Brazil, already a potent export competitor for many Canadian commodities, would be a major beneficiary of a trade-liberalizing world trade deal, says an influential economic organization.
“Given that Brazil has broadly liberalized its own agricultural policies, most of the future benefits to the country from multilateral agricultural reforms are expected to come from the removal of protectionist measures in other countries,” says a recent analysis by the Paris-based Organization for Economic Development and Co-operation.
“Indeed, Brazil is expected to be one of the biggest external beneficiaries from reforms in OECD countries and elsewhere.”
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In recent years, Brazil has emerged as a leader of the so-called Group of 20 developing nations within World Trade Organization talks, demanding greater market access and subsidy cuts from rich countries.
Brazil, with vast tracts of land, huge farms, low costs and an aggressive export policy, has become one of the main drivers of low commodity prices and one of the main competitors to North American commodity producers and exporters.
The OECD analysis of Brazil explains why the South American economic powerhouse is interested in a WTO deal that sharply cuts import restrictions, export subsidies and domestic supports in its industrialized competitors. It could be worth more than $2 billion annually.
In its first look at Brazilian farm policy, the OECD said the country deserves credit for liberalizing its agricultural sector, effectively forcing many small producers to get efficient or get out. Brazil has one of the lowest levels of farm support in the world – approximately three percent of farm receipts compared to an OECD average of 30 percent.
The result is a series of large farms that take advantage of economies of scale and cheap land and labour. Brazil has sold state farms to the private sector.
But the analysis also noted that many in rural Brazil have not benefited from the liberalization.
“Brazil’s reforms over the past 15 years have helped reduce poverty overall, yet more than 60 percent of the rural population still has an income below the absolute poverty line of half the minimum wage,” said the report.
“A range of policies is needed for small scale farmers to raise their incomes and benefit from the expected growth in Brazil’s share of world agricultural trade, for example programs to upgrade farming skills and technologies.”
But for the moment, the main beneficiaries of Brazilian liberalization policies and world trade are the mega-farms developing in the country.
