WASHINGTON, September 2, 2010 – The World Bank approved a US$ 90 million loan today for the State of Santa Catarina, in southern Brazil, in support of its Rural Competitiveness Program. The project seeks to increase the capacity of family producer organizations to compete and open markets, contributing to increase incomes and wellbeing in the rural area.
Agriculture has an important social and economic role in Santa Catarina. Along with agro-industry, that sector accounts for approximately 60 percent of exports and employs 40% of the labor force. Twenty percent of the population lives in rural areas, while 90 percent of the State’s 187,000 rural properties belong to family producers, who contribute with 70 percent of the Santa Catarina’s agricultural GDP. The project will directly and indirectly benefit some 90,000 families in the State, 1,920 of them indigenous.
“Santa Catarina is proud of its long agricultural tradition. Family agriculture in the State is responsible for the food that reaches the tables not only of Santa Catarina residents, but of many other Brazilian states,” said the Governor of Santa Catarina, Leonel Pavan. “The project approved today is an important step toward further strengthening the State’s calling, and helping bind producer families to the land.”
Nevertheless, challenges remain. Environmental degradation and rural poverty are intimately interconnected to agricultural activities. Close to 140,000 low income people live in rural areas, mainly small-scale agricultural families, rural workers and indigenous people. These small-scale agricultural families have difficulties competing with large businesses, to offer quality products at competitive prices.
“Family production provides dynamism to the local economy and creates jobs. Providing incentives for cooperatives and associations of agricultural families will strengthen the rural economy even more and make it more competitive,” said World Bank Country Director for Brazil, Makhtar Diop. “At the same time, the project creates the mechanisms needed to make that growth sustainable, both economically as well as environmentally. This is extremely important in order to reduce poverty permanently.”
The project seeks to support the competitiveness of small-scale producers’ organizations, providing financial capital, technical assistance and incentives for technological innovation, diversification, increased productivity, quality enhancement and market access. A 30 percent increase in sales volume is expected from participating organizations. In parallel, the project will reinforce the provision of public services needed to expand and make production more sustainable, including financing for infrastructure, such as the rehabilitation of 1,300 km (800 mi) of rural roads; implementation of decentralized management for water and environmental resources, product certification and the provision of sanitation, legal and environmental services.
The third work front supported by the project seeks to improve public sector performance in support to rural competitiveness. This includes more efficient management of the State’s financial and procurement systems, as well as as the adoption of a results-based approach in the main institutions dealing with the rural sector.
“Improving the competitiveness of family-based agricultural producers goes hand in hand with greater production diversity, productivity and equality, but also with better conditions for producing and living,” said World Bank Project Manager, Alvaro Soler. “The cultivation of a diversified basket of crops, with greater added value and based on sustainable systems, in areas formerly used for monocultures or extensive cattle ranching also generates positive effects on the environment.”
This is a US Dollar-denominated commitment-linked IBRD Flexible Loan with a variable spread, with level repayments of principal, with a 10-year grace period and a 25-year total loan term with all conversion options selected. Since 1971, the World Bank has invested approximately US$ 485 million in Santa Catarina, including today’s loan.