What is family farming and what is its importance in Brazilian agriculture?

In 1957, professors Ray A. Goldberg and John H. Davis first used the term “agribusiness” in their work “A Concept of Agribusiness” to describe the interdependence between on-farm production and other links that make up the chains of agricultural products. They observed that agriculture was no longer an activity closed to the “inside the farm gate” environment, but was now demanding more labor, capital, and technology, and increasingly related to upstream (inputs) and downstream (processing of products and services) activities, comprising more complex chains.

This original definition of agribusiness does not include any mention of the size of the rural property. However, nowadays, it is very common to associate it with the image of huge properties or the monocultures intensive in technology and capital. Thus, a division was established, which did not exist in the original concept, between what is called “commercial agriculture” and “family farming”, which includes the smaller producer. In Brazil, it is almost common sense to think of it as a dichotomy. And so family farmers, is often not included in what is known as agribusiness.

The Federal Government itself encourages this division, with the existence of two specific ministries to support each group (Ministry of Agriculture and Livestock, and Ministry of Agrarian Development and Family Farming). However, when analyzing data from the sector, it is concluded that this division is sometimes difficult to sustain.

Family farming has different definitions depending on the country in question. In the United States, for example, it is defined as any farm organized as a corporation, partnership or family business, excluding those that are organized as corporations or non-family cooperatives, as well as those with hired managers. Countries in the European Union follow the definition of the FAO (Food and Agriculture Organization of the United Nations), which understands family farming as any agricultural enterprise that is managed and operated by the family itself, in which at least 50% of the workforce is family members. Both the American and European definitions encompass everything from small to large properties. And it is precisely at this point that the Brazilian definition differs from those mentioned.

In Brazil, family farming is defined by National Policy on Family Farming and Rural Family Enterprises. This legislation defines a family farmer as someone who carries out activities in rural areas and who simultaneously meets four requirements:

i) does not hold, under any title, an area larger than 4 (four) tax modules;

ii) predominantly uses labor from its own family in the economic activities of its establishment or enterprise;

iii) have a family income predominantly originating from economic activities linked to the establishment or enterprise itself;

iv) run your establishment or business with your family.

Source: Embrapa based on data from IBGE (2012) and Incra (2012).
*See definition of tax modules in the glossary.

Scholars acknowledge that the criteria of the legislation, which was created almost 20 years ago, present certain questions [1]. These are: (i) the linking of the concept of family farming to small properties, (ii) the delimitation of the property's workforce to the owning family only, and (iii) the specification that the majority of the family's income must come from agricultural activity. Despite the points raised, information from the history of implementation of this public policy still constitutes the best source for conducting approximate analyses of the reality of family farming in Brazil.

Based on the definition provided by law and the IBGE data on rural establishments, it is possible to observe the predominance of family enterprises in the country and, therefore, a prevalence of small agricultural properties. Brazil has, in total, more than 5 million rural establishments, and 77% of this contingent is classified as part of family farming. The Northeast region is where there is the largest number of family farmers, representing practically half of Brazilian family farming.

In most product chains, family farming is predominant. Livestock farming comprises the largest number of rural establishments in Brazil, most of which are classified as family farming. Even in soybean production, the total number of family-owned rural establishments is more than double that of non-family-owned ones.

However, the predominance of family farming in terms of the number of rural establishments does not necessarily mean that it accounts for the majority of the gross value of domestic production of agricultural products. Quite the opposite is true. According to data from Agricultural Census of 2017, it is found that non-family farming is responsible for 89% of gross value of production and for 78% of the sales value of Brazilian agriculture. Thus, it is understood that Brazilian agricultural production is concentrated in a minority of producers considered non-family by Brazilian legislation. 

Data on the volume and value produced for each product highlight this reality. Of the ten items most produced by Brazilian agribusiness, only cassava and forage corn are mostly produced by family businesses (see graph). In more pulverized products such as horticulture and the plant extraction family farming is predominant, representing 71% and 62% of the value of total national production, respectively.

Family farms, although they are the majority, face challenges in reaching the production level of commercial agriculture [2]. The main one is access to credit. Since family farms are more exposed to the risks of agricultural activity, credit becomes more expensive and less accessible. As a way to solve this problem and direct credit to this target audience, the Brazilian government created, in 1995, the Family Farming Strengthening Program (Pronaf).

Pronaf is intended to provide financial support for agricultural activities carried out through the direct employment of the producer's and his/her family's workforce. The program provides lines of credit that are tailored to the needs of family farmers, such as the acquisition of inputs, seeds and financing of their activities.

 The program is widely used by family farmers. According to the 2017 Agricultural Census, of the total number of family farmers who received credit from government programs, 84% used the available Pronaf lines. Furthermore, it can be seen that the majority of beneficiaries used the resources to invest in agricultural activities and cover their costs, while only a minority used the financing obtained through Pronaf to maintain their establishments and sell their products.

It could be concluded from these data that the credit program achieved its intended objective, since it benefits the majority of family farmers and the resources raised are intended to improve agricultural activity. However, according to Decree No. 3991/2001, the purpose of Pronaf is to promote the sustainable development of rural areas through actions aimed at increasing production capacity, generating jobs and raising income, with a view to improving the quality of life and exercising citizenship rights of family farmers. Therefore, it makes sense to verify whether the program was able to achieve the results sought by the government.

There are studies that show a positive impact of Pronaf on the performance of family farming: such as increases in labor and land productivity [3] and increased productivity in crops in the Northeast [4].

On the other hand, there is evidence that the family income of program beneficiaries did not differ significantly from that of non-beneficiaries [3], in addition to more localized studies that demonstrate problems with the program. Such problems refer to differences in the allocative efficiency of resources between different locations [5], no effect on productivity [6] and even the induction of environmental degradation [3].

Therefore, depending on the region or the scope of the study, different evidence or results are found. Special lines of credit have been created in recent years to fill some gaps in the program, such as intensive land use causing degradation. This is the case of Pronaf ABC+ Bioeconomia, which finances families to invest in the use of renewable energy technologies, and Pronaf ABC+ Agroecologia as an incentive to invest in agroecological production systems. Despite these initiatives, it is important to always study the impact of rural credit policies on family agricultural production to make the allocation of resources even more efficient.

References and recommended readings:

[1] PEDROSO, MTM NAVARRO, Z. Family farming: it is necessary to change in order to advance. Brasília, DF: Embrapa Information Technology, 2011.

[2] GUANZIROLI, CE; BUAINAIN, AM; DI SABBATO, A. Evolution of Family Farming in Brazil (1996-2017). Brasília, DF: Ipea, 2020

[3] Kageyama, A. (2003). Productivity and income in family farming: effects of PRONAF-credit. Agriculture in São Paulo, 50(2), 1-13

[4] Santos, RBN (2010). Impacts of rural credit restrictions on Brazilian agricultural establishments (Doctoral thesis). Department of Rural Economy, Federal University of Viçosa, Viçosa.

[5] Magalhães, AM, Silveira Neