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Abstract
For decades, the Brazilian agriculture sector has suffered
strong income transfers to many of the country’s other economic sectors,
which caused the impoverishment of many Brazilian farmers. Govern-ment sponsored rural credit assistance programs have somewhat redres-sed this inequity and ameliorated the farmer’s plight. However, due to
the structure of these credit assistance programs, the majority of their
benefits have gone to the country’s largest agricultural producers, there-by increasing income disparity found between family and commercial
farms. New policies are needed that actually assist the majority of those
that work in the Brazilian agriculture sector: the family farmers. This
work evaluates effects of implementation of an Income Stabilization
Policy (ISP) intended to support family farmers, focusing on cassava,
milk, and bean producers. The evaluation is based on the costs and
benefits of ISP, with reference to the theory of economic surplus. This
article also considers the policy’s negative effect on the surplus gene-rated by commercial producers. Study results indicate that implemen-tation of the proposed ISP would increase the prices received for cassa-va, milk and beans, improve the income of Brazilian family farmers
producing these products, and lead to consumer gains that more than
offset the losses suffered by large, commercial agriculture producers.