NOTES AgriculTurAl & rurAl DEvElOpmENT 42692 Land Policy and Administration Brazil land-Based poverty Alleviation project iSSuE 31 FEBruAry 2008 By mAlcOm D. chilDrESS Through the Land-Based Poverty Alleviation Project, With poverty heavily concentrated in rural areas, Brazil is addressing one of the major factors underlying land and agrarian reform is a high priority of the poverty in the countryside: inadequate access to land Brazilian Government. Since 1995, the Government by the rural poor. Preceded by two highly successful has redistributed land to about 372,500 families, Bank-financed pilots, the project demonstrates the using a combination of traditional approaches includ- large-scale viability of a community-based approach ing expropriations, settlement on government-owned to land reform. In the project beneficiary groups lands, and direct negotiation of land sales by the negotiate directly with willing sellers for the purchase government with landowners. Beginning in early of suitable properties. They then obtain financing for 1996, the Government also began experimenting the purchase of the land, support for complemen- with a community-based approach to land reform in tary subprojects, and technical assistance to establish the Northeast region under the two abovementioned themselves on or near the land and to improve the Bank-supported pilots. The results have been posi- productivity of the acquired properties. The total tive, in terms of speed, cost per family, participation project cost is 436.4 million, of which the Bank is of beneficiaries, and expected impact. The first pilot, financing 218.2 million. called Projeto Cedula da Terra, benefited some 23,000 families with about 617,000 hectares of land at a per hectare cost of about R$193 and per family cost of about R$4,759. By mid-2007 the Land-Based Poverty Alleviation Project had financed/contracted 2,366 land acquisition proposals benefiting 44,522 families on approximately 835,000 hectares of land. The northeastern states of Piaui and Maranhao constitute 48 percent of total subprojects and 38 percent of beneficiaries. Another 157 proposals are in the contracting phase with com- munity subproject financial institutions, representing an additional 2,944 families. About 70 percent of these proposals were expected to be financed by end-2007 benefiting 1,760 families and bringing the total number of project beneficiary families to about 46,000. On-farm investment subprojects implemented stand at 34,300 (69 percent of the target), and are ThE WOrlD BANK expected to increase to 36,000 by early 2008. Owing financing to purchase agricultural properties from to high demand, another 38,000 families are on wait- willing sellers. Within an overall financing pack- ing lists in the 14 participating states, with proposals age for each family equal to around US$4,000 at at various stages of processing. 2007 exchange rates, federal Government-financed land purchases are complemented by World Bank- The project is implemented by civil society through financed matching grants that are used to fund on- community associations. Participation is also open farm investments. In addition, a separate settlement to local, state, and national civil society organiza- grant of about $450 is used to tide families through tions, and to governmental organizations, including their first year. Resources for technical assistance the National Confederation of Agricultural Workers contracted by the associations are also included in (CONTAG). Associations of poor rural laborers and the program. From the outset, the program's explor- subsistence farmers select, negotiate, and obtain atory, groundbreaking approach required design Box 1. The challenge of rural poverty Alleviation in Northeast Brazil The distribution of income and assets in Brazil is among the most unequal in the world, with poverty rates that greatly exceed those of other countries with similar per capita incomes. Beyond the obvi- ous relationship between inequality and poverty, consensus has emerged that limited access to land and extreme inequality in land ownership are central factors in rural poverty in Brazil. Most of the country's 16.5 million rural poor are landless or lack adequate land for subsistence.About 10 million of these people live in the rural northeast, where regional poverty indicators are much higher than national and regional averages.The region is characterized by: (a) a relatively poor natural resource base, (b) periodic droughts due to variable agroclimatic conditions, (c) skewed land distribution and (d) poor functioning rural financial markets.These characteristics have combined to perpetuate rural poverty. In the South and Southeast, although the quality of land and other natural resources is gen- erally better than in the Northeast, poverty is similarly concentrated in rural areas.Any strategy for addressing rural poverty therefore needs to emphasize policies and programs to reduce this asset inequality, with a range of interventions directed at different population groups. Expanded education and training opportunities are critical variables, both for to improve rural productive activities and services, and to facilitate absorption of part of the rural poor into other sectors of the economy. Commercial agriculture can also absorb some wage labor, especially for those with basic educa- tion. Further expansion of irrigated areas in the Northeast will create more such opportunities for smallholders who remain in rural areas. Physical infrastructure, services and productive investments can significantly improve living conditions. Demand-driven, community-based approaches (including community-based land reform) can be particularly effective. Finally, there is a group of rural poor (typically older, often widows as heads of household, and those farming in areas with especially poor natural resources) who will not benefit sufficiently from any of the aforementioned strategies, and for whom a special safety net is critical to ensuring a basic decent living standard. 