The negative effects of exchange rate policy on Brazilian agriculture

Abstract

This paper gauges upon the cost paid by the Brazilian agricultural sector due to the exchange rate policy followed during the period 1989/97. The appreciation of the exchange rate during that period, particularly during the Real Plan, originates a considerable decrease in prices received by the producers. Despite this fact, total production increased modestly and the reduction in the per capita production was not significant. Increases in international prices of primary products during 1994/97, reductions in the prices of inputs used in the agricultural sector and considerable improvements in land productivity helped the agricultural sector to overcome the cost imposed by the overvaluation of the exchange rate during the period.