public policy decisions were made, and, in the 1960's, have been consistently implemented which involve an increasing shift of public resources to development to the Northeast, Through budgetary allocations and via a major federal tax incentive program, hundreds of millions of dollars are annually directed to the Northeast. The proportion of Federal revenues devoted to the Northeast has steadily increased and in 1968, was nearly three and one.-half times larger than it was in 1962. Brazilian priorities are further reflected in the GOB's stated determination to move ahead on national agrarian reform, most particularly in the Northeast Sugar Zone.

B. The Northeast as a Bilateral Priority

Although the United States is the principal source of external assistance to the Northeast, other countries have assigned priority to the Northeast in their bilateral programs. In addition to the evident problems of the region, commercial and cultural factors contribute to third-country interest.

France, Japan, West Germany, Israel and the U.K. have each mounted technical assistance programs in the last few years. West Germany also earmarked 51 percent of its 1963 $50 million loan to Brazil for use in the Northeast. Other countries, includ­ ing those behind the Iron Curtain, have also demonstrated interest 3 in technical assistance and possible loans--e. g. Spain, Portugal, Belgium, Czechoslovakia. Volunteers, a la the Peace Corps, some under semi-private auspices from third countries and the Papacy have been working in the Northeast.

Many of the reasons cited above, indicating the impor­ tance of the Northeast to Brazil, are obviously also part of the U.S, rationale for a major regional assistance program. In addition, the following considerations are pertinent:

In 1961, Brazil asked the U. S. for large-scale assistance to the Northeast. (A unique Special Diplomatic Agree­ ment was signed between the two countries in 1962, covering bilateral collaboration in the development of the Northeast. It is still operative.)

During 1961-62, the U.S. was.particularly sensi­ tive to possible Castroist threats of subversion and to the activi­ ties of leftist-led P6asant Leagues in the Northeast and of such radical authorities as the then Governor of Pernambuco.

Currently, with Brazil's efforts to counter infla­ tion and strengthen its balance of payments position increasingly successful, the Northeast emerges as a particularly logical priority within important national programs in education, agri­ culture and public administration.

As understanding of the change process has widened, and as the U.S. Congress has encouraged assistance programs to move more and more in the "Title IX" direction, ithas become clearer that the ieduction of regional'economic, social and political disparities within Brazil--epitomized by the gap between the Northeast and Brazil's "Golden Triangle"--is indispensable to national economic development and moderniza­ tion, and to democratic and non-violent change.

It is evident, therefore, that the Northeast's massive poverty and inequitable social conditions represent a classic case of the rationale for U.S. assistance in Latin America. More than any other area of its size, the Northeast typifies the problems which the Charter of Punta del Este sought toattack. 4

C. The Northeast as a Hemispheric and Multilateral Priority

The United Nations, World Bank and Inter American Development Bank have been active in the Northeast since 19S0. For exarnple, the World-Bank extended a critical $15 million loan for the development of the region's major hydroelectric center in 1950. UN agencies and technicians (FAO, UNESCO, WHO UNDP) have been and are active in many fields including: livestock, minerals, fertilizer, rural credit, rural housing, public health, child feeding, hydrology, irrigation, training, research, and river basin feasi­ bility surveys. The IDB has provided some 14 loans amounting to almost $100 million in several fields, with industrial development, power and water and sewers the most important. The IDB (along with Brazil and the U.S: ) is thus responding to Title II, Ch. I1 2.b(2) of the Charter of Punta del Este which committed its signatories "to concentrate efforts within each country in the less developed or more depressed areas in which particularly serious social prob­ lems exist."

It now seems clear that after several years of inactivity in the Northeast, the World Bank intends to initiate a substantial loan program in such sectors as agriculture (colonization and credit), industrial credit, and possibly irrigation and municipal water supply. Following Mr. McNamara's trip to the Northeast, several World Bank teams have visited the region in recent months, with intentions to develop a concrete program of financial and technical assistance.

II. REGIONAL DEVELOPMENT; SUCCESS OR FAILURE?

One might conclude that, despite significant attention and investment, Northeast development efforts have been unsuccessful. The following could be cited to support such a view:

More than half the population 14 years old and over are illiterate.

Infant mortality rates range from roughly 15 percent to 40 percent in the region.

Per capita income is less than half the level of the Central-South. IL 5 Malnutrition, debilitating and fatal diseases and low life expectancy still prevail throughout the region.

Public utilities serve a fraction of the population and then on less than a reliable basis.

Unemployment and underemployment continue high.

The absolute gap between the Northeast and Brazil's "Golden Triangle has widened.

What has accelerated and concentrated national and interna­ tional attention accomplished? Has the effort been worth it? Should it be continued?

Starting from a low base, relative improvements in develop­ ment indices are striking. For example:

Since 1961, per capita electric power consumption has more than doubled, rising, as a percentage of national per capita consumption, by more than 60 percent.

The population served by public water and sewerage systems has doubled, rising to almost 4, 000,000.

Thousands of kilometers of all-weather roads have been constructed.

Regional gross and per capita income have been increas­ ing more rapidly than the national average.

In long-run development terms, perhaps what has been happen­ ing in education is most revealing.

800, 000 children have been added to elementary school rolls since 1961, an increase of 45 percent while the number of children in this age bracket rose only 14 percent.

Enrollment in industrial schools has surged to 17,000, an increase of almost 400 percent.

Enrollment in universities exceeded 40,000, an increase of 150 percent. _6

Over 30, 000 teachers, supervisors and administrators have received training in Brazilian and USAID programs.

Most important, perhaps, is the change in the professional approach to education planning and management, and to the measur­ ably more sophisticated role now played by the state education secretariats. Particularly at the elementary level, an institutional modernization revolution has occurred in the last 5 years.

From this summary description of t progress and poverty', the following conclusions can be drawn:

Brazil has been and is engaged in a forceful self-help development effort in the Northeast, but the situation is still desperate.

The fact.of impressive improvement in a short few years demonstrates that, even in an area where antediluvian structures and attitudes persist after hundreds of years, important change and modernization are achievable.

Many of the elements of "take-off" are present or visible: significant physical infrastructure has been created; human resource development has been measurably intensified; a momentum of growth has been achieved, exceeding the national rate; and, capable and sustained development leadership, a sharp contrast with the moribund past, has emerged at all levels.

It is probably too early to determine whether either the word success or "failure" is an appropriate verdict. But it seems clear that, as one of the Free World's major regional development efforts, the Northeast is succeeding. Whether it can be considered a success or should be called a failure years from now depends on whether progress to date is continued, social injustices are significantly eliminated, and whether the average individual comes to participate more fully in modern life. The outcome and the verdict still depend on continued major Brazilian effort and on sustained external help. -7

III. POLICY AND PROGRAM ISSUES

1. Should the U.S. Reduce or Withdraw from the Northeast on the Grounds that Brazil's Substantial Self-Help Effort Is Adequately Supported by Other Bilateral, Hemispheric and International Assistance Sources?

It will probably take the better part of a generation for the Northeast to achieve per capita income levels comparable to the current figure in the.Central-South. External assistance, most of which is from the U. S., has not been sufficient, even with sig­ nificant Brazilian investment, to reduce the absolute disparity between these regions. Departure of the U.S. would widen the existing resources gap and delay further the achievement of important U. S.. objectives in the region and in Brazil as a whole.

It appears quite unlikely that the U. S. can rely on othir external sources to generate both the required financial and technical resources to attain valid development targets. In political terms, it is important for the U.S. to continue to be associated with mean­ ingful efforts to tackle the mass poverty and social injustices which characterize the region, especially when these efforts appear to have a reasonable chance of success.

TheU. S. is fully accepted as a partner in Northeast development and despite recent political developments at the national level, has never had a better climate for its development collaboration in the region. Overall, the U.S. is probably the most effective, as well as thef largest, external assistance source.

Continuing U. S. cooperation, along with efforts to encourage other countries and institutions to expand their assist­ ance, makes sense.

2. What Priority Should Be Assigned by the U.S. to the Northeast within its Total Aid Program in Brazil?

Although what would be regarded as appropriate U.S. aid levels to the region depend upon a variety of factors--Brazilian inputs and Brazilian views on priorities, magnitude of non-U. S. external resources, regional absorption capacity, available U.S. funds--and, therefore, cannot be precisely calculated, it seems _W8 clear that the U.S. should direct a larger share of its total assistance to Brazil to the Northeast than it has in the recent past.

This shift reflects the reduced need to provide resources to help on the national, macro-economic level, as Brazil consoli­ dates its stabilization and balance of payments gains. USAID is shifting more of its resources toward the longer run social and modernization priorities in education, agriculture, public adminis­ tration and health--and relatively m6re of those bottlenecks, more deeply embedded, are found in the Northeast. Moreover, until the market and development potential of the Northeast is more nearly realized, the region will constitute a .drag on national growth and development, as it fails to spur production and as it continues to require large transfers of public funds.

To plan and manage the higher priority envisaged for the Northeast will probably require a strengthening of the capacity bf the U. S. staff in Recife. The combining of the positions of the U. S. Consul General and of the USAID chief in the Northeast was a useful step in that direction.

3. What Program Elements and Techniques Should Be Pursued Within the U.S. Program in the Northeast?

Technical assistance should be expanded, focusing on training, especially in education, agriculture and public administration. As elsewhere, the underlying objective should be to strengthen the Northeast's human and institutional capacity to serve itself, and to effectively employ capital resources--domestic and external -- which, eventually, should be acquired under conventional, rather than concessionary terms.

Within the Northeast, as realistic opportunities emerge, the U.S. should concentrate much of its assistance on the Northeast Sugar Zone, a sub-region of 6 million people, one of the most critical areas in the Western Hemisphere, which typifies the urgent need for fundamental economic and social change.

Although assistance to finance capital goods imports is not likely to be required in major magnitude, opportunities for such 9 assistance should be more assiduously explored, especially when key development bottlenecks could be resolved--e. g. the produc­ tion of lower cost fertilizer for the region.

More important, if U. S. policy permits, is the stra­ tegic use of dollar funding for priority programs which require local cost financing, e. g. infrastructure (ports, roads, irrigation) and social development (education, agricultural modernization and reform, and health).

4. Should the U.S. Negotiate, Within the Existing Special Northeast Diplomatic Agreement, a Package of Assistance Activities Which Could Lead to a U. S. Commitment of a Specific Level of Assistance Over a Designated Time Period?

Such a strategy could augment the possibilities of U.S. pressure alid influence on the Brazilians on policy and resource allocation questions at national and regional levels. It would also provide desirable program continuity- -especially as the package would require commitments on the Brazilian side (including Federal budgetary allocations and Brazilian­ owned counterpart).

Disadvantages would stem principally from the political pressures which such commitments generate.

It might be useful to consider a commitment for certain types and levels of technical assistance, tying these to Brazilian funding performance, while leaving capital assistance open. CONFID ItLL

CONF*INTIA-L -·-···------

UNCLASSIFIED. .,. LIMITElUNUSSlfili~L USE

Part -II NORTH-EAST BRAZIL A SUCCEEDING PROGRAM OF REGIONAL DEVELOPMENT

SECTORAL PAPERS PREPARED FOR THE ROCKEFELLER VISIT , TO BRAZIL

Recife, June 10, 1969 Sectoral Statements: Northeast Brazil

This document contains a brief' description of eight major program areas in which USAID is cooperating with the Government of Brazil in its efforts to integrate the Northeast region into the more highly. developed Center- South economy-. A ninth program area dealing with pop­ ulation is also discussed.

I Brazilian goals and efforts to achieve them are presented. UT.S. and other foreign assistance and re­ maining problems and policy issues are discussed.

Selected statistical tables are presented following the seetoral statements,

June 10, 1969 Sectoral Statements: Northeast Brazil

Table of Contents

I Pages 'Education 1 - 13

Agricilture 14 - 23

Agrarian Reform 24 - 35

Public Administration 36 - 42

Food for Peace 43 - 48

Health 49 - 54

Population 55 - 57

Infrastructure 58 - 65

Industry 66 - 69

Statistical Annex

June 10, 1969 EDUCATION

I. GOALS

The Federal Government's Strategic Development Program - (1968-1970) sets national goals applicable throughout the country. SUDENE. the Northeast Development Agency, has its five year plan (1969-1973) and each state also has set its own educational targets.

The following goals apply to the Northeast as well as na­ tionally:

1. Enroll all children in ages 7-14 in the major cities by 1970 and in the other areas by 1975o

2. Reform elementary education: modernize curriculato meet today's requirements: reduce drop-outs and repetition; im­ prove teaching skills.

3. Make secondary schools more practical, better equipped and better taught. Greatly increase enrollment.

4. Reform and modernize the entire university systen increase enrollment opportunities; establish advance degree pro­ grams in critical specialty areas to produce the needed scholars and professionals in Brazil

II. BRAZILIAN PROGRAMS

1. "Operation School" has been launched by the Federal Government to make possible total school attendance of primary school age children in all capital cities by 19704

2 Federal support is given to a school-book publishing program designed to make 51, 000, 000 books available for distri­ bution to elementary, secondary and higher levels. I 2

3. A team of high level educators has been designated to study the problem of drop-outs and repetitions

4. The Ministry of Education and Culture is expanding its technical assistance and lay teachers training programs to improve teaching skills.

5. In the Northeast, SUDENE has made funds available to improve the administration of state school systems, has con­ tracted for research on regional educational conditions, and has contributed to teacher training programs in all states.

6. All Northeast states have established a Department of Curriculum and Supervision, have begun decentralizing edu­ cational activities and decision-making away from the capital cities and into the interior, have greatly increased teacher training efforts and, now provide at least limited technical assistance to outlying formerly isolated schools . Two of nine states have established planning sections within the Secretariat of Education Others are about to do likewise. One state has completed a total revision of its elementary school curriculum; two other states are nearly complete, Curriculum revision is under study in all remaining states

7. Plans have been developed for introduction of all­ purpose junior high schools and implementation is well under­ way in Bahia, the region's largest and most populous state.

8. University reform is getting underway. The Federal University of Ceara has already reorganized into the department system patterned after U.S. universities and plans are well underway for creation of academic conditions which will permit the granting of advance degrees.

