Agriculture: profitability determines land use | Chapter 3 of “A Perfect Storm in the Amazon”

Highway infrastructure initiates the deforestation process, but it is almost always accompanied by some sort of agricultural activity. Depending upon circumstances, deforestation can proceed rapidly or slowly, lead to large or small forest clearings, and create forest remnants of different sizes and configurations.

Agricultural production models vary from huge ranches and plantations spanning tens of thousands of hectares to small plots consisting of less than a single hectare. These differences are rooted in cultural traditions and business models as well as incentive systems and land tenure regimes imposed by the state. The Pan Amazon covers a vast geographic area with a diversity of landforms, soil types and climates that support a wide range of production systems supplying food, fibre and biomass energy to local, national and global markets.

The diversity of landholdings, production systems and business models lead to a similarly wide range of social and environmental impacts. Agriculture supports the livelihoods of millions of families across the Pan Amazon. For many migrant families, it provides a pathway out of poverty. For the middle class, it is a way to accumulate wealth and ensure prosperity for future generations. For entrepreneurs, it represents a business opportunity with a proven technology and manageable levels of risk.

As long-term investments, agricultural production systems can assume a role as key elements of a sustainable economy. When practiced as a speculative enterprise, however, extractive practices that yield cashflow tend to degrade productive potential over the medium term. Under-investment in smallholder communities forces the adoption of non-sustainable options that function as a poverty trap and rob the regional economy of an important driver of growth.

A great deal of emphasis is placed on the first phase of deforestation, which follows soon after the construction of a highway through a remote area. The amount of deforestation that occurs in later years depends largely on the ability of producers to move their production to market. Some landscapes remain remote due to distance or a physical barrier, such as a river without a bridge or mountain range subject to landslides. These forest frontiers may experience relatively low deforestation rates over many years. Those that enjoy more direct market access usually have a higher rate of deforestation, which creates a larger agricultural landscape but also one with fewer forest remnants. Over time, agricultural frontiers evolve into consolidated frontiers as they become incorporated into the global economy as producers of basic food commodities.

The role of the private sector becomes increasingly important in landscapes with viable transportation networks and expanding agricultural production. Landholders are the primary actors in determining land use, but commercial agents play an essential role by supplying inputs, such as seeds, fertilizers and pesticides, as well as by acting as intermediaries between the producers of basic food commodities and consumer markets.

Commodity traders invest in logistical facilities and bulk transport systems that are key components in global supply chains. Industrial infrastructure, such as crushing mills and slaughterhouses, adds value to primary production that increases demand for basic commodities. As the rural economy grows and becomes more diversified, incomes increase for farmers and ranchers, which acts as a catalyst to accelerate deforestation.

Agricultural production systems can be classified as a proximate cause of deforestation, but the demand for commodities is the ultimate driver that motivates producers to expand production. The markets that influence agricultural production are as varied as the commodities produced by the farmers of the Pan Amazon.

Global markets dominate the supply chains of soy, coffee and cacao, while maize, rice, manioc and perishable fruits are largely commercialized in national markets. Beef and palm oil are global commodities and are influenced by international markets, but most of the production in the Pan Amazon is commercialized domestically to meet the needs of national consumers. Understanding the market dynamics of each commodity is essential to devise strategies that promote sustainability and to eliminate deforestation.

The global market for food commodities has been greatly influenced by demand from China. Policies designed to improve the standard of living of its citizens combined with phenomenal economic growth created positive synergies that led China to import large quantities of basic food commodities. Unlike mineral commodities, which experienced a unique super-cycle linked to a one-time buildout of that nation’s basic infrastructure, the demand for food commodities will continue to grow for the foreseeable future.

China is transitioning from a dependence on manufacturing and infrastructure investment to a more diversified economy with an emphasis on consumer spending. Food commodities will continue to be subject to short-term volatility but, over the medium to long term, demand for food will grow. The impact of China is most noticeable in Brazil, but producers in the Andean republics all aspire to sell their production to China, be it beef (Bolivia and Colombia) or coffee and cacao (Ecuador and Peru).

Many conservation advocates focus their attention on forest communities and promote policies that will foster a more robust forest economy. This is well and good. A coherent conservation strategy, however, must also address the proverbial 800-pound gorilla that dominates the domestic policies governing land use on frontier landscapes.

The commodities that flow from the region’s farms, ranches and plantations are essential to the financial wellbeing of all the Pan Amazonian nations. Consequently, there is an enormously powerful group of stakeholders who are not likely to abandon the policies and practices that underpin their business models. Like most economic interest groups, they are not satisfied with the status quo; much to the contrary, they hope to expand their financial wellbeing and their economic power.

This is true of the corporate sector, typically represented by groups like the chamber of commerce, as well as the smallholders’ associations and syndicates who represent the rural poor, particularly the migrant populations on forest and agricultural frontiers.

Some environmental and social activists, particularly those who hold progressive (socialist) views, advocate for a regulatory approach to constrain the negative forces emanating from an expanding agricultural production. That approach, however, must overcome the real political and economic power of these vested interest groups, many of whom righteously believe their systems are in the national interest. A more realistic option is to convince these groups there are growth-positive options that do not include an expansion of the forest frontier, which will outperform the conventional options they seek to protect.

With that goal in mind, this chapter seeks to describe and understand the predominant agricultural production systems that dominate the conventional economy of the Pan Amazon in the second decade of the twenty-first century.

“A Perfect Storm in the Amazon” is a book by Timothy Killeen and contains the author’s viewpoints and analysis. The second edition was published by The White Horse in 2021, under the terms of a Creative Commons license (CC BY 4.0 license).

Read the other excerpted portions of chapter 3 below: