ReportNo. 3938BR L co RuralDevelopment Programs for Brazil'sNortheast: An InterimAssessment Public Disclosure Authorized February7, 1983 Latin America and Caribbean Region FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized FILECOPYt Public Disclosure Authorized Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their officialduties Its contents may not otherwise be disclosed without World Bank authorization AVERAGE EXCHANGERATES Cruzeiros/US$ 1975 8.13 1976 10.67 1977 14.14 1978 18.08 1979 26.82 1980 52.81 1981 92.64 Source: Central Bank Bulletins FOR OFFICIAL USE ONLY Preface This report attempts to synthesize the economic and operational experience gathered by the World Bank during six years of active partici- pation in rural development in Brazil's Northeast. It therefore relies heavily on the cumulative knowledge acquired by Bank staff, Government officials, academic researchers and others involved in carrying out rural development projects. Several missions and desk studies were performed to distill the general body of wisdom into a readable report. These are as follows: Mission Staff Member S p e c i a 1 t y Preliminary Mission David Bovet Loan Officer November 1980 Juan Carlos Collarte Agricultural Economist Principal Mission David Bovet Chief of Mission February 1981 Dennis Mahar Economist Donna Dowsett Recife Office Yves Tencalla Educator Jean-Claude Bousquet Agricultural Economist (Consultant) Anthony Hall Rural Sociologist (Consultant) Eleazar de Carvalho Research Assistant Other contributors: F. Agueh, J. Coates, B. Duel, 0. Echeverri, B. Insel, P. Knight, Z. S. Kowalski, J. Marques, P. Pomerantz, J. Redwood, E. Senner, L. Yap. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. J TABLE OF CONTENTS Page No. ABBREVIATIONSAND ACRONYMS SUMMARY AND CONCLUSIONS . ................................ i-v I. INTRODUCTION ................................ 1 II. THE REGIONAL SETTING ................................... 3 A. Population ................ 5 B. Dimensions of Poverty ............................. 7 C. The Rural Economy ........................... 11 D. Principal Rural Development Constraints .14 III. FEDERAL INVOLVEMENT IN THE NORTHEAST . .. 24 A. Resources for Special Programs ...................... 25 B. Review of Public Policies for the Rural Northeast ... 27 C. SUDENE's First Ten Years ............................ 33 D. The Drought of 1970 and the Establishment of PIN and PROTERRA .34 IV. INTEGRATED RURAL DEVELOPMENT .. 43 A. Description .44 B. Results ............................................. 51 C. Issues and Recommendations .60 V. DROUGHT RELIEF AND WATER RESOURCE PROGRAMS . .68 A. The Emergency Drought Relief Program .68 B. Large Irrigation Schemes .72 C. The Sertanejo Project .77 D. Water Resource Use Program .82 E. Semi-Arid Tropics Research Program .85 F. Conclusions .86 VI. CONCLUSIONS AND RECOMMENDATIONS .. 91 A. Special Programs .92 B. Role of SUDENE ................................... 95 C. Toward a Regional Strategy .96 D. Further Research .98 ANNEX I Questionnaire. lOO MAPS List of Tables Table Page No. 2.1 Northeast Region: Population Growth, 1970-80 .... ........ 6 2.2 Northeast and Rest of Brazil: Selected Socioeconomic Indicators, 1979 or 1980 ............................... 8 2.3 Northeast and Center-South: Trends in Selected Socioeconomic Indicators, 1970-79/80. 9 2.4 Northeast Region: Ratio of Rural to Urban Daily Wage Rate, 1970-79 .10 2.5 Northeast Region: Growth of Real Value-Added in Agriculture, 1970-79 .11 2.6 Northeast and Center--SouthRegions: Comparative Yields of Selected Crops, 1977/79 .12 2.7 Northeast Region: Trends in Production, Cultivated Area and Yield, Selected Crops, 1969/71-1977/79 ........ 13 2.8 Northeast Region: Agricultural Aptitude of Soils ........ 15 2.9 Northeast Region: Size Distribution of Farm Establishments, 1975 ., 19 2.10 Northeast Region: Indicators of Factor Intensity by Farm Size, 1975 ..................................... 20 3.1 Public Expenditures Budgeted for Special Programs in the Rural Northeast ................................. 26 4.1 Funds Budgeted for POLONORDESTE .......................... 52 4.2 POLONORDESTE Counterpart Allocations by Component, 1975/76 to 1981/82 ..................................... 53 4.3 World Bank Co-Financed POLONORDESTE Projects .... ......... 56 4.4 POLONORDESTE Project Achievement of Appraisal Targets .... 57 List of Figures 4.1 POLONORDESTE Program Organization ........................ 