III. STATUS OF EDUCATION IN THE NORTHEAST: 1961-1968

Elementary education is a state responsibility in Brazil, although there are many municipal and private elementary schools. The state Secretariat of Education is the organ with general overall responsibility for primary and secondary edu­ cation. In 1961 more than 60% of the school age children were I -3 not in school. Neither schools nor personnel were sufficient to offer adequate educational opportunity to the region. Classrooms were poorly equipped and almost no books or other materials were available. Teachers at best received little training and at worst they were barely literate. Of those children entering school, only some 20% remained in school through the fourth grade. The number of children in the first grade equalled the number in all the other grades and failure rates of 50% were not uncommon during the first year.

Significant gains have been registered during the past eight years in primary education The number of children out of school has been reduced to 50%. The educational program has improved significantly in state schools in terms of better facilities, planning and personnel. Each state has a Secretariat of Education which is at least beginning to analyze the global situation in elementary edu­ cation. More funds are being expended and programs of improvement and supervision are in being in each state. However, little has been done to improve municipal school systems.

Secondary education is divided into two levels that can be roughly compared to junior and senior high schools in the United States. The schools are further divided into various types: aca­ demic, industrial, commercial, agricultural, and normal. Secondary schools are operated by the federal, state, municipal and private agencies. The federal government is responsible for the operation of most of the vocational schools in the Northeast,

The number of federal industrial schools has increased rapidly in the last few years and enrollments have gone up 180% since 1961. Enrollment in other types of secondary schools is approximately 15% of the 14-18 school age group and has increased approximately 3% a year. While nearly half of the students are currently in private schools, the percentage in these schools has been decreasing steadily for a number of years.

Enrollment in universities has increased 150% since 1961. About 65% of the students attend federally operated institutions, private universities have 30% and state or municipal institutions enroll the remaining 5%. I4 In general, universities are made up of colleges that are autonomous to the extent of operating as separate institutions. Classroom space tends to be adequate, but laboratories, libraries, and instructional materials are deficient or non-existent. The shortage of facilities is more pronounced because of the dupli­ tocation its students.that exists, as each college tries to furnish all services

There is a need for major revision of university programs and for administrative reform and integration of the different levels of teaching.

Literacy rates in the adult population of the Northeast are usually quoted as near 50%. Although this is an approximation because of the lack of accurate statistics. there is a general agreement that more adults are illiterate today than in 1961. Probably more than half of the people who attained adult status during this period have at least been enrolled in school; however, many did not remain in school long enough to become functionally literate.

Several literacy programs have been launched in the North­ east. Most of these had a short life due to lack of funds, political difficulties and the absence of an institutional base. There is little or no evidence to indicate that these programs were ef­ fective.

Cruzada ABC. which is still operating in five states, has had the most extensive experience. It developed a program of five phases with accompanying materials. Phases 1-3 are in­ tended to take a student up to the junior high level and phases 4-5 are vocation-oriented. The first phase uses volunteer teachers who receive limited training. The Cruzada has also suffered from uncertain financing. The effectiveness of this program is now being evaluated.

All State Secretariats of Education have some provision for adult education but enrollments are minimal. I5

IV. FOREIGN ASSISTANCE TO EDUCATIONAL PROGRAMS- BRAZIL

United States

Since 1962-1963 USAID, the Brazilian Ministry of Education And SUDENE have cooperated in programs with the nine states of Northeast Brazil and the State of Minas Gerais for the improvement of Basic and Elementary Education. Five separate development loans or grants were made totalling $64, 312,400. 00 with counter­ part funds totalling $3, 548, 9806 00 contributed by the States and by SUDENE.

The purpose of three of these programs was to assist the. Northeast Brazilian institutions to expand and improve their ele­ mentary education programs. This was done through providing technical assistance to state organizations responsible for school construction, as well as funds for the construction or reconstruction of over 3, 000 classrooms and equipment. Assistance was provided to State Secretariats of Education in establishing processes for up­ grading teaching staff, developing curricula and teaching materials and increasing textbook utilization. Decentralization of functions of Secretariats and development of regional centers of supervision and administration are important aspects of the programs.

The fourth agreement was with the National Institute of Educational Research (INEP) for the purpose of constructing and equipping a Northeast Regional Training Center, an institution for higher-level training courses for elementary supervisors admini­ strators, normal school instructors and educational research specialists.

The fifth agreement had as its principal purpose the im­ provement and extension of adult and basic education throughout the Northeast. The Cruzada ABC was greatly assisted in its efforts to develop and expand adult training programs and to extend to state governments assistance and financial aid in the area of adult and basic education. * S6

There have been other educational efforts in the Northeast of lesser magnitude but of importance to the total development picture. These include assistance from the University of Vanderbilt to the University of Pernambuco's Institute of the Sciences of Man through technical assistance of a two-man team. There has been continual cooperation in special programs between USAID and SENAI (National Union for Apprenticeship Training in Industry) since 1965 in all of the Northeast states. This is in addition to vocational edu­ cation programs on the national level which have also included the Northeast.

There are two major national programs which will affect parts of the Northeast and eventually most states. One of these is the USAID/MEC Secondary Loan Agreement which involves a $32- 000, 000 loan, counterpart funds from the GOB of approximately $20, 000, 000 and a contribution by the four participating states of $12, 000, 000. Activities under this program will start in the immediate future. It is planned to include more states in subsequent years. The State of Bahia is one of the four states presently included within the program and the State of Pernambuco is expected to be the fifth.

The program includes the construction of multipurpose junior high schools, the construction of pilot comprehensive high schools in each participating state3 the training of teachers for the schools constructed, and the development of an orientation and philosophy appropriate to such multipurpose junior high schools.

COLTED (The Commission for Textbooks and Didactic Material) is a program for increasing the numbers of textbooks available to schools at all levels. It was created by an agreement between USAID, the Ministry of Education and the book publishers' union in 1966, beginning its functions in 1967. With equal contri­ butions, Which to date have approximated $30, 000, 000, the following objectives have been reached: over 16, 500, 000 books have been printed and distributed of which 3, 000, 000 were in the Northeast; 17, 500 development library kits have been organized and distri­ buted, half going to the Northeast. All children in elementary schools of all capital cities have received textbooks, including 500, 000 Northeast children. The program will reach over 70 major cities by 1970. Thousands of teachers have been trained in the utilization of textbooks and didactic materials, and resource books have been developed for self-instructional purposes in the use of such material. Two other programs are presently in the planning stage be­ tween USAID and the Ministry of Education. The first is aimed at assisting the GOB in its program of administrative reform at the university level and the development of centers for post-graduate study in Brazil, eliminating the present necessity for sending so many students abroad for higher level training in certain specialties. The second prospective program is one leading to further development in the area of elementary education aiming at increasing the numbers of children who enter and proceed through the elementary school system. The first grade is presently a critical bottleneck, with less than 50% of the children ever reaching second grade in any one year and only about 20% ever concluding the fourth grade. Through cooperation with the MEC and the National Institute of Educational Research, a concerted effort will be made in three selected Northeast states to increase the flow of students through the system.

Other Donors

ID13

The Inter American Development Bank is the only other major agency at the present time seriously involved in educational development in the Northeast. Through two loans in 1964 and 1965 totalling approximately $7, 000, 000, IDB assisted in the development of Federal Technical Schools in all Northeast states and also in equipping technical shops for many SENAI schools.

A second major loan of $27, 000, 000, made by IDB in 1967, was directed at improvement of the higher education system. This was to be accomplished through assistance to the development of institutes for sciences and mathematics at nine universities. Three of the Federal Universities involved are those in Ceara' Pernambuco and Bahia.

UNESCO-UNICEF

UNICEF, in collaboration with the National Institute for Educational Research, has provided assistance of two kinds in the last three years. The first has been technical assistance to the Ministry of Education for development of plans and sponsoring of seminars in each of the states for the purpose of analyzing the education system and making recommendations. Colloquies were held in 1967 through 1969 in all the Northeast states and the pro­ gram is now phasing-out, I -

The second program was one of assistance in the de­ velopment of training centers for the education of supervisors, directors of elementary schools, specialized technicians in edu­ cation (such as psychologists), and the training of both certified and uncertified teachers. Centers in Paraiba received this as­ sistance during 1967 through 1969. UNICEF contributed approx­ imately $1, 000, 000 during the three year period and approximately 6, 000 persons received training. UNICEF will continue a program of a similar nature, but its emphasis will shift from the Northeast to the Amazon region, particularly the States of Amazonas, Pars, Mato Grosso and Goias.

IBRD

At the present time there is no World Bank activity in the field of education in the Northeast. Personnel of the World Bank are involved with the Ministry of Education in planning for a loan for up-grading secondary education, particularly, at the junior high level. Also involved would be assistance to technical schools. agricultural schools and teacher training schools. The State of Sergipe is among those tentatively included. Another possibility is the State of Maranhio. Present sums contemplated are in the vicinity of $25, 000, 000 with substantial counterpart funds to be supplied by the Brazilian Government.

Other Countries

The National Union for Apprenticeship Training in Industry (SENAI) has received assistance for certain specialized types of training from various countries. Japan is presently nearing the end of an agreement for assistance in establishing a training center and organizing courses of training in the textile industry. France assisted in training electrical workers and Spain, in developing machine shops.

The Eastern European block of countries have re­ cently entered into an agreement to supply equipment to federal technical and SENAI schools in most Northeast states. The equipment is presently being installed and will amount to approximately $2, 000, 000. U9

Ford Foundation

The efforts of the Ford Foundation in the Northeast have been varied and relatively modest. Assistance has been given in development of the Center for Science teaching located on the campus of the Federal University of Recife. This center aims at up-grading the teaching of science at the middle levels and is now advancing to the university level. The Foundation is also interested in improving the teaching of economics at the Federal University of Ceara and may offer assistance in sociology at the University of Pernambuco.

Organization of American States

The Center for Training and Development of the National Economy (CETREDE) was developed with technical assistance and budget support in the amount of approximately $230, 000 annually for the seven year period 1964-1970. This center was established in coordination with the Federal University of Ceara' and aims at developing a permanent system of training in economic development, business administration and public finance.

V. PROGRAM ISSUES AND PROBLEMS

What decisions are made, what actions are pursued, what. investment is undertaken, will depend largely on how the following question is answered: Does Brazil havethe reformomenta-ity- ° -- -­ ' which will permit a national commitment to revolutionize its society through education?

With this question as background, the following issues merit consideration:

1. When Brazil is about to substantially increase edu­ cational investment up to 5% of its gross national product and when the educational investment may reach 1/3 of national savings available for capital investment, how much more can the economy afford as the country seeks to meet its educational needs? 10

2. In the Northeast 60% to 80% of the children in the rural areas are not in school. How can education be made available to this area?

30 In the Northeast 43% of the population is below the age of 14. With a population growth rate approximating 3%, how can the systems be expanded to meet the overall needs?

4. Can a realistic partnership be developed between Federal-State-City agencies responsible for education so that equitable budget allocations are made?

5. As a result of an inefficient primary school system, more illiterates exist in the Northeast than there were ten years ago. Should scarce resources go into adult literacy campaigns or into improving the primary system? How should these competing demands for resources be reconciled?

6. Can the academic curriculum that exists at all three levels be effectively changed to meet the manpower needs through­ out the emerging economy?

7, Can teaching become a full time profession with the status and incentives that will attract the numbers of capable people necessary to meet the demands of quality programs?

8. Can the thirteen universities and thirty colleges in the Northeast carry out effective administrative reform within the framework 'of centuries old elite cultural patterns and the strong institutional resistance to change?

9. In the Northeast most of the educational planning is based on the availability of current funds, without systematic reference to needs and unit costs, How can regional education planning be improved to reflect the concepts of requirements, goals, per-pupil costs, and other fundamental planning concepts ? II

VI. IMPLEMENTATION PROBLEMS

1. Finances

Many educational programs are not implemented or miss their stated objectives because of the erratic flow of money. Often federal funds are a year to two years late and state funds vary, depending on tax collections and revised priorities influenced by political expediency.

Educational planning is not cost oriented and conse­ quently budgets are not developed realistically. The results of this type of planning show up in incomplete school construction, unequipped schools, lack of maintenance funds, teachers without materials for instruction and supervisors who can't travel because there are no funds to purchase gasoline for their jeeps.

2. Technicians

At any level, a poorly trained, part-tine teacher can not direct a system-designed program. With 60% of the primary and secondary teachers uncertified, Northeast program imple­ mentation is too often based on the natural ability and interest of the individual, rather than the expertise which comes from trained professionals.

Many teachers and professors teach in two or three schools. This part-time schedule does not allow them time, nor do they have the energy to prepare lessons properly or to develop a sense of responsibility to a particular school and its program,

3. Institutions

Most schools function within the framework of national and state regulations with very little flexibility allowed. This makes it difficult for local programs to be developed-io meet the needs of a specific area Schools exist with students and teachers who receive very little institutional support in material , direction and conditions favorable to good learning situations. 12

4. Administration and Organization

Until recently no courses were available in the Northeast in school administration. Educational leadership was in the hands of a teacher with little or no training, or of political appointees. Authority is highly centralized. All major decisions are made by a very few people in each state, and operational problems at the school level receive very little attention. Personnel with management ability and office skills have finally begun to appear in the Northeast. Because of the administrative and operational weaknesses of the various educational organizations, when new programs are introduced, a new commission is usually established to im­ plement the program. With the scarcity of trained admini­ strative and professional personnel, this proliferation of commissions and regulatory bodies weakens the entire system and creates endless layers of overlap and duplication of efforts.

5. Planning

Accurate data and an adequate statistics gathering capacity do not exist in the Northeast. Departments of research are just being established. Demographic studies, manpower surveys and educational program requirements were not the bases for educational planning. What has happened in most sit­ uations resulted from plans reflecting opinion or political in­ fluences. This situation is now being corrected in the more advanced Northeast states, several of which have recently established planning sections.

VII. REMAINING NEEDS

Significant progress has taken place in the field of edu­ cation throughout the Northeast. Institutional structure have begun to change; a professional leadership is evolving, and an environment that will permit reform is beginning to develop, The goals already established are far from reached. Much still needs to be done. As a first priority the GOB should establish policy that clearly indicates the national commitment to education and designates the amount of resources that will be made available in the future. $=E 13

External technical assistance and financial resources will be needed in the following areas:

1. Training of professors in the United States and third countries until such time the Brazilian universities can meet their own staff requirements.

2. Recruitment of foreign expertise. Several European countries have a surplus of professors. Programs should be devel6ped to bring selected professors to Brazil for 5 to 10 year periods.

