Crop rotation and the dynamics of Brazilian Agriculture
19/03/2015
Crop rotation is a land management practice used in the world's largest grain producing countries that can deliver important insights on how landowners react to changes in incentives to produce crops. The existence of such practices should be taken into account in the evaluation of policies that have impact on crop choice and land use. In this paper, we are interested in the impact on cropland area of changes in incentives generated by different types of policies. We incorporate crop rotation into our model by considering that productivity gains are obtained by cultivating soybeans and corn in a particular sequence and estimate those gains. As the crop choice is tied to previous planting decisions, the farmer's problem is intrinsically dynamic. Therefore, we estimate a structural model that accounts for the dynamic interdependencies between productivity functions of these two crops, using data from 30 grain-producing municipalities in Brazil. Using this framework, we show that a policy that stimulates the production of soybeans has an indirect positive effect on corn production. This approach allows for a richer analysis of the impact of policies across markets affected directly and indirectly. Finally, the result differs from the ones reached by static and single-choice approaches in terms of the magnitude of the impact of such policies over crop supply and, by extension, over prices. It also differs in its prediction of the magnitude of the environmental cost of policies that promote crop production.
Vitoria Rabello de Castro.
Orientador:
Juliano Assunção.
Co-orientador:
Leonardo Rezende.
Banca:
Arthur Amorim Bragança. Gabriel Ulyssea. Juliano Assunção. Leonardo Rezende.