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Rural credit and agricultural supply in Brazil
Article first published online: 30 MAR 2012
© 2012 International Association of Agricultural Economists
Volume 43, Issue 3, pages 293–302, May 2012
How to Cite
de Castro, E. R. and Teixeira, E. C. (2012), Rural credit and agricultural supply in Brazil. Agricultural Economics, 43: 293–302. doi: 10.1111/j.1574-0862.2012.00583.x
- Issue published online: 19 APR 2012
- Article first published online: 30 MAR 2012
- Received 22 April 2010; received in revised form 29 April 2011; accepted 4 October 2011
- Rural credit;
- Agricultural supply;
- Multi-output analysis;
- Translog restricted profit function
The objective of this study is to determine the financing impact of total expenditure on the use of agriculture inputs (fertilizers, labor, and pesticides), and the output of cotton, rice, beans, corn, soybean, and wheat in Brazil. We study the period 1976–2005. The analysis is based on duality applied to the production theory. The output supplies and conditioned input demands are estimated from a translog multi-output, multi-input restricted profit function, where the total production credit is used as proxy of the total expenditure. Farmer expectations with respect to crop prices are incorporated to the estimation based on the quasi-rational expectation model. The output and input responses to the total expenditure are positive and statistically significant except for cotton, wheat, fertilizer, and pesticides. The short-run output supply response to own prices is inelastic, except for wheat, which presents elastic response to its price. Acreage has a positive impact on the output supply and it is influenced by land productivity. The main conclusion is that farmers face budget restrictions to purchase inputs, and a government credit program might increase the agricultural supply.