3. The development of administrative, management and middle level technical skills.

4. The acquisition of additional facilities and equipment.

5o The- adaptation and application of modern technology.

Several areas wherein significant changes can be brought about without major increases in investments are:

1. In-service programs conducted during the long va­ cation periods.

2. Encouragement of professional organizations.

3. Establishment of .realistic student promotion policies and age-grade distributions in primary and secondary schools.

4. Curricula revision, including programs that would encourage students to seek technical training.

5., Enforcement of existing legal requirements, which would accomplish much in the way of university reform.

IJ

II AGRICULTURE

1. GOALS

The fifth stated objective of the Alliance for Progress is "to raise greatly the level of agricultural productivity and out­ put and to improve related storage, transportation andmarketing services. "

These aims are more precisely defined in Brazil's Stra­ tegic Development program, which sets forth the country's in­ tent to:

1. Increase agricultural production and productivity by transforming traditional agriculture through a change in pr6duction methods and to expand credit facilities, thereby strengthening the purchasing power of the rural population.

2. Break the food supply barrier by solving the pro­ blems concerned with agricultural marketing services.

The specific objectives for agricultural development in the Northeastern Region were further delineated in 1967 in the Charter of Brasilia, as follows:

1. Elevate the standard of living of the rural producer through the creation of cooperatives and labor unions; facilitate legal acquisition of land; provide technical assistance, agricultural insurance, effective credit and financial incentives; improve the economic and social infrastructure.

2. Increase agricultural production and improve quality by modernizing farming methods through applied research, practical training and extension services.

3. Maintain adequate food supplies as to quantity and quality and at price levels high enough to stimulate producers while still being reasonable to the consumer, through regulating stocks, crop insurance, adequate warehousing, marketing in­ frastructure and rural credit. .. .15

4. Provide incentives for establishing rural industries, utilizing agricultural products.

5. Stimulate agricultural exports through fiscal in­ centives.

6. Coordinate and organize the public and private sectors toward agricultural development.

The Superintendency for the Development of the Northeast (SUDENE), is the regional coordinator and a substantial financial source for all regional development efforts. SUDENE has esta­ the-following priority programs for the agricultural sector in its IV Master Plan (1969-1973):

1. Promote region-wide agronomic research in food crops and agricultural research in the development of cotton, fruits, oil crops and livestock production on the coastal tablelands.

2. Develop marketing services to handle efficiently the purchase, storage and sale of foodstuffs in order to afford a better price to producers and to provide greater stability of supplies in large urban centers.

3. Develop cooperatives for the small and medium­ size producers to facilitate the delivery of agricultural inputs and-to handle market production.

4. Promote the production of beef cattle and improved seeds, especially cotton.

5. Increase the emphasis, on the use of Article 34/18 resources in the agricultural sector.

6. Stimulate and facilitate the settlement and agri­ cultural development of new lands in the coastal tablelands, through fertility studies; in the State of Maranhao, through the implementation of a colonization project; and in the semi-arid zone , through the development of water resources for irrigation. * 16

II. BRAZILIAN PROGRAMS

Agricultural programs developed in the Northeast by the public sector are implemented by a large number of national agencies and institutions, principally the following:

Ministry of Agriculture Bank of Brazil (BB) National Cooperative Credit Bank (BNCC) National Institute for Agrarian Development (INDA)

Regional agencies and institutions:

Superintendency for the Development of the Northeast(SUDENE) Special Group for the Rationalization of the NE Sugar Agro- Industry (GERAN) Bank of the Northeast of Brazil (BNB) National Superintendency of Food Supply (SUNAB) State Development Banks Secretariats of Agriculture Extension Services

SUDENE has given special attention to the:

1. Promotion of production and use of improved seed, principally cotton and corn, in six states. Although there was little or no improved seed production in 1961, there have been distributed 2, 514 tons of improved seed thus far in 1969.

2. Prorhotion of investment in agriculture under its fiscal incentive programs. Projects valued at $85 million have been ap­ proved to date; so far, $11 million have been released for these projects.

3. Completion and publication of extensive fertility studies on peanuts, cotton and yams in the coastal Tabuleiro.

4. Further development of the Alto Turi Colonization Project in Maranhio started in 1962, including establishment of a small agricultural research program and large scale expansion of rice production.

I 17

5. Development, in cooperation with DNOCS and SUVALE, of irrigation systems for some 27,400 acres in the San Francisco, Piranha and Jaguaribe Valleys.

III. PRESENT STATUS AND RESULTS SINCE 1961

Research

The Ministry of Agriculture has reorganized its research division, centralizing control of funding and planning for their nine regional experimental institutes and has established higher standards for technical personnel and for more effective use of their resources. It also has gradually delegated more authority and responsibility for programming and implementation activities to the state level.

Useful research is in progress at the nine sub-stations on: identification and control of serious plant pathogenes; cotton cultural practices and breeding; improved-pasture development through weed control; introduction of new species and varieties of forage crops (64 plots); insect control (biological control of Rhodesgrass scale) and fertilization; fertilizer trials to establish plant requirements and the efficiency of different phosphorus carriers in major soils; variety trials with cowpeas and tomatoes. A national scientific journal has been published for the past two years to make known the findings.

The State Institute of Agricultural Research (IPA) in the State of Pernambuco is implementing useful research on its 12 sub-stations on: animal nutrition; poultry husbandry; pasture management; variety trials; and, cultural practices with corn, sorghum, cotton and vegetables.

Marketing

The Ministry of Agriculture has established a national forecasting service providing market news and crop forecasting through the state secretariats. The Recife marketing shed now receives increasingly effective coverage. SUDENE has supported the establishment and expansion of the Recife Wholesale Marketing Center and-is extending facilities to include additional centers of population. The State of Bahia has completed plans for wholesale marketing facilities in Salvador, and the State of Cear6 has started feasibility studies for similar facilities in Fortaleza.

Price Support

With the elimination of most price controls, the Ministry of Agriculture, financed by the Bank of Brazil, has established minimum price supports, by producing areas, for most basic agricultural commodities. As yet, this has not been very effective in the Northeast.

Cooperatives

In November, 1966, a new cooperative law placed the responsibility for all agricultural cooperative development with INDA, which acts through State Departments of Assistance to Cooperatives. By the same law, all agricultural cooperatives were obliged to be registered as such, and to modify their charters to establish as their primary functions the provision of agricultural inputs and the marketing of agricultural production. Six hundred and twenty-seven rural cooperatives are registered in the * Northeast.

Credit to cooperatives through the BNCC increased for Brazil as a whole from US$10, 500, 000 in 1963 to US$44, 650, 000 in 1968, of which approximately 140i came to the Northeast. In 1964 the Bank of the Northeast gave credit to 91 cooperatives with 9, 920 members, in the amount of US $1, 382, 000. By 1968 these figures had increased to 144 cooperatives with 23,440 members and US$9, 189, 000. SUDENE, in collaboration with INDA, is supporting a program to provide technical assistance to cooperatives through State Extension Services. IV. U.S. AND OTHER FOREIGN EFFORTS

USAID has contributed-to agricultural develovment of the Northeast through assistance to both national and regional pro­ grams as shown below.

1. Technical assistance and demonstration equipment is provided to the Ministry of Agriculture by IRI Research, Inc., through a national grant-funded contract for agricultural re­ search, extension and training. Under this contract eleven specialists have been assigned to the Northeast.

2. North Carolina State Universit assists the Ministry of Agriculture, through an AID/Washington grant-funded contract, to establish soil testing facilities, determine nutrient requirements of major soils and stinulate use of fertilizers. There are three soil testing laboratories now serving the North­ east. In these laboratories, the first of their kind in the region, 25,000 soil samples have been analyzed and recommendations made since 1963. A report has been completed on the nutrient require­ ments of Northeast soils, but as yet has not been published.

3. The University of Arizona is assisting the Federal University of Ceari, through a USAID/NE grant-funded contract. to establish an agricultural land-grant type institution. A complete experimental farm is being developed as part of an integrated program which will enable the University of Ceari to offer advance degree courses in Agronomy starting in 1970.

4. Michigan State University, through a USAID/Washington grant-funded contract, completed a study of the marketing processes in the Recife area and is providing training to SUDENE staff in marketing systems.

5. A USAID /PASA Marketing Specialist was provided for 2 1/2 years to advise SUDENE and State Secretariats on their marketing programs. Local currency support and technical assistance and training has been provided by USDA/PASA to the Ministry of Agriculture and Secretariats on market news services.

6. USDA /PASA Rural Credit and Cooperative Specialists have been provided to serve as advisors to federal, regional and state institutions working with cooperatives. For two years USAID supported the program of the Cooperative League of the U.S.A. in the Northeast. 20

7. USAID has contributed substantially through PL 480 generated loEc-W-Zeurrency to the SUDENE/INDA programs for providing technical assistance by the ANCARs to cooperatives. In three different loans to the Government of Brazil, approximately $59, 000, 000 in local currency was generated for rural credit, of which 15% is estimated to have been used in the Northeast.

8. Mississippi State University, through a national grant contract with USAID, has provided technical assistance, demon­ stration equipment and training to the Ministry of Agriculture and to the State Secretariats for the development of a seed improvement program, establishing in the Northeast four seed testing labora­ tories, five seed storage facilities and two seed processing facilities. L USAID/Brazil has supported SUDENE with local cur­ rency in the establishment of a large seed processing plant with storage facilities.- This is located in the San Francisco Valley where the majority of the regiont s improved seed is now being produced.

9. SUDENE's Alto Turi colonization project in the State of Maranhgo is being supported by USAID/Brazil through generated local currency.

10. The development of water resources for irrigation by SUDENE, DNOCS and SUVALE in the Northeast is technically supported through USD4 with funding going for feasibility studies and technical assistance and training.

11. USAID's Northeast Area Office supports general training programs to upgrade technical competence in all fields. Emphasis is given to technical assistance, demonstration equipment, and training to increase fish production in fresh water impoundments through USDI/PASA. It also assists through local currency support to the Regional Agricultural Extension Training Center in Recife, which is presently.upgrading approximately 1, 500 state and federal employees annually. This Center has contributed greatly to dissemination throughout the Northeast of agricultural research results by IRI-trained infor­ matiofn specialists. 21

Agricultural aid to the Northeast from countries other than the U.S. has been negligible. Only short-term assistance has been offered and no permanent resident offices have been established. Non-U. S. aid to regional agriculture is as follows:

1. A France/SUDENE agreement provided for technical assistance for the development of irrigation in the Jaguaribe Valley and to increase production and commercial sale of coconuts.

2. In 1967 German,:I_ agreed to build a small reservoir for the State of Ceara foapproximately $400, 000.

3. A Japan/SUDENE agreement in 1967 covered a study of the wood reserve and marketing of babaou.

4. An Israel/SUDENE agreement for technical assistance included the development of a seed industry and the expansion of irrigation in the San Francisco Valley; subsequently, development of water resources in the State of Piaui was undertaken, involving seven technicians.

5. The United Nations, through the Food and Agriculture Organization, in addition to providing other technical assistance, has an agreement with SUDENE to assist with an irrigation project in the San Francisco Valley, to carry out feasibility studies for large-scale irrigation in mid-river areas and to make soil studies and conduct agricultural research in the area. The second stage covered two pilot projects for the irrigation of 12, 500 acres, The total investment by UN from their special fund is approximately $1, 000, 000. The UN also has an agreement with SUDENE to develop meteorological services and research with a total invest­ ment of $1, 060, 650.

V. PROGRAM PRO3LEMS AND ISSUES

The money economy of the region is largely based on the production of totton, sugar, cacao, sisal and livestock. In general, all three agricultural crops ar6 produced under extensive methods which have not advanced much in the last fifty years. 22

These crops provide most rural employment. Coton, sugar (even though heavily subsidized) and sisal are barely compet­ itive in price and quality and are depressed commodities in world markets. Producers do not have the capital nor access to sufficient credit to change traditional methods.

A great majority of the peasantry is landless farm workers, or subsistence farmers. Many are unemployed or under-employed and those employed can barely exist on the wages paid. the Northeast has had the highest rate of regional out-migration, mostly from the rural areas. The urban population increase, reflecting rural immigration, is 2. 3 times that of the rural population. It is estimated that only 42% of the lan&has sufficient rainfall for dry farming and only 51o is cultivated. Due to climate, origin and use, soils are generally low in fertility. Crop productivity levels are very low and have not appreciably advanced in the last twenty years. In recent years, foodstuff prices have risen more than in all other regions of Brazil. The majority of the rural peasantry is illiterate and their level of food consumption is below minimum caloric/nutrient requirements.

Development efforts have produced positive results but still are not keeping pace with increasing needs. Agricultural production is increasing at a rate higher than Brazil as a whole but this is due mostly to an expanding labor force and increases in areas cultivated. The low educational level of the peasantry greatly contributes to low productivity and delays adoption of technological improvements. The inefficient marketing system places the producer at a great disadvantage.

VI. REMAINING NEEDS

The Northeast needs increased inputs in all fields. Because of insufficient resources, priority must be given to relieving the major recognized bottlenecks. Priority needs include:

1. Training, at all levels. *23

2. Greater availability of rural credit not only to large and medium producers, but also to the small producer. - Long­ term credit at reasonable interest rates is still practically un­ known.

3. Simplified procedures for acqufsition of land titles.

4. - evelopment of accurate agricultural statistics on which to base decisions.

5. Accelerated development of marketing system to get the inputs to the producer and to get his products to the consumer,

6. Further development of cooperative activities for the small producer through technical assistance and education.

7. Basic agricultural inputs at reasonable prices, to stimulate technological changes in production methods. 8. Increased participation of the private sector in agricultural development.

VII. IMPLEMENTATION PROBLEMS

1. SUDENE has not been too successful in effectively co­ ordinating efforts of all national, regional and state agencies.

2. Capable administrative/technical personnel are in short supply.

3. Lack of adequate, timely funding has hindered the implementation of planned reforms and-progressive programs. -24

AGRARIAN REFORM

I. GOALS

Brazil's intentions with respect to Agrarian Reform co­ incide with the stated objectives of the Charter of Punta del Este. "To encourage, in accordance with the characteristics of each country, programs of comprehensive agrarian reform leading to the effective transformation, where required, of unjust sttuc­ tures'and systems of land tenure and use, with a view to re­ placing latifundia and dwarf holdings by an equitable system of land tenure so that, with the help of timely and adequate credit, technical assistance, and facilities for the marketing and distri­ bution of products, the land will become for the man who works it the basis of his economic stability, the foundation of his in­ creasing welfare, and the gua-rantee of his freedom and dignity."

