Brazil is a key agricultural and industrial power with the strongest economy in Latin America. However, despite recent improvements in income distribution, poverty remains widespread, with income inequality a significant challenge at the root of rural poverty. Approximately 35 percent of the population lives on less than two dollars per day; in rural areas, this increases to 51 percent (IFAD 2012). Since approximately 19 percent of Brazil’s population lives in rural areas, this means that Brazil has about 18 million poor rural people. The country’s North-East region has the single largest concentration of rural poverty in Latin America. In this region, 58 of the total population, and 67 percent of the rural population, lives in poverty (IFAD 2012).

Brazil has approximately 4 million farms, many of which are small, family-owned farms that produce at the subsistence level. Small-scale agriculture accounts for about 70 percent of the country’s food production, as well as a significant share of the country’s food exports (IFAD 2012). For poverty in the country to be efficiently addressed, these smallholders must play a central role.

Two of the main causes of poverty in the country are extreme inequalities in land tenure and a lack of access to formal education and skills training. In recent years, the government has established programs designed to address these challenges, including the 2010 Technical Assistance and Rural Extension Law which includes a National Policy to provide support to smallholder production. In addition, in response to recent global food crises, the country’s social assistance program was extended to cover an additional 1.3 million households in 2009. The income ceiling for eligible households was raised from BRL 120 (USD 52) per person per month to BRL 137 (USD 60) per person. Subsidies on marketing and stocking of several key commodities (maize, wheat, and milk) were also increased in 2010 to reduce the impact of the global economic crisis on rural areas. In 2011, rice exports were also temporarily suspended to safeguard domestic supplies (FAO/GIEWS 2012).

Currently, the 2012 maize crop is anticipated to reach a record high of 38.5 million tons. Wheat output in 2012 is expected to be lower at 4.9 million tons. Despite the increased maize output, maize production in the North-East region was severely affected by drought in 2012. It is anticipated that the drought will affect 4 million people. In response, the government declared a state of emergency in several municipalities of the states of Pernambuco, Ceara, Maranhão, Rio Grande do Norte and Bahia and allocated some USD 1.4 billion to assist affected families, with water distribution and support for agricultural rehabilitation activities. The government also created the Integrated Committee in the Fight against Drought (FAO/GIEWS).