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R$ 1,20 R$ 1,00 R$ 0,80 R$ 0,60 R$ 0,40 R$ 0,20 R$ 0,00 Grain maize (R$/kg) Milk(R$/L) DEFORESTATION AND LOWER AGRICULTURAL AND ANIMAL HUSBANDRY PRODUCT PRICES DEFORESTATION AND THE INCREASE IN CULTIVATED AREAS ALSO DEPRECIATE THE PRICE OF AGRICULTURAL PRODUCTS. GRAPH 2. AVERAGE PRICE REDUCTION OF AGRICULTURAL AND ANIMAL HUSBANDRY PRODUCTS DUE TO DEFORESTATION AND LAND INCORPORATION IN 2017 R$ 1,40 FACTORS THAT IMPROVE PRODUCTIVITY ALSO INCREASE LAND PRICES Factors that directly impact productivity — such as rainfall or access to technical guidance and infrastructure - also positively influence land prices. GRAPH 3. ELASTICITY OF LAND PRICES WITH RESPECT TO PRODUCTIVITY DETERMINANTS AND DEFORESTATION IN 2017, USING THE MUNICIPAL TERRITORIAL CLASSIFICATION SYSTEM. Paddy rice (R$/kg) R$ 0,00 -R$ 0,01 -R$ 0,02 -R$ 0,03 -R$ 0,04 -R$ 0,05 -R$ 0,06 Soybean (R$/kg) Average reduction of deforestation on price in 2017 (R$/kg) Internet Technical guidance Energy Average price in 2017 (R$/kg) Average reduction of deforestation on price in 2017 (R$/kg) Source: original survey results. Only the most statistically significant impacts selected for inclusion (≤1%). Deforestation caused a US$ 0.61 reduction in the average price of a 60kg bag of soybeans (US$ 0.009/kg as per Graph 2), i.e. -4.5% compared to the 2017 level. This number was more pronounced in municipalities classified as "in expansion" due to their higher deforestation rates. If there had been no deforestation from 2011 to 2014 in those municipalities, the price of soybeans in 2017 would have been, on average, 22% higher. The reduction in the price of agricultural and animal husbandry products is a positive and desirable effect if we consider the consumption levels of Brazilian families and the competitiveness of Brazilian producers in foreign markets. However, lower commodity prices can also be achieved by factors designed to increase productivity, such as access to technical guidance. Access to technical guidance in areas totalling 840,000 to 996,000 hectares, depending on the product, renders the same effect as the deforestation of 7 million hectares as regards reducing prices for soy, corn, rice and milk. According to the IBGE5, only 20% of establishments (51% of the agribusiness area) received technical guidance in 2017. 5 Brazilian Institute of Geography and Statistics - IBGE. 2019. 2017 Agricultural Census: Definitive results. Available in Portuguese at: <https://sidra.ibge.gov.br/pesquisa/censo-agropecuario/censo-agropecuario-2017>. 1,2 1 0,8 0,6 0,4 0,2 0 -0,2 -0,4 -0,6 -0,8 In expansion In transition Stagnated As can be seen in the above graph, the negative impact on the value of land prices caused by deforestation and land incorporation for agribusiness production is outweighed by the positive impact caused by other factors, such as access to infrastructure, technical guidance and Consolidated In crisis Brazil Source: original survey results. biophysical land characteristics. This may explain Brazil's persistent increase in land prices, even with constant deforestation and land incorporation. It also demonstrates the importance of investing in productivity factors, while simultaneously promoting an end to deforestation. Precipitation Education Distance from ports HOW DOES BRAZILIAN AGRIBUSINESS BENEFIT FROM DEFORESTATION? Deforestation 17
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