II. BRAZILIAN PROGRAMS

To translate these intentions into reality, the Government of Brazil passed the Land Statute Law in November, 1964. Under this Law, two special Institutes were created:

1. The Brazilian Institute for Agrarian Reform(IBRA). whose purpose it is to correct the agrarian structure and carry out plans of land reform, operating in the fields of zoning, cadastral surveys, land taxation, land distribution, colonization in priority areas, and agrarian incentives.

2. The National Institute of Agrarian Development(INDA), whose purpose it is to promote rural development through education, cooperatives, and formation of new population centers, operating in the fields of immigration, settlement, community activities, agricultural training, unions, cooperatives, rural electrification, soil conservation, food technology research in rural organizations, and resale of agricultural inputs.

Brazil's agrarian reform policy was restated in July, 1967, in its Strategic Development Program. Specific objectives for agrarian reform and rural development were further delineated *25 later that same year in-the Charter of Brasilia. Under the Charter's Agrarian Reform provisions, IBRA was specifically charged to:

1. Analyze the data recorded from'the 3, 000, 000 registered properties to develop overdue basic information for planning.

2. Resettle 27, 000 people in new colonies, provide them with technical and financial assistance, and stimulate cooperative development.

3. Execute projects within the priority areas which will stimulate private initiative.

4. Establish and regulate property titles in the rural areas where ownership is in doubt.

5. Establish clearly what is public domain, especially in frontier areas.

6. Provide adequate training at all levels for the people involved in agrarian reform through a timely and systematic schedule.

7. Provide incentives and stimulate private initiative in colonization.

8. Revise agrarian reform legislation to guarantee social justice.

9. Classify the areas for agrarian reform according to stage of development and need, establishing priorities.

In the area of Rural Development, INDA was given I responsibility to:

1. Study the complex rural sector and establish methods for implementing rural social-economic reforms.

2, Settle new areas by establishing rural. communities providing good living conditions and develop the region in con­ formity with the strategic and social-economic objectives of the Government. 26

3. Promote the development of rural cooperatives for the benefit of all.

4. Promote mechanization of agriculture as a way of increasing productivity and lowering production costs.

5. Provide the necessary agricultural inputs to modernize production, by purchase and re-sale to the producers.

6. Establish rural electrification.

7. Stimulate and assist the development of rural industries utilizing agricultural production.

8. Stimulate self-help and community development through establishing model municipalities.

In 1965, a presidential decree established four priority areas for agrarian reform, two in Northeastern Brazil: (1) the entire state of Ceara; and (2) the eastern half (53%) of the state of Pernambuco, combined with the Southeastern part (17%) of the state of Paraiba.

GERAN

In,October of.1965, a presidential decree created the Special Group for the Rationalization of the Northeast Sugar Agro- Industry (GERAN) composed of the Superintendency of the Development of the Northeast (SUDENE), IBRA, INDA, the Sugar and Alcohol Institute (IAA) and Bank-of Brazil (BB)

GERAN was initially created to develop a program for the execution of an agrarian reform and rural modernization in the sugar zone of theNortheast.. By another decree in October, 1966, GERAN was given powers necessary to execute the program, primarily acting as a coordinator of the inputs of its component agencies. More recently in late 1968 and early 1969, GERAN's organization was strengthened and its effectiveness in achieving program objectives was enhanced. I27

The specific objectives are:

1. Modernization of the sugar industry through in­ creasing agricultural yields, industrial productivity, reduction of manpower required, reduction of harvest season and lengthening of milling season.

2. Diversification of the sugar zone economy by: in­ creasing production of food crops and other agricultural raw materials for processing and export; stimulating development of cane and sugar by-product industries; fostering development of agricultural processing industries and the production of manufactured goods and other inputs; and, creating new job opportunities.

3. Implementation of agrarian reform by establishing 17, 000 family farms in the Northeast during the first three year period, for workers made surplus by mechanization of the sugar industry.

4. Development of human resources through programs for adult literacy, interim employment, vocational education and self-help community activities.

SUDENE

SUDENE is the regional planner and coordinator for all development efforts in the Northeast as well as a major source of funds. In addition to its support to GERAN, SUDENE established the following priority programs for agrarian reform in the Northeast, in its IV Master Plan (1969-1973):

1. Open up new lands in the dry zone (Sertao) through the development of water resources for irrigation.

2. Develop the large Alto Turi colonization project in the State of M aranhgo, through increased investments in agricultural research, infrastructure and basic feasibility studies. *28

3. Furnish technical, administrative, material and financial assistance to farmers', livestock, producers' and fishermen's cooperatives.

4. Improve marketing services in the rural communities by providing marketing news services, research studies, regulation of supply, market centers and warehouses.

5. Encourage the use of Article 34/18 funds in agri­ culturaland livestock projects.

The IV Master Plan promises a renewed attempt to, promote successful land settlement projects based on: (1) better implemen­ tation of plans; (2) technological research; (3) improved social services; and, (4) natural resources studies.

III. PRESENT STATUS AND RESULTS SINCE 1961

An important effort has been made to encourage and finance resettlement or colonization programs throughout the Northeast by private, state and federal agencies on public domain, purchased and expropriated lands. Three projects have been established in two states by IBRA (in priority areas of Pernambuco and Paraiba); 14 projects, in six states by INDA; one project by SUDENE; one project by Superintendency of the San Francisco Valley (SUVALE); 30 projects in six states by state agencies and five projects in four states by.private institutions. Not counting numerous irrigation projects by SUDENE, SUVALE and the National Department Against Droughts (DNOCS) which involve resettlement, this is a total of 54 projects, involving more than 17, 000 families or about 100, 000 people.

Some projects have been more successful than others. None has proved to be fully satisfactory. Projects of this nature, of course take time. The settlers now have land of their own and, while still not living well, are living better than before. The projects have been costly and require further financing. The colonists have been slow to adopt improved farming practices and new crops. Generally, speaking, they have lacked adequate technical assistance, on the part of sufficient credit and efficient planning and organization problem of a landless the sponsors. In short, the magnitude of the peasantry has not been meaningfully reduced. *29

INDA and IBRA have started model municipalities in each state, have expropriated land, compiled rural statistics, collected rural property taxes, revised land tenure legislation and developed rural cooperatives. Recent presidential decrees of significance to agrarian reform have:

1. Required all agricultural cooperatives to handle agri­ cultural inputs and market members' production.

2. Created the Special Group for the Rationalization of Agrarian Reform (GERA) to coordinate the activities of INDA and IBRA.

3. Facilitated the expropriation of land and clatified legal procedures and conditions of compensation.

GERAN

During its first two years, (1966-1968) GElRAN organized, established norms for development of modernization/diversification project proposals, began formulating a coordinated plan, and initiated some basic studies. However, difficulties developed and it was evident that the organizational structure of GERAN would have to be changed before it could operate effectively. When the GERAN Deliberative Council could not reach an agreement on program implementation the Secretary General resigned, as he had no authority to activate projects. Late in 1968, a presfdential decree modified the organizational structure of GERAN, whereby operational control was passed from the president of the Deliberative Council to the Secretary General. Early in 1969, with the appointment of a new Secretary General, progress towards objectives was objectives was resumed. A professional staff has been appointed and is working on an overall, coordinated plan of action. GERAN contracted with a private association "Cooperarte", to upgrade, standardize and supervise the private primary educational program of the sugar producers. GERAN is also beginning to work with state education authorities in this field. GERAN has revised the norms for sugar growers' project proposals for financing of modernization of production and agrarian reform on their properties. Two such projects have been received and are under study. Nego­ tiations are now being conducted with various institutions and agencies to provide services in the field of rural development. *- 30

IV. U.S. AND OTHER FOREIGN EFFORTS

Food for Peace has provided "grub-stake" food to a number of colonization projects, with the greatest amount going to the Pindorama colony.

Local currency grant funds have been provided to Cabo, Vitoria and Guabiraba colonization projects in the State of Pernambuco. and counterpart funding support to Landulfo Alves, a colonization project in the State of Bahia. These monies were used principally to establish loan funds for agricultural inputs.

During 1966-1968, USAID provided a Land Settlement Advisor to assist all agrarian reform activities being carried out in the Northeast by I-BRA, INDA, SUDENE, GERAN, State of Pernambuco and Pindorama Colony.

During the period 1964-1966, USAID played a major role in the creation of GERAN and provided technical assistance in development and planning after' it was established.

In 1966, AID contracted Hawaiian Agronomics, Inc., to perform an extensive economic feasibility study of the Northeast sugar industry to evaluate the utilization of the human, natural and institutional resources and make specific recommendations for a feasible program of adjustment which would minimize the displacement of manpower. The final report was presented to all interested parties in early 1969 and it is serving as a useful guide for project proposals to GERAN as well as stimulous to private initiative to modernize and diversify. This study is also being used by GERAN in its overall planning.

An observation tour of the sugar production and processing facilities in the U.S. and third countries was provided by USAID to seven Brazilian producers in June, 1967.

In August, 1967, short-term consultant service from Cheechi Company wasprovided by USAID to evaluate the technical assistance needs of GERAN itself and member agencies. I 31

Recently GERAN requested USAID assistance in the fol­ lowing areas:

1. Feeder roads, public water systems and basic sanitation programs for colonization projects and farm communities.

2. Food for farm families during initial period of resettlement, for pre-school and school children and for pregnant and nursing women.

3. Food and feed grains for cooperatives for sale to members, the proceeds to be used to establish revolving funds for financing crop production and marketing.

4. Building materials and guidance for self-help'con­ struction of community facilities and housing for farmers and laborers.

5. Agricultural implements and equipment for re­ settlement.

6. Pilot factories for products and by-products of a diversified agriculture.

7. Agricultural research to backstop sugarcane pro­ duction and agricultural diversification.

8. Training and technical guidance to GERAN staff.

V. PROGRAM PROBLEMS AND ISSUES

Background

There are three major climatic zones in the Northeast Region. The "Zona da Mata" 'is a narrow, humid belt along the Atlantic coast with large concentrations of population and rolling to rough topography, which produces sugar in the northern half and cacao and rubber in the southern part. Large farms, only partially utilized, dominate the zone. The majority of the rural population is landless, living on the large farms in a semi-feudal state. Increasing numbers are unemployed or under-employed and flock to the larger communities and cities which are unable to absorb them. *32

The "Agreste" is a wider belt, inland and paralleling the Zona da Mata. It is fairly well populated with 30" to 60" of rain­ fall per year and rolling topography. It produces cotton, live­ stock and diversified foodstuffs. Small farms dominate the zone. Scattered large holdings produce cotton and livestock. In the Northeast, more people are employed in the cotton industry than in any other crop. Pratically all cotton, mostly perennial, is produced by share-croppers who barely exist on their income.

The "Sertgo" is the largest zone, comprising about 65% of the region. It is sparsely populated, has under 30" rainfall, rolling to flat topography, with large holdings engaged in producing cotton, sisal and livestock. Here the rural worker is a share-cropper where cotton is produced and is poorly paid or under-employed on the ranches. Land is only exploited for the little that nature offers.

Besides these major zones, there are areas (principally Maranhio) in the northwestern part of the region which are part of the Amazon climatic zone. These and other new frontiers of the Northeast opened up by roads or accessible by water have been as yet sparsely settledalthough migration to MaranhEo from the"bulge" states has contributed about one-fifth of its three and one-half million population.

The rural population as a whole leads a bleak existence, is illiterate, poorly nourished, and bound to feudal traditions. According to the 1967 agricultural census, about 45% of the farms. were of less than 25 acres in size, representing only 2.6% of the total area. Farms larger than 2, 500 acres represented only 0.9% of the number of farms but occupied 33% of the total farm area. Agricultural statistics also indicate that over time, rural properties tend to fragment, especially on the small farms, which absorb the largest portion of the working population. Some 23% of the area of large farms is in fallow; this holds for less than 10% of the small farams. Owners of large-farms generally have several sources of income but for the small farm owner, agri­ cultural work is his only means of livelihood, in addition to which a share of his production is used for his own subsistence. The pattern of land ownership and distribution of land adversely influences land utilization and seriously hinders agricultural development. 33

The sugar industry (production and processing) is the backbone of the region's economy, directly employing some 450, 000 workers. The sugar-producing zone has suffered a series of severe economic crises over the past decade. The primary cause has been the inability of the sugar producers to keep pace with the growing more modern sugar industry of southern Brazil, which has absorbed the internal market, and with other more efficient producers in the international market. Related to the underlying economic problems, the sugar-pro­ ducing zone has long been characterized by a number of basic social and political problems. Prior to 1964, several extremist movements produced serious efforts at upheaval, apparently aimed at correcting the inequities through radical means. Prior to GERAN, periodic financial relief and protectionist measures, designed to guarantee the short-term survival of the industry, comprised the Government's approach to the "sugar" problem.

Agrarian Reform and Rural Development are urgently needed throughout the region but limited resources preclude overall treatment. Within the priority sugar area there should be an orderly and logical sequence of activities compatible with institutional capacities to implement.

A decision should be made as to whethet modernization of sugar production and processing should be permitted to proceed before agrarian reform and rural development plans are formulated and implementing action programs oriented to the welfare of the worker are agreed upon.

GERAN's present plan to accomplish agrarian reform and modernization on a project by project basis rather than as a fully integrated program embracing the entire Sugar Zone could have serious disadvantages and should be restudied.

Criterea need to be established to guide resettlement activities. Such criterea should take into account the desires and abilities of those to be resettled and should provide a rationale for deciding-who will be settled on family farms and who will be placed in centralized agricultural communities. I -34

Present institutions providing credit, marketing facilities, technical assistance and extension services are inadequate to sup­ port the region's agriculture sector. Unless greatly strengthened they can not be relied upon for the special effort required to make GERANts resettlement activities successful.

Funding from Brazilian sources to implement GERAN's multi-year goals does not appear adequate and past contributions from GERAN's component entities have been unsteady. Funding needs to be arranged for on a reliable basis and prospective resource gaps need to be identified, so that new, including external, resources can be sought and appropriate program adjustments made.

VI. REMAINING NEEDS

The Agencies involved in rural development and agrarian reform in the Northeast have taken only the first steps forward. Programs for the priority areas are largely in the planning stage.

