Modernization of production in the agricultural sector is a critical driver of economic development. During the last three decades, developing countries experienced a strong expansion of commercial farming, leading to a 30% increase in cultivated land, a 70% rise in labor productivity, and a 24% decline in the share of labor employed. How this process affects conflict is unclear.
In the BSE Working Paper 1314, “Agricultural Modernization and Land Conflict,” Stefano Falcone and Michele Rosenberg study the effect of the expansion and intensification of capital-intensive agriculture on land conflict.
The Brazilian context from 1988 to 2014
Brazil from 1988 to 2014 provides a compelling setting to explore this question. In that period, the country was the leading global producer of soy, the most capital-intensive crop in Brazilian agriculture, and land conflict was endemic, with around 9,000 land occupations and 1,700 land dispute-related deaths.
In 1995 the government introduced a market-oriented reform opening the country’s economy to foreign investments and incentivizing agricultural production. One year later, the labor-saving genetically engineered (GE) “Roundup Ready” soy seed became commercially available in Latin America for the first time.
Since these events, Brazil has experienced a sharp expansion of soybean production, which more than doubled in only ten years. Along with this large increase in agricultural production, the country experienced a surge in land conflict, with the yearly number of land occupations increasing fourfold. This suggests there might be an effect of agricultural modernization on land conflict, as illustrates the figure below with regard to land occupations.
Identifying the causal effect
To identify the causal effect of agricultural modernization on land conflict, the authors first define the potential gains from investments in soy at the municipal level, using potential yields under different technological regimes. This allows us to have a notion of how profitable land is for soy production.
Then, using data on land occupations and agricultural information from a wide variety of sources, they measure how the increase in potential gains from investments in soy due to the reform and the GE soy invention affected land conflict.
The main result shows that the potential gains from investments in soy induced an increase in land occupations starting from 1996. On average, an additional standard deviation in potential gains led to a 54% increase in the number of land occupations in the post-1995 period.
Exploiting potential gains from investments in GE versus non-GE soy due to differences in soil and climatic conditions suitable to the two types of seeds, the authors measure the relative contribution of the market reform and the GE soy invention. Their estimates suggest that, taken independently, the market reform and the GE soy invention caused quantitatively similar effects on land occupations. The next step is understanding the mechanism that drives the effect on land occupations.
Appropriation for subsistence
They found three main reasons. First, the expansion of soy production in subsistence areas implied an increase in the land unavailable to traditional farmers. Second, the increase of capital-intensive agriculture displaced labor for capital, reducing employment opportunities in the agricultural sector. Finally, there is some evidence that the modernization process increased landless movements’ political incentive to engage in land disputes.
Overall, the authors find that the expansion of soybean caused a decline in the number of farmers with access to land. As a consequence, farmers were restored to land appropriation for subsistence purposes.
The relevance of policy
By establishing a causal link between agricultural modernization and land conflict, the paper helps to understand the negative economic and political consequences of agricultural progress. It is crucial to evaluate these results in light of the sharp rise in agricultural investments in developing countries in the last three decades. Trying to minimize the negative effect of agricultural modernization should be on the agenda of policymakers, for whom this result is helpful.