Assessing Brazil’s Cerrado agricultural miracle

Brazil’s emergence as a primary global agricultural producer is often credited to production expansion into soils of the Brazilian savannah or Cerrado. These soils are, however, deficient in important nutrients and prone to degradation, requiring input-intensive processes that suggest a low level of productive efficiency. Employing a sequence of agricultural censuses and a biome approach for characterizing agricultural zones, the present study evaluates the Cerrado’s total factor productivity growth and productive potential. The analysis highlights the resource cost of Brazil’s “Cerrado Miracle,” the role of paved road infrastructure in expanding production opportunities, and the significant production gains that the Cerrado may yet achieve. Results suggest a substantial productivity gap between the Cerrado’s most efficient and average producers, implying that Cerrado production might well be further boosted if average producers succeed in adopting the technologies and management practices of the more efficient operators. More generally, and to the extent the Cerrado model is generalizable elsewhere, agricultural development of the world’s savannahs, such as Sub-Saharan Africa’s Guinea regions, into breadbaskets will be expensive in terms of material inputs such as fertilizers and pesticides, depending for their success therefore on the real prices of these inputs.