Priority activities should include:

1. Training of institutional staff at all levels, appropriate for the jobs to be performed (salaries are inadequate for staff stability; incentives and provisions for promotion on merit are a must).

2. Building of an institutional educational system, especially in the field of vocational education, to reach the younger generation of the rural population.

3. Expanded extension services with broader range of activities to reach and supply needs of the adult working class, staffed with personnel acceptable to them.

4. Greater stimulus and incentives to the private sector to expand and develop.

5. Expanded communication system, principally rural roads, to allow economic flow of materials. Ifl35 35

6. Greater supply and availability of medium and long­ term credit at economic rates to the small producer and the pri­ vate sector in agricultural services and rural industries.

7. drdater flow of external resources, financial and technical, into the regional agricultural sector. 37

1. The Superintendency for Development of the Northeast (SUDENE).

2. The National Department for Work against Droughts (DNOCS).

3. The Bank of the Northeast (BNB).

4. The Executive Group for the Rationalization of the Sugar Zone (GERAN).

5. State Development Banks, all states.

6. State Planning Commissions, all states.

The first three of the organizations listed above were, in fact, established -priorto the Charter of Punta del Este, although SUDENE did not become operative until the early sixties. All three have been strengthened in recent years.

SUDENE has sponsored a large variety of training courses in administrative skills and has participated in the creation of three public administration institutions each of which is unique to the Northeast. These are:

1. The Institute of Public Service (ISP)

This institute, an autonomous organization attached to the School of Administration of the Federal University of Bahia, provides consultive services, research and training to state governments. It is the only institution in Brazil exclusively dedicated to state administration.

2. . The Regional Institute of Municipal Administration (CRAM)

This institute, an autonomous organization attached to the School of Administration of the Federal University of Pernambuco, provides consultive services, research and training to municipal governments. It is the only institution of its kind in the Northeast. -38

3. The Regional Training Center for Administration (CERTA)

This institute, an autonomous organization attached to the School of Administration of the University of Ceara, provides administration and management training in highly -specialized fields,' such as: school systems administration, hospital administration, program budgeting and development prbject management.

SUDENE, with support from USAID, has also assisted in strengthening university level Schools of Administration throughout the region. It has sponsored courses and seminars in development planning, has strengthened and mechanized its statistics-gathering capability and has standardized accounting procedures in connec­ tion with all projects executed under its auspices.

III. RESULTS SINCE 1961 AND PRESENT STATUS

SUDENE has become an accepted part of the region's public infrastructure. It has raised the level of project planning, execu­ tion and inspection procedures. It has helped to create a develop­ ment mentality throughout the Northeast.

The Institute of Public Service has accomplished a complete administrative reform of the State of Bahia, is terminating . a similar undertaking in the States of Maranhao and Piau and is preparing itself to guide administrative reform activities in Pernambuco and Alagoas upon completion of activities in Maranhio and Piaui. The Regional Center of Municipal Administration has trained 1, 500 local government employees, has provided technical assist­ ance to several of the region's largest cities and has published several volumes of specialized management information tailored to Northeast requirements.

The Regional Training Center for Administration has trained some 650 administrative and management employees and is fully scheduled for the next year with training courses in support of administrative requirements of the SUDENE IV Master Plan (1969-1973). I ______39

Under a program established to provide advanced degrees to faculty members of the Schools of Administration of the region's three major universities, approximately thirty young instructors were progranmed for a year to eighteen months! study in the United States. Twenty of these have already returned after suc­ cessfully completing their courses. Enrollments in public administration courses offered by these universities have more than doubled in the past five years.

SUDENE has progressed in its effort to link its planning function with that of the several Northeast States. This has been accomplished by the assignment of SUDENE representatives to the respective states on a permanent basis and by the reciprocal assignment of state representatives to SUDENE.

Introduction by SUDENE of a standardized program budget system throughout the Northeast, coupled with a uniform account­ ing procedure and supplemented by systematic audits, have provided an improved financial management base for program and project development.

IV. U.S. AND OTHER FOREIGN EFFORTS

The Ford Foundation provided a grant of $132, 000 to the School of Public Administration of the Federal University of Bahia to pay salaries of student researchers. The Foundation also contributed two man-years to the Center for Improvement of Northeastern Economists in Fortaleza, Ceara.

The United Nations and Food and Agriculture Organization (FAO) have public administration technicians assigned to SUDENE to provide development administration assistance in the fields of agriculture and health.

V. PROGRAM PROBLEMS AND ISSUES

1. SUDENE is charged with planning and coordinating federal investment in the Northeast. In practice this occurs imperfectly. Many federal organizations, notably the Ministry of Education and Culture, invest large sums in the Northeast without adequate coordination with SUDENE. Coordinition could be improved if SUDENE representatives served in the appropriate federal ministries. I - 40

2. *As the responsibld federal agent for development of the Northeast, SUDENE must assure itself of the viability of proposed projects. Piojects have failed and most projects suffer, some seriously, from: administrative deficiencies in program and project formulation; inadequate work plans, ehronograns, and budgets; failure to follow prescribed procurement policies; losses incurred through mismanagement of equipment and operat­ ing supplies; failure to recruit and retain the required number of personnel with necessary skills; and, inability to, maintain proper accounts and render adequate financial reports in support of rtquests for releases of funds.

SUDENE would be more effective if it possessed a well-staffed Public Administrative Division. The "Division" now consists of one technician.

3. SUDENE has given essentially token financial support to ISP, CRAM and CERTA (discussed above). Uncertain funding has led to staff reductions and has limited the effectiveness of all three institutions. Increased and consistent financial assist­ ance from SUDENE would make an important contribution to the work of these useful institutions.

4. Only three of the nine Northeast States have as yet undertaken major administrative reform since the beginning of the Alliance for Progress. Despite the problems and the scarcity of resources, SUDENE should exert pressure on the remaining -states to strengthen their administrative and operating apparatus.

5. The Brazilian Institute for Municipal Administration (IBAM) and the National Service of Municipal Administration (SENAM) are two organizations, national in scope, dedicated to the solution of problems at the municipal level. CRAM has not yet progressed satisfactorily, partly due to inadequate financing and lack of support from SUDENE.

The issue here is whether efforts should be made to strengthen CRAM or should CRAM be closed down and the facilities made available to SENAM or IBAM which would then be encouraged to concentrate their efforts more heavily in the Northeast. 41

6. There are three major universities in the Northeast with Schools of Public Administration. There are several other university-level institutions also offering courses of instruction in this field. None is adequately endowed either financially or in terms of physical facilities. Instead of this scatteration of effort, which tends to use scarce resources inefficiently and to produce less than optimum results, it would appear sensible to focus on one large, well-equipped and financed public adminis­ tration center with dormitory facilities and sufficient academic credentials to permit the granting of advanced degrees.

7. All Northeast state governments, without exception, are over-staffe.d and under-paid. Where merit systems exist on paper, they are largely ignored. Only a minorify is adequately trained.

Each state should develop a long-term plan under which surplus employees would be gradually eliminated from the rolls, and a program should be developed which, through higher salaries and other incentives' Would facilitate recruit­ ment and retention of qualified manpower.

VI. IMPLEMENTATION PROBLEMS

There is a general lack of adquately trained and experienced public administrators at all levels of government throughout the region. Many chiefs of development departments and holders of other responsible positions have bachelors degrees in law, economics or the fine arts. Very few have had specific iraining in public administration and almost none had extensive practical work experience before their current employment.

Decision-making is too centralized. This creates inefficiency and intolerable delays on even the most routine bureaucratic matter.

There is a tendency, even if inefficiently implemented, to over-control, over-inspect and over-audit expenditures of public funds. 42

The inability of development planning and executing agencies to pay adequate salaries results, in practice, in either a four-to­ six hour work day, recruitment of mediocre individuals and a constant turnover of the higher quality personnel. At the state and local level, the vast majority of subordinate employees have less than a high school education and little or no practical exper­ ience beyond that gained in their present job.

VII. REMAINING NEEDS

Necessary training programs must be developed and bzrdught to the mass of state and municipal employees.

Regional technical assistance capabilities should be increased by expanding and providing long-term funding for the Institute of Public Service and the Regional Center for Municipal Administration.

The Regional Training Center for Administration should be equipped to provide municipal leaders with foundatiori instruction in city planning and management.

SUDENE should stimulate interest in popular participation at the local level to increase public responsiveness to community necessities and to local leaders' efforts to meet these require­ ments within available resources. 43

FOOD FOR PEACE

I. GOALS

The Charter of Punta del Este states that "in evaluating the degree of relative development, account will be taken not only of average levels of real income and gross product per capita, but also of indices of infant mortality, illiteracy and per capita daily caloric intake." The Charter further sets forth the goals of raising adult literacy, improving individual and public health, and increasing the construction of loi-cost housing. Food for Peace programs in the Northeast are designed to achieve these, as well as other goals.

II, BRAZILIAN PROGRAMS

Child Feeding

Brazilian Government activities in the field of nutrition were largely devoted to research and reporting until the inception of the Food for Peace Program in 1962. There were no institutions capable of handling mass food distribution to improve nutrition nor were there programs oriented to the use of food to promote economic and social development.

Present Child Feeding Programs have their origin in milk provided for school children by the United Nations Children's Fund (UNICEF) in 1955. The National School Feeding Campaign and pre-school child and pregnant mother feeding program carried out by the "National Department of the Child" grew out of this small beginning. Both are now receiving considerable Brazilian Government input as well as Food for Peace grant food commodities.

Work Fronts Program

The Northeast Work Fronts Program began in Bahia in 1964 when food stocks left over from the 1962 flood were utilized as partial payment of wages in the construction of two dams. 44

The experiment proved successful and the first Work Fronts Coordinator was appointed by the Governor of Bahia the following year. The program was then extended to Cear&, Rio Grande do Norte, Paraiba and Alagoas.

This program has steadily grown in size and popularity and is being further extended to other Northeast states.

Voluntary Agencies

Caritas/ Catholic Relief Services, Diaconia/Church World Services and Lutheran World Relief began cooperative food distri­ bution programs in the Northeast in 1962. They have built an admin­ istrative capability and distribution network to 'stimulate community development programs, health, nutrition, education, arid work projects, handicraft centers and literacy instruction.

Feed Grains

Feed grains are used to improve livestock and poultry pro­ duction. This program is operating in four Northeast states through the State Secretaries of Agriculture and participating agriculture production cooperatives.

ABC Crusade--Adult Literacy Program

This is the-largest and,to date, the most successful Brazilian effort to reduce adult illiteracy. This program, carried out in cooperation with the Federal Ministry of Education, provides both adult literacy instruction and vocational training. Food has been distributed to enrolled students since December 1966.

Nutrition Education

The Institute of Nutrition in Recife sponsors various nutrition activities. These include research, training and practical field applications, better utilization of local and Food for Peace com­ modities, nutrition and health subjects. The Institute will provide professional guidance to a network of nutrition centers planned for the Northeast. n45

National Superintendency for Supply (SUNAB) is responsible for providing logistic support to Title II programs. Its activities include receiving, warehousing, handling, accounting, transporting and reporting on donated commodities.

Superintendency for the Development of the Northeast (SUDENE

Among many other developmental activities, SUDENE provides technical assistance upon request in support of work projects utilizing Food for Peace commodities. SUDENE recently approved an allocation of NCr$300, 000 to provide NCr$60,000 to each of five Northeast states carrying out Work Fronts programs. SUDENE has also allocated funds for study and research in regional nutrition and health problems.

I. PRESENT STATUS AND RESULTS SINCE 1962

An -extensive 1963 nutrition study by the Inter-Departmental Committee on Nutrition for National Defense and the Institute of Nutrition of the Federal University of Pernambuco revealed that food production in the Northeast was not meeting the needs of the population. The study also indicated that average daily consumption consisted of 1, 9115 calories and 62 grams of protein. Various nutrition studies carried out in the last 15 years have shown a con­ tinuing severe calorie and protein deficiency, varying degrees of anemia and Vitamin A deficiency.

Food for Peace programming reflects this situation. As Brazilian support has increased on the national, state and local levels and as the administrative capabilities of Brazilian distri­ bution agencies have improved, financial and administrative responsibility has been gradually shifted to the Brazilian Government Improved Brazilian coordination of all programs has resulted in greater benefits for both recipients and their communities.

The Food for Peace Program in the Northeast addresses itself particularly to the severe undernourishment of large numbers of the population and to the underemployed and unemployed unskilled worker. Food is increasingly used as a development resource and thereby helps to provide important outside assistance at the ,I_ _-_ ­ 46

state and county levels which are unable, on their own, or from other Brazilian sources, to fieet the need for social and economic

development projects. - -

Major accomplishments of Brazilian organizations utilizing Food for Peace commodities are summarized below.

Child Feeding

The National School Feeding Campaign of the Ministry of Education provides either a glass of milk or a lunch,, using wheat flour, bulgur, rolled wheat, rolled oats, corn meal, vegetable oil, powdered milk and local foods for primary and secondary school children. Some 1, 750., 000 children received food under this program in 1969.

The National Department of the Child provides milk through its health posts and child care centers to some 240, 000 pregnant and nursing mothers and pre-school age children.

Child feeding programs have been popular, well supported by 'public funds and have expanded rapidly since their inception.

Work Fronts

Public works carried out under this program include road construction and repair, construction of small dams, schools and public buildings, agricultural undertakings and a variety of communityaction projects. Approximately 50,000 workers are employed annually. Through them an estimated 350, 000 family members receive added nutrition.

Feed Grains

Feed Grains'project involves the use of U.S. donated grain together with Braziliangrain, mixed in a balanced ration for animal feed. Substantial production increases have been experienced. Additionally, the sale of this balanced ration generates funds for technical assistance and capital for market­ ing and production needs of the participating cooperatives. The increase in animal protein made possible by this program helps

I. __ _-__ I47 alleviate a chronic regional protein deficiency. Benefits from the program have caused other states to wish the program to be extended to them.

ABC Crusade--Adult Literacy Program

This program of adult education and training includes a five month basic course leading to ability to read and write 700 words. Successful students may continue advance instruction or may elect to learn a trade. Distribution of food to students is made on the basis of regularity of class attendance. During the past two years approximately 250,000 persons have benefitted. I Nutrition Education In the Northeast, the Food for Peace Division,has organized a number of courses to demonstrate proper utilization of Food for Peace commodities and to teach improved nutrition, better utilization of local foods and better eating habits. Pilot nutrition centers are planned to demonstrate the effects of proper diet on undernourished children. The results achieved by participating children in terms of added weight, increased height and improved vitality, using carefully selectbd locally available low cost foods, will be instructive to the entire communities to which the children belong.

