ENHANCING BRAZIL’S AGRICULTURE SUPPORT: POLICIES FOR A COMPETITIVE, GREEN, AND INCLUSIVE AGRIFOOD SECTOR Marie Paviot, Hector Peña, Mauro del Grossi, Elena Mora López, María Florencia Tejeda, Victoria Traverso, Beatriz Garcia, Luisa Leite 2025 © 2025 The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved. This work is a product of the staff of the World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. Although the World Bank makes reasonable efforts to ensure all the information presented in this document is correct, its accuracy and integrity cannot be guaranteed. Use of any data or information from this document is at the user’s own risk and under no circumstances shall the World Bank or any of its partners be liable for any loss, damage, liability or expense incurred or suffered which is claimed to result from reliance on the data contained in this document. The boundaries, colors, denomination, and other information shown in any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because the World Bank encourages the dissemination of its knowledge, this work may be reproduced, in whole or in part, for non-commercial purposes as long as full attribution to this work is given. Attribution Please cite this work as follows: World Bank. 2025. Enhancing Santa Catarina’s Agriculture Support: Policies for a Competitive, Green, and Inclusive Agrifood Sector. Paviot, M., Peña, H., del Grossi, M., Mora López, E., Tejeda, M. F., Traverso, V., Garcia Ferreira, B. M., Leite, L. World Bank: Washington, DC. Any queries on rights and licenses, including subsidiary rights, should be addressed to: World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org ENHANCING BRAZIL’S AGRICULTURE SUPPORT: POLICIES FOR A COMPETITIVE, GREEN, AND INCLUSIVE AGRIFOOD SECTOR Marie Paviot, Hector Peña, Mauro del Grossi, Elena Mora López, María Florencia Tejeda, Victoria Traverso, Beatriz Garcia, Luisa Leite 2025 4 CONTENTS LIST OF FIGURES 6 LIST OF TABLES 7 LIST OF BOXES 7 ACKNOWLEDGEMENTS 9 ACRONYMS 10 1. INTRODUCTION 12 2. ECONOMIC PERFORMANCE OF THE AGRICULTURAL SECTOR (BRAZIL AND SANTA CATARINA) 14 2.1 Gross Domestic Prsoduct Brazil 14 2.2 Value Added and Contribution to GDP by Economic Sector 15 2.3 Contribution to GDP by State 17 2.4 External trade 17 2.5 National Consumer Price Index 22 2.6 Santa Catarina 23 5 3. EVALUATION OF SUPPORT FOR AGRICULTURE IN SANTA CATARINA (2017-2021) 26 3.1 Methodology 26 3.2 Producer Support Estimates (PSE) 31 3.3 Consumer Support Estimate (CSE) 37 3.4 General Service Support Estimates (GSSE) 39 3.5 Total Agricultural Support Estimates (TSE) 43 3.6 Sources of Funding for Support in Santa Catarina 45 3.7 Environmental Impact of Support for the Agricultural Sector in Santa sCatarina 46 4. SUMMARY AND RECOMMENDATIONS 48 REFERENCES 52 ANNEX 1. SECTOR SUPPORT ESTIMATE, SANTA CATARINA 2017-2021 54 ANNEX 2. BUDGET EXERCISED BY SANTA CATARINA STATE PROGRAM (GENERAL SERVICES) 56 ANNEX 3. BUDGET EXERCISED BY SANTA CATARINA STATE PROGRAM (OTHER DIRECT SUPPORT) 63 ANNEX 4. BUDGET EXERCISED FOR CONSUMPTION SUBSIDIES OF THE STATE OF SANTA CATARINA 68 6 FIGURES FIGURE 1. ANNUAL CHANGE IN GDP 15 FIGURE 2: ANNUAL VARIATION IN VALUE ADDED BY ECONOMIC SECTOR (2011-2020) (SOURCE IBGE) 16 FIGURE 3. COMPOSITION OF BRAZIL’S GROSS DOMESTIC PRODUCT: 2011 VS 2021 (SOURCE IBGE) 16 FIGURE 4. STATE SHARE OF TOTAL GDP: 2011 VS 2020(SOURCE IBGE) 17 FIGURE 5: BRAZIL’S FOREIGN TRADE (MILLION USD) 18 FIGURE 6: BRAZIL EXPORTS BY ECONOMIC ACTIVITY 18 FIGURE 7. EXPORTS OF MAIN PRODUCTS (SHARE OF VALUE OF TOTAL EXPORTS) 19 FIGURE 8. AGRICULTURAL SECTOR EXPORTS, 2022 100%= $74.787 MILLION 20 FIGURE 9. TOTAL EXPORTS BY COUNTRY OF DESTINATION (100% = $334.136 MILLION) 21 FIGURE 10. ANNUAL VARIATION OF THE NATIONAL CONSUMER PRICE INDEX (INPC) 2017 – MAY 2023 23 FIGURE 11. SANTA CATARINA – ANNUAL CHANGE IN GDP 23 FIGURE 12: ANNUAL VARIATION IN VALUE ADDED BY ECONOMIC SECTOR IN SANTA CATARINA: 2011 – 2020 24 FIGURE 13. COMPOSITION OF SANTA CATARINA’S GROSS DOMESTIC PRODUCT: 2011 VS 2021 25 FIGURE 14. SANTA CATARINA: SECTORAL BREAKDOWN OF GHG EMISSIONS (SOURCE: SEEG) 25 FIGURE 15. SCHEME OF TRANSFERS ASSOCIATED WITH THE IMPLEMENTATION OF AGRICULTURAL POLICIES 28 FIGURE 16. SANTA CATARINA PRODUCER SUPPORT ESTIMATE AS A PROPORTION OF TOTAL INCOME (PSE%) 32 FIGURE 17. BENCHMARKING PSE% - 2017-2021 32 FIGURE 18. %PSE BY PRODUCT IN SANTA CATARINA (AVERAGE 2017-2021) 36 FIGURE 19. SANTA CATARINA PERCENTAGE OF CONSUMER SUPPORT ESTIMATE (%CSE) 38 FIGURE 20: BENCHMARKING GSSE AS PROPORTION OF AGRICULTURAL GDP – AVERAGE 2017-2021 41 FIGURE 21: BENCHMARKING THE COMPOSITION OF THE GSSE 42 FIGURE 22. SANTA CATARINA, COMPOSITION OF TSE 43 FIGURE 23. SANTA CATARINA TOTAL SUPPORT ESTIMATE IN MILLION R$ AND AS PROPORTION OF AGGDP 44 FIGURE 24: BENCHMARKING TSE AS SHARE OF AG GDP 44 FIGURE 25. BENCHMARKING TSE BY SOURCES OF TRANSFERS 45 LIST OF TABLES TABLE 1. 22 EXPORTS BY STATE(100% = $334.136 MILLION)) TABLE 2. 35 STRUCTURE AND COMPOSITION OF PSE. SANTA CATARINA (AVERAGE 2017-2021) TABLE 3. 35 STRUCTURE AND COMPOSITION OF PSE. BAHIA, SANTA CATARINA, SÃO PAULO AND OECD (AVERAGE 2017-2021) TABLE 4. 36 %PSE PER PRODUCT PER YEAR TABLE 5. 39 %CSE BY PRODUCT IN SANTA CATARINA (2017-2021) TABLE 6. 40 SANTA CATARINA, GSSE TABLE 7. 51 AREAS OF REFORMS FOR A COMPETITIVE, GREEN, RESILIENT AND INCLUSIVE AGRICULTURE SECTOR IN SANTA CATARINA BOXES BOX 1. OECD INDICATORS OF SUPPORT FOR AGRICULTURE 27 BOX 2. APPROACH TO TSE CALCULATION FOR SANTA CATARINA 29 8 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector ACKNOWLEDGEMENTS 9 9 ACKNOWLEDGEMENTS This report was prepared by a World Bank team led by Marie Paviot (Senior Agriculture Economist, World Bank), and including Elena Mora López (Agriculture Economist, World Bank), María Florencia Tejeda (Agriculture Economist, World Bank), Victoria Traverso (Agriculture Analyst, World Bank), Beatriz Garcia (Intern, World Bank), Hector Peña (Consultant), Mauro del Grossi (Consultant), Luisa Leite (Intern, World Bank). The team is grateful for the guidance and support received from Diego Arias (Practice Manager, World Bank), Eli Weiss (Program Leader, World Bank), Edward Bresnyan (Lead Agriculture Economist, World Bank), Sergiy Zorya (Lead Agriculture Economist, World Bank), Svetlana Edmeades (Lead Agriculture Economist, World Bank), Vanina Daphne Forget (Senior Agriculture Economist, World Bank) and Paolo de Salvo (Senior Sector Specialist for Rural Development, Inter-American Development Bank), Barbara Farinelli (Senior Agriculture Economist, World Bank), Eirivelthon Santos Lima (Senior Agriculture Economist, World Bank), Leonardo Bichara (Senior Agriculture Economist, World Bank). The team expresses its gratitude for logistical and administrative support from Kayo Barbosa (Team Assistant, World Bank). 10 10 ACRONYMS AAGR IBGE Annual Average Growth Rate Brazilian Institute of Geography and Statistics - Instituto Brasileiro de Geografia e Estatística ABC Low Carbon Emission Agriculture Plan – LAC Plano Agricultura de Baixa Emissão de Carbono Latin America and Caribbean AgGDP LCA Agricultural Gross Domestic Product Agricultural Credit Notes – Letras de Crédito do Agronegocio APP Area of Permanent Preservation - LPI Area de Preservação Permanente Logistics Performance Index BNDES MAPA Brazilian National Development Bank – Banco Ministry of Agriculture and Livestock – Nacional de Desenvolvimento Economico e Social Ministerio de Agricultura e Pecuaria CAR MPS Rural Environmental Cadaster – Market Price Support Cadastro Ambiental Rural NDC CNPA Nationally Determined Contribution National Agricultural Policy Council – NPC Conselho Nacional de Política Agrícola Nominal Protection Coefficient CSE OECD Consumer Support Estimate Organization for Economic EMBRAPA Cooperation and Development Brazilian Agricultural Research Corporation - PGPM Empresa Brasileira de Pesquisa Agropecuaria Minimum Price Guarantee Policy GDP PNCPD Gross Domestic Product National Program for Conversion of Degraded GHG Pastures to Sustainable Agrifood Productive Greenhouse Gas Systems - Programa Nacional de Conversão de Pastagens Degradadas em Sistemas de Produção GRID Agropecuários e Florestais Sustentáveis Green, Resilient and Inclusive Development PPCDAm GSSE Plan for the Prevention and Control of General Services Support Estimate Deforestation in the Legal Amazon 11 11 PPP RL Purchasing Power Parity Legal Reserve - Reserva Legal PROAGRO SCT Agricultural Activity Guarantee Program Single Commodity Transfer PRONAF SICAR National Program to Strengthen Family National Electronic System for Rural Farming – Programa Nacional de Environmental Cadaster – Sistema Fortalecimento da Agricultura Familiar Nacional de Cadastro Ambiental Rural PSE SNCR Producer Support Estimate National Rural Credit System – Sistema Nacional de Crédito Rural PSR Premium Subsidy Program - Programa de TFP Subvenção ao Prêmio do Seguro Rural Total Factor Productivity R&D TSE Research and Development Total Support Estimate 12 1. INTRODUCTION 1. There are various efforts to conduct comprehensive assessments of agricultural policies in countries around the world. With the use of various methodologies, the work of international bodies such as the Food and Agriculture Organization of the United Nations (FAO), the World Trade Organization (WTO), the International Food and Policy Research Institute (IFPRI), and the Organization for Economic Cooperation and Development (OECD) have carried out several efforts towards this goal. 2. In the case of the OECD, its methodology (designed in the 1970s and first applied in the 1980s) has been adapted and consolidated as an effective tool for policy monitoring and evaluation. In practical terms, it has frequently been used as a reference for establishing a dialogue at the national and international levels. Its standard character allows comparisons between countries, economies or over time; highlighting the impact of policies on the gross income of both consumers and producers. 3. Importantly, the OECD methodology estimates the value of monetary transfers made by taxpayers and consumers to agricultural producers. In its definition, the transfers generated as a result of the implementation of agricultural policies are considered. Based on this, it is possible to observe, as part of its indicators, the importance of these transfers in the total gross income of producers. Introduction 13 4. The methodology considers four basic indicators to determine the amount of transfers to the agricultural sector and to the consumer of agricultural products:  Total Support Estimates (TSE).  Quantifies, in monetary terms, the impact of all policies and the sector as a whole.  Producer Support Estimates (PSE): Quantifies the total transfers to the producer resulting from the implementation of agricultural policies aimed at a specific product or group of products.  Producer Support Estimates as a percentage of gross income (PSE%):  Estimates the impact of estimated transfers as a proportion of the gross income of the producer under analysis.  Consumer Support Estimates (CSE):  Quantifies the impact of agricultural policies on domestic consumers or on a particular product. 5. One of the objectives of this analysis is to quantify the impact of the agricultural policies of the state government of Santa Catarina on producers, consumers, and the sector as a whole, based on the transfers that these policies generate, thus, in this analysis the result obtained will only reflect the transfers derived from the implementation of agricultural policies of the government of the state of Santa Catarina. In this sense, the transfers derived from the implementation of national policies are not considered in this exercise and, in any case, both could be considered as complementary and measure their total impact on the income of the State producer. During the analysis, the amount of these transfers is estimated, as well as their importance within the producer’s gross 1 income, which facilitates comparisons over time and with other economies. 6. The analysis considers the period 2017-2021, which is relevant considering the various events that affected the sector during that period, such as the presence of the global pandemic and a food price crisis. Based on the results obtained, recommendations for repurposing public policies and programs to foster a competitive, green and resilient growth of the sector have been formulated in the final section. 1 The OECD annually estimates the transfers derived from the implementation of national government policies, considering Brazil as a non-member country. Its results are published on the Organization’s website. 14 2. ECONOMIC PERFORMANCE OF THE AGRICULTURAL SECTOR (BRAZIL AND SANTA CATARINA) 2.1 Gross Domestic Product Brazil 7. The pace of growth of the country’s economy has slowed over the past ten years. According to data from the Brazilian Institute of Geography and Statistics (IBGE), in 2020 the Gross Domestic Product (GDP) was recorded at 7,6 trillion reais, which represented an annual growth of 3.0 percent over the previous year which meant a decrease of 9.6 p.p. compared to the annual growth of 12.6 percent recorded in 2011 when GDP stood at 3,885,847.00 million reais. For that period, the Average Annual Growth Rate (AAGR) of GDP stood at 5.7 percent. 8. It is important to note that, during 2020, the pandemic and the confinement and social distancing measures to contain the spread of the virus significantly affected the economic activity, resulting in challenges for which the country implemented a series of measures such as direct cash transfers, support for small and medium-sized enterprises, postponement of the payment of certain taxes, among others. Economic Performance of the Agricultural Sector (Brazil and Santa Catarina) 15 FIGURE 1. Annual change in GDP (Source: IBGE) 12.6% 10.7% 10.0% 8.4% 6.4% AAGR 4.6% 5.0% 5.5% 5.7% 3.8% 3.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2.2 Value Added and Contribution to GDP by Economic Sector 9. Despite the decrease in GDP growth in recent years, the value added of agricultural production has had the greatest dynamism among sectors. In 2020, the annual variation in Agricultural Value Added was recorded at 39.9 percent, which implied an increase of 21.1 p.p. compared to 2011. For the period from 2011 to 2020, the agricultural sector presented an Annual variation of Value Added of 8.6 percent. 10. During 2020, a year in which there was low growth of the economy in general due to the effects of COVID-19, the agricultural sector showed resilience being an important engine for development, providing food security with record productions in crops such as corn and soybeans and recorded solid exports. According to data from the Ministry of Trade (Brazil), agricultural exports grew by 4.9 percent in 2020 compared to those observed in 2019, while exports corresponding to the processing and extractive industries decreased by 9.7 percent and 3.0 percent, respectively. 16 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector FIGURE 2. Annual Variation in Value Added by Economic Sector (2011-2020) (Source IBGE) 40.0% 39.9% 35.0% 30.0% 25.0% 20.0% 18,8% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Agricultural Industry Services Administration Taxes 11. In addition, the agricultural sector has increased its participation in the total economy. In 2020, the agricultural sector contributed 5.7 percent of the total GDP, which implied an increase in the sector’s share of 1.6 p.p. after ten years, only behind the contribution of the service sector, which increased by 2.6 p.p. for the same period. FIGURE 3. Composition of Brazil’s Gross Domestic Product: 2011 vs 2021 (source IBGE) Composition of Brazil’s GDP: 2011 Composition of Brazil’s GDP: 2020 Agricultural 4.1% Agricultural 5.7% Industry 23.3% Industry 19.5% Services 43.8% Services 46.4% Administration 13.8% Administration 15.1% Taxes 15.0% Taxes 13.3% Economic Performance of the Agricultural Sector (Brazil and Santa Catarina) 17 2.3 Contribution to GDP by State 12. Santa Catarina is the sixth state that contributes the most to the national GDP. In 2020, its share was 4.6 percent. This trend has continued since 2011 when the State’s participation was recorded at 4.0 percent. FIGURE 4. State Share of Total GDP: 2011 vs 2020 (Source IBGE) Share of the State of Santa Share of the State of Santa Catarina in the National GDP: Catarina in the National GDP: 2011 2020 Santa Santa Catarina 4.0% Catarina 4.6% Others 96.0% Others 95.4% 2.4 External trade 13. Brazil’s trade balance is historically in surplus, however, in recent years imports have recorded a higher rate of growth than exports. Between 2017 and 2022, exports registered a AAGR of 9.2 percent, while the average growth of imports was 11.4 percent. In 2022, the trade balance stood at 61.525 million dollars, the result of a total amount of 334.136 million dollars of exports and 272.611 million dollars of imports. 18 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector FIGURE 5. Brazil’s foreign trade (Million USD) (Source: Ministry of Development, Industry, Trade and Services / Ministry of Trade (Brazil). https://www.gov.br/produtividade-e-commerce-exterior/pt-br /assuntos/commerce-exterior/estatisticas) 400,000 300,000 200,000 100,000 0 2017 2018 2019 2020 2021 2022 Exports Imports 14. By the end of 2022, the main economic export activity was the processing industry, with a 54.3 percent share of the total value exported in that year, followed by the extractive industry with 22.8 percent and agricultural activity with 22.4 percent. It should be noted that the processing industry, as the main export activity, is strongly driven by the export of agri-food, which accounts for almost a third of this sector. FIGURE 6. Brazil exports by economic activity (MUSD) (Source: Ministry of Development, Industry, Trade and Services / Ministry of Trade (Brazil). https://www.gov.br/produtividade-e-commerce-exterior/pt-br/assuntos/commerce-exterior/estatisticas) Processing Industry Agriculture 22.4% Agrifood 31% Extractive Industry 22.8% Processing Industry 54.3% Others 69% Others 0.5% Economic Performance of the Agricultural Sector (Brazil and Santa Catarina) 19 15. The main export products, according to 2022 figures, were soybeans, crude oil, and iron ore, with shares of total exports of 13.9 percent, 12.7 percent and 8.7 percent, respectively, registering average growth rates of 12.6 percent, 20.7 percent, and 8.5 percent, respectively. In addition, 10 of the 22 main products exported come from the processing industry, 7 of which are agri-food. FIGURE 7. Exports of main products (Share of value of total exports) (Source: Ministry of Development, Industry, Trade and Services / Ministry of Trade (Brazil). https://www.gov.br/produtividade-e-commerce-exterior/pt-br/assuntos/commerce-exterior/estatisticas) 2017 Soy 12% Cellulose 3% Iron ores 9% Coffee 2% Crude petroleum oils 8% Fuel oils 1% Sugar 5% Bird meat 3% Passenger motor vehicles 3% Unground corn 2% Soy flour 3% Semi-products Beef 2% 2022 Soy 13.9% Sugars 3.3% Crude petroleum oils 12.7% Cellulose 2.5% Iron ore 8.7% Beef 3.5% Fuel oils 3.9% Coffee 2.5% Unground corn 3.6% Semi-products: Soya flour 3.3% Bird meat 2.7% 20 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector 16. In 2022, exports from the agricultural sector grew by 35.6 percent compared to the previous year and at an average annual rate of 14.2 percent over the last five years. In addition to soy, other products such as corn (16.3 percent), coffee (11.4 percent), and cotton (4.9 percent) stand out. FIGURE 8. Agricultural sector exports, 2022 100%= $74.787 million (Source: Ministry of Development, Industry, Trade and Services / Ministry of Trade (Brazil). https://www.gov.br/produtividade-e-commerce-exterior/pt-br/assuntos/commerce-exterior/estatisticas) Soy 46.559 | 3% Wheat 12.184 | 1% Coffee 8.514 | 1% Cotton 3.676 | 0% Fruits and Non-oilseed nuts 946 | 62% Rice 312 | 20% Wood 194 | 13% Others 2.401 | 0% 17. The main destinations for Brazil’s exports are China, with 26.8 percent of the total; the United States, with 11.2 percent; and Argentina, with 4.6 percent. Despite China concentrating about a quarter of exports, Brazil has a good diversification of trading partners, according to the Herfindahl and Hirschman Index (IHH) of 947. Economic Performance of the Agricultural Sector (Brazil and Santa Catarina) 21 FIGURE 9. Total exports by country of destination (100% = $334.136 million) (Source: Ministry of Development, Industry, Trade and Services / Ministry of Trade (Brazil). (https://www.gov.br/produtividade-e-commerce-exterior/pt-br/assuntos/commerce-exterior/estatisticas) China 26.8% Singapore 2.5% United States 11.2% Mexico 2.1% Argentina 4.6% Japan 2.0% Netherlands 3.6% India 1.9% Spain 2.9% Others 39.7% Chile 2.7% 18. The five main exporting states accounted for 56.6 percent of the total export value in 2022. São Paulo generated the highest value for this item with 20.8 percent, followed by Rio de Janeiro with 13.6 percent. The latter state also showed considerable growth in its total share of exports with an average annual rate of 18.3 percent. While Santa Catarina was the tenth state with the highest share of exports in 2022, collaborating with 3.1 percent of the total, the Average Annual Growth Rate (AAGR) registered for this State was 7.1 percent for the period from 2017 to 2022. 22 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector TABLE 1. Exports by State(100% = $334.136 million) (Source: Ministry of Development, Industry, Trade and Services / Ministry of Foreign Trade (Brazil). (https://www.gov.br/produtividade-e-commerce-exterior/pt-br/assuntos/commerce-exterior/estatisticas) AAGR # State 2022 % in 2022 2022/2017 1 SÃO PAULO 69,631 20.80% 6.60% 2 RIO DE JANEIRO 45,514 13.60% 18.30% 3 MINAS GERAIS 40,194 12.00% 9.70% 4 MATO GROSSO 32,508 9.70% 17.20% 5 RIO GRANDE DO SUL 22,565 6.80% 4.90% 6 PARANÁ 22,133 6.60% 4.30% 7 PARÄ 21,515 6.40% 8.20% 8 GOIÁS 14,148 4.20% 15.40% 9 BAHIA 13,923 4.20% 11.60% 10 SANTA CATARINA 11,966 3.60% 7.10% OTHERS 40,040 12.0% 5.2% Total 334.136 100.00% 9.20% 2.5 National Consumer Price Index 19. The pace of price growth has slowed for most of 2022 and so far in 2023. In May 2023, the National Consumer Price Index (INPC) was recorded at 6,893.3 points, for that date, the annual variation of the index was 3.7 percent, which represents a slower growth rate compared to the 11.9 percent annual variation of the same month of 2022. Economic Performance of the Agricultural Sector (Brazil and Santa Catarina) 23 FIGURE 10. Annual Variation of the National Consumer Price Index (INPC) 2017 – May 2023 (Source: IBGE) 14.00 2017 2018 2019 2020 2021 2022 2023 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Jan Mar May Jul Sep Jan Mar May Jul Sep Jan Mar May Jul Sep Jan Mar May Jul Sep Jan Mar May Jul Sep Jan Mar May Jul Sep Jan Mar May Nov Nov Nov Nov Nov Nov 2.6 Santa Catarina 2.6.1 State Gross Domestic Product 20. In recent years, Santa Catarina’s pace of economic growth has slowed. Between 2011 and 2020, the annual variation of the State’s GDP fell from 13.2 percent to 8.0 percent, which represented a decrease of 5.2 p.p. The Average Annual Growth Rate (AAGR) recorded for this state in the same period was 7.2 percent. FIGURE 11. Santa Catarina – Annual Change in GDP (Source: IBGE) 13.2% 13.1% 11.8% 10.2% 8.0% 8.4% 8.0 % 7.6% AAGR 3.1% 2.7% 7.2% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 24 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector 2.6.2 Value Added and Contribution to GDP by Economic Sector 21. The annual variation of the Value Added of agricultural production in the State has had the greatest dynamism among the sectors. From 2011 to 2022, Santa Catarina’s annual rate of economic growth went from 0.0 percent to 27.6 percent with a CAGR of 8.1 percent. 22. This remarkable growth in the agricultural sector in 2020, a year highlighted by the presence of COVID-19 in Brazil and the rest of the world, was influenced by local, national, and international factors. According to data from the Brazilian Ministry of Trade, agricultural exports decreased in Santa Catarina by 5.9 percent between 2019 and 2020, while the processing industry, which is largely explained by agri-food, grew by 10.7 percent. This highlights the importance of the sector in the State as an economic engine in the face of various macroeconomic phenomena. FIGURE 12. Annual Variation in Value Added by Economic Sector in Santa Catarina: 2011 – 2020 (Source: IBGE) 40.0% 35.0% 30.0% 27.6% 25.0% 20,2% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Agricultural Industry Services Administration Taxes Economic Performance of the Agricultural Sector (Brazil and Santa Catarina) 25 23. As for the contribution of the agricultural sector to the State’s economy, it has decreased by 0.2 p.p. from 2011 to 2020, going from 5.8 percent to 5.6 percent, respectively. FIGURE 13. Composition of Santa Catarina’s Gross Domestic Product: 2011 vs 2021 (Source: IBGE) Composition of Santa Composition of Santa Catarina’s GDP: 2011 Catarina’s GDP: 2020 Agricultural 5.8% Agricultural 5.6% Industry 27.7% Industry 22.4% Services 40.4% Services 44.1% Administration 10.9% Administration 10.8% Taxes 15.1% Taxes 17.2% 24. The State of Santa Catarina is the 15th State when it comes to GHG emissions within the country. The Agriculture sector and Land Use Change represent 37 and 9 percent of the State’s GHG emissions respectively. Within agriculture, it is worth noting that 49 percent of GHG emissions come from enteric fermentation, 26 percent from soils and 26 percent from animal waste. Emissions coming from the agriculture sector increased by 53 percent between 2002 and 2022, while emissions from Land Use Change decreased by 78 percent during the same period. FIGURE 14. Santa Catarina: Sectoral breakdown of GHG emissions (Source: SEEG) Agriculture 37% Land Use Change 9% Energy 44% Waste 8% Industry 2% 26 3. EVALUATION OF SUPPORT FOR AGRICULTURE IN SANTA CATARINA (2017-2021) 3.1 Methodology 25. This section provides a quantitative assessment of monetary transfers to agriculture in Santa Catarina, derived from the implementation of agricultural policies, during the period 2017-2021. For the estimation of these transfers, the OECD methodology for estimating agricultural support has been taken as a base reference, including the Producer Support Estimate (PSE), the Consumer Support Estimate (CSE), the Total Support Estimate (TSE), and the General Service Support Estimate (GSSE) (see Box1). It is important to note that for the estimates, the transfers derived solely from the implementation of state government policies have been considered, which allows quantifying them and estimating their impact on the producer/ consumer or on the state sector. In this sense, national policies are not considered since this would correspond to an analysis of transfers associated with national policies, which is not part of the objectives of this analysis. 27 BOX 1. OECD INDICATORS OF SUPPORT FOR AGRICULTURE • Indicators of support for producers state that support agriculture, regardless of their nature, objectives, or impacts on the Throughout this document, it will be emphasized that consumption of agricultural products. the estimation of the various supports will consider only the implementation of policy measures by the CSE in percentage (CSE%): CSE as a percentage of State and their impact on the state sector or state consumption expenditure (measured on an operating producer/consumer. basis) net of transfers from taxpayers to consumers. Producer Support Estimate (PSE): The annual • Indicators of support to general services for monetary value of gross consumer and taxpayer agriculture transfers to agricultural producers, measured at the farm level and derived from the implementation General Service Support Estimate (GSSE): The of state government agricultural policy measures annual monetary value of gross transfers to that support agriculture, regardless of their nature, general services provided to agricultural producers objectives, or impacts on agricultural production collectively (such as research, development, or incomes. training, inspection, marketing, and promotion), derived from measures of the implementation Percentage of PSE (%PSE): PSE as a percentage of of policies that support agriculture by the gross agricultural income (including transfers). state, regardless of their nature, objectives, and impacts on agricultural production, income, or Single Commodity Transfers (SCT) represent consumption. The GSSE does not include any the total annual monetary value of transfers from transfers to individual producers. consumers and taxpayers to agricultural producers. These transfers are measured at the farm gate Percentage GSSE (% GSSE): GSSE as a percentage level and are a result of policies specifically tied to of the Total Support Estimate (TSE). the production of a single commodity – conditional transfers. In order to receive the payment, producers • Indicators of Total support to the sector are required to produce the designated commodity. This category also encompasses broader policies where Total Support Estimate (TSE): The annual transfers are specified on a per-commodity basis. monetary value of all gross transfers from taxpayers It can also be expressed as a percentage of Gross and consumers resulting from the implementation Agricultural Income for the specific product. of agricultural support policy measures by the state, net of associated budget revenues, regardless of their • Indicators of support to consumers objectives and impacts on agricultural production and incomes, or consumption of agricultural products. Consumer Support Estimate (CSE): The annual monetary value of gross transfers Percentage TSE (TSE%): TSE as a percentage of GDP. from (to) consumers of agricultural products, measured at the farm level, arising from the implementation of policy measures by the 28 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector 26. The OECD methodology makes it possible to identify the beneficiaries of transfers and also identifies (and quantifies) the sources of financing for such transfers. The following figure outlines the relationship between beneficiaries and sources of financing for the transfers generated. In relation to recipients, there are fundamentally three types of transfers: to individual producers, to the sector, and to consumers. First, and to the extent that a state policy measure benefits a product or group of products, these measures are classified within the PSE and their source of financing can be consumers (through higher prices) or taxpayers (through tax payments with which the support programs are financed). Secondly, when a measure is carried out and benefits the sector as a whole, it is classified as GSSE. Virtually all of these measures are funded by taxpayers. Finally, policy measures that promote or hinder the consumption of agricultural products are classified within the CSE. The sources of financing for these measures are through taxpayers (public programs that subsidize the consumption of products) or through consumers themselves (through intervention measures that affect the market price). FIGURE 15. Scheme of Transfers Associated with the Implementation of Agricultural Policies Tot l Support Estim te Producer Support Support for Consumer Support Estim te Gener l Services Estim te M rket Bud et r Bud et r M rket Price Tr nsfers Tr nsfers Price Support Support Consumers T xp er Sources 27. The methodology applied in this study is consistent with that used by the OECD reports that monitor and evaluate agricultural policies in the OECD and other countries. Box 2 provides basic information on how this methodology has been applied to the case of Santa Catarina, Brazil. 29 BOX 2. APPROACH TO TSE CALCULATION FOR SANTA CATARINA The approach to estimating support for the sector quotas, export subsidies, export taxes, quantitative in the state of Santa Catarina faithfully applies the restrictions on exports and other measures that principles of the OECD methodology. In this sense, the generate an increase (or decrease) in the domestic estimate is limited to estimating the support derived price in relation to an international reference. from the implementation of State government Additionally, other types of policies can be included policies in the agricultural sector. Likewise, the within these measures, including the imposition indicators will indicate the impact that, in the margin, of managed prices (maximum and minimum), the State support represents on the producer’s government purchases, etc., which generate a gap gross income, on GDP, etc. This allows a reasonable between prices. comparison with other economies. In some cases, differences between domestic and It is worth mentioning that during the analysis, some international prices are also explained by factors support programs have been found that have a pari that are not strictly policy-related, for instance, passum financing scheme, with a national and a deficiencies in physical infrastructure, inadequate state contribution. In those cases, only the State information, and weak market institutions or contribution has been considered, as for the case of exchange rate variations (considering that the the school feeding program. comparison is commonly made in a local single currency). The OECD methodology indicates that, Under this principle, it is clear that the support that if the gap detected is due to the presence of any of a producer can receive in the State is complemented these factors, it is not considered for its calculations). by the support they receive from national policy measures (although the latter are not estimated in It is important to mention that the implementation this exercise). of policies related to border measures (restriction/ promotion of imports/exports) based on the • PSE calculation for Santa Catarina imposition of tariffs/quotas/subsidies is an exclusive power of the national government.2 However, other Broadly speaking, the PSE has two main components: measures that can generate a domestic price support via market prices and budget support. gap in relation to international references can be implemented by the state government, including, for • Market Price Support (MPS) example: administered prices, and public purchases or production quotas. Market price support is based on measuring the difference between a country’s (or state’s) domestic In the case of Santa Catarina, and according to the prices and international (property-level) reference information collected, there was no evidence that, prices. This price gap is the result of a variety of during the analyzed period (2017-2021), the State policy measures that prevent domestic prices from government implemented a policy that intervened in aligning with international levels. These policies the prices of the products analyzed and generated a include trade measures such as import tariffs, tariff gap in relation to the international reference price. 2 See: Receita Federal — Receita Federal (www.gov.br); Import customs procedures in Brazil - Santandertrade.com 30 The MPS was calculated based on the following The local consultant provided data on FOB prices information: and transportation and processing costs from information generated by Brazil’s National Land Analyzed Products and representativeness: Maize, Transport Agency (ANTT), adjusted for inflation soybean, rice, chicken, and beef and pork represent between 2018 and 2021. 74 percent of the total value of gross agricultural production in Santa Catarina by 2021.3 The OECD Price gap estimates: The “zero price gap” was used methodology requests that a sample of products when negative gaps were obtained, as the estimated that represents around 70 percent of the value of negative price gaps reflect factors other than agricultural production (in this case of the State) has agricultural policies. to be analyzed. Thus, this parameter has been met for this State, and general conclusions can be made. • Budget support Prices to the domestic producer: Corresponds to Budget support comes from information on public the average annual prices received by producers at spending at the sectoral level executed solely by the property level in Santa Catarina. This information the State Government through any of its agencies has been provided by the local Consultant, from the or entities that executed support programs for the National Supply Company (CONAB) and Empresa sector in the period. The budget information was de Pesquisa Agropecuária e Extensão Rural de Santa provided by the Local Consultant through information Catarina (EPAGRI). from the portal da Transparência - Governo do Estado de Santa Catarina External reference prices: Average annual export (https://www.transparencia.sc.gov.br). prices (FOB) were used for the products under analysis. Those prices were adjusted at the property level with the cost of port transportation and other processing costs, in order to make reasonable comparisons with domestic prices. The adjustment followed the comparability criterion (like to like) suggested by the OECD. 3 Source: SANTA CATARINA GOVERNMENT. CEPA/EPAGRI. Observatório Agro: https://www.observatorioagro.sc.gov.br. Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 31 3.2 Producer Support Estimates (PSE) 3.2.1 Level of Support 28. The Producer Support Percentage Estimate (%PSE) is one of the most important indicators used by the OECD to measure the impact on the farmer of the transfers associated with the implementation of State policies, coming from both consumers and taxpayers, expressing this amount as a proportion 4 of the gross agricultural income of the state producer . Under this criterion, this indicator reasonably allows comparisons of the impact between products, countries or over time, and the OECD considers it as the “most appropriate indicator to compare changes in the level of support to the farmer”. 29. The %PSE expresses the monetary value of state aid transfers to agricultural producers in the state as a percentage of that producer’s gross income. As it is unaffected by inflation, it allows for comparisons in the level of support both over time and across countries. This indicator provides information on consumer and taxpayer transfers (budget transfers) to farmers. 30. Figure 15 shows the estimate of %PSE of Santa Catarina for the period 2017- 2021. For the first year, the %PSE shows that 0.07 percent of the gross income of agricultural producers was generated by state support policies. By 2021, that level rose to 0.12 percent. The average %PSE for the period was 0.06 percent. All these levels denote a relatively low average impact (almost zero) of direct support policies on producers’ income. This situation also reflects that the products used for this analysis are mainly for export and therefore exposed to international prices. Finally, and as will be shown below, there were no policies by the government of the state of Santa Catarina that implied an interventionist measure in prices, since these are fundamentally governed by market conditions. 4 Calculated as the value of production plus transfers received. 32 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector FIGURE 16. Santa Catarina Producer Support Estimate as a proportion of Total Income (PSE%) 0,12% 0,07% 0,06% 0,04% 0,04% 0,03% 2017 2018 2019 2020 2021 Promedio 2017-2021 31. The %PSE indicator allows for reasonable comparisons, in this case with other countries, including the OECD countries, and other states in Brazil. The level of support to the producer in Santa Catarina as a proportion of income in the analyzed period (0.06 percent) is comparatively lower than that observed in other economies such as Chile, Mexico, etc., and 5 lower than that of São Paulo (0.1 percent) and Bahia (0.2 percent). FIGURE 17. Benchmarking PSE% - 2017-2021 17,4% 9,8% 9,8% 4,8% 2,4% 2,8% 0,1% 0,1% 0,2% Argentina Sta. São Bahia* Brazil Chile LATAM Mexico USA OECD Catarina* Paulo* 5 As mentioned, the comparison with other economies is reasonable and valid to the extent that the % PSE estimates represent the importance of transfers generated by policies (whether state or national) in the producer’s gross income, which can be reasonably compared with the same impact with other economies. Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 33 3.2.2 Composition and Structure of the Producer Support Estimate (PSE) by Support Category 32. A fundamental part of the research on support to the sector includes not only the analysis of the level and impact, but also the composition of the sector. The relative importance of each of the categories of support considered by the OECD methodology reveals the way in which the supports are granted and from there, conclusions can be reached on the degree of efficiency (inefficiency) and progressiveness (regression) of those supports. In practical terms, this can help identify that not necessarily a high (or low) level of support implies that it is being done efficiently or equitably. 33. For example, aid can be granted through support via prices or subsidies to inputs. It can take the form of a payment per hectare or per animal, or compensation to the producer’s income; but its impact (measured from various angles) can differ. Also, by identifying the various categories of support, it is possible to determine in the first instance, the impact that the form of support can have on production, trade or income or other variables of great relevance such as the environment. 34. Support through market prices (MPS) is considered a highly distorting measure with a high social cost on consumers. During the analyzed period, the State of Santa Catarina did not implement any support measures that intervened in the level of domestic market prices to producers. Thus, according to the methodology, the calculation of the price gap is not considered and therefore there is no MPS during the analyzed period. 35. Table 2 shows that, during the period of analysis, the direct support to producers in Santa Catarina was implemented mostly through payments based on inputs use. Almost 99 percent of transfers directed to a product or group of products were made through this category. The State Government carried out multiple programs that offered credit with preferential rates, such as Programa de Apoio financeiro a projeto de novos empreendimentos agroindustriais (Financial support program for new agroindustries projects), Apoio financeiro a formalização de emprendimentos informais (Financial 34 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector support for the formalization of informal enterprises), and Apoio financeiro a 6 projetos de fortalecimento de cooperativas (Financial support for cooperatives). 36. A relatively smaller part of the total support (1.4 percent) includes other programs implemented by the State Government and whose objectives fundamentally consider the preservation of the environment as part of agricultural activity. Programs such as Programa de Adequação Ambiental (Environmental Regulation Program) e Corredores Ecológicos (Ecological Corridors) have been included here. Given their characteristics, these programs are considered “green” programs. 37. In a comparative analysis of the structure with other states in Brazil and OECD countries (Table 3), two aspects are highlighted: the first is that, unlike in the OECD, market price support is not used as a policy instrument to transfer resources to the sector. The second is that, in the OECD, most of the policy instruments that transfer resources to the sector (40.1 pecent), are carried out through programs that are not conditional on production (decoupled) and thus, are less distorting, considered less harmful to the environment and result in support that is not subject to sanctions or trade compensation within the WTO’s foreign trade rules (green box). In general, the OECD observes the use of a more diverse range of categories and is mostly oriented towards decoupled support categories. 3.2.3 Analysis of Producer Support by Product 38. The OECD methodology allows obtaining a disaggregated level for each product selected as the basis for the analysis. By definition, the methodology makes it possible to identify the supports that are transferred to a type of product or group of products (PSE). Formally, the analysis of support by product is called “Individual commodity transfers”. For these purposes, we will call it “Product Producer Support Estimate (product name)”. The PSE per product can also be expressed both in absolute terms and as a percentage of the gross revenue of the product under analysis. For the 6 See the annex for details of the programmes Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 35 TABLE 2. Structure and Composition of PSE. Santa Catarina (average 2017-2021) Santa Catarina Item Rs Mill % III.1 Producer Support Estimates (PSE) 25.2 100,0% Market Price Support 0.0 0.0% Production-based payments 0.0 0.0% Payments based on the use of inputs 24,8 98.6% Supports based on non-current production A/ 0.0 0.0% AN/I. REQUIRED PRODUCTION : Supports based on non-current production 0.0 0.0% A/AN/I. No production is required. Support based on criteria not related 0.4 1.4% to agricultural production Others 0.0 0.0% TABLE 3. Structure and Composition of PSE. Bahia, Santa Catarina, São Paulo and OECD (average 2017-2021) São Santa Bahia OCDE Category Paulo Catarina % % % % III.1 Producer Support Estimates (PSE) 100.0% 100.0% 100.0% 100.0% Market Price Support 0.0% 0.0% 0.0% 17.1% Production-based payments 0.0 0.0% 14.3% 0.3% Payments based on the use of inputs 96.6% 98.7% 63.9% 14.1% Supports based on non-current production 0.0% 0.0% 0.0% 27.0% A/AN/I. REQUIRED PRODUCTION : Supports based on non-current production 0.0% 0.0% 0.0% 40.1% A/AN/I. No production is required. Support based on criteria not related 3.4% 1.3% 21.7% 1.1% to agricultural production Others 0.0% 0.0% 0.0% 0.3% 36 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector latter case, a figure of 33 percent, for instance, indicates that the value of the transfers derived from the implementation of state agricultural policies, which are specific to that commodity, is equivalent, on average, to one third of the gross agricultural income of the producers of that product in the particular state and for the year or period analyzed. 39. Figure 17 shows the PSE of Santa Catarina in percentage (%PSE) for the five products included in the support estimation analysis, considering the average of the analyzed period. Throughout that period, rice had the highest level of %PSE, while the rest of the products observed a much lower and marginal level. FIGURE 18. %PSE by Product in Santa Catarina (average 2017-2021) Rice 0.28% Bovine 0.14% Swine 0.12% Chicken 0.11% Maize 0.09% Soy 0.03% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% TABLE 4. %PSE per product per year Santa Catarina 2017 2018 2019 2020 2021 Soya 0.1% 0.0% 0.0% 0.0% 0.1% Maize 0.1% 0.1% 0.0% 0.0% 0.2% Chicken 0.2% 0.1% 0.1% 0.1% 0.2% Swine 0.1% 0.1% 0.1% 0.1% 0.3% Bovine 0.2% 0.1% 0.1% 0.1% 0.2% Rice 0.3% 0.2% 0.1% 0.1% 0.6% Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 37 40. Table 4 includes the monitoring of this indicator for each year and an increase towards 2021 is shown in all the products. This increase has resulted from the significant increase in resources of various state programs in 2021 aimed at financing agricultural projects and located within the Payment based on inputs category of the Producer Support Estimate. Between 2020 and 2021. The amount of resources in this category of support almost multiplied by 5, going from 13.2 million reais to 62.9 million reais (See Annex 1). 3.3 Consumer Support Estimate (CSE) 41. The Consumer Support Estimate (CSE) measures the cost (or benefit) to state consumers of the state government’s implementation of sector support policies. A negative CSE indicates a negative cost to the consumer, which is equivalent to an implicit consumption tax on agricultural products. To the extent that a (state) agricultural policy raises the domestic price of products above international reference prices (for example, the imposition of administered prices), the consumer is the one who must bear that cost and transfers them as a benefit to the producer. Conversely, a policy that generates a domestic price below the international reference price (for example, a maximum price), generates an “implicit subsidy” to the consumer financed by the producer. 42. The OECD methodology considers, in addition to these supports, those that may result from consumption subsidy programs, and which are financed by taxpayers. In any case, both sources of financing are considered in the calculations to determine the net support to the consumer. 3.3.1 Structure of the Consumer Support Estimate (CSE) 43. Like the PSE, the CSE can be expressed in relative terms as a percentage of consumption expenditures (%CSE). The average percentage of CSE for Santa Catarina was positive for the entire period under analysis (0.1 percent). Since the state government did not implement measures to support the sector that would result in higher prices received by the producer (including measures 38 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector such as price administration, production quotas, public purchases), the consumer was not affected. Additionally, there were food subsidy and support 7 programs implemented that, when accounted for, contributed to this indicator being positive. The estimated average result indicates that, derived from the implementation of subsidy programs financed with state resources and combined with a policy of non-intervention in agricultural prices by the state, the consumer found the value of the food basket 0.1 percent lower. Comparing the result with that observed at the national level, the result for Santa Catarina is higher than the result at the national level in that period (0.29 percent). FIGURE 19. Santa Catarina Percentage of Consumer Support Estimate (%CSE) 0,28% 0,28% 0,28% 0,2% 0,2% -0,10% 2017 2018 2019 2020 2021 2017-2021 Average 3.3.2 Estimated Consumer Support by Product 44. In the following table, the %CSE is observed at the level of each product and during the period under analysis for Santa Catarina. All the products analyzed show a positive %CSE. In the case of the State, the results can be divided in two aspects: (i) the agricultural policies of the State did not include any type of measure that intervened in the price received for the product (and therefore the price paid by the consumer) of any of the products under analysis. In that sense, there is no impact on the consumer indicator, and it is considered as zero; (ii) on the other hand, the state government carried out consumer subsidy programs, from which consumers have benefited. Thus, the overall impact of both measures generates positive consumer support. The level varies according to the product and the year analyzed, but in general it was positive. 7 School feeding programs funded by the State Government. Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 39 TABLE 5. %CSE by product in Santa Catarina (2017-2021) Average Status Product 2017 2018 2019 2020 2021 2017-2021 Santa Catarina Maize 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% Santa Catarina Soya 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% Santa Catarina Rice 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% Santa Catarina Chicken 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% Santa Catarina Bovine 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% Santa Catarina Swine 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 3.4 General Service Support Estimates (GSSE) 45. In addition to the transfers received by individual producers, government policies by the state provide assistance to the agricultural sector by financing activities that provide general benefits (public goods), such as agricultural research and development, training and extension, sanitary inspection, information, sector promotion, etc. The generation of this type of public services creates positive externalities to the sector as a whole. The OECD methodology estimates this type of transfer to the sector through the General Services Support Estimate (GSSE), which considers the amount of public investment (from the state government) towards these activities. The GSSE is financed by taxpayers and its financing by the state government is key as, due to its characteristics as public goods, the level provided by the market is lower than the socially optimal level. 46. During the period of 2017-2021 (Table 6), the GSSE for Santa Catarina reached an annual average of 100.3 RS Millions. About 30 percent of the 40 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector total disbursements of GSSE were allocated to the financing of Promotion and marketing; 24 percent to Research and Development (training, research, knowledge and transfer of technology and resources for agricultural institutes); and the remaining (46 percent) to Infrastructure (water collection infrastructure, rural infrastructure and digital inclusion tele-centers) and Inspection and Control (health defense, control of inputs, health monitoring). 47. It is worth mentioning that although the GSSE has represented a very important part of total support (about 46 percent on average between 2017-2021), its level as a proportion of the state’s Agricultural GDP (0.7 percent) is relatively lower than that observed in São Paulo (1.2 percent). TABLE 6. Santa Catarina, GSSE Average 2017 2018 2019 2020 2021 Investment in 2017-2021 General Services Rs Mill % Santa Catarina Total 83.0 72.4 75.0 66.5 204.5. 100.3 100% Agricultural knowledge 16.6 27.2 21.1 24.2 33.4 24.5 20% Inspection and monitoring 11.3 8.1 12.8 14.3 21.3 13.6 10% Infrastructure development and 18.4 4.7 14.4 4.1 21.1 12.5 10% maintenance Marketing and Promotion 12.1 10.8 11.8 19.6 98.4 30.5 30% Cost of public actions 20.7 21.5 14.8 3.6 3.5 12.8 10% Miscellaneous 3.9 0.0 0.0 0.8 26.9 6.3 10% Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 41 48. Evidence shows that the level of GSSE is positively correlated with the degree of development of countries. In addition, this type of support is in the green box in the World Tarde Organization (WTO), which means that it is not subject to any compensatory measures by trade counterparts. Investment in GSSE is often associated with long-term agricultural growth and competitiveness. 49. Figure 19 shows the GSSE as a percentage of each state’s agricultural GDP for Santa Catarina, São Paulo, Bahia, and the OECD for 2017-2021. The figure shows that the public investment in general services made by the state government of Santa Catarina, measured as a proportion of its Agricultural GDP (0.7 percent), was higher than the equivalent observed in Bahia (0.57 percent). However, the indicator is lower than that observed in São Paulo (1.2 percent) and the OECD benchmark. FIGURE 20. Benchmarking GSSE as proportion of agricultural GDP – Average 2017-2021 5.30% 1.21% 0.51% 0.57% 0.70% Brazil Bahia Santa Catarina São Paulo OECD 50. Figure 19 shows the distribution of state public investment in general services for Santa Catarina and other states, as well as the OECD. São Paulo and Bahia concentrate this investment in important areas such as Research, Inspection, and Infrastructure. In the case of Santa Catarina, it shows a more diverse distribution of its investment in other categories, similar to the OECD. 42 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector FIGURE 21. Benchmarking the composition of the GSSE 6.3% 2.28% 3.7% 6% 8.6% 1.02% 3.52% 0.16% 1.4% 3% 12.8% 22.0% 12.5% 2% 8.8% 29% 18.5% 51.7% 30.4% 42.5% 93.02% 24% 12.5% 13.5% 59.5% 39.7% 36% 31.1% 24.5% BAHIA SANTA SÃO PAULO BRAZIL OECD LATAM CATARINA Agriculture innovation Infrastructure Development and Maintenance Inspection and control Marketing and promotion Cost of public actions Others 51. Supporting research and innovation plays a vital role in helping to mitigate agricultural emissions. There is ample evidence that public investments in agricultural research and development also generate high rates of return (Alston, Pardey, & Rao, 2021). Agricultural research and development a key driver of productivity growth, which can help reduce emissions by allowing more food to be produced with the same amount or fewer emissions-intensive inputs (e.g., land, fertilizers). Innovations such as improvements in agricultural management practices, new crop varieties and livestock breeds, and new digital technologies (e.g., precision agriculture) can reduce the intensity of production emissions while mitigating emissions from land-use change. Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 43 3.5 Total Agricultural Support Estimates (TSE) 52. The Total Support Estimate for Agriculture (TSE) is the indicator that includes the sum of transfers to agricultural producers directed both individually (PSE) and collectively (GSSE), in addition to direct budget transfers to consumers arising from state agricultural policies. This indicator can be expressed in absolute terms or as a percentage of GDP. In the latter case, %TSE provides an indication of the cost that support to 8 the agricultural sector entails for the state economy and is mostly used to make reasonable comparisons between economies or over time. 53. Figure 20 shows the composition of the TSE in Santa Catarina for the period 2017-2021. It is shown that of the total estimated average annual amount for that period (177.8 R$ million), the GSSE constituted 56.4 percent, followed by the PSE (12.9 percent), and the fiscal transfers of support to the consumer accounts for the remaining 30.7 percent. FIGURE 22. Santa Catarina, Composition of TSE Total Support Estimate R$ 177.8 million USD 35.6 million Santa Catarina Consumer Producer General Services Support Support Support Estimate, Estimate, Estimate 58.4% 30.7% 12.9% 8 Sometimes it is also represented as a proportion of the Gross Agricultural Domestic Product (PIBAgr). In any case, the use of one or another variable corresponds to a criterion and this depends on the objectives of the researcher. 44 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector FIGURE 23. Santa Catarina Total Support Estimate in million R$ and as proportion of AgGDP Santa Catarina 1.2% 1.0% 1.0% 0.6% 0.95% 346.0 171.3 139.6 152.5 135.8 79.8 2017 2018 2019 2020 2021 2017-2021 Average Total Support Estimate (TSE) RS Millions and TSE/Ag GDP EAT/PIB AGRO 54. When this level of total support (TSE) is measured as a percentage of state agricultural GDP, it is observed (Figure 21) that the average TSE during that period was 0.95 percent of state agricultural GDP. The evolution of this indicator in the analyzed period shows a significant reduction towards 9 2020, but a noticeable increase towards 2021. These results are relatively low compared to the results observed in São Paulo, and in other countries. FIGURE 24. Benchmarking TSE as share of Ag GDP 54.7% 46.4% 42.0% 13.9% 14.5% 11.1% 6.8% 6.7% 0.91% 0.95% 2.9% Colombia UE OECD Mexico EEUU Costa Brazil Chile Bahia* Santa São Rica Catarina* Paulo* 9 The increase towards 2021 was due to various causes: 1) state programs to support inputs increased significantly between 2020 and 2021, going from 13.2 to 62.9 RS Millions; 2) State public investment in general services and particularly spending associated with promotion and marketing almost tripled in that period, especially related to promotion and marketing spending and 3) spending associated with consumer subsidy programs (school breakfasts) also registered a considerable increase between 2020 and 2021. The detail can be seen in the annexes Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 45 3.6 Sources of Funding for Support in Santa Catarina 55. The OECD methodology allows estimating the level of support considering the source of financing of transfers to the sector. This analysis is widely useful as it helps determine the associated cost for the two groups identified as main sources (Consumers and Taxpayers) and, from there, evaluate their efficiency from an economic and distributive point of view. 56. Figure 23 shows the participation of each of the sources of financing for transfers to the sector in the period 2017-2021. From the total generated in Santa Catarina, its taxpayers generated all of the transfers. It was mentioned above that, to the extent that there was no application of policy instruments that intervened in market prices, consumers did not generate any transfer to the sector. The methodology considers other possible consumer transfers made from the payment of taxes and tariffs for foreign trade, where the beneficiary is not the sector but the government, which represents a public income. For this analysis, and since these tariffs are not derived from a state government policy, these transfers have not been taken into account. FIGURE 25. Benchmarking TSE by sources of Transfers 22.3% 85.2% 100% 100% 100% 77.7% 14.8% Bahía Santa Catarina São Paulo Brazil OECD Consumers' transfers Taxpayers' transfers 46 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector 3.7 Environmental Impact of Support for the Agricultural Sector in Santa Catarina 57. Agriculture is an important source of greenhouse gas emissions, particularly in Brazil, and is at the same time highly vulnerable to it. It is estimated that on average the Brazilian agriculture sector loses 1 percent of agricultural GDP every 10 year due to climate events. The sector however has ample opportunities to reduce its emissions, enhance carbon storage and increase its climate resilience. 58. Recent research shows that reducing the impact of agriculture on GHG emissions can come directly from increases in productivity and activity- associated factors, including restoration of degraded land, increased soil carbon sequestration in croplands, and rangelands and afforestation, etc. In recent years, the importance of various tools that can help this purpose or that could negatively affect it, has been emphasized. These tools include the various policies to support the sector, which directly or indirectly have an impact on the contribution of the sector in focusing on the environment. 59. In recent years, the OECD has considered the categories of support for agriculture and has labeled those that have a negative impact and those whose impact is minor or zero (potentially positive). For OECD, market price support (MPS) provides incentives for additional production, the intensification of the use of inputs, the allocation of land to supported crops, and the entry of land into the agricultural sector and, thus, is considered harmful to the environment. Similarly, input supports (particularly if based on production, current cropping area, or number of animals), typically encourage farmers to increase their output, either through intensification, land expansion, or retention of farms that would be financially unviable without support. 60. On the other hand, the development of new types of support that has been observed in OECD countries have included a “decoupled” ingredient, 10 World Bank. 2015. Rapid and Integrated Agriculture Risk Management Review for Brazil Evaluation of Support for Agriculture in Santa Catarina (2017-2021) 47 that is, they are not conditional on the production of any particular product or products and in that sense, their impact is less or minimal. 61. Finally, other supports that incorporate incentives for the non-use of certain natural resources or stimulate the growth of environmental activities are considered. This type of support generates positive or pro- environmental impacts. This category also considers public investment in research and development that promotes sectoral productivity. 62. Most of direct support to producers implemented by the State of Santa Catarina is granted through payments based on inputs (see Table 2), which, according to the OECD criteria, have a negative effect on the environment and on GHG emissions. However, it is important to consider that a sizeable part of these supports is support for interest rates and subsidies for agricultural insurance premiums, which are conditional to the implementation of environmental policies within the production process and in that sense, the negative impact of these supports on the environment can be nuanced. 63. The remaining direct support to producers (that only represents 1.4 percent of 11 the PSE) is implemented through decoupled payments. Decoupled payments are considered to generate positive environmental outcomes, encouraging farmers to provide environmental goods and services such as carbon sequestration, preservation of rural landscapes, resilience to natural disasters, pollination, habitat provision, etc. These types of measures are potentially 12 among the most environmentally beneficial types of support measures. 11 For example: “Support Program for Environmental Adequacy” and “Ecological Corridors Program”. 12 DeBoe, G. et al. 2020. Reforming Agricultural Policies Will Help to Improve Environmental Performance, EuroChoices, Vol. 19/1, pp. 30-35, https://doi.org/10.1111/1746-692X.12247 48 4. SUMMARY AND RECOMMENDATIONS 64. Total support estimate to agriculture (TSE) in Santa Catarina averaged RS Millions 177.8 per year in the period 2017-2021, which is equivalent to 0.95 percent of the State agricultural GDP. This level is higher than the level observed in Bahia (0.87 percent) and lower than São Paulo (2.89 percent). 65. Most of this support was transferred through investment in public goods and services to the sector in general (56.4 percent of the total), and a smaller part (12.9 percent of the total) through direct support to producers. Another important part (30.7 percent of the total) was budget transfers to consumers of agricultural products. 66. The support that is granted directly to producers (and that derives from the implementation of state policies) measured by the PSE was, on average, equivalent to 0.06 percent of the total gross income of state producers during the period under analysis. During that period, a decrease was observed towards 2019 and a significant increase towards 2021. This level of support is relatively low – reflecting the sector’s competitive condition and alignment with international markets and lower than the national average (2.08 percent). Rice was the most supported product (PSE 0.3 percent). No MPS was observed during the analyzed period, most of direct support to producers happened through payment based on inputs. 67. From every 10 reais transferred, 9.86 were transferred directly to producers through payments based on inputs. This type of support is considered inefficient in transferring income to the producer and can be questioned as distortive within international trade processes. Furthermore, payments based on inputs are considered to have a high negative impact on the environment. In the case of Santa Catarina though, part of these payments based on inputs include Summary and recommendations 49 environmental criteria as a condition of access. Within the direct support scheme, there was a lack of instruments to support the sector “decoupled” or not conditioned to the production of a specific good. This type of support could be designed and meet two objectives. First, to continue promoting transfers that generate income for the producer and secondly, to do so efficiently and without any impact on importing countries, which would not detract from the competitiveness of the exported products. 68. With regards to support to public goods and services (GSSE) for the sector, despite the fact that GSSE represented a high share of TSE, there was a low level of investment in public goods in the sector during the period of analysis, which was equivalent to 0.7 percent of the state agricultural GDP. This level is below the OECD average (more than 5 percent), and what was observed in São Paulo (1.2 percent), though higher than in Bahia (0.57 percent). Compared to what was observed in São Paulo, it is below (1.2 percent) although higher than the resultant in Bahia (0.57 percent). It is recommended that this level be increased to at least 1.5 percent in the coming years, in order to promote competitiveness and challenges related to productivity, resilience, and the sector as an income generator in the medium and long term. 69. Of the total State’s investment in public goods in the sector, 24 percent corresponds to Research and Development and the rest is distributed in infrastructure, health inspection, control services, and others. It is important to note that investment in public goods is the most important factor that will promote the most efficient use of factors and, therefore, sustained long- term productivity. In that sense, it directly contributes to food security and stimulates the potential that the sector has to reduce GHG emissions through carbon sequestration. Using public spending on agricultural support to invest in the development and adoption of green innovations (i.e., new technologies that reduce emissions and increase productivity, such as climate- smart agriculture) can reduce emissions from agriculture and land use, from productivity and lower use of inputs that are emission-intensive. 70. The Consumer Support Estimate (CSE) reached 0.1 percent during the period under analysis. This means that consumer support policies represented an implicit subsidy to consumption equivalent to 0.1 percent of the value of the food basket for that period. This positive result was the result of two aspects: (i) the non-intervention in product prices by the state government, which did not mean that the consumer had to pay a higher price; and (ii) the implementation of consumer subsidy programs (school feeding programs). These measures 50 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector represented the implicit subsidy that has been pointed out. It is advisable to keep this type of program properly targeted to the most vulnerable population. 71. The recommendations for realigning agriculture support policies and programs towards greater competitiveness while increasing climate mitigation and resilience of the sector can be summarized around the following three key areas. There was no market price support observed during the analyzed period and in view of promoting competitiveness it is desirable that the State keep without any price interventions.  Increase support to agricultural public goods and services. In Santa Catarina, GSSE represented an important share of TSE (56.4 percent), showcasing a strong orientation of the State’s public support to the agricultural sector towards public goods. However, when brought as a share of the agricultural GDP, GSSE (0.7 percent of AgGDP) is well below the average observed in OECD countries (5.3 percent). It has been demonstrated that support to agriculture public goods and services yield higher economic return than public investments in private goods.13 In the context of climate change that already has an important impact on the sector, it is even more crucial to ensure further innovations are brought to the farmers to adapt to climate change and mitigate the sector’s impacts on the environment, that stronger Sanitary and Phytosanitary systems are in place to face increased occurrence of pest and diseases and that infrastructure is developed to support the changes the sector is facing. For these reasons it is important to seek, whenever the fiscal space allows it, to increase support to public goods and services. It will also be important to foster the synergies and complementarities between the public goods and services supported at State and federal levels, to increase the diffusion of innovations to all farmers, in particular medium and family farmers, and improve rural infrastructure across the various regions of the countries.  Repurpose direct support to producers to foster adaptation and mitigation of the sector to climate change. Producer support (PSE) could be revised to not only support farmers’ incomes, but also to support the adoption of climate- smart14 and low-carbon agriculture and seek to stop agricultural area expansion. Part of the payment based on inputs were linked to the implementation of environmental conditions. The State of Santa Catarina should expand this type of requirement linking its direct support to producers to environmental 13 World Bank. 2001. World Development Report 2002. https://doi.org/10.1596/0-1952-1606-7, And DeBoe, G. et al. 2020. Reforming Agricultural Policies Will Help to Improve Environmental Performance, EuroChoices, Vol. 19/1, pp. 30-35, https://doi.org/10.1111/1746-692X.12247. 14 See https://www.worldbank.org/en/topic/climate-smart-agriculture Summary and recommendations 51 TABLE 7. Areas of reforms for a competitive, green, resilient and inclusive agriculture sector in Santa Catarina Climate Competitiveness mitigation Inclusiveness Agriculture Policy Shift objective and resilience objective Shift from providing private goods (PSE) X X X to public goods and services (GSSE) Shift direct support to producers X to climate-smart subsidies Expand risks management X instruments conditions and further shift its payments based on inputs to support adoption of climate-smart practices. Furthermore, moving away from payments based on production (inputs or outputs) to decoupled payments could enable the State to continue promoting transfers that generate income for the farmers in an efficient way, while allowing farmers to make production decisions based on market opportunity rather than the level of public support needed.  Expand risk management instruments. Agricultural production in Santa Catarina is facing increasing risks as a result of climate change, with extreme events becoming more frequent, causing significant crop failures and an increase in the volume of rural insurance claims. Strengthening the State’s agricultural policy through measures that protect rural producers and reduce the negative the negative impacts of climatic and socio-environmental events on the sector is more and more crucial. Given that uninsured risk hampers farmers’ investment15, increasing the part of agricultural public subsidies towards instruments that promote risk management could help improve the management of environmental and social risks in the agricultural sector. To do so in an inclusive manner, it would be important to design such a shift in a progressive way and to ensure it respond to the specific needs of small and medium farmers, who have the most difficulties in accessing those instruments through the market. 15 SOUZA, Priscila; ASSUNÇÃO, Juliano. 2020. Risk Management in Brazilian Agriculture: Instruments, Public Policy, and Perspectives. Climate Policy Initiative. 52 52 REFERENCES Alston, J., P. Pardey and X. DeBoe, G. et al. (2020), Guerrero, S. et al. (2022), Forest Service. How Rao (2021), “Payoffs to a half “Reforming Agricultural “The Impacts of Agricultural Transportation Costs Affect century of CGIAR research,” Policies Will Help to Improve Trade and Support Fresh Fruit and Vegetable American Journal of Environmental Performance”, Policy Reform on Climate Prices. Richard Volpe, Agricultural Economics, Vol. EuroChoices, Vol. 19/1, Change Adaptation and Edward Roeger, and Ephraim 104/2, pp. 502-529, https:// pp. 30-35, https://doi. Environmental Performance: Leibtag (2013). doi.org/10.1111/ajae.12255. org/10.1111/1746-692X.12247 A Model-Based Analysis”, OECD Food, Agriculture and OECD (2019), Enhancing Anderson, K. and E. FAO (2021), The share of Fisheries Papers, No. 180, Climate Change Mitigation Valenzuela (2021), “What agri-food systems in total OECD Publishing, Paris, through Agriculture, OECD impact are subsidies and greenhouse gas emissions: https://www.oecd-ilibrary. Publishing, Paris, https://doi. trade barriers abroad Global, regional and country org/agriculture-and-food/ org/10.1787/e9a79226-en having on Australasian trends 1990–2019, Food and oecd-food-agriculture- and Brazilian agriculture?”, Agriculture Organization and-fisheriesworking- OECD. Agricultural Market Australian Journal of of the United Nations, papers_18156797. Information System: Home Agricultural and Resource Rome, Italy, https:// (amis-outlook.org) Economics, Vol. 65/2, https:// fenixservices.fao.org/faostat/ Heisey, P. and K. Fuglie doi.org/10.1111/1467- static/documents/EM/ (2018), “Public agricultural OECD. Agricultural Policy 8489.12413. cb7514en.pdf R&D in high-income Monitoring and Evaluation countries: Old and new OECD iLibrary | Agricultural Blandford, D. and K. roles in a new funding Policy Monitoring and Hassapoyannes (2018), “The environment”, Global Food Evaluation 2020-2022 (oecd- role of agriculture in global Security, Vol. 17, pp. 92-102, ilibrary.org) GHG mitigation”, OECD Food, https://doi.org/10.1016/j. Agriculture and Fisheries gfs.2018.03.008. OECD. Agricultural Papers, No. 112, OECD Policy Monitoring and Publishing, Paris, https://doi. Henderson, B. and J. Lankoski Evaluation 2021. org/10.1787/da017ae2-en. (2020), “Assessing the Environmental Impacts of OECD data monitoring and Agricultural Policies”, Applied evaluation: Reference Tables: Economic Perspectives and Total Support Estimate (TSE) Policy, pp. 1-16, https://doi. (oecd.org) org/10.1002/aepp.13081. 53 ANNEX 1. SECTOR SUPPORT ESTIMATE, SANTA CATARINA 2017-2021 2019- Concept/Cateogry Unit 2017 2018 2019 2020 2021 2021 Average I. Total Production Value (at farm gate) Rs Mill 30.407,7 31.094,8 33.676,8 40.883,6 55.733,8 38.359,3 1. Of which the share of PSE products (%) % 57,8% 56,7% 58,4% 62,2% 65,8% 0,6 II. Tpotal Consumption Rs Mill 24.581,6 20.504,2 24.555,5 28.662,1 37.203,9 27.101,5 value (at farm gate) 1. Of which the share of PSE products (%) Rs Mill 14.212,0 11.628,8 14.351,6 17.830,5 24.463,3 16.497,2 III.1 Producer Support Estimate (PSE) Rs Mill 19,3 10,5 8,7 13,2 62,9 22,9 A.1 Market Price Support Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 1. Of which the share of PSE products (%) Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 A.2 Payments based on production Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 B. Supports based on the use of inputs Rs Mill 17,9 10,5 8,7 13,2 62,9 22,6 1. Variable inputs Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 2. Fixed inputs Rs Mill 17,6 10,5 8,7 13,2 62,9 22,6 3. Services Rs Mill 0,3 0,0 0,0 0,0 0,0 0,1 C. Supports based on production Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 A /An/ I. Production required 1. Based on income Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 2. Based on surface the number of animals Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 D. Supports based on A / AN / I Not Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 current. necessary production E. Supports based on A / AN / I Not Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 current. production not necessary 1. Variable Rates Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 2. Fixed Rates Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 F. Support granted in criteria not related to the production Rs Mill 1,4 0,0 0,0 0,0 0,0 0,3 of agricultural products 54 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector 2019- Concept/Cateogry Unit 2017 2018 2019 2020 2021 2021 Average 1. Long term resources Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 2. A specific product Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 3. Other criteria not related to products Rs Mill 1,4 0,0 0,0 0,0 0,0 0,3 G. Miscellaneous supports Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 III.2 Producer Support Estimate % 0,1 0,0 0,0 0,0 0,1 0,1 in Percentage (PSE%) IV. Estimate of Support to Rs Mill 83,0 72,4 75,0 66,5 204,5 100,3 General Services (GSSE) H. Agricultural Knowledge Rs Mill 16,6 27,2 21,1 24,2 33,4 24,5 I. Inspection and Control Rs Mill 11,3 8,1 12,8 14,3 21,3 13,6 J. Infrastructure development Rs Mill 18,4 4,7 14,4 4,1 21,1 12,5 and maintenance K. Marketing and promotion Rs Mill 12,1 10,8 11,8 19,6 98,4 30,5 L. Public storage Rs Mill 20,7 21,5 14,8 3,6 3,5 12,8 M. Various Rs Mill 3,9 0,0 0,0 0,8 26,9 6,3 V.1 Consumer Support Estimate (CSE) Rs Mill 69,0 56,7 68,9 0,0 78,6 54,6 N. Transfers from consumers Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 to producers (-) 1. Of which the share of PSE products Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 O. Other consumer transfers (-) Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 1. Of which the share of PSE products Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 P. Transfers from taxpayers Rs Mill 69,0 56,7 68,9 0,0 78,6 54,6 to consumers V.2 Percentage of CSE % 0,3 0,3 0,3 0,0 0,2 0,2 VI.1. Total Support Estimate (TSE) Rs Mill 171,3 139,6 152,5 79,8 346,0 177,8 Q. Consumer Transfers Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 R. Taxpayers Transfers Rs Mill 171,3 139,6 152,5 79,8 346,0 177,8 S. Budget revenue (-) Rs Mill 0,0 0,0 0,0 0,0 0,0 0,0 55 ANNEX 2. BUDGET EXERCISED BY SANTA CATARINA STATE PROGRAM (GENERAL SERVICES) Agricultural Knowledge Program Descripciom Origin Unit 2017 2018 2019 2020 2021 Secretariat Monetary resources used for for Agriculture, various collective projects, Fisheries Laboratório such as a sales center, a and Rural de Defesa Mill Rs 0 0 0 0 0 study/diagnosis, equipment Development Agropecuária and laboratories, etc., which https://www. are used for collective use. agricultura. sc.gov.br/ Resources aimed at promoting technical Secretariat Assistência assistance and rural for Agriculture, técnica e extension through Fisheries extensão no EPAGRI, which is a Public and Rural Mill Rs 11 10 7 6 12 meio rural Agricultural Research and Development e pesqueiro Rural Extension Company https://www. - EPAGRI of Santa Catarina, linked agricultura. to the Government of the sc.gov.br/ State of Santa Catarina Resources driven to the Secretariat formento da capacitação for Agriculture, Capacitação through EPAGRI, which is a Fisheries de beneficiários Public Agricultural Research and Rural do meio rural Mill Rs 0 8 8 7 6 and Extension Company Development e pesqueiro of Santa Catarina, linked https://www. - EPAGRI to the Government of the agricultura. State of Santa Catarina sc.gov.br/ Secretariat Resources aimed at for Agriculture, Capacitação e promoting training through Fisheries treinamento de CIDASC, which is the and Rural Mill Rs 0 0 0 0 0 beneficiários Integrated Agricultural Development - CIDASC Development Company https://www. of Santa Catarina. agricultura. sc.gov.br/ 56 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector Agricultural Knowledge Program Descripciom Origin Unit 2017 2018 2019 2020 2021 0 Resources aimed at Secretariat promoting environmental for Agriculture, education through EPAGRI, Rural Fisheries which is a Public Rural environmental and Rural Agricultural Research and Mill Rs 0 0 0 0 education Development Extension Company of - EPAGRI https://www. Santa Catarina, linked to agricultura. the Government of the sc.gov.br/ State of Santa Catarina. Resources aimed at research Secretariat for the rural sector through for Agriculture, EPAGRI, which is a Public Fisheries Agricultural Agricultural Research and and Rural research - Mill Rs 3 10 6 11 15 Extension Company of Development EPAGRI Santa Catarina, linked to https://www. the Government of the agricultura. State of Santa Catarina sc.gov.br/ Resources aimed at research Secretariat for the rural sector through for Agriculture, EPAGRI, which is a Public Fisheries Miscellaneous Agricultural Research and and Rural diagnostics Mill Rs 0 0 0 0 0 Extension Company of Development and studies Santa Catarina, linked to https://www. the Government of the agricultura. State of Santa Catarina sc.gov.br/ Rural SC Program: Rural development program co- financed by the World Bank and the state government, with the objective of Its general objective is to increase the competitiveness of family farming organizations through Secretariat the strengthening and for Agriculture, structuring of their productive Fisheries Support for chains. and focused on the and Rural Adequação Mill Rs 0.36 0 0 0 0 provision of infrastructure in Development Ambiental the rural sector, supporting https://www. the environment and agricultura. young entrepreneurs in sc.gov.br/ agricultural activities such as the processing and improvement of food production, the diversification of rural activities and the commercialization of trade in rural products. Annex 2. Budget exercised by Santa Catarina State Program (General Services) 57 Agricultural Knowledge Program Descripciom Origin Unit 2017 2018 2019 2020 2021 Rural SC Program: Rural development program co-financed by the World Bank and the state government, with the objective of Its general objective is to increase the competitiveness of family farming organizations Secretariat through the strengthening for Agriculture, Capacitação and structuring of their Fisheries dos productive chains. and and Rural beneficiários Mill Rs 1.34 0 0 0 0 focused on the provision Development do projeto of infrastructure in the https://www. SC Rural rural sector, supporting the agricultura. environment and young sc.gov.br/ entrepreneurs in agricultural activities such as the processing and improvement of food production, the diversification of rural activities and the commercialization of trade in rural products. Secretariat for Agriculture, Fisheries Support and actions Educação and Rural for agriculture and Mill Rs 0 0 0 0 0 sanitária Development rural development. https://www. agricultura. sc.gov.br/ Mill Agricultural Knowledge 17 27 21 24 33 Rs 58 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector Inspection and Control.  