47 List of Maps Map 1 Northeast Region Map 2 Northeast Region (Physiographic Zones and Rainfall) Map 3 Northeast Region (Special Programs) ABBREVIATIONS AND ACRONYMS BB Banco do Brasil (Bank of Brazil) BNB Banco do Nordeste do Brasil (Bank of the Northeast) BNCC Banco Nacional de Credito Cooperativo (National Cooperative Credit Bank) BNDE Banco Nacional de DesenvTolvimentoEcon6mico (National Bank for Economic Development) CAP Compra Antecipada da Produ,ao (Guaranteed Crop Purchase Program) CEPA Comissao Estadual de Planejamento Agricola (State Agricultural Planning Commission) CEPLAC Comissao Executiva do Plano de Recupera,cao da Lavoura Cacaueira (Executive Commission for the Plan for Recovery of Cocoa Cultivation) CHESF Companhia Hidro-El6trica do Sao Francisco (Sao Francisco Hydroelectric Company) CIDA Companhia Integrada do Desenvolvimento Agri'cola (State-owned Input Supply and Development Company) CODEVASF Companhia do Desenvolvimento do Vale do Sao Francisco (Sao Francisco Valley Development Company) COLONE Companhia do Colonizaqco do Nordeste (Northeast Colonization Company) CVSF Comissao do Vale do Sao Francisco (Sao Francisco Valley Commission) DER Departamento de Estradas de Rodagem (State Highway Department) DNOCS Departamento Nacional de Obras Contra as Secas (National Department for Drought-Related Works) EMATER Empresa de Assistencia Tecnica e Extensao Rural (State Technical Assistance and Rural Extension Company) EMBRAPA Empresa Brasileira de Pesquisa AgropecuAria (Brazilian Agricultural Research Company) EMBRATER Empresa de Assistencia Tecnica e Extensao Rural (Federal Technical Assistance and Rural Extension Company) EMEPA Empresa de Pesquisa Agropecuaria de Paraiba (Paraiba Agricultural Research Company) ENDEF Estudo Nacional da Despesa Familiar (National Family Expenditures Study) FINOR Fundo de Investimentos do Nordeste (Northeast Investment Fund) GECA Grupo Especial de Coordina,ao e Acompanhamento (Special POLONORDESTE Interministerial Commission) GEIDA Grupo Executivo de Irriga,ao para o Desenvolvimento Agrfcola (Executive Group for Irrigation for Agricultural Development) GERAN Grupo Especial para a Racionaliza,cao da Agroindastria Canavieira do Nordeste (Special Group for the Coordination of the Sugarcane Agroindustry of the Northeast) GTDN Grupo de Trabalho para o Desenvolvimento do Nordeste (Working Group for Northeast Development) IAA Instituto do Ac,ucar e do Alcool (Institute of Sugar and Alcohol) IBDF Instituto Brasileiro de Desenvolvimento Florestal (Brazilian Institute for Forestry Development) IBGE Instituto Brasileiro de Geografia e Estatistica (Brazilian Institute of Geography and Statistics) INCRA Instituto Nacional de Coloniza,ao e Reforma Agraria (National Institute of Colonization and Agrarian Reform) IOCS Inspetoria de Obras Contra as Secas (Inspectorate of Drought-Related Works) IPA-PE Instituto de Pesquisa Agropecuaria de Pernambuco (Agricultural Research Company of Pernambuco) MEC Ministerio de Educacaio e Cultura (Ministry of Edu,cation and Culture) MINAGRI Ministerio da Agricultura (Ministry of Agriculture) MINTER Ministerio do Interior (Ministry of the Interior) OCEC Organizaqdo das Cooperativas do Estado do Ceara (Ceara Organization of Cooperatives) OME Orgao Municipal de Educacao (Municipal Education Unit) PDRI Projeto de Desenvolvimento Rural Integrado (Integrated Rural Development Project) PIASS Programa de Interioriza"a"odas Acoes de Saude e Saneamento (Program for the Extension of Health and Sanitation Activities) PIN Programa de Integra,a~oNacional (National Integration Program) PNAD Pesquisa Nacional por Amostra de Domicilios (National Household Survey) POA Plano Operativo Anual (Annual Operating Plan) POLONORDESTE Programa de Desenvolvimento de &reas Integradas do Nordeste (Development Program for Integrated Areas in the Northeast) PROAGRO Programa Agricola de Cre'dito (Crop Insurance Program) PROALCOOL Programa Nacional do Alcool (National Alcohol Program) PROCANOR Programa Especial de Apoio as Populasoes Pobres das Zonas Canavieiras (Special Support Program for the Poor in the Sugarcane Areas) PROHIDRO Water Resource Use Program PROTERRA Programa de Redistribuic,ao de Terras e de Estfmulo a Agro-Indu'stria (Land Redistribution and Agroindustrial Modernization Program) SEC Secretaria de Educa,cao e Cultura (State Secretariat of Education and Culture) SERTANEJO Programa Especial,de Apoio ao Desenvolvimento da Regiao Semi-Arida do Nordeste (Special Support Program for Development of Northeast Semi-Arid Region) SEPLAN Secretaria de Planejamento (State Secretariat of Planning) SES Secretaria Estadual de Saude (State Secretariat of Health) SSE Small-scale Enterprise SUDENE Superintendencia de Desenvolvimento do Nordeste (Northeast Development Superintendency) SUVALE Superintendgncia do Vale do Sao Francisco (Superintendency for