WASHINGTON, May 25, 2010 - The World Bank approved today a US$ 78 million loan to the State of São Paulo, Brazil, in support of the Sustainable Rural Development and Access to Markets Project. The project will promote sustainable rural development and agricultural competitiveness in the State, increasing job opportunities and incomes for small farmers and their families and vulnerable rural populations. The new initiative will empower some 22,000 small farming families, including an estimated 1,500 indigenous and traditional community families.
“Agriculture is vital to the State’s economy, and the Government has been working hard to support both family agriculture and agribusiness,” said Alberto Goldman, Governor of São Paulo. “The project approved today will be very important to small family farming, which represents the overwhelming majority of farm units in the state, and supplies most of the foodstuffs that reach the population.”
São Paulo contributes nearly one-fourth of national agricultural output, and also has the largest domestic consumer market in the country. Agriculture accounts for more than half of all economic activity in 60% of the state’s municipalities, and is a significant factor in employment, especially in the rural area, where 80% of the population depends on it.
However, a majority of small farmers have not been able to integrate into supply chains and compete within state and national markets. Nearly 40% small farming families in the state live with less than two minimum wages per month.
Over its history, the State’s rural sector also suffered from steady deforestation and in some cases from unsustainable agricultural practices, affecting the wellbeing, productivity and income of small farmers and other vulnerable rural populations. Still today, inadequate land management practices often result in erosion, the degradation of water bodies and fertility losses for many areas.
“Increasing the sustainability, productivity and competitiveness of small producers will boost the economy in much of the interior of São Paulo and make agriculture gains more equitable, especially for the poorest,” said Makhtar Diop, World Bank Director for Brazil.
The Sustainable Rural Development and Access to Markets Project will assist small-scale farmers and other vulnerable rural producers to:
- Increase the productivity of their land and labor, and improve the quality of their products through enhanced production techniques, and increase sales value;
- Engage more actively in market supply chains by undertaking basic processing and marketing techniques;
- Strengthen the organization and management capacity of producers associations;
- Disseminate improved land and water management practices, and increase agricultural area where these practices are being implemented.
“The project approved today builds on the previous Land Management Project, financed by the Bank, which helped some 70,000 small-scale farming families in the State adopt more sustainable land management practices,” said Laurent Debroux, World Bank Project Manager. “Additionally, the State is currently implementing the Ecosystem Restoration of Riparian Forests Project, which is helping pilot activities that reverse land degradation and restore forests along rivers.”
This is a Specific Investment Loan of US$78.0 million over a five-year period with variable spread option. Repayment schedule is linked to commitments and all the conversion options, payable in 30 years, including a 5-year grace period. Since the first loan in 1952, the World Bank has invested approximately US$ 4.3 billion in São Paulo (including today’s loan).