3.1. Household and Farming System Characteristics
Descriptive statistics for socio economic characteristics of households in the 2011 sample show that 71 percent of household heads were male, with a mean age of 53 years (see
Table 1). On average, four people lived on each property, with a residence of 11 years on site. In terms of education, the average for the household head was three years of formal education, with 23 percent of those interviewed illiterate, and only one person in the entire sample who reached the maximum level of formal education (15 years with a college degree). The property size ranged from 8 to 50 hectares with a mean of 33 hectares, indicating that all properties fell within the regional limits (5 to 70 hectares) of the
Módulo Rural, which is a classification for properties eligible for government agricultural assistance programs and deemed a size sufficient for family farming that ensures food security, as well as social and economic progress, which is the goal of the SPs (See
Table 1).
Of the estimated 53 percent of households that reported involvement with cropping in 2010, most stated that the land dedicated to crops was small, and only 20 percent were able to report the area planted, which averaged 4 hectares. An estimated 7 percent indicated that they sold limited production to local markets. Corn, rice, and manioc were the three most important crops planted, primarily for family consumption or feed for animals, with the exception of two households that sold small quantities of manioc flour to neighbors (see
Table 2). Beyond annuals production, a variety of fruit trees were planted in small numbers, with a handful of farmers selling banana and cacao. Despite the plans for diversified food production elaborated in the PDAs, smallholders indicated minimal involvement with cropping, and an estimated 47 percent of households stated that they planted no crops at all.
In contrast to lack of involvement in cropping, 71 percent of respondents reported having cattle in 2010. This is not surprising given that the focus of this research was smallholder cattle production activities in SPs, thus, the main criterion for sample selection was household engagement with cattle in the 2006 fieldwork by Simmons and colleagues. Of the 29 percent reporting no cattle in 2010, all indicated that they had cattle previously, but needed to sell animals in order to pay accumulating debts, and their plans were to re-build their herds in the future. Other smallholders stated that they rented pasture, at about 9 percent of the sample. A comparison of cattle data from the 2006 and 2011 surveys reveals some notable changes. The mean number of animals (cows) per property increased from 19 to 21, which corresponds with pasture expansion by almost 19 percent, from an average 18 hectares to 22 hectares per property (see
Table 3). Despite these increases, there was a decrease in animal density per lot across the five-year period. The decline in cattle density would appear to contradict the expected
pecuarização of Amazonia, and the overall importance of cattle in the region [
12]. Indeed, the stocking density is below smallholder averages in other parts of Amazonia (i.e., 1 animal/hectare), which is reflective of a highly unproductive land use that raises concerns about smallholder welfare and environmental sustainability. However, further analysis of the data shows that while mean changes in animals between 2006 and 2011 were not statistically significant, changes in area under pasture and animal density (cows/hectare) were. These findings suggest that decreases in density were due to increases in pasture, rather than reduction in animals.
In general, the livestock system of smallholders is distinct from that of large ranchers, who specialize in commercial production with animals genetically manipulated to produce high quality beef in a short period. For their part, smallholders have a mixed herd (dairy and beef) rather than pure-bred cattle, because such animals are less expensive and they better meet the dual needs of milk production and calving. Of the 74 households reporting cattle in 2010, 30 percent reported engagement in dairy, 9 percent in meat production, and 61 percent of smallholders reported mixed dairy-meat activities (see
Table 4). When it comes to animals sold in 2010, regardless of reported activity, calves were by far the most important, with 85 percent of the sample reporting calf sales compared to only 31 percent who sold cows for meat (see
Table 4). Furthermore, almost three times as many calves were sold than cows, and those reporting meat or mixed meat-dairy production actually sold more calves. From the interviews with smallholders it became apparent that calving operations were the primary focus of their activities, and the vast majority of sales were to middlemen working with large ranchers in the region. In general, farmers stated that they sold primarily male calves to middlemen and ranchers, and cows over five years of age and sickly to the local butcher. Finally, nearly all households with cattle received credit originally provided for dairy cattle, but most of them are engaged in mixed production (dairy and beef), and only 13 percent said they produced a limited quantity of milk for sale in local markets, the remaining produced milk for self consumption.
3.2. Income and Expenditures
Overall, non-cattle agricultural production ranked only fourth as a source of income, providing less than 10 percent of the annual average (See
Table 5). Off-farm employment provided the highest income (28 percent), although only 30 percent of the sample reported involvement in such activities, and the average income was skewed as a result of a select few residents with formal sector jobs (e.g., teacher, ambulance driver). By and far the most important income source was (1) government transfers, at 28 percent average annual income, that were received by 68 percent of the sample, followed by (2) the sale of calves to large ranchers at 17 percent, involving 60 percent of those interviewed (
Table 3). Government support included: (1)
bolsa-família (the Family Allowance); (2)
rural retirement; and (3)
disability retirement.
Bolsa-família is a governmental direct cash transfer program designed to reduce poverty, with payment tied to child vaccinations and school attendance. This monthly household stipend changes according to per person income, number of children and adolescents up to 17 years old, and number of pregnant and lactating women in the family. For the sample, the amount varied from US $16 to $151 per month.
Rural retirement benefits can be claimed by all rural workers who prove they have worked and contributed to social security for at least 180 months, and have met the retirement age (60 years for males and 55 years for females). The retirement income is always equivalent to one minimum wage, which at the time data were collected was US $270
2 per month [
30].
Disability retirement, also equivalent to one minimum wage, is a benefit granted to employees incapable of working due to illness or accident, in accordance with a certification by a medical group approved by the office of Social Security.
In terms of monthly expenses, an estimated one-third of smallholder income is used to pay principal and interest on loans acquired during initial creation of the SPs (31 percent), and an additional 28 percent of monthly income is used to purchase food at local grocery stores. Indeed, despite claims extolling the virtue of and commitment to agro-ecology and food sovereignty advocated in SP policies, the vast majority of households (88 percent) reported that they bought most of their food at grocery stores. Corroborating this finding, one smallholder reported that, “It’s cheaper to buy vegetables and meat in the grocery stores than produce them myself” (personal communication, April 2011). Another substantial expense stems from monthly installments to pay off credit for the purchase of durable goods, such as motorcycles, refrigerators, and TVs, amounting to about 9 percent of monthly income. Interestingly, the increase in debt from the purchase of durable goods coincides with the arrival of electricity in the SPs as part of the
Luz Para Todos program (Light for All), initiated in 2003 to eradicate electricity exclusion in Brazil’s rural areas [
26]. By the time of the 2011 fieldwork, 71 percent of households stated they had access to electricity for the first time, with average monthly costs of US $21, or 3.5 percent of total income. Other monthly expenses, in order of importance, include medication, water, and rent for housing nearer the city center, which is necessary for sending children to school.
3.3. Smallholder Decision Making: Crops versus Cattle
In terms of institutional support for agriculture, only 33 people said they received credit for non-cattle (or alternative) activities. Of those who did receive credit for alternative production such as cropping (e.g., cassava, banana, coconut) or small animals (e.g., poultry), a limited 3 people are still involved in those activities in 2011. When queried as to the reasons for no longer engaging in these activities, respondents identified, in order of importance: the absence of technical support, accidental fires, and their lack of experience with intended crops. As one smallholder put it, “Crops did not develop since there was no technical support or evaluation of soils and water in the region. There was no contract establishing banana sales, and I would not know where to sell the product even if it had worked out well” (personal communication, April 2011). In addition to criticism associated with lack of technical support and market strength, it was also mentioned with high frequency that soils were not sufficiently fertile, and that additional inputs would be needed, such as expensive fertilizers and tractors, which only large-scale farmers can afford.
All extension agents interviewed recognized the potential viability in the region for the production of cassava flour, banana, pineapple, passion fruit, cupuaçu and açaí. However, these options are limited by a number of problems that must be resolved before these crops can be productive. Foremost among them is the absence of a well-developed production chain for those products. Furthermore, roads are in poor condition during the extended rainy season, making it impossible to bring perishable products to the city in time to get a good return. For instance, acerola cherry and açai, two viable and profitable crops for the region, need to reach the market within 24 h after harvest, and cupuaçu within a window of four days (personal communication, extension agent, Marabá, April 2011). When it came time to recommend productive activities for the region, these logistical barriers were of greater concern than the physical and chemical characteristics of the soils. Another problem relates to the lack of continuity in technical support for diversified crop production after the contract with INCRA has ended. A final obstacle to crop production stems from the lack of laboratories in the region qualified to perform scientific analysis of soils, which is essential for any agricultural plans.
Of those 33 smallholders who had invested in alternative production, only nine (27 percent) considered this more profitable than investments in cattle. The most frequent explanation related to inadequate lot size for cattle to be economically viable and the long-term unsustainability of pasture in an area where soil quality is questionable. Indeed, smallholders understand that productivity and profitability are related to seasonality, investment in technology and soil quality in the region. The importance of seasonality became an issue for consideration during our data collection. For example, when the questionnaire was tested in July 2010, smallholders from SP Castanhal Araras reported that the region was not good for anything, and that after 23 years of settlement creation, there was not a single profitable plantation operating in the region. However, during the final data collection in 2011, which happened during cupuaçu harvest season, we learned that many smallholders were engaged in production of that fruit.
One respondent reported that it was possible to sell up to 60 kilograms of cupuaçu pulp per day, at a price up to US $2.50 per kg. However, price instability for crops in the region, such as cupuaçu, made the activity less appealing than investing in cattle, which have stable prices and demand. Furthermore, cupuaçu is harvested during the rainy season, which corresponds to a time when road conditions are the most problematic. Agricultural extension agents confirmed that all crop production during the rainy season, even that of farmers engaged in banana and cassava, has experienced serious problems due to the lack of options for sales. As a result of these failures, in the short-term many smallholders, even those who received credit for cropping, shifted their land use to pasture and began to invest in cattle.
Given an understanding of these economic gains coupled with the need to reduce deforestation in the region, i.e., by the inclusion of Marabá in the List of priority Municipalities
3, a number of strategies to include smallholders in diversified initiatives have been developed by agronomists. However, inadequate lot size was cited by extension agents and smallholders as being the main barrier to their involvement in such green economic activities. For instance, an economically viable project for carbon sequestration requires an area of at least 1000 hectares, which excludes the smallholders who participated in this research, as the average property size is 33 hectares. To be feasible, smallholders would need to form a cooperative. Although not impossible, cooperative formation has proven to be a challenge in the SPs located in this region and elsewhere. An additional constraint is the long-term planning time horizon to see a profit, since it would be several years before the standing forest generates income from carbon sequestration at the level required by the project. According to key informants, the opportunity costs for forest protection under programs, such as REDD, are too great, and smallholders see no motivation to keep their land in forest if they are unable to receive a profit.
Cattle, and in particular calving, is the only activity in the region that has a well-consolidated supply chain and does not depend on road conditions to reach the market in good condition. All told, credit availability for cattle production is the key motivation cited by smallholders in their decision to invest in cattle. Our 2011 interviews show that an estimated 79 smallholders reported that they received government credit exclusively for investment in cattle, and of those farmers, 63 (80 percent) still have animals on their property. According to our analysis, there was a statistically significant relationship between receiving credit for cattle and having cattle in 2010. Those no longer engaged in cattle activities, despite receiving credit, explained that they had no option but to sell their animals in order to pay debts, mostly related to medical expenses, and all expressed their intention to buy more cattle in the future.
Agricultural extension agents and smallholders alike have the perception that cattle provide better economic returns when compared to crops. This is especially so since herds move by themselves regardless of season, eliminating transportation costs, and they provide the added benefit of milk production for familial consumption. Therefore, once smallholders perceive that there is a well-established chain for calf sales, they open small plots of pasture without any credit and at the time of PDA development, they refuse to switch to more diversified production.
It is logical for smallholders to pursue an activity that requires less labor, receives easy credit, and has a stable market for their production. This fact perpetuates cattle production in the region. Even extension agents, who are tasked with explaining the benefits of agricultural diversification, argue that smallholders make more profit in cattle ranching. Given the small number of extension agents and high demand for their services, agents interviewed reported that they save time, and are, therefore, able to provide services to more SPs, if the recommended projects promote cattle as opposed to crop diversification, which requires feasibility studies and training for several crops, in accordance with the settler’s history as PDA and policy require. According to a lawyer working with the landless movement (personal communication, April 2011), smallholders work by following the logic of immediate results, and the mechanics of bringing products to market in larger cities remain a challenge. Even new smallholders receiving a piece of land inside SPs know that crop diversification would be a better option for the environment; however, it is easier to get credit for cattle only, since rarely is credit made available for other production activities. In addition, a lawyer for the landless movement emphasized that some smallholders have previously worked on farms as vaqueiros (cowboys), which is an important factor when it is time to decide about investments in the lot: “They stay with the activity that they know when it comes to establishing their own land” (personal communication, April 2011).
3.4. Emergent Production Chains
In the SPs of Southeastern Pará, a multiplicity of factors potentially affect the switch from subsistence agriculture to cattle ranching, including the availability of credit and strong economic returns stemming from the global demand for beef [
2,
12,
17]. Within the region, many smallholders started ranching in order to produce milk for home consumption and to sell to local micro-industries. It is important to recall that credit given for SP livestock was originally meant for milk production, although few households today are engaged in this activity. However, an important secondary product of dairy production are calves, which proved to be economically more profitable. Over time, many smallholders began selling off their male calves, which makes sense given calf prices rose from US $137 in 2005 to US $363 in 2011 [
34,
35]. The viability of such marketing has involved the development of commodity chain links between smallholders and large-scale ranchers, who buy calves to fatten on the way to the slaughterhouse. The precipitous rise in calf prices probably reflects the sudden insertion of Southeastern Pará into the global economy by way of a fast hook-up to transcontinental value chains in the provision of chilled beef. The expansion of meat processing capacity in the region has come quickly, from not even one modern slaughterhouse in 2000, to 14 modern facilities by 2014, capable of processing from 500 to 1200 animals per day (
Table 6). This new industrial capacity also reflects global interests with significant transnational participation. For example, the Brazilian Company JBS, which is today the world’s largest meat-processing corporation, possesses five of the region’s slaughterhouses. Its record of corporate buyouts includes the acquisition of the formerly US-held businesses Swift & Company in 2007, Smithfield Foods in 2008, and Pilgrim’s Pride in 2009.
Because of smallholders’ lack of access to technology, largeholders still provide a decisive commercial link between smallholders and final consumption, via slaughterhouses in the region. This is because modern slaughterhouses, highly capitalized and corporate, only buy in truck-lots of at least 18 animals. Since smallholders possess neither the land nor the resources to produce this many animals at one time, largeholders with fattening operations purchase aggregated production from multiple smallholders within SPs in their vicinity. Indeed, our fieldwork establishes that more than two-thirds of smallholders resident in SPs sell calves to local largeholders. Consequently, such purchase arrangements, often informal in nature, put considerable market power in the hands of largeholders to set the terms of trade, leaving smallholders at a disadvantage.
This study uncovered several questionable instances where individual largeholders bought the entire production of a SP, coercing smallholders to accept payments in kind instead of monetary compensation, including pasture improvements, fence repairs, etc. In most cases there is no formal contract specifying the rights and duties of each actor. For instance, one settler stated that he owed money to the rancher for the expenses to build a fence, which was necessary to make his property ready to receive the ranchers’ animals. It was agreed that the amount owed would be deducted from the final pasture rental payment, which was to be paid not in currency, but in calves born on the smallholder’s property. However, at time of reconciling accounts, the smallholder owed more than the quantity of animals he was supposed to keep as payment for the land rental. In the end, the smallholder had no calves in payment, and he had a debt still owed to the rancher, which was in turn tacked onto the subsequent pasture-for-calves rental agreement.
The newly emergent production chain linking large and smallholders has the potential to undermine Amazonian family farming, with implications for food security [
5]. Starting in 1989, crops, such as beans (
Phaseolus vulgaris), cassava (
Manihot esculenta Crantz), and coffee (
Coffea arabica L.), which historically were important in that region, began to yield space to more commercial products such as soybeans (
Glycine max) and cattle ranching [
5]. During this evolution, soybeans utilized more hectares in Northern Mato Grosso, while cattle expanded toward the so-called arc of deforestation [
36]. In this process, food security concerns stem from exposure to the vagaries of the market, as food insecurity can result from a market crash. However, investing in diversified production provides access to nutritious food, and does not expose the producer to economic crashes, for example, in case a disease affects commercial products, not only reducing production, but also in closing markets.