IV. U.S. 'AND OTHER FOREIGN EFFORT

The dnly other food, aid program in operation in Northeast Brazil at present is a small World Food Program school lunch project in Bahia in the Sao Francisco River Valley. It is integrated into the National School Feeding Campaign.

V. PROGRAM PROBLEMS AND ISSUES

The several Food for 15eace programs discussed above reach some 3,500,000 persons. All programs receive Brazilian Govern­ ment support. They have not, however, achieved the desired level of self-help. The shift from dole program to self-help undertakings 48 has not been entirely completed. A greater financial input, increased technical assistance and greater voluntary leadership participation on the part of the Brazilian Government and people are required.

Food for Peace commodities are stored in warehouses through­ out the Northeast. This region has one of the highest food losses in Latin America. Inadequate storage facilities, high incidence of storage insects, high rodent population, lack of facilities to regu­ late moisture and inadequate education programs on warehousing contribute to this situation. A special effort is required by SUNAB and other government and private entities to provide better ware­ house facilities, rodent and insect control equipment and supplies, and an education/demonstration program for storage personnel.

VI. REMAINING NEEDS

No viable long-run plan or program has been developed to solve the region' s malnutrition problem. The Institute of Nutrition of the Federal University of Pernambuco in Recife is actively carrying out theoretical and practical research in this field. Until such a plan is developed and accepted, it will not be possible to coordinate or direct adequately the efforts of the scores of institu­ tions which are capable of contributing meaningfully to the solution of the problem.

GERAN, the Brazilian organization responsible for modernizing Northeast sugar production and processing and for agrarian reform throughout the Sugar Zone, has recently indicated its desire to utilize Food for Peace commodities. Food resources can be utilized in land development, education, health, road construction, com­ munity development, construction of low-cost housing and the establishment of agricultural colonies. A long-term plan is needed to schedule and maximize the use of food resources in the Sugar Zone. I49 HEALTH

I. GOALS

The following health goals have been established for the Northeast in SUDENEs IV Master Plan (1969-1973):

1. Creation of Pre-Conditions for Development of Health Activities

a. Aid the establishment of 68 regional health centers and their integral functioning with State Health Planning Units.

b. Encourage the collection of disease information through the establishment of 27 registering areas responsible to State Divisions of Health Statistics which would work closely with the Recife-based regional Bureau of Health Statistics.

c. Realize through its Regional Health Training Center, the training of some 3, 000 paramedical and medical personnel.

d. Promote research in the health areas of prime importance to the region.

e. Assist four regional laboratories in the increased production of vaccines.

2. Development of General Health Activities

a. Aid in the provision of curative and preventive health services -to a larger proportion of the population through a 3 percent annual taxation plan.

b. Eradicate malaria from the region by 1973.

c. Encourage the following immunization programs:

(1) Smallpox--20 percent of the total population.

(2) Polio--80 percent of the 4-month to 10-year age group of urban localities containing 5,000 or more inhabitants. I50 (3) Diptheria-Pertussis-Tetanus (DPT)--60 percent of the 3-month to 4-year age group in cities of more than, 20, 000 inhabitants.

(4) Tetanus--S0 percent of school children in cities of 20, 000 or more and all expectant mothers seen at health clinics.

d. Encourage the control of tuberculosis primarily through doctor-hospital services, but also through mass efforts (chest X rays, immunizations, etc.)

e. Support the combat of schistosomiasis primarily through increased sanitation and health educatiofi, and the campaign against Chagas' disease by the systematic control of the Triatomid bug vector. u f. Promote further campaigns against other endemic diseases.

II. BRAZILIAN PROGRAMS

The Brazilian Ministry of Health has established the following broad objectives: communicable disease control; inqrease in medical manpower; improvement of health planning; and, adminis­ tration and improved nutrition.

The Ministry of Health carries out curative and preventive health activities in the Northeast. These include the operation of health centers in the interior and the national smallpox and malaria campaigns. Financial aid to certain regional projects is also given through its planning unit.

Northeast State Secretaries of Health provide some curative and preventive health services. By and large, however, they depend on the Federal Government to carry out substantially all preventive activities.

SUDENE, through its team of health advisors, is coordinating health development plans in the Northeast. 51

III. PRESENT STATUS AND RESULTS SINCE 1961

The Ministry of Health is at present undergoing an administra­ tive reform which promises to delegate more responsibility to the states.

SUDENE's health objectives coincide with this overall shift in administrative responsibility. Several of the planned sixty­ eight regional health centers are now in operation.

A Northeast Regional Training Center established in 1965 is offering short and long-term public health training to help states staff their regional health centers.

A regional biostatistical collection center was inaugurated in August of 1968 and is working closely with the states to collect health information on a systematic basis.

Laboratories have been established in Bahia and Pernambuco for the production of vaccines.

The Malaria Eradication Program is now in the surveillance stage in seven of the Northeast's nine states, and endemic malaria is now only found in parts of Bahia and in Maranhao and Piaui. This represents a considerable achievement over a disease which was estimated to be the major cause of mortality in the Northeast interior as recently as 1961.

The lack of a major smallpox outbreak in the Northeast during 1968 has likewise been attributed to the vaccination efforts of the Smallpox Eradication Program.

A Water Loan Fund has been established. Through this Fund, basic sanitation of many small communities in the Northeast has been improved. This is particularly noticeable in the decreased prevalence rates of intestinal parasites in the benefitted communities.

IV. PROGRAM PROBLEMS AND ISSUES Although Brazil is making some progress in its fight to conquer infectious diseases, budget increases are being offset 52 in part by inflation and by substantial increases in population, particularly in urban areas. Budgets for health campaigns have frequently been insufficient to achieve desired results.

Urban growth creates acute shortages of adequate and safe water supply. The lack of sewerage systems to remove wastes and transport them to a disposal or treatment area also poses serious problems.

Faulty communications have presented a serious adminis­ trative problem because of excessive centralization of control, and the extensive distances between the center of authority and the operating agencies.

Broad campaigns against specific diseases such as malaria, smallpox, Chagas' disease and schistosomiasis generally con­ stitute a sound approach. Such campaigns will obviously not succeed unless they are soundly based, well planned, and efficiently administered. Considerable research is needed to ascertain which control measures are most effective and what changes should be made in the current control and eradication programs. Periodic evaluation of the results is needed for all the specific campaigns. 'The evaluation mechanism utilized in the malaria eradication program could be employed in other campaigns.

V. U.S. AND OTHER FOREIGN EFFORTS

USAID contributes to specific programs including those against plague, malaria, smallpox, Chagas.' disease and schistosomiasis. Assistance consists of both technical and finan cial support.

Food for Peace contributes heavily in the struggle against malnutrition, primarily through its school and child feeding programs.

- USAID has also contributed to the establishment of water systems for many small Northeast communities. 53

The Peace Corps, through its volunteers engaged in community development work, provides basic health education inmany interior communities, and in some cases, furnishes paramedicalhealth services within Brazilian public health facilities. In addition, a small group of Peace Corps Volunteers works as technicians within the Bahia and Pernambuco Schistosomiasis Pilot Control Projects.

UNICEF is supporting a Recife Medical School project, the general purpose of which is to improve the training of physicians and other health personnel in the field of pediatric care.

WHO/PAHO maintains a staff of five technicians in Recife who are conducting a Child Mortality Study and who work closely with SUDENE technicians in health development planning for the Northeast.

VI. REMAINING NEEDS

The most sensitive index of health in any area is the Infant Mortality Rate. The Northeast of Brazil has an average Infant Mortality Rate of 176 per 1,000 live births, a full 70 percent higher than the national average and one of the highest in all Latin America. In addition, prenatal and postnatal complications take their toll of a sizeable proportion of Brazilian mothers. Tradi­ tionally, the mother and child are the group of greates risk. Children are particularly vulnerable to the diarrheas, or to one or more of the many communicable diseases which account for 40 percent of the mortality in the Northeast. Most of these deaths are preventable. The great need is thus seen for an extension of maternal and child health services for this very important group who already comprise 75 percent of health clinic patients.

Though having 30 percent of Brazil's population, the Northeast has less than half that percentage of its doctors. Even more critical is the.situation of the interior since the great majority of these doctors as well as other professional health personnel is in the capital cities and large coastal population centers. The need for the "interiorization" of health services is urgent for the long-range development of these areas.

I'I _ __ _I___ __ -54

There is a general ignorance of good health habits, particu­ larly among the rural population. Although this can be solved satisfactorily only through an overall rise in the level of education, certain techniques, particularly those using the mass media, can be very helpful. In addition, a determined effort is needed in school health education particularly with regard to incorporation of health materials ihto primary school and adult education curricula.

Although some progress is apparent, clean water supplies are still seriously deficient. The effect of inadequate water and sewerage services on the health of the population is reflected in the mortality rate of children from diarrheal infections which is among the highest in the world.

Despite recruitment and training efforts by State Departments of Preventive Medicine, qualified auxiliary health personnel, as well as doctors and nurses with adequate training in preventive medicine, are still critical shortages in the Northeast.

The Government of Brazil has the organization structure and plans to meet her many health needs. What is lacking are the funds and personnel necessary to carry out these plans. With the shifting of responsibility to the states, they too shall need financial and technical assistance to meet their-obligations. I55

POPULATION

I. GOALS AND.PROGRAMS

The Charter of Punta del Este does not establish an ex­ plicit goal, nor does it recommend an articulate policy in the field of population and family planning. However, it set forth a variety of goals which call for programs having direct or in­ direct influence on national and regional rates of population growth. For exanple, one of the fundamental goals was "to increase life expectancy at birth by a minimum of five years. " Other targets related to the control and prevention of diseases, to the improve­ ment of nutrition, basic health services, and the provision of potable water and facilities for sewage disposal. Except, possibly, for those provisions relating to education, public health training and research, and the over-all impulse to raise income levels, the clear effect of the Charter's goals is to raise the rates of population growth and to do so in the reasonably short run. Even those aspects of the Charter which could have a limiting influence on population growth would have their impact only indirectly and in the long run.

Although the subject of family planning is receiving more attention in the media in Brazil and in the Northeast, the Government's current attitude toward this question is a negative one. Moreover until recently, Brazil encouraged population growth by imposing an income surtax on unmarried persons over 25 and on childless couples. What goals will come out of the recent indication that the GOB intends to define a population policy remains to be seen. But at least the door is open to official consideration of some of the issues.

SUDENE has not departed from the Government's line on this subject, although a former SUDENE Superintendent, now the President of the Bank of the Northeast, is a recognized advocate of population control. 56

Ii. PRESENT STATUS

The population question in Brazil is invested with political as well as religious issues. The major world power status to which Brazilians overtly aspire, a melange of nationalist impulses related to a certain competitiveness with the U.S. in the western hemisphere, and fears of "domination" are obstacles to the adoption of public policies explicitly aimed at reducing the rate of population growth.

Some of these issues obviously have less force in a regional context and particularly in the Northeast where it is simpler to demonstrate the problems created by population pressures.

In the past, Northeast "gross" rates of population growth have probably exceeded the national average, because of the relatively larger rural population (higher birth rate) and not too different death rates. Out-migration caused the "net" rate to fall below the national average. However, outrmigration has declined in the 1960ts as have infant mortality and overall death rates. Thus, the "net" regional rate of population growth may now be comparable with the national average.

The population facts in the Northeast, combined with the economic and social situation, raise the question of population control, to the extent it is relevant in Brazil, in the sharpest terms.

In a region already over-populated, especially in the "bulge states, population will, present trends continuing, exceed 50 million before the year 2, 000.

Close to half the regional population is under 14 years of age, exacerbating the requirements for social overhead capital, --and putting further stains. on resources already insufficient for conventional "productive" investment.

T he region does not appear to be generating sufficient new jobs to handle new entries into the labor force, let alone an entry rate which could grow as infant mortality and death rates among the younger population decline. I57

Should the Government of Brazil soften its approach, it might find it expedient to initiate a positive public policy where population density and overall conditions suggest the highest need for programs in this area. To date, there has been no evidence of such an inclination in the Northeast. Without public policies facilitating the involvement of the poor masses in family planning (middle and upper classes are participating), research and other private efforts-e.g., Ford Foundation help to the University of Bahia and to BEMFAM-will obviously not alter present demographic trends.

III. ISSUES

Until the Government of Brazil indicates a positive interest in population control/family planning, the question of program issues is rather academic.

However, the U.S. and other donors may wish to consider whether, without Brazilian efforts in this direction, large scale external assistance to Brazil and to the Northeast continues to be an appropriate use of scarce assistance resources. This is an extremely complex question but one which is not irrelevant.

Another related issue is whether external sources of assistance should attempt to initiate a dialogue with the Brazilians on the question of family planning on a regional rather than national basis. The claim of massive land and other resources cannot be convincingly made with respect to the Northeast, with much of the region over-populated and some 65% lying in the "Drought Polygon. " Brazil's"policy" in its Strategic Program, namely, "adoption of an adequate rate of population expansion that allows the progressive utilization of the natural resources of the country and the effective occupation of her territory", is not inconsistent with an initiative on a regional basis, although the possibility that Brazil would approach this problem on less than a national basis is extremely dim. 58

INFRASTRUCTURE

I. GOALS

Specific goals for infrastructure established at Punta del Este call for Latin America to: (1) provide adequate potable water supply and sewage disposal to not less than 7016 of the urban and 50%6 of the rural population; (2) increase the con­ struction of low cost houses and provide necessary public services to both urban and rural centers of population; (3) in­ crease the exploration and more efficient use of natural resources; and, (4) establish interrelated far expanded capacity in agriculture, industry, mining, transport, communications and power. These goals provide the framework for infrastructure targets in the Northeast.

SUDENE is Brazil's coordinating agency for all activities in this field in the Northeast. Specific SUDENE goals include the following:

1. Increase the generating capacity of the Sio Francisco Hydro-electric Company (CHESF) by 660 MW during the next five years.

2. Increase the generating capacity of the Boa Esperanga (COHEBE) plant by 54 MTW, starting in 1973.

3. Expand and extend the transmission systems of CHESF, COHEBE and other producers in the region to cover all communities of 800 or more inhabitants.

