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Structural Change and State Policy: The Politics of Sugar in Brazil since 1964

Published online by Cambridge University Press:  12 October 2022

Barbara Nunberg
Barbara Nunberg*
Affiliation:
The World Bank
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The distinctive blend of authoritarian and technocratic rule in Brazil since 1964 has been well explored in its implications for industrial policy, but the consequences of two decades of military rule for agriculture are only now being studied. This article will analyze state policy in the single agricultural sector of sugar in light of major changes in sociopolitical and economic structures and in view of the particular relations between the state and civil society that have characterized Brazil after 1964. Although debate continues over the precise nature of these relations, it is widely held that the state played the dominant role in the policy process, subordinating elites, excluding popular classes from the decision-making arena, and incorporating international capital as a critical element in economic growth.

Type
Research Article
Information
Latin American Research Review , Volume 21 , Issue 2 , 1986 , pp. 53 - 92
Copyright
Copyright © 1986 by the University of Texas Press

Footnotes

∗

I wish to thank the Stanford University Center for Research in International Studies, the Organization of American States, and the Getúlio Vargas Foundation for supporting this research. I am also grateful to Catherine LeGrand, José Murilo de Carvalho, and Barry Ames for their valuable comments. The views expressed in this article are mine and in no way reflect positions of the World Bank.

References

Notes

1. Discussions of the agricultural development model that prevailed in the post-1964 period can be found in a growing number of recent works. See, for example, Bernardo Sorj, Estado e Classes Sociais na Agricultura Brasileira (Rio de Janeiro, 1980); Manuel Correia de Andrade, Agricultura e Capitalismo (São Paulo, 1979); Maria de Nazareth Baudel Wanderley, Vilma Figueiredo, Lúzia Alice Guedes Pinto, and Abdias Vilar de Carvalho, Reflexões sobre a Agricultura Brasileira (Rio de Janeiro, 1979); Octavio Ianni, Bitadura e Agricultura (Rio de Janeiro, 1979); José Graziano da Silva, Progresso Técnico e Relações de Trabalho na Agricultura (São Paulo, 1981); Estrutura Agrária e Produção de Subsistência na Agricultura Brasileira, edited by José Graziano da Silva (São Paulo, 1980); Barbara A. Kohl, “State and Capital: Agricultural Policy in Post-Coup Brazil,” Ph.D. diss., Ohio State University, 1981; Tito Ryff, “A Cornucópia Agrícola: Mito e Realidade,” in A Economia Política de Crise, edited by Maria da Conceição Tavares and Mauricio Dias David (Rio de Janeiro, 1982), 89–100; Charles C. Mueller, “Formulação de Políticas Agrícolas,” Revista de Economia Política 2/1, no. 5 (Jan.–Mar. 1982):89–122; Geraldo Muller, “Estado e Classes Sociais na Agricultura,” Estudos Econômicos 12, no. 2 (1982):81–94; Alberto Passos Guimarães, A Crise Agrária (Rio de Janeiro, 1978); Maria Yedda Linhares and Francisco Carlos Teixeira Silva, História da Agricultura Brasileira (São Paulo, 1981); Tamás Szmrecsányi, “Análise Crítica das Políticas para o Setor Agropecuário,” in Desenvolvimento Capitalista no Brasil: Ensaios sobre a Crise, vol. 2, edited by Luiz Gonzaga M. Belluzzo and Renata Coutinho (São Paulo, 1983), 223–40; and Bertha Becker, “Agriculture and Development in Brazil,” Regional Development Dialogue 1, no. 2 (Autumn 1980):160–84.

2. See, for example, Guillermo O'Donnell, “Corporatism and the Question of the State,” in Authoritarianism and Corporatism in Latin America, edited by James Malloy (Pittsburgh, 1977), 285–318; and O'Donnell, Modernization and Bureaucratic-Authoritarianism (Berkeley, 1973). For the most recent version, see O'Donnell, El estado burocrático autoritario: triúnfos, derrotas y crisis (Buenos Aires, 1983); see also The New Authoritarianism in Latin America, edited by David Collier (Princeton, 1979); and Alfred Stepan, The State and Society: Peru in Comparative Perspective (Princeton, 1979).

3. This process has been documented in a number of studies. For examples, see Graziano da Silva, Estrutura Agrária, 57–82; Vilma Figueiredo, “A Intensificação da Agro-Empresa no Distrito Federal,” in Wanderley et al., Reflexões sobre a Agricultura Brasileira, 41–120; Geraldo Muller, “Agricultura e Industrialização do Campo,” Revista de Economía Política 2/1, no. 6 (Apr.–June 1982):47–78; and Geraldo Muller, “O Complexo Agroindustrial Brasileiro,” unpublished report, Fundação Getúlio Vargas, São Paulo, 1981; Bernardo Sorj, “Estrutura Agrária e Dinámica Política no Brasil Atual,” mimeo, 1977; Sorj, Estado e Classes; and Ruben Brandão Lopes, Do Latifúndio a Empresa (São Paulo, 1977). For a theoretical treatment of this phenomenon in agriculture in peripheral societies, see Alain DeJanvry, The Agrarian Question and Reformism in Latin America (Baltimore, 1981), ch. 1–3.

4. For a history of state intervention in the sugar sector before 1964, see my study, “State Intervention in the Sugar Sector in Brazil: A Study of the Institute of Sugar and Alcohol,” Ph.D. diss., Stanford University, 1979.

5. Analyses of the Sugarcane Cultivation Statute are found in Alexandre José da Barbosa Lima Sobrinho, “A Experiencia de urna Reforma Agrária Setorial,” Jurídica 27, no. 78 (June-Sept. 1962):205–10; and Vicente Chermont de Miranda, O Estatuto da Lavoura Canavieira e Sua Interpretação (Rio de Janeiro, 1943).

6. See Mário Lacerda de Melo, O Homem e o Açúcar (Recife, 1975) for an extensive discussion of comparative soil conditions.

7. The IAA's integration into the clientelist system that characterized electoral politics in the Northeast during the democratic period was widely reported in a series of key informant interviews conducted with sugar industry participants in 1976 and 1977. An interlocking elite existed among usineiros, IAA officials, and elected representatives at both the national and state levels. IAA endorsement was considered crucial for successful candidacies in many contests. Some political figures rose to prominence on the basis of their association with the IAA. But the institute was not a partisan institution. Indeed, politicians associated with various parties, such as Cid Sampáio and Gilberto Freyre of the União Democrático Nacional (UDN), João Cleofas of the Partido Social Democrático (PSD), and even Miguel Arrães of the Partido Trabalhista Brasileiro (FTB), all had links to the IAA.

8. Annual statistics on sugar production by state were obtained from the statistics department of the IAA in Rio de Janeiro.

9. The IAA's perpetuation of noncompetitive producers in the Northeast was made possible through the manipulation of Article 28 of the Sugarcane Cultivation Statute. This article empowered the IAA to intervene in the financial affairs of any insolvent mill should its normal industrial activities be paralyzed for more than a week. The mill would be placed in receivership under IAA fiscal supervision until it regained financial health. These interventions were common in the period from the mid-1940s through the mid-1960s. Although the IAA justified intervening in mill administration on socioeconomic grounds, citing the social upheaval likely to result from the collapse of an important usina in a given area, IAA officials were not unaware of the clear side benefits of this public assistance to individual mill owners who were foundering financially. For example, Caxangá, a very large mill in Pernambuco that became the scene in the 1960s of intense peasant mobilization, was supported for long periods by the IAA as it lapsed into and out of bankruptcy during a twenty-year span.

10. Between 1935 and 1956, exports averaged only 5.2 percent of total sugar production. From 1957 through 1959, exports grew to 14 percent of production, but the trend was very uneven and total production was rising slowly. This information was obtained from the statistics department of the IAA and the Sugar Year Book (London), various years.

11. In 1930 Brazilian exports fell 87 percent to 12,210 metric tons from the previous year's volume of 92,928 metric tons. Because production had only decreased 13 percent from 1,293,666 metric tons to 1,121,736, the quantity of sugar to be placed on the internal market was significantly burdensome. This situation provided ripe conditions for state intervention in the sector. See figures cited in Tamás Szmrecsányi, O Planejamento da Agroindústria Canavieira do Brasil (São Paulo, 1979), 504.

12. The 1967 quota represented 125 percent of Brazil's average annual exports of sugar in the 1950s.

13. Omer Mont'Alegre, “A Economia Açucareira Mundial nos Anos 60,” Brasil Acuçareiro 78, no. 1 (July 1971):59–89. Also see Heinrich Brunner, Cuban Sugar Policy from 1963 to 1970 (Pittsburgh, 1977), 77–137; and D. Gale Johnson, The Sugar Program (Washington, D.C., 1974).

14. United States Department of Agriculture, “Sugar: World Supply and Distribution: 1954/55–1973/74,” Statistical Bulletin no. 562 (Oct. 1976):12.

15. índice do Brasil, 1977/1978 (Rio de Janeiro, 1977), 209.

16. Ibid.

17. Ibid., 201, 211. Coffee exports in 1974 earned U.S. $980,358,000.

18. Serviço de Documentação do Instituto de Economia Agrícola de São Paulo, mimeo report of production statistics, São Paulo, 1977.

19. Regina Machado Curi, “Os Barões de Açúcar,” Veja, 21 July 1976, 23–29.

20. Jornal do Brasil, 8 Oct. 1976. Coffee cultivation was also reduced in São Paulo in response to recurring frosts. Much coffee production relocated to Minas Gerais, where climatic factors were more hospitable.

21. The increased production of sugar and other export crops at the expense of food crops as an intentional component of national policy during the period in question affected Brazil as a whole. This trend is discussed in much of the literature on Third World agriculture. DeJanvry provides an excellent explanation of its place in the capital accumulation process of peripheral societies in his previously cited book, The Agrarian Question and Reformism in Latin America. For a discussion of the national state's policy of promoting export production for foreign exchange earnings in order to fuel industrial growth, see Szmrecsányi's discussion of the public incentives offered to agricultural export crops, which included special financing packages and subsidized interest rates, tax exemptions, and fiscal credit. These government policies coincided with a major boost in the world market prices for these exported commodities, a situation that was perhaps the biggest spur to production. At the same time, the price paid to the farmer for basic food crops was kept artifically low to relieve pressure on urban working-class salaries, thereby allowing for relatively steady economic growth without permitting labor to place unmanageable social and economic demands on the state. This approach in turn provided a disincentive to food crop production. See Szmrecsányi, “Análise Crítica das Políticas para o Setor Agropecuário,” in Desenvolvimento Capitalista no Brasil, no. 2, edited by Luiz Gonzaga M. Belluzzo and Renata Coutinho (São Paulo, 1983). Also see DeJanvry, Agrarian Question, tables 5 and 6.

22. An interview with José Maria Azambuja Rolim, director of the Associação de Agricultura de Mogi Murim in Campinas, revealed in 1976 that most of the cultivatable land in that region was worth an average maximum of one hundred thousand cruzeiros per hectare. The sugar usinas intent on increasing their area of cultivation were offering to pay as much as two hundred thousand cruzeiros per hectare, however, and although official registration of land sales by small farmers indicated one price paid for land, the actual cost of the transaction was rumored to have been higher. See A Gazeta Mercantil, 16 Nov. 1976.

23. Various categories of temporary laborers can be found in São Paulo agriculture. Bóias frias permanentes (permanent day workers) are linked directly with one agricultural property and entitled to certain legal rights. Bóias frias esporádicas (occasional day workers) work on a temporary basis, usually less than two months during the harvest period, and often do not belong to a regular labor force because they are school-age children under fourteen, old people, or housewives. Bóias frías temporários (temporary day workers) are employed primarily at harvest time but alternate seasonal employment between the rural and urban sectors. Some portion of this last group are usually queima-latas, small sugar producers in the Northeast who work in the São Paulo usinas during peak periods. All of the above categories are classified as trabalhadores volantes, or migrant workers. Graziano da Silva finds that these migrant workers increased from 15.8 percent of the rural labor force in São Paulo in 1964 to 35.8 percent in 1975. These workers may find alternative employment as unskilled laborers in nearby cities in the interior of the state, they may work part of the year in the capital, or they may seek supplemental work in the rural sector. When faced with this precarious option of life as a temporary worker, some subsistence farmers choose permanent rural migration to primary or secondary urban centers. See Graziano da Silva, Estrutura Agrária, 101–43; Szmrecsányi, “Análise Crítica,” 236–39; Delma Pessanha Neves, Lavradores e Pequenos Produtores de Cana (Rio de Janeiro, 1981); and Paulo Rabello de Castro, Barões e Bóias Frías (São Paulo, 1982). The increasing use of this form of labor is part of a process of semiproletarianization of the rural work force described at length by DeJanvry in Agrarian Question.

24. Serviço de Documentação do Instituto de Economia Agrícola de São Paulo, mimeo report of production statistics, 1977.

25. Interviews with IAA officials in late 1977 revealed their conviction that the consolidation of this capital-intensive model of production was an “inevitable and natural phenomenon,” and one that despite the original mandate of the IAA to maintain a stable relationship among the various productive classes in the sugar sector, could not be reversed. Interview with Nilo Area Leão, Regional Superintendent of the IAA in São Paulo, São Paulo, 28 Mar. 1977.

26. “Levantamento sobre a Influência da Expansão de Produção Açucareira no Estado de São Paulo,” mimeo of the Sindicato da Indústria de Máquinas do Estado de São Paulo, São Paulo, 1977.

27. Among these large mill-owning families are the Omettos, reputed in 1975 to have produced 12.3 percent of all Brazilian sugar. Gazeta, 16 Nov. 1976.

28. “Relatório da Diretoria,” COPERSUCAR report, São Paulo, 1977, 2; and “O Cooperativismo no Setor Açucareiro,” COPERSUCAR report, São Paulo, 1975, 8.

29. “Relatório,” COPERSUCAR report, 2.

30. Ibid., 11. An important link in the chain of interrelated agro-industrial functions was found in the firms that manufactured industrial inputs for sugar cultivation, harvesting, and refining. A number of these industrial firms in São Paulo were also engaged in primary agricultural activities through interests in usinas that were members of the large cooperatives such as COPERSUCAR. Several firms maintained an oligopolistic position in the marketplace. Four companies—Dedini, Zanini, Fives Lilies, and Mausa—owned an average of 77.6 percent of the liquid assets in the sector between 1970 and 1975. See Barjas Negri, “A Indústria Brasileira de Equipamentos para o Setor Produtor de Açúcar e Alcool: Um Estudo de Oligopólio,” Revista de Economia Política 1, no. 3 (July–Sept. 1981):83–112.

31. COPERSUCAR, “Acabamos de Adquirir a Hills Bros. Coffee, Inc.”; “Açúcar Brasileiro Refinado no Kuwait para Atender ao Oriente Médio,” mimeo report, São Paulo, 1976; A Gazeta Mercantil, 4 Nov. 1976. By the end of the 1970s, COPERSUCAR had indeed achieved a financial status of enormous proportions. By 1978 it was ranked as the thirty-seventh largest firm in Latin America, with U.S. $380 million in revenues, U.S. $495 million in assets, and twenty-four hundred employees. See Progresso (Mexico City), Jan.–Feb. 1978, 34. Because this ranking included many state-owned enterprises as well as multinational corporations, COPERSUCAR's standing was all the more striking. By 1981 COPERSUCAR was ranked fifteenth among national privately held companies in Brazil in terms of revenues, liquid assets, total assets, and number of employees, having fallen from eleventh place the previous year. Negócios em EXAME (São Paulo), 14 July 1982, 18–22.

32. A good discussion of IAA pricing policies is found in Gustavo Máia Gomes, “Caráter e Conseqüências da Intervenção Estatal no Setor Açucareira do Brasil, 1933–1978,” Estudos Econômicos 9, no. 3 (1979):123–50. The issues that dominated the policy debate were related to the question of differential versus uniform pricing systems for the Northeast and Center-South regions—the relationship between the agricultural and the industrial price set for sugar and the criteria for determining product value—and the interaction among cost of production, pricing, and subsidized credit in the sector and their mutual effect on all levels of producers and urban consumers. Máia Gomes argues that with the modernization program of the 1970s, the government pursued a contradictory policy of low prices and highly subsidized credit, thereby paradoxically promoting sectoral contraction and expansion at the same time.

33. See Jornal do Brasil, “FGV Indica Novo Preço para a Cana,” 23 July 1976; and O Estado de São Paulo, “CADE contra a COPERSUCAR,” 24 July 1976. Also see Jorge Wolney Atalla, “Informações Levadas a Douta Comissão Parlamentar de Inquérito de Defesa do Consumidor,” unpublished COPERSUCAR report, São Paulo, 15 Sept. 1976, 10–13. Evidence suggests that this policy of miniadjustments actually resulted from steady pressure applied by COPERSUCAR affiliates when they sabotaged the regularized price structure. Indeed, COPERSUCAR was widely accused of price-gouging wholesalers and withholding stocks in order to create false shortages in urban markets. Before a parliamentary commission inquiry on behalf of the consumer, Jorge Atalla defended the practice of manipulating prices, suggesting that it was an informal way of adjusting the wholesale price to the increases in the cost of living, and he recommended that the government officially adopt such a system of “miniadjustments.” The monopolistic leverage thus exercised by COPERSUCAR was roundly denounced in the press as an “abuse of economic power.” See A Gazeta Mercantil, 11 May 1976, p. 5. But the only public sanctions applied to COPERSUCAR (and COPERFLU) were nominal fines, despite the coordinated prosecution by CADE (Conselho Administrativo de Defesa Econômica) and SUNAB (Superintendência Nacional de Abastecimento). Indeed, the real outcome of the process was the informal adoption of a miniadjustment in the price of sugar by the following year. See Jornal do Brasil, “FGV Indica Novo Preço para a Cana,” 16 Sept. 1976.

34. Jornal do Brasil, 2 May 1976. See COPERSUCAR's “Relatório,” for a discussion of the cooperative's position and activities vis-à-vis a consumer subsidy (p. 5). The urban sector reacted strongly and publicly to the cancellation of the consumer subsidy for sugar. Indeed, even the rumor of its elimination caused hoarding and consequent supermarket shortages in Rio. See Opinião, “IAA e as Donas-de-Casa,” 13 Feb. 1976. This ultimate decision to end the consumer subsidy reveals an interesting contrast to the situation described by Susan Kaufman Purcell in the Mexican sugar sector during the same period, a contrast that sheds light on fundamental differences in regime strategies. In Mexico political pressure from the urban working classes constrained state policymakers to continue a fixed consumer subsidy, which cut significantly into sugar producer profits. The resulting flight of capital to urban-based enterprise depressed the sugar industry, requiring further state intervention as a “last resort.” See Susan Kaufman Purcell, “Business-Government Relations in Mexico: The Case of the Sugar Industry,” Comparative Politics 13, no. 2 (Jan. 1981):211–33. In Brazil the evident strength of the sugar lobby in its quest to retrieve the profits from the special export fund was ill matched by the disorganized response of the urban consumer.