2 features sufficiently flexible to permit midstream Box 2. household and land use adjustments based on research findings and respon- impacts of the project sive to changing circumstances and experiences. Evaluation by the University of Campinas A set of basic principles have been found key for suc- (UNICAMP) shows that between 1998 and cessful implementation: 2000 agricultural production on project- Decentralization. In the Northeast, the Rural financed lands increased 366 percent, and Poverty Alleviation Projects and the Land Reform and between 2000 and 2003 another 204 percent, Poverty Alleviation Pilot project were successfully indicating markedly better use of land and implemented using decentralized approaches. These an increase in family labor devoted to farm provided the basis for a model institutional frame- activities. Moreover, between 1998 and 2003 work in which community-based land reform was beneficiaries' real income rose 75 percent. jointly administered by state agencies and financial These increases occurred despite drought institutions. and less-than-anticipated credit and technical assistance availability. Community-based approach. The community- based approach has proven cost-effective and non- conflictive. Community associations take the initiative tial beneficiary groups, assisting in the group's busi- in selecting and negotiating land purchases and in ness development, and providing ongoing support deciding priorities for productive investments. Funds through monitoring and evaluation. are channeled directly to the respective community associations. Project experience shows that reliance The project has created an agile and effective method on community initiative leads to higher sustainability of settling landless rural families. The community- through self-selection by beneficiaries and selection of based approach expedites land acquisition, with the lands to be purchased. entire process-- from identification to purchase--typi- cally taking less than 90 days. Self-selection for project Access to Investments. Rather than suffering participation has proven effective in pinpointing the from delays in public provision of support services, landless rural poor; the vast majority of beneficiaries community associations have immediate access to have household incomes and characteristics consis- financing for joint investments to make their newly tent with the target population. acquired lands productive. A lump-sum amount, with Most properties acquired under the pilot project have a per-family ceiling, is available for infrastructure and been small, relative to traditional land reform settle- productive investment subprojects. ments, ranging in size from 15 to 30 families. Groups Involvement of agricultural workers federa- of less than 10 families face difficulties in forming an tions: The National Confederation of Agricultural association board, and the resources available to them Workers (CONTAG), its state-level federations (FETAGs) tend to be insufficient to carry out critical investments. and local unions actively participate in all phases of On the other hand, groups of over 50 families can be the project, spreading information, identifying poten- difficult to manage. 3 To date, communities have consistently chosen good Project implementation by community associations quality land at costs that represent significant savings has been successful overall. The design of the project relative to traditional land reform, and without upward places beneficiaries in the driver's seat, and the success pressure on land prices. This result is quite striking, of community associations in mobilizing members, given the often low quality of agricultural lands in the selecting land for purchase, designing a productive Northeast. In drought-prone areas, the pilot project is subproject, and implementing it has been impressive. focusing on ensuring sufficient access to water resourc- es and state technical units are avoiding approval for REFERENCES land purchases in areas where irrigation either does not exist or cannot be rapidly put into place. Credito Fundiario. 2007. Relatorio do Progreso 2006: Ministerio de Desenvolvimento Agrario, Secretaria de Land prices have been favorable, with lands under Reforma Agraria. July 2007. Cedula da Terra costing about 28 percent less per Roumani, Anna and Luis Coirolo. 2005. "Brazil: Innovation family than the present value of initial expropriation Increases Land Access and Incomes of Poor Rural Families" prices in the Northeast. Since expropriated owners in En Breve, No. 70, May 2005. often obtain additional compensation through sub- World Bank. 2006. "Land-based Poverty Alleviation Project sequent judicial actions, the final cost of expropriated I: Project Appraisal Document. November 6, 2000. World Bank: Brazil Country Management Unit and Environmentally lands can be as much as three times the initial com- and Socially Sustainable Development Sector Management pensation amount. Unit, Latin America and Caribbean Region. The ARD Notes series on Land Policy and Administration aims to disseminate results from research and Bank ESW, describe innovative operational practices, or point towards areas meriting further analytical attention. Significant contributions to their publication and content come from the DFID-World Bank land policy partnership, the World Bank-FAO collaborative program, the Knowledge for Change Trust Fund, the Global Land Tools Network, the multi-donor trust fund supporting implementation of the Gender Action Plan, and the Norwegian ESSD Trust Fund. The views expressed are those of the author(s) and not neces- sarily those of the World Bank Group or supporting institutions. THE WORLD BANK 1818 H Street.NW Washington, DC 20433 www.worldbank.org/rural