4. Provide the region with permanent all-weather north­ south trunk roads to link the region with the more developed Center- South.

5. Construct or improve 4, 600 miles of federal highways in the region by 1974.

6. Link all Northeast capitals with all-weather highways and construct connecting roads from principal agricultural areas to major market centers. I59

7. Provide or expand safe public water supplies to all Northeast capital cities and 400 smaller urban areas.

8. Provide public sewerage systems to all capital cities.

9. Improve facilities for all Northeast ports handling 250, 000 tons or more anriually.

II. BRAZILIAN PROGRAMS

SUDENE has channelled more than 601o of its funds into infrastructure projects through agreements with other federal or state agencies. It has also acted as the fiscal agent for loan fi­ nanced projects in the region. Other federal agencies have also participated in infrastructure development, including DNOCS, CHESF, COHEBE, the BNH, and the Ministry of Mines and Energy, as well as various state entities.

SUDENE has been instrumental in obtaining loans from the Inter American Development Bank and from USAID in highways, power and water supply. FSESP, the Federal Public Agency, has obtained an IDB loan for small community water supply projects which includes 28 Northeast cities.

SUDENE is now negotiating loans from the IDB'and World Bank for water supply projects in medium-sized and capital cities and for irrigation, highway, sewer and power generation and transmission projects.

Separate loan programs for housing and sanitation have been established within the National Housing Bank(BNH). All Northeast states have active programs in low cost housing construction. Three Northeast States have signed agreements for sanitation programs with BNH. The other Northeast States are now negotiating such agreements.

Financing for highways from other than loan funds is carried out by a distribution to the states of a portion of the Federal Road Fund derived from a tax on petroleum products. The amount received by the Northeast States has amounted to about $25 million per year. Three Northeast States have borrowed from external private banks to finance road construction. 560

III. PRESENT NORTHEAST SITUATION

1. Sanitation 1960 1968

Urban population (in millions) 7.7 10.1 Number of public water supply-systems t65 504 Population served (in millions) 1.9 3.8 Perzcelt of urban population served 24.6% 37. 6% Nurfber of public sewage systems 3 10 Population served(in milliofis) 0.4 0.8 Percent of urban population served 5. 2% 7.9%

Number of rural water supplies 1450 5329 (well, tank, public fountain) Population served by rural supply (in 0.7 2.5 millions) (estimated)

Much of the activity in water and sewage works during the period centered around the large capital cities. Priority was initially given to public water supply systems. Now more attention is being directed toward public sewer systems.

2. Natural Resources

Preliminary and detailed studies -of ground water and mineral resources have been made- for about 25% of the total Northeast area.

Water resource studies, including 16 potential ir­ rigation project sites, have been carried out in all states except Maranhao.

Since 1961 1,000 small dams and reservoirs have been constructed, almost doubling the previous number. 4,000 wells have been put into service, a 57% increase.

SUDENE's Division of Geology has prepared regional geological maps- covering 30% of the Northeast area. France has furnished three geologists as technical assistants for this work. ~61

The Ministry of Mines and Energy has mapping and ore appraisal programs in specific mining areas (tungsten and molybdenum in Rio Grande do Norte, phosphates, chromium and copper in Bahia, and potash in Alagoas). Technical assistance is being furnished by the U.S. Geological Survey.

A government owned corporation (Petrobras) is exploring and developing petroleum resources throughout the are North'east and in the offshore areas. No production figures available-but approximately 50% of the national requirement is being produced from wells in Bahia, Sergipe and Alagoas.

The 1968 tungsten production was 800 tons of con­ centrate. This production could be augmented by development be of the mining and processing facilities. Molybdenum could produced from the tungsten ore with proper processing.

Comprehensive hydrology and meteorology networks covering all Northeast States are nearing completion.

More than 200 technicians have been trained in the U.S. or a third country.

3. Housing

There have been 46, 400 housing units built since has 1961. About 34, 000 of these were built in 1968 alone. There been a progressive increase in activity each year since the Each state beginning of the National Housing Bank program in 1964. in the Northeast now has an active low-cost housing program new through agreements with BNH. However, over a million of units are needed and each year this deficit increases in spite new construction starts. 4. Power

About 90% of the electric power for the nine Northeast at the states is supplied by the 670 megawatt hydro-electric plant River. Paulo Afonso Falls, 100 miles inland, on the Sio Francisco or The rest of the power comes from a few very small hydro all thermal plants, and local-town diesel generators. Practically the towns over 5, 000 population have a power supply but presently only about a half of these towns are connected to the hydropower system. *62

Northeast electric power capacity and consumption has grown as follows:

Installed Consumption per capita Capacity 1000's I&of all Year 1000's KWH KWH of Brazil

1960 343 37 14.1%

1967 868 91 28.1%

By the end of 1969, a new 106 MW hydro-electric plant at Boa Esperanga in southern Piau will be operating, providing power for Maranhio and Piauf. With this addition to capacity, power requirements for the Northeast region will be adequately met until some time in the period 1970-1972.

5. Transportation

State highway systems--In 1960 almost nine-tenths of the 16, 000 miles of state highways were in poor condition. By 1968, this figure had dropped to around one-third. In 1960, less than 30 miles of state highways were paved. By 1968, the paved mileage was over 3,500.

Within the Federal system, there is no all-weather connection between the Northeast and the Center-South. In 1968, arrangements, however, were made with the Inter American Development Bank to finance the completion of three North-South trunk roads.

IV. U.S. AND OTHER FOREIGN EFFORTS

The USAID infrastructure program in the Northeast has consisted of:

1. Providing grants and loans for construction projects, equipment and technical assistance.

2. Encouraging administrative and financial reforms.

3. Promoting national loan programs in housing and sanitation. I63

4. Providing and stimulating local and U.S. training programs.

In all phases of the program, USAID has provided technical assistance through a permanent staff (largely from other U.S. agencies) and short-term consultant services.

Loans have been provided by the Inter American Development Bank for specific highway, housing, sanitation and power projects.

Negotiations are underway for World Bank financing of other infrastructure needs.

The United Nations is providing technical assistance in the fields of irrigation, sanitation, hydrology and meteorology.

Israel, Portugal, Spain and France have all provided technical assistance for irrigation project studies.

West Germany is providing technical assistance for natural resources and meteorology studies. German expertise is supporting hydrologic studies in the Acara6' River Valley.

V. PROGRAM PROBLEMS AND ISSUES

1. Some loan and grant funds come into the Northeast without SUDENE control or coordination. To what extent should the U.S. tie any future assistance in infrastructure to Brazilian steps to improve the planning and coordination of domestic investment and external assistance in this sector?

2. Some cities and states in the less developed areas of Brazil are so lacking in capital that they cannot take advaitage of loan programs requiring their initial financial participation. Should there be more favorable loan terms or grant funding for these poorer, less-developed areas? Should a special Northeast Region Water Fund be established? _64

3. Even the capital cities of the Northeast with popu­ lations of 500, 000 to 1 000, 000 are not connected by all-weather roads. Key bridges remain unbuilt, requiring the use of slow and cumbersome ferries. What priority should be given to completing the Federal Highway system to provide inter- and intra- regional integration, compared with investments for the development of state road networks?

4. New state roads are being constructed and/or surfaced while existing roads of equal social and economic im­ portance are deteriorating for lack of maintenance. Should adequate maintenance of existing state highways be a condition precedent to receipt of federal outlays for new road construction?

5. Should further investment in electric power generation and distribution await a regional study of potential demand for the foreseeable future and a federally approved plan to consolidate into an integrated network all systems currently existing, under con­ struction, or planned for the area?

6. Most funds to expand and improve electric power distribution are directed to increase urban consumption, while vast areas of the interior either have no access to such power or are served by small and unreliable generator units. Should a higher priority be assigned to rural electrification, via expansion in capacity and distribution?

VI. REMAINING NEEDS

1. A vast number of infrastructure works must still be carried out involving financing, planning, administration, and construction on a large scale..

2. Personnel must be trained in the skills required to administer, operate and maintain new and expanded systems, This is a continuing process. There is a need for permanent training programs in Brazil at all levels.

3. An integrated national loan program needs to be established in Brazil to provide a permanent financing institution for infrastructure works to reduce the need for external financial assistance and to assure that external assistance is consistent with national priorities. ,- -65

4. Autonomous state agencies operating on a self-sup­ porting basis and staffed with competent personnel are still needed in some states to carry out effective programs.

VII. IMPLEMENTATION PROBLEMS

1. There is a constant turnover in Brazilian personnel in key positions in counterpart agencies.

2. Too much bureaucracy is involved in implementing projects. Routine decision making is overly centralized.

3. Greater cooperation on the part of Brazilian agencies is needed in effectively utilizing the skills of U.S. technicians.

4. Effective program planning is very limited due to uncertainty of budgetary sources, lack of administrative control over program funds, and threats to existing allocations. 66

INDUSTRY

I GOALS

The Charter of Punta del Este pledges its signatories "To accelerate the process of rational industrialization ... taking full advantage of ... both private and, public sectors ,.. utilizing the natural resources of the country ... (giving) special attention to the establishment and development of capital goods industries."

- Official Northeast objectives are presented in SUDENE's IV Master Plan (1969-1973). The realization of these regional goals is expected to produce a 7 percent annual increase in industrial production. Industry program emphasis inthe Northeast, as reflected in SUDENE's Plan, is as follows:

1. Administration of the Fiscal Incentive System

2. Sector Research, Planning. Basic Feasibility Studies

3. Technical Assistance to Small and Medium Industry

4. Planning and Promotion of Industrial Parks

5. Assistance to the Steel Rolling Mill in 'Bahia

6. Rationalization of Traditional Industry (textiles, oils, hides)

II. BRAZILIAN PROGRAMS

Public sector industrial development programs are summarized above. Private sector programs are more varied and emphasize productivity, technical training and apprentice education. A large share of these private sector program expenses are paid by the allocation of a few percent of federally collected manufacturing taxes. Industrial vocational training programs exist in all Northeast states, promoted by local state Federations of Industry which in turn are members of the National Council of Industry. I67

The private sector is also well represented in the Northeast by FUNDINOR (Foundation for Industrial Development), which promotes investment through information collection and dissemi­ nation, industrial profiles and investors' conferences.

IlI. PRESENT STATUS AND RESULTS SINCE 1961

SUDENE's public sector financial incentive program has dramatically changed the northeast industrial panorama since 1962. State and local incentives have also assisted, but it is the SUDENE 34/18 system that, through 1968, has attracted the equivalent of about $600 million of new capital investment for industry to the Northeast.

Briefly, the 34/18 plan permits any business firm in Brazil to deposit up to 50 percent of its annual income tax payment in a special account in the Northeast Development Bank (BNB). The firm is permitted three years to find an approved Northeast industrial, farming or telecommunications project in which to invest. After three years, the money reverts to the Government, if not invested.

The projects are approved by SUDENE which employs selec­ tion criteria, including the following factors:

Adequacy of project Food related; preparation non-luxury

Local raw materials Profitability.

Domestic or export market Labor intensity

A measure of the effectiveness of this program in drawing capital from investors in Brazil to the Northeast is shown in the following table: 68

Use of 34/18 Finds for Northeast Industry Development (US$ Millions)

BNB SUDENE Project Year Deposits Project Approvals Disbursements

1962 15 1963 14 13 .2 1964 30 21 3.4 1965 81 18 4.3 1966 102 69 17.1 1967 130 184 53.8 1968 127 142 81.2

TOTALS 499 447 160.0

The new factories and businesses cover the full range from sophisticated electrical, chemical and mechanical capital goods to many forms of consumer goods industries. Mining and tourism have also been supported. Projects thus far approved will generate an estimated 120, 000 direct employment opportunities.

The most attractive projects have now been submitted. New proposals, by and large, will be smaller and less desirable. . Import substitution possibilities are nearly exhausted and difficult local markets must now be found and courted. Competitiveness through improved product quality and lower costs now demand specialized training at all levels.

IV. U.S. AND OTHER FOREIGN EFFORTS

USAID has spent about $4 million in grant funds directed toward small and medium industry creation and development, technical assistance, export promotion and participant training.

Other grant foreign assistance has been very small, consist­ ing of about 5 man-years of United Nations specialists (UNIDO), plus scattered short missions from Israel, France and Germany.

USAID has made only two significant loans to industry in the Northeast, one to a synthetic rubber plant ($4.8 million) and the H69 other to a powdered carbon (lamp-black) plant ($1. 9 million). Several country-wide special investment funds, financed in part with counterpart local currency and administered through Brazilian banks, have been available to industrial borrowers in the Northeast. In practice, however, these funds were used almost entirely in the Center-South.

V. PROGRAM PROBLEMS AND ISSUES

Industry program issues include the following:

1. How long should fiscal incentives to industry be continued in the Northeast?

2. Should the present low priority assigned to industrial development by USAID in the Northeast be changed?

3-. Should the role of the BNB be expanded, either through a greater share of counterpart or by direct dollar lending or both?

4. How can the increased emphasis on U.S. private sector investment be translated into action in the Northeast?

VI. REMAINING NEEDS

Basic needs include: (1) reliable industry statistics; (2) industry-university linkages for research and on-the-job student-faculty experience; (3) broad-scale continuing technical assistance, possibly subsidized, for the next several years to small industries; and, (4) engineering and technical education, research and development.

Specific industry needs include fertilizer production, down to the basic chemicals, if feasible. Tungsten, copper, gypsite and magnesite production can also be bolstered. 'The latter, however, are strongly dependent on highway and port improvement. .THE NORTHEAST REGION (Basic' Statistics)

June 10, 1969 Basic Statistics: Northeast Brazil

List of Tables

1. Geography and Population (mid-1969)

2. Annual, Growth of NE Gross Regional Product Compared with Brazil's Gross Domestic Product

Per Capita Income Comparison

3. Public Sector Investments in the NE Compared to Brazil's Total Public Sector Revenues (1960-1966)

4. Federal Receipts and Expenditures

5. SUDENE Expenditures and Art. 34/18 Releases Compared to Total Federal Revenues- -­

6. Literacy'Rate in Comparison to Other Parts of Brazil

7. -Wage Levels of Employed - Comparison with Center-South

Generation of Employment- Comparison with Rio de Janeiro, Sao-Paul6 azid Guanabara

.8.,•NumBer ahd Are~a of Farms,

Land Tenure

9. Farm Size Distribution in Comparison to All of Brazil

10. Principal Agricultural Crops

1 1. Exports Abroad, Principal 6 Commodities, Comparison with Brazil's Total Exports

12. Federal Income Tax Investment Incentives (Art. 34/18)

Approved Industrial Projects-Status of Implementation

13. Electric Power Consumption Per Capita

14. Highways - Comparison with Center-South TABLE 1

NE Brazil: GEOGRAPHY AND POPUIATION (MID 1969)

States Area Population (from North to South) Thousand % of % of Sq.Miles NE Million NE

Maranho 127 20.0% 3.6 13.3%

Piauf 97 15.6 1.4 5.2

Cearl 57 9.2 3.9 14.4

Rio Grande do Norte 21 3.4 1.3 4.8"

Paraiba 22 3.5 2.3 8.5

Pernambuco 38 6.1 4.8 17.8

Alagoas 11 1.8 1.4 5.2

Sergipe 9 1.5 0.9 3.3

Bahia 217 35.0 7.1 26.3

Total Northeast 620 100% 27.0 100% (Inel. the portion of Minas Gerais assigned to NE region)

Brazil 3,284 90.0

NE of Brazil 19% 30%

Population Growth Rate

Brazil: 3% NE: Official estimate 2.2% based on low 1950/60 growth due to heavy out­ migration. Now believed 2.8%.

NE Center/South ±_

Population Density per sq.mi. 43.5 27.4

Population Distribution Urban 40% 56%

Rural 60% 44%

Cities of 100,000 population 15 33

Population (million) 2/ 5.1 20.9

% of Total Population 18.7% 37.1%

i/ 8 States. Source: IBGE, Pesquisa Nacional por Amostra de Domicilios, 1968. 2/ IBGE Anufrio Estimates for mid 67 + 10% growth to end-1968. TABLE 2

ANNUAL GROWTH OF NE GROSS REGIONAL PRODUCT

COMPARED WITH BRAZIL'S GROSS DOMESTIC PRODUCT

Year Brazil Northeast NE GRP % of Brazil GDP % %

1960 7% 8% 15.8% 1961 7 7 15.5' 1962 5 6 15.6 1963 2 7 16.7 1964 3 4 17.6 1965 4 7 18.1 1966 3 6 18.6 1967 5 7 18.8 1968 6 8 19.1

Source: Brazil and NE 1960/4: SUDENE IV Master Plan p. 27 1965/8 Brazil : Ministry of .Planning "A Revolugao e 0 Desenvol­ -vimento" 3/11/69, p. 14. 1968 shown as 6 - 7% prel. estimate; .6% was quoted by CECIA. 1965/6 NE: Computed. 1967/68 BNB - XN% of Brazil: 1960/7: BNB"Disparidades Intra-Regiohais de Crescimento Econtmtco no Nordeste" 11/28/68 p. 26. 1968: Computed.

NE-Brazil: PER CAPITA INCOME COMPARISON

Year Northeast Per Capita Income

_____ % of National Average -%of Rest of Brazil /

1950 48% 38%

1960 51 42 1961 49 40 1962 50 41 1963 54 . 45 1964 58 49

1965 60 51 1966 62 53 1967 63 54 1968 j65 57

I/ Brazil Excl. NE Source: Ist Column BNB, 1969 2nd Column computed. TABLE 3

PUBLIC.SECTOR INVESTMENTS 1T THE NORTHEAST COMPARED TO

II BRAZIL'S TOTAL PUBLIC SECTOR REVENUJES

(1960- - 1966)

In Million NCr$

Total ,Government Public % of Total Year Revenues Collected in NE Sector Government (Faeral, State Investment Revenues and Municipal) % in NE _/

1960 489 7.6 26.1 5.3

1961 687 8.3 39.7 5.8

1962 1.540 7.0 78.1 5.1

1963 1.954 8.8 126.6 6.5

1964 4.169 8.2 236.3 5.7

1965 7.276 8.0 511.0 7.0

1966 11.757 7.6 786.1 6.7

Source: Column 1 and 2: IBGE, Angario Estatistico.

Column 3: "Formaro de Capital Fixo do Setor Publico no Nordeste" SUDENE, Boletim Econtmico - Vol. IV, No.1, Oct/Dec.1968 p.2 3 .

Column 4: Computed.

1/ Public Sector Investment includes only capital expenditures. Public outlays on operating costs, e.g. salaries, and Art.34/18 investments are not included. TABLE 4

NE Brazil: FEDERAL RECEIPTS AND EXPENDITURES

in Million NCr$ (current prices)

Year Federal Investment Federal Revenue Revenue % in NE Collected in NE of Investment

1960 18.8 11.7 62.2%

1961 28.6 16.6 58.0

1962 57.8 24.8 42.9

1963 93.7 47.9 51.1

1964 144.2 106.5 73.8

1965 316.8 182.7 57.6

1966 487.4 285.0 58.5

1967 964.5 328.7 34.0

Source: SUDENE Annual Report 1968, p. 16. TABLE 5

NE Brazil: STUDENE EXPENDITURES AND ART. 34/18 RELEASES COMPARED TO TOTAL FEDERAL REVENUES.

(In Million NCr$, Current Prices)

Total SUDENE Art. Total of % of Year Federal Expend- 34/18 Preceding Federal Revenues itures Releases 2 Columns Revenues

1962 512 6.1 - 6.1 1.2%

1963 953 14.0 0.1 14.1 1.5

1964 2.011 30.9 4.2 35.1 1.7

1965 3.594 77.6 8.7 86.3 2.4

1966 6.007 138.5 42.7 181.2 3.0

1967 7.384 120.3 178.1 298.4 4.0

1§68 11.277 112.7 315.8 428.5 3.8

Source: BNB, Os Incentivos Fiscais e o Deficit Orsamentirio da Uniao, 1969, except 1968 figures for SUDENE, which were taken from SUDENE Annual Report 1968. TABLE 6

NE Brazil: LITERACY RATE IN COMPARISON TO OTHER PARTS OF BRAZIL - 1968

I Literate of Population of 6 Years and Over Parand Region NE Sao Paulo Santa Catarina Minas Gerais Rio Grande do Sul Espirito Santo

Urban 68.6 % 82.5 % 83.9 % 76.4 %

Rural 35.8 68.8 68.6 51.1

Overall. 49,0 978.1 74.9 62.8

Source: IBGE Household Sample Suvey of 1968 (SUDENE Annual Report 1968, p. 18) TABLE 7

NE Brazil: WAGE LEVELS OF EMPLOYED - COMPARISON WITH CENTER-SOUTH, 1968

Wage Group Employed - Weekly Wage NE SLo Paulo South

Under NCr$ 30 74.0 % 40,8% 50.3 %

NCr$ 30 to 60 15.8 32.8 34.0

Over NCr$ 60 10.2 26.4 15.7

Source: IBGE Household Sample Survey 1968 ( SUDENE Anntial Report 1968, p.17)

NE Brazil: GENERATION OF EMPLOYMENT - COMPARISON WITH RIO DE JANEIRO,

SAO PAULO AND GUANABARA

Rio de Janeiro NE S~o Paulo Guanabara

Population (Million) 27.0 26.1

New Jobs 1968 (1000 s) 1/ 73.3 431.5

New jobs per 1000 pop. 2.7 16.5

1/ Source: Ministry of Labor, quoted SUDENE, Annual Report 1968, p. 17. TABLE8

NE Brazil: NUMBER AND AREA OF FARMS

Year Number Index Area Index (1-000) '(1000-ha)

1950 845 100 58,341 10

1960 -1,410 167 63,571 109

1967 1,092 129 80,225 138

Source: 1950, 1960 SUDENE IV Master Plan, p. 50 1967 : IBGE Anu6rio Estatfstico 1968

NE Brazil: LAND TENURE

1 -950 1960 Increase Number % bf Number % of - over 1950 -(1000) 'Tota4 (1000) Total %

Owners & Administrators 664.2 15.3 959.8 14.6 -44.5%

Tenants & Occupants 180.5 4.1 448.2 6.9 148.9

Sharecroppers & Unidentified 326.6 7.5 388.8 5.9 18.9

Workers, incl. Part Time 1,541.6 35.7 1,950.5 29.7 26.5

Unpaid Family Members 1,616.0 37.3 2,820.7 43.0 74.6

Total Agriculturally Active Population 4,334.9 100 6,567.9 100 51.5

Source: SUDENE IV Master Plan, p. 53 TABLE 9

NE Brazil: FARM SIZE DISTRIBUTION IN COMPARISON TO ALL OF BRAZIL

1950 1960 1967 Hectares % of Farm % of Farm % of Farm of rarm " of Farm % of Farm Number Area Number Area Number Area (I ha=2.5 Brzil NE Brazil NHE Brazil NE Brazil NE Brazil NE Brazil NE acres)

Under 10 34.4 % 53.2% 1.3 % 2.8% 44.7 % 61.7 2.4 % 4.3% 36.0 % 44.8% 1.8 % 2.6

10 - 100 50.9 35.5 15.3 17.2 44.6 29.0 19.0 21.7 51.2 42.6 18.3 20.9

100 - 1000 12.9 10.3 32.5 40.5 9.4 7.5 34.4 43.3 11.2 11.7 34.0 43.8

1000 and 1.5 1.0 50.8 39.5 1.0 0.5 44.1 30.7 1.2 0.9 46.0 32.5 over

1/ 1967 Register of Rural Properties may have followed somewhat different criteria and therefore may not be wholly comparable with previous agricultural census data.

Source: NE 1950-and 1960 : SUDENE IV Master Plan, p. 50.

All other: IBUE, Anurio Estatistico do Brazil 1968. TABLE 10

NE Brazil: PRINCIPAL AGRICULTURAL CROPS, 1967

area (1000 ha Productionr) (1000 MT) Value (illion $) Brazil BEf E% NEE% IE of NE Brazil of NE Brazil of Brazil Brazil Brazil

Cotton 2,764 3,720 74% S10 1,692 48% 118 222 53% Sugar 585 1,681 35% 25,775 77,087 33% 113 '301 38% Beans(Feij~o) 1,572 3,651 43% 951 2,554 37% 87 244 36% Corn 2,058 9,256 22% 1,785 12,825 14% 65 439 16% Rice 739 4,291 17% 981 6,192 14% 56 519 11%

Cacao 443 473 94% 187 195 96% 51 53 96% Sisal 333 333 100% 219 319 100% 22 22 100%,

Source: 1BGE Anudrio Estatistico 1968

1/ 1 heetare (ha) = 2.5 acres. TABLE U

NE Brazil: EXPORTS ABROAD, PRINCIPAL 6 COMM0DITIES

COMPARISON WITH BRAZIL'S TOTAL EXPORTS

in Million $

GRAND % of Year Cacao Sugar Cotton sisal Tobacco Castor Various TOTAL Brazil Oil NE Exports 1/ 1960 97.4 34.1 13.4 21.7 15.8 8.1 56.3 246.8 19.4 %

1964 44.2 33.0 30.5 37.5 19.5 13.0 44.9 222.6 15.6

1965 38.8 45.7 24.1 24.6 19.3 18.5 49.4 220.4 13.8

1966 69.7 60.4 25.7 23.1 16.3 17.4 55.7 268.3 15.4

1967 82.3 61.1 34.6 16.3 15.3 15.9 51.7 277.2 16.8

Source: "Evolugo do Setor Exportador do tordeste", SUDENE Boletim Econtmico, Vol. IV. No. 1, Oct/Dec. 1968, p. 80.

I/ Computed from IBGE, Anugrio Estatistico do Brasil 1968, p. 253. TABLE 12

NE Brazil: FEDERAL INCOME TAX INVESTMENT INCENTIVES (ART.34/18)

Million NCr$, in Current Prices

Deposits Releases Approved Industrial Projects - Year in lieu of Approved Total Art. 34/18 Employment Income Tax Projects, Investment Funds projected All Types Projected Approved (thousands)

1962 5.7 - - 9.9

1963 7.7 0.1 36.4 7.3 7.1

1964 37.3 3.4 133.4 26.4 9.5

1965 149.4 8.1 139.0 33.1 8.9

1966 226.6 39.0 335.4 152.4 22.0

1967 351.1 157.0 1,099.7 496.0 25.0

1968 456.7 315.8 953.8 510.8 22.5

Total Through 1,234.5 523.4 2,697.7 1,226.0 123.3 2/ 1968 _42.4%of 'Deplsits. I

APPROVED INDUSTRIAL PROJECTS - STATUS OF IMPLEMENTATION

as of 12/31/1968

Planning Underway Completed Total Stage

New Plants 116 151 155 422

Modernization 136 55 32 223-

TOTAL 252 206 187 645 1/

Source SUDENE I/ Incl. 6 Telecommunications and 8 Fisheries Projects. / ncl. 18.4 in projects approved in 1960/61. TABLE 13

NE Brazil: ELECTRIC POWER CONSUMPTION

Per Capita

Brazil Annual NE Annual NE Year KWH % KWH % % of p.Capita Change p.Capita Change Brazil 1/

1961 272 - 48 - 17.6 %

1962 294 8.1% 54 12.5 % 18.3 %

1963 295 0.3 60 11.1 20.3

1964 297 0.7 71 18.3 23.9

1965 298 0..3 80 1-2.7 26.8

1966 315 5.7 90 12.5 28.5

1967 323 2.5 91 1.1 28.1

1968 355 / 13.1 2/ 106 16.5 29.8

Source: SUDENE Annual Report 1968, March 1969 p. 13. I/ Computed. 2/ Production. "A Revolugao e o Desenvolvimento", Ministry of Planning, 3/11/69, p. 24. TABLE 14

NE Brazil: HIGHWAYS

Comparison with Center/South

NE I/ Center/South NE Compared to 2/ Center/South

Area (1000 Sq. Miles) 597 580 103%

Population (Million) 27.0 55.5 49%

Total Federal 3/ and State 4/ Highways (Km) 33,288 75,267 44%

Of These Paved (Km) 4,800 21,488 22%

Paved Highways % of Total 14.4% 28.5% 51%

1/ Not incl. portion of Minas Gerais assigned to NE region.

2/ Minas Gerais, Espirito Santo, Rio de Janeiro, Guanabara, Sao Paulo, Parani, Sgnta Catarina, Rio Grande do Sul.

3/ End 1967

4/ End 1965

Source: IBGE Anudrio Estatfstico 1966 and 1968.