35. “O Potencial da Mistura Carburante na Solução da Crise de Combustíveis,” unpublished COPERSUCAR report, São Paulo, Sept. 1974. See also Açúcar e Alcool: Um Grande Projeto Econômico do Brasil, Anais III Encontro Nacional dos Produtores de Cana-de-Açúcar, held in Campos in 1975 and published by COPERFLU (Rio de Janeiro, 1976). The literature on the alcohol program is already vast and includes many discussions of the early phases of the Proálcool program. See William Saint, “Farming for Energy: Social Options under Brazil's National Alcohol Programme,” World Development 10, no. 3 (Mar. 1982):238; Alceu Veiga Filho, Elcio U. Gatti, and Nilda T. C. de Mello, “O Programa Nacional de Alcool e Seus Impactos na Agricultura Paulista,” Estudos Econômicos 11, special no. for 1981:61–83; and Amaury Santos Fassy, O Brasil e o Dilema Energético (Rio de Janeiro, 1981), for summary discussions of socioeconomic and political issues in the PNA.

36. O Globo, “Atalla Critica Dirigismo na Indústria Açucareira,” 16 Sept. 1976; and Folha de São Paulo, “COPERSUCAR Diz que Não Respeitará Tabelamento,” 16 Sept. 1976. Among the most vocal opponents of Atalla's direction of COPERSUCAR's activities were those Paulista usineiros who formed a splinter producers' association called SOPRAL (Sociedade de Produtores de Açúcar e de Alcool). Because SOPRAL members did not share financial resources, they constituted a political, rather than an economic, opponent of COPERSUCAR.

37. A Gazeta Mercantil, 20 Sept. 1976, pp. 1 and 5.

38. Interview with a COPERSUCAR representative in São Paulo, 15 Mar. 1976. It was also speculated that many of Atalla's excesses with regard to COPERSUCAR were tolerated because of his generous support during the late 1960s and early 1970s of Operação Bandeirantes, a right-wing organization that reputedly tortured political dissidents. See the London Sunday Times article by Keith Batsford, “Sinister Backing for Fitipaldi,” 1 Feb. 1976, p. 14. This allegation was also widely reported in informant interviews.

39. GERAN was created as a coordinating agency for various government organs working in the northeastern sugar sector after the 1964 coup. Its deliberative council consisted of representatives from SUDENE (Superintendência de Desenvolvimento do Nordeste), IAA, INDA (Instituto Nacional de Desenvolvimento Agrária), IBRA (Instituto Brasileiro de Reforma Agrária), and the Banco do Brasil. Its development strategy consisted of two basic goals: first, to modernize sugarcane refining and cultivation through technological development, utilizing such methods as irrigation and mechanization to improve agricultural yields per hectare, thus liberating inefficiently used land; and second, to accomplish an agrarian reform of this liberated land for diversification of crop cultivation and for more equitable distribution among small farmers. These goals conformed with SUDENE's desire to improve agricultural and industrial output in the sugar industry and at the same time lessen the regional dependence on sugar monoculture. The plan to redistribute excess land for subsistence purposes to peasants was seen as a remedy that might alleviate the long periods of unemployment between harvests and counteract the proletarianization of the northeastern countryside. The land reform to be enacted was embodied in the rural labor statute legislated by the Castello Branco regime. This law distributed two hectares of usable adjacent land to each peasant and allowed communal cultivation. Despite its essential emphasis on technical rationalization, GERAN provoked usineiro opposition by virtue of its redistributive implications. GERAN was also administratively anomalous in that it was a regional agency charged with supervising federal organs that were part of its own deliberative council. Its lines of authority were thus extremely confused. In addition, GERAN depended for most of its resources on the Instituto do Açúcar e do Alcool. The IAA had originally favored the creation of GERAN, but soon after its establishment, IAA became convinced by pressure from its own usineiro constituency of GERAN's potential subversion of land tenure patterns in the Northeast. As a result, the IAA managed to withhold a substantial portion of GERAN's funding until 1969, by which time the group's demise was virtually assured. The former secretary general of GERAN, Celson Mendes, was one of the principal architects of the IAA modernization program in the 1970s. He reported that the IAA planners adamantly sought to avoid linking rationalization with social reform in the IAA program (based on interviews with former GERAN functionaries made in Recife during January 1977). See also Implementação da Política Açucareira: IAA e Governo Revolucionário ao Problema Agroindustrial Canavieiro de Nordeste, Ministério do Interior (Recife, 1970); and Riordan Roett, The Politics of Foreign Aid in the Brazilian Northeast (Nashville, 1972).

40. Augusto Cezar da Fonseca, “Atividades da Agroindústria Açucareira,” manuscript, 1975; and Cezar da Fonseca, “Política Governamental de Investimento no Setor Açucareiro,” Brasil Açucareiro 76, no. 4 (Oct. 1974):41–52.

41. Cezar da Fonseca, “Atividades.”

42. Cezar da Fonseca, “Política.”

43. For a discussion of this rationale as a moving force behind traditional IAA policies in the Northeast, see Nunberg, “State Intervention,” 81–129; also Lacerda de Melo, O Homem e o Açúcar.

44. A good summary of the period of intense social mobilization in the Brazilian Northeast is found in Joseph Page, The Revolution That Never Was (New York, 1972); see also João Gonçalves de Souza, O Nordeste Brasileiro (Fortaleza, 1979), for a discussion of bureaucratic politics in social programming during this period. Also see Kit Sims Taylor, Sugar and the Underdevelopment of Northeastern Brazil (Gainesville, 1978).

