Does Access to Rural Credit Help Decrease Income Inequality in Brazil?

Abstract

Agricultural production in Brazil has increased in recent decades. Despite this, the rural population continues to face income inequality. Policies targeting this issue, such as rural credit, have been implemented during this period. This study estimates the influence of credit on income inequality in Brazilian rural areas. Results suggest that the family farming credit program (PRONAF) is not associated with increase in inequality. However, access to rural credit from sources other than PRONAF has led to greater household income inequality. Results also indicate that greater levels of education and access to rural extension have boosted the effect of credit on income.

Rural extension and technical efficiency in the Brazilian agricultural sector

“…Delgado (1985) and Nunes et al (2014) highlight the fundamental role of three agricultural policies in this period: (1) agricultural research initiatives that developed new production technologies; (2) subsidized rural credit, which created opportunities for these technologies to be acquired by producers; and (3) rural extension services, which were responsible for the process of diffusion of new technologies and information to rural producers -this was extremely important for the adoption of these innovations in the production process. Although several papers have evaluated the effects of credit (Castro and Teixeira, 2012;Gasques et al, 2017;Neves et al, 2020) and agricultural research (Barreto and Almeida, 2009;Mendes et al, 2009;Rada and Valdes, 2012) on Brazilian agricultural performance, little has been done to assess the returns of extension services. 1 In this article, we test whether rural extension plays a significant role in improving farmers' productive performance, as measured by technical efficiency.…”

Systematic Review of the Literature on Family Farming and the Social and Solidarity Economy in Brazil and Latin America

“…At the intersection of the political and social fields, in the last two decades in Brazil, despite the increase in agricultural production accompanied by the increase in family income at all income levels, the income inequality of the rural population is still present and growing (Neves et al, 2020). As of 2015, the dismantling of family farming policies and other policies follows the global tone of weakening democratic institutions (Milhorance et al, 2020).…”

“…In Brazil, after the consolidation of the guidelines of the National Policy on Family Farming (Law #11,326/2006), PRONAF obtained significant results in promoting FF. However, the income inequality of the rural population is increasing and this trend, even if at a slower rate, also occurs among PRONAF beneficiaries (Neves et al 2020).…”

Heterogeneous regional effects of rural credit on agricultural production in Brazil

“…Silva & Vian (2021) classified Brazilian municipalities according to the standard of agricultural modernization, identifying a concentration of municipalities with a low standard in North and Northeast regions.4 The proportion of rural establishments that received some funding decreased from 17.76% in 2006 to 15.46% in 2017 (Instituto Brasileiro de Geografia e Estatística, 2022).5 Positive effects on agricultural income and participation in agricultural activities(Ely et al, 2019;Khandker & Koolwal, 2016;Luan & Bauer, 2016;Neves et al, 2020;Chen et al, 2021); on farmland rental market participation of rural households(Li et al, 2020); on GDP(Borges & Parré, 2022); on land use, agricultural practices and deforestation(Assunção et al, 2020;Assunção & Souza, 2019;Carrer et al, 2020;Porgo et al, 2018).…”