Program Description Origin Unit 2017 2018 2019 2020 2021 State Fund to Maintain and improve animal health in Santa Secretariat Catarina through for Agriculture, compensation to Fisheries Ações de Defesa animal breeders, sick and Rural Mill Rs 4 3 3 2 4 Sanitária Animal or under suspicion of Development disease, in order to https://www. allow the acquisition agricultura. of healthy animals sc.gov.br/ for the continuity of production. Secretariat for Agriculture, Fisheries Support and actions Ações de Defesa and Rural in favor of agriculture Mill Rs 1 1 1 0 0 Sanitária Vegetal Development and rural development. https://www. agricultura. sc.gov.br/ Secretariat for Agriculture, Fisheries Classificação Support and actions and Rural de produtos de in favor of agriculture Mill Rs 0 0 0 0 0 Development origem vegetal and rural development. https://www. agricultura. sc.gov.br/ Secretariat for Agriculture, Resources for the Fisheries Fiscalização de promotion of the and Rural Mill Rs 0 0 0 0 0 estabelecimentos review of agricultural Development establishments. https://www. agricultura. sc.gov.br/ Secretariat for Agriculture, Resources for Fisheries monitoring agricultural Fiscalização of and Rural inputs Resources Mill Rs 0 0 0 0 0 agricultural inputs Development for monitoring https://www. agricultural inputs agricultura. sc.gov.br/ Annex 2. Budget exercised by Santa Catarina State Program (General Services) 59 Inspection and Control.  Program Description Origin Unit 2017 2018 2019 2020 2021 Subvenção de intereses de préstamos em Secretariat municípios afetados for Agriculture, por fenômenos Fisheries Indenizações em meteorológicas and Rural emergências e extrema. Investments Mill Rs 6 4 9 12 17 Development ações sanitárias in the recovery of https://www. productive systems, agricultura. including improvements, sc.gov.br/ boats, machinery and damaged equipment. Secretariat for Agriculture, Fisheries Health monitoring Apoios e ações for and Rural of two organic agriculture and rural Mill Rs 0 0 0 0 0 Development products development https://www. agricultura. sc.gov.br/ Inspection Mill and Control. Rs 11 8 13 14 21 Infrastructure rollout and monitoring             Program Origin 2017 2018 2019 2020 2021 Secretariat for Agriculture, Captação, Fisheries armazenagem and Rural 10 4 0 0 0 e uso da água Development na agricultura https://www. agricultura. sc.gov.br/ Secretariat for Agriculture, Fisheries Rural and Rural 6 0 14 3 20 infrastructure Development https://www. agricultura. sc.gov.br/ 60 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector Infrastructure rollout and monitoring             Program Origin 2017 2018 2019 2020 2021 Secretariat for Agriculture, Fisheries Digital Inclusion and Rural Telecenters (Beija 2 0 0 0 0 Development Flor Program) https://www. agricultura. sc.gov.br/ Secretariat for Agriculture, Fisheries Regularização and Rural 0 1 1 1 1 fundiária Development https://www. agricultura. sc.gov.br/ Infrastructure Development 18 5 14 4 21 and Maintenance Marketing and Promotion             Program Origin 2017 2018 2019 2020 2021 Secretariat for Agriculture, Fisheries Promotion of rural and fishing and Rural 12 11 12 20 98 development projects Development https://www. agricultura. sc.gov.br/ Marketing and Promotion 12 11 12 20 98 Annex 2. Budget exercised by Santa Catarina State Program (General Services) 61 Public storage               Program Description Origin Unit 2017 2018 2019 2020 2021 Secretariat Movimentação for Agriculture, de granéis no Fisheries and Rural Mill S/I 17 18 11 Porto de São Development Rs 0 0 Francisco do Sul https://www. agricultura.sc.gov.br/ Monetary resources granted for various Secretariat Apoio para collective projects for Agriculture, construção e such as a bandage Fisheries and Rural Mill ampliação de center, a study/ 4 4 4 .3 .3 Development Rs armazenagem diagnosis, equipment, https://www. no meio rural etc., which are used agricultura.sc.gov.br/ for the collective use of the goods. Mill Custo de ações públicas 21 21 15 4 3 Rs Miscellaneous                 Program Description Origin Unit 2017 2018 2019 2020 2021 Support for agropastoral activities: Secretariat for Apoio nas In this field, resources Agriculture, Fisheries and agropastoral were directed to Mill Rural Development 4 - - 1 27 and fishery general services such Rs https://www. activities as protection and agricultura.sc.gov.br/ recovery of soils from some state fields. Mill Miscellaneous 4 - - 1 27 Rs 62 ANNEX 3. BUDGET EXERCISED BY SANTA CATARINA STATE PROGRAM (OTHER DIRECT SUPPORT) Program Description Origin Unit 2017 2018 2019 2020 2021 Resources for the subsidy of Secretariat up to 50% of the premium for Agriculture, Subvenção of the Agricultural Insurance Fisheries and Rural Mill ao prêmio do not subsidized by another 0 0 0 0 0 Development Rs seguro rural entity, for producers of https://www. some specific products agricultura.sc.gov.br/ in Santa Catarina. Provide and/or improve the appropriate infrastructure for the development of fishing activity in the coastal municipalities of Santa Catarina. Financing of up to two infrastructure projects to support fishing Secretariat in each of the main Fishing Support for for Agriculture, Municipalities whose value rural and fishing Fisheries and Rural Mill does not exceed the value of 4 1 1 1 0 development Development Rs R$1 million, with a maximum projects https://www. value of R$30 million. The agricultura.sc.gov.br/ municipalities have as a counterpart the preparation of projects and regularization before the competent bodies. This Program will not cover obstruction projects or hydraulic works, such as landfills and boardwalks. Annex 3. Budget Exercised by Santa Catarina State Program (Other Direct Support) 63 Program Description Origin Unit 2017 2018 2019 2020 2021 Apoio a projetos voltidos Secretariat Apoio às ações à melhoria dos sistemas for Agriculture, na area of produtivos, acesso à energia Fisheries and Rural Mill agriculture 1 5 0 0 0 elétrica, inovação, agragação Development Rs and rural de valor, turismo rural e apoio https://www. development à legalidade produtiva. agricultura.sc.gov.br/ Bonificação de juros para Secretariat I support projetos de inversión que for Agriculture, financeiro a visam melhorar e tornar mais Fisheries and Rural Mill projeto de novos 4 0 0 0 0 competitivos os sistemas Development Rs empreendimentos produtivos das propriedades https://www. agroindustriais rurais e pesqueiras. agricultura.sc.gov.br/ O Programa de Regularização e Regularização Fundiária – Terra Legal de Santa Catarina tem como objetivo Secretariat promover a regularização for Agriculture, Financing of e regularização de imóveis Fisheries and Rural Mill Terras aos 0 1 0 0 1 no meio rural, até quatro Development Rs farmers modulo tributários, por meio https://www. do georreferenciamento e agricultura.sc.gov.br/ atualização do Cadastro Nacional de Imóveis Rurais – CNIR. Secretariat Apoio financeiro Promoção financeira for Agriculture, a formalização de para formalização Fisheries and Rural Mill 1 0 0 0 0 empreendimentos de empreendimentos Development Rs informais informais no setor rural. https://www. agricultura.sc.gov.br/ 64 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector Program Description Origin Unit 2017 2018 2019 2020 2021 Promoção de Valor Agregado e Empreendimentos Coletivos de até R$50,000, com possibilidade de 50% em parcelas de custo, com prazo de pago de até 5 anos ou até R$20,000 somente para Secretariat I support financiamento, com prazo for Agriculture, financeiro to de pago de até 2 anos . Os Fisheries and Rural Mill projects to 1 0 0 0 0 elementos que puedenem be Development Rs strengthen apoiados são: Embalagens, https://www. associativism rótulos, matéria-prima para agricultura.sc.gov.br/ o agronegócio e mão de obra especial (responsável técnico, serviço de marketing ou comunicação, consultoria specifica para melhoria da atividade produtiva). Bonificação de juros para Secretariat Apoio financeiro projetos de inversión que for Agriculture, a projetos de visam melhorar e tornar mais Fisheries and Rural Mill melhoria de 8 0 0 0 0 competitivos os sistemas Development Rs sistemas de produtivos das propriedades https://www. produção rurais e pesqueiras. agricultura.sc.gov.br/ Secretariat Apoio financeiro a projetos for Agriculture, Apoio financeiro que complementm as Fisheries and Rural Mill a projetos atividades do setor 1 0 0 0 0 Development Rs não agricola agropecuário, más que sejam https://www. desenvolvidos no setor rural. agricultura.sc.gov.br/ Bonificação de juros para Secretariat Subvenção projetos de inversión que for Agriculture, de juros à visam melhorar e tornar mais Fisheries and Rural Mill projetos de 1 2 3 3 6 competitivos os sistemas Development Rs desenvolvimento produtivos das propriedades https://www. rural e pesqueiro rurais e pesqueiras. agricultura.sc.gov.br/ Annex 3. Budget Exercised by Santa Catarina State Program (Other Direct Support) 65 Program Description Origin Unit 2017 2018 2019 2020 2021 Provide and/or melhorar to infrastructures suitable for or development of fishing activities in the coastal municipalities of Secretariat Promotion of Santa Catarina. Financing for Agriculture, rural and fishing of até dois projetos de Fisheries and Rural Mill 12 11 12 20 98 development infraestrutura de apoio Development Rs projects à pesca em cada um dos https://www. principais Municípios agricultura.sc.gov.br/ Pesqueiros cujo valor não exceda o valor de R$1 milhão, com valor máxima de R$30 milhões. Maintenance and improvement of animal health in Santa Catarina through compensation to breeders of sick or suspected animals, in order to allow Secretariat Certify the acquisition of healthy for Agriculture, properties as animals for the continuity of Fisheries and Rural Mill products of production. Suspecting that 0 0 0 0 0 Development Rs animal and the animal is sick, the breeder https://www. vegetable origin must seek a veterinarian agricultura.sc.gov.br/ accredited by Cidasc to perform the examination. If confirmed, you must contact Cidasc, who will initiate the process to receive compensation and discharge. The program seeks to contribute to technical qualification in rural areas, Secretariat through the training of for Agriculture, Capacitação farmers and rural youth, Fisheries and Rural Mill dos Técnicos do 1 0 0 0 0 for the management of Development Rs Projeto SC Rural agricultural companies https://www. and for the technological agricultura.sc.gov.br/ improvement of production processes. 66 ENHANCING BRAZIL’S AGRICULTURE SUPPORT: Policies for a Competitive, Green, and Inclusive Agrifood Sector Program Description Origin Unit 2017 2018 2019 2020 2021 The Government of Santa Catarina is implementing Ecological Corridors in the basins of the Chapecó and Timbó rivers, totaling 10,000 Secretariat km², in 34 municipalities, for Agriculture, Ecological corresponding to 10.7% Fisheries and Rural Mill 0 0 0 0 0 corridors of the state’s area. The Development Rs aim is to combine nature https://www. conservation with local agricultura.sc.gov.br/ and regional development. In which resources were allocated for the planning of state corridors. 67 ANNEX 4. BUDGET EXERCISED FOR CONSUMPTION SUBSIDIES OF THE STATE OF SANTA CATARINA Support Origem Unit 2017 2018 2019 2020 2021 Total SCHOOL FEED https://www. Mill Rs 119 100 102 122 transparencia.sc.gov.br  - (Basic Education) Total   Mill Rs 119 100 102 122 -