45. Instituto do Açúcar e do Alcool, Annual Report, 1977.

46. Interviews with Augusto Cezar da Fonseca, chief of the IAA modernization department, Rio de Janeiro, 3 Apr. 1977; and with Sebastião Araújo, vice-director of the modernization department, Rio de Janeiro, 28 Mar. 1977.

47. Confúcio Pamplona, Proálcool (Rio de Janeiro, 1984), 9.

48. Instituto do Açúcar e Alcool, Annual Report, various years.

49. Visão, 19 Aug. 1974.

50. International Sugar Organization, Sugar Year Book (London, 1982). Just how badly the IAA had failed to predict future trends in the world market became clear by 1976. By November of that year, export earnings from sugar had plummeted a spectacular 77 percent. Although the institute had predicted that the price would not go below U.S. $500 per ton, it dipped as low as $150 per ton, and exports were reduced by 45 percent. See O Estado de São Paulo, 4 Nov. 1976, p. 21. Although world consumption did rise from 80.8 million tons in 1975 to 82.8 million tons in 1976, production increased enough to create a two-million-ton surplus on the world market by 1976–77. See A Gazeta Mercantil, 7 January 1977, p. 8. To make matters worse, Brazil could not fall back on any kind of protective trade agreement because no international sugar agreement guaranteeing a fair base price for sugar had ever been reached. Moreover, when the United States failed to renew its sugar legislation in 1974, Brazil was denied the assurance of an export quota at a preferential price.

51. Gustavo Máia Gomes, “Setor Açucareiro um Pouco Mais Vulnerável,” O Estado de São Paulo, 22 Feb. 1977. Máia Gomes develops this argument further in “Caráter e Conseqüências.”

52. Salomão Quadros da Silva, “O Crescimento da Lavoura Canavieira no Brasil na Década de 70,” Revista Brasileira de Economia 37, no. 1 (1983):40.

53. Máia Gomes, “Setor Açucareiro.”

54. Gustavo Máia Gomes would argue that the structural changes brought about by post-1964 state policies were less important than the continuities in paternalistic subsidies and credit that maintained the market inefficiencies and noncompetitiveness of both the Northeast in relation to the Center-South and the entire Brazilian sugar industry in relation to international competitors on the world market. Indeed, he posits that northeastern producers particularly have been among the most significant losers as a result of IAA modernization programs. This state-directed modernization program promoted what DeJanvry would classify as Lenin's category of the junker road to capitalist development in agriculture, whereby the precapitalist, feudal landlord becomes a capitalist entrepreneur, dispossessing peasants who worked internally for the estate and rehiring them as wage labor. V. I. Lenin, “The Agrarian Programme of Social Democracy in the First Russian Revolution,” in Selected Works 3, cited in DeJanvry, Agrarian Question, 107.

55. For the seminal piece on panelinhas, see Anthony Leeds, “Brazilian Careers and Social Structure,” American Anthropologist 66 (Dec. 1964):1321–47.

56. The heads of these superdepartments were the three coordinators of planning and budgeting, of evaluation and auditing, and of regional units. See Instituto do Açúcar e do Alcool, Regimento Interno (Rio de Janeiro, 1975).

57. “Técnicos” or “technocrats” are often defined as administrators with specialized training in their given fields of expertise. See Barry Ames, Rhetoric and Reality in a Militarized Regime (Beverly Hills, 1973). It is commonly argued that because of their training and socialization patterns, technocrats are more likely to base decisions on “rational,” “universalistic” criteria than on ascriptive, particularistic ones. In Brazil technocrats came to be associated with the “modernizing” mentality of the military regime after 1964; at the same time, however, they were deemed to be above politics in setting policies on purely objective, scientific bases. Thus the assumption existed that technocrats would be less vulnerable to the impact of informal influence networks such as panelinhas. See Carlos Estevan Martíns, Tecnocracia e Capitalismo (São Paulo, 1974); Jerald Arthur Johnson, “Brazilian Bureaucracy and Politics: The Rise of a New Professional Class,” Ph.D. diss., University of Texas, 1977; Hans-Peter Dreitzek, “Ação Racional e Orientação Política,” and Claus Offe, “O Dilema da Tecnocracia,” both in Tecnocracia e Ideologia (Rio de Janeiro, 1975); and Jurgen Habermas, Toward a Rational Society (Boston, 1971).

58. This method of control was widely used by the military to imprint its “modernizing ethic” on important areas of the indirect administration. To a large extent, this practice was simply a continuation of the process by which the interlocking power elite was maintained.

59. According to informants, irregularities in the financing arrangements for modernization projects were commonplace. Convênios (deals) were allegedly made between IAA officials and usineiros that involved kickbacks, inflated loan packages, and loans awarded for technical improvements that were never carried out. It was reported that usineiros sometimes borrowed IAA cash at negative interest rates (12 percent per annum when the average annual inflation rate was 50 percent) to apply to other sectors where financing terms were less favorable. This behavior is predicted by the critical view of subsidized credit programs positing that when prices in the sector have not been “gotten right,” capital obtained for one purpose that is less than adequately compensatory will flow naturally and inexorably toward other ends that are more profitable but for which inexpensive credit is not available.

60. This trend toward centralization of national economic policy-making should not be overstated or oversimplified, however. The power of the CMN, for example, increased only gradually and peaked in the late 1970s and early 1980s. Moreover, the strength of the CMN was largely derived from the power of individual ministries that constituted its board. Also, the trend toward centralized macroeconomic policymaking coincided with the continued proliferation of parastatal organs and state-owned enterprises, many of which had become extremely powerful actors in their own right.

61. These reforms were enacted by Decreto-Lei no. 200, 25 Feb. 1967. See Reforma Administrativa (Rio de Janeiro, 1976).

62. This trend may reflect bureaucratic phenomena occurring elsewhere in Brazil during this period. Sérgio Hudson de Abranches recently noted that the increasing centralization of decision making in most economic spheres in Brazil occurred simultaneously with a fragmentation of the apparati of policy-making and implementation. This fragmentation produced a chaotic system in which agencies had overlapping jurisdictions, and policies were consequently uncoordinated. In the sugar sector, the surrendering of the IAA's myriad functions to other agencies reflected such fragmentation, and this lack of coordination prompted resourceful organizations such as producers cooperatives to step into the power vacuum. See Sérgio Hudson de Abranches, “The Divided Leviathan: State and Economic Policy in Authoritarian Brazil” (Ann Arbor: University Microfilms, 1978). Other recent works on public policy in Brazil also address the centralization issue. See Luciano Martins, Pouvoir et développement économique: Formation et evolution des structures politiques au Brésil (Paris, 1976); Renato Raul Boschi, National Industrial Elites and the State in Post-1964 Brazil: Institutional Mediations and Political Change (Ann Arbor: University Microfilms, 1978); Wanderley Guilherme dos Santos, “Centralização Burocrática e Renovação Governamental Administrativa, Voltado para o Processo do Desenvolvimento Nacional: O Caso Brasileiro,” Revista de Administração Pública (Rio de Janeiro) 13, no. 2 (Apr.–June 1979):7–36.

63. Pamplona, Proálcool, 25. Whereas autonomous distilleries had produced only 9.5 percent of all alcohol in 1975–76, by 1983–84 they were already producing 35 percent.

64. Ibid., 21.

65. The following forms of government support were given to automakers in exchange for large-scale manufacture of alcohol-fueled vehicles: first, a subsidized price for alcohol cars (as opposed to gasoline-fueled cars); second, continued pegging of the price of alcohol at 59 percent of the price of gasoline; third, guarantees of an uninterrupted supply of alcohol from national production; fourth, guaranteed purchase of alcohol cars for the government's own fleet; and fifth, a tax incentive system for alcohol cars purchased for the national taxi fleet. See Visão, “Empresário Rebatem Críticas ao Proálcool,” 21 May 1984; and Comissão Executiva Nacional do Alcool, Relatório Annual, 1983 (Brasilia, 1984), 34. By 1985, 90 percent of all passenger cars produced in Brazil were built to use alcohol.

66. Instituto do Açúcar e do Alcool, Annual Report, 1982.

67. Instituto do Açúcar e do Alcool, Departmento de Modernização, Proálcool report, 1984.

68. COPERSUCAR's change in leadership followed the fall of President Jorge Wolney Atalla. Financially overextended, Atalla had incurred debts exceeding U.S. $305 million by 1979. The shining jewel of his financial empire, Hills Brothers Coffee, was virtually controlled by the Banco do Brasil and was later sold to pay off prior obligations. Atalla's personal insolvency threatened the financial soundness of COPERSUCAR as well, and twenty-five of its most influential associates (including the powerful Grupo Ometto) staged a walk-out in order to deny Atalla reelection as president. As the abertura progressed in the 1980s, Atalla's fate became an increasingly political issue, and it focused particularly on the 105.9 billion cruzeiros owed to the IAA, the Banco do Brasil, and various private banks by the Atalla-owned Usina Central in the state of Paraná. In arrears for months at a time on workers' salaries, the large usina faced strikes and social upheaval. By 1973 a Paraná representative of the increasingly active opposition party, the PMDB (Partido do Movimento Democrático Brasileiro), sought redress from Atalla by asking the special inquiry commission of Paraná‘s state assembly to seize Atalla's assets and pay workers from a special fund provided by INCRA (Instituto Nacional de Colonização e Reforma Agrária). Such protests went largely unheeded. Despite the specter of widespread social turmoil in the usina environs, funds continued to be released by the Banco do Brasil to the Atalla group. Although such funds were designated for paying workers’ salaries, Atalla was widely reported to have spent the money on land acquisition for usina expansion elsewhere. See Estado de São Paulo, 12 Apr. 1983.

