About 15,000 of the richest people in Brazil benefited the most from agribusiness growth in the country and the rise in the prices of agricultural products in the world market from 2017 to 2022, according to a study released by Getúlio Vargas Foundation (FGV) on January 16. The document reads that 0.01% of the country’s richest people had a 248% rise in their income from rural activities in the last five years. For all Brazilians, rural income grew by 74% – less than a third of the increase seen among the richest.
The study was produced by economist Sérgio Wulff Gobetti, a researcher at the Institute for Economic and Applied Research (IPEA, in Portuguese), based on general data from income tax returns provided by Brazil’s Revenue Service. The figures show that agribusiness is currently the activity that contributes most to the increase in inequality in the country.
None of the other activities analyzed in the study (such as income from work, profits etc.) earned so much for the super-rich. Also, in none of these cases was the difference between the increase in the earnings of the super-rich and the increase in average earnings so great.
It made the agribusiness sector more important to the country’s richest people. In 2017, about 3.3% of their annual earnings came from agribusiness. In 2022, the percentage jumped to 5.9%, according to the country's Revenue Service.
To Gesmar Rosa dos Santos, PhD in Sustainable Development at the Center for Sustainable Development at the University of Brasília (UnB, in Portuguese), the high earnings have also attracted the super-rich who live in urban areas to invest in the agribusiness sector. “The highest incomes from agriculture, as well as the ownership of the largest properties and the best lands, are held by economic agents who live in the cities," he told Brasil de Fato.
Reasons
According to other researchers Brasil de Fato heard, the significant growth in the income of the richest through agribusiness is related to the agribusiness “boom”. The economist and agronomist José Giacomo Baccarin stated that food prices rose considerably between 2017 and 2022 – a period that included the pandemic – which increased inflation but boosted rural producers' earnings.
The Real Food Price Index released by the Food and Agriculture Organization of the United Nations (FAO) was 98 points in 2017, Baccarin recalled. In 2022, it was 143.7 points, which means a 46% rise in food prices in a five-year period around the world.
In Brazil, food prices rose by 11.64% in 2022 alone, according to the Brazilian Institute of Geography and Statistics (IBGE, in Portuguese).
André Roncaglia, an economist and professor at the Federal University of São Paulo (Unifesp, in Portuguese), highlighted that the increase in earnings of agribusiness people was not equally distributed. The reason for this is the high concentration of land ownership by the Brazilian elite. When agriculture advances, most of the income generated goes to those who already have a very high income.
According to Gobetti’s research, Brazil’s richest 0.01% who have gained the most from the growth of agriculture, have a monthly income of BRL 2.1 million (US$ 427 million). The average monthly income in Brazil is BRL 3,600 (US$ 732).
Tax exemptions
Gobetti also recalled that income from agricultural activity in the country is poorly taxed, which makes it quite advantageous for the richest people.
Mauro Silva, the president of the National Association of Tax Auditors of Brazil’s Revenue Service (Unafisco, in Portuguese), added that rural producers have tax benefits that other professionals don't have. "Those who work in rural areas use only 20% of their income as a result and pay taxes on top of that. It's a great advantage," he said.
For Pedro Faria, an economist and researcher at the Center for Development and Regional Planning of the School of Economic Sciences (Cedeplar, in Portuguese) at the Federal University of Minas Gerais (UFMG), there is a contradiction in this method of collecting taxes. He explained that agriculture generates few jobs and, because of this, it should be taxed more so that its earnings are partly distributed among a larger portion of the population.
Faria admits that taxing agricultural products would pressure food prices in the country. Precisely for this reason, he explained, taxation should focus on the profit or income of rural producers, who are currently poorly taxed.
Débora Nunes, from the national coordination of the Landless Workers' Movement (MST), added that agriculture naturally appropriates common goods for its production: water, sunlight, biodiversity, etc. It would be fair if the gains from this activity were better shared with everyone. "Rural activity has become one of the main ways of concentrating and increasing the income of the super-rich because it transforms natural goods, which should be at the service of humanity, into profits," she said.
