Improving Agricultural Productivity in Drought-Prone State
WASHINGTON - March 6, 2012 - The World Bank Board of Directors approved today a US$ 100 million loan to the State of Pernambuco, in Brazil’s Northeast, which will benefit some 25,000 poor small farmers. The Rural Economic Inclusion Project will promote rural business initiatives and expand access to water and other vital infrastructure in the State’s rural areas. Ninety percent of the farms in Pernambuco are family owned, but they account for only for 52 percent of the state’s agricultural production.
Although Pernambuco represents six percent of Brazil’s agricultural population, it contributes only two percent to the country’s agricultural Gross Domestic Product (GDP). This low productivity results in high rural poverty rates, compounded by a general scarcity of water and a lack of structural investments in transport and logistics.
“In Pernambuco, low rural productivity and weak market knowledge inhibit the competitiveness of family farms. This project will promote climate-smart responses across selected value chains to increase market access for these smallholders,” said Makhtar Diop, World Bank Director for Brazil.
Over the past decade, Brazil has become a globally competitive agricultural powerhouse, with a nearly 70 percent increase in the value-added of crop production and a ten-fold increase in beef exports. However, aside from strong performance in the horticultural sector (primarily on irrigated parcels near Petrolina), agriculture in Pernambuco, particularly family agriculture, has not participated significantly in this production and export boom.
To fast forward agriculture development in the State, the Project will focus on:
- Coordinating various Federal- and State-level programs to boost economic and social inclusion across value chains;
- Stimulating innovations that jointly raise agricultural productivity, increase the efficient use of scarce water, and promote climate change resilience in infrastructure development in order to adapt to climate change;
- Facilitating family farmers’ adoption of new technologies and access to greater commercial knowledge in order to thrive in dynamic markets; and
- Promote equity among value chain partners through alliances that offer “win-win” market solutions.
The World Bank has a long standing partnership with the State of Pernambuco in the rural sector through a series of loans under the Northeast Rural Poverty Reduction Program (1993-2010), which significantly improved local productive and social infrastructure for more than one-half of the State’s rural population. The Pernambuco Rural Economic Inclusion Project represents the next generation of this partnership, aimed at building on these previous achievements, including social capital across existing producer organizations and municipalities, to increase rural incomes. The Bank’s partnership with Pernambuco also includes support in public sector management and education; the Recife Urban Upgrading (Prometropole) Project and the Pernambuco Sustainable Water Project.
This Rural Economic Inclusion Project will be financed through a flexible loan with a 29-year maturity and six-year grace period.