69. Pamplona, Proálcool, 33.

70. Fernando Homem de Melo and Eduardo Giannetti da Fonseca, Proálcool, Energia, Transportes (São Paulo, 1981), 28.

71. Comissão Executiva Nacional do Alcool, Relatório Anual (1984), p. 10. Even where new agricultural frontiers were being crossed, however, Center-South elites were clearly behind the scenes, investing in usina expansion, distillery construction, and sugarcane production in these virgin areas. For example, the family-owned Grupo Ometto, Brazil's largest sugar producer, mounted the enormous Jaiba project in a newly irrigated portion of Bahia by the São Franciso River, which is expected to produce 1.3 million liters of alcohol daily by 1988. The Usina Central in Paraná, that state's largest mill, was also controlled by the Atalla group from São Paulo.

72. O Globo, “Cana Continua Invadindo Area de Alimentos em São Paulo,” 15 Dec. 1980.

73. Nelson Coutinho, “O Fornecedor de Cana em Face da Indústria Alcooleira,” in Boletim Canavierio, PEPEANA (Rio de Janeiro) 1, no. 4 (1983):10–11. Evidence supports a steady decline in the participation of fornecedores in production from 50 percent in 1964 to 35 percent in 1979. See Alceu de Arruda Veiga Filho, Elcio Umberto Gatti, and Nilda fereza Cardoso de Melli, “O Programa Nacional do Alcool e Seus Empactos na Agricultura Paulista,” Estudos Econômicos (São Paulo) 11, special no. (1981):73. The shrinking number of independent suppliers was perhaps not a wholesale assault on fornecedores as a class, but it may have represented the decimation of one fraction. Evidence suggests that the smallest fornecedores were the ones who were being eliminated, while medium-sized and larger independent growers managed to survive. Between 1970 and 1975, the smallest area producers of sugarcane declined in all states. See Salomão L. Quadros da Silva, “O Crescimento da Lavoura Canavieira no Brasil na Década de 70,” Revista Brasileira de Economia 37, no. 1 (1983):39–54.

74. Homem de Melo and Giannetti da Fonseca, Proálcool, Energia, Transportes, 16.

75. O Globo, “Cana Continua Invadindo Area de Alimentos em São Paulo,” 15 Dec. 1980.

76. Visão, 28 May 1984, p. 59. Projections indicate that the conflict between food crop and sugarcane production is likely to be exacerbated in coming years. A conservative estimate suggests that meeting Proálcool's production target of 9.8 billion liters of alcohol in 1985 would require an additional 1,600,000 hectares of land. See World Bank, Brazil: A Review of Agricultural Policies (Washington, D.C., 1982), p. 99. Less cautious estimates project a need for an additional 2,410,000 hectares. The estimated opportunity costs for various crops are as follows: 1,000,000 tons of beans; 1,280,000 tons of rice; and 1,600,000 tons of corn. These foodstuffs were all imported after 1980. Fernando Homem de Melo, “A Agricultura de Exportação e o Problema da Produção de Alimentos,” Estudos Econômicos 9, no. 3 (1979):101–22.

77. Visão, 28 May 1984, pp. 53–59.

78. Instituto de Planejamento Econômico e Social, “Estudo Nacional de Despesa Familiar,” mimeo, Brasilia, 1984. The food scarcity problem takes on extremely serious dimensions in a country where in 1983 nearly 24 million people suffered mild nutritional deficiency (up to 200 calories per day), 40 million had serious deficiencies (between 200 and 400 calories per day), and 23 million experienced total malnutrition (exceeding 400 calories per day).

79. Pamplona, Proálcool, 51–55.

80. The protest in Riberão Preto was triggered by a newly instituted system called sete ruas (“seven streets”), a method of planting cane in rows far enough apart to allow mechanized harvesters to pick up the cuttings more easily, but one that requires greater physical exertion from the cutter. In reality, this issue was only the last of a long list of grievances that included the need for higher pay, greater medical and social security benefits, and the removal of the hated “gato” (slang for the overseer), who acted as the middleman for usineiros in controlling the labor force. Protests also focused on rising water rates set by the state-controlled utility. See Veja, “Os Canaviais da Ira,” 23 May 1984, 20–26; and Isto É, “O Amargo Nó da Cana,” 23 May 1984.

81. Jornal do Brasil, “IAA Perde As Suas Ultimas Atribuições sobre Açúcar,” 30 May 1978.

82. The principal organs involved in alcohol policy after 1979 were the CNA (Comissão Nacional do Alcool), and its executive arm, CENAL (Comissão Executiva Nacional do Alcool); the Ministério de Indústria e Comércio; the Ministério de Minas e Energia; the Ministério de Fazenda; and Petrobras, the state oil company. As the program evolved, new entities such as Alcoolbras, a mixed venture for alcohol production, were incorporated into the policy arena. Also, private actors, including usineiros, distillery equipment manufacturers, and multinational companies trying to enter the sector, were all involved in policy struggles.

83. Jornal do Brasil, 3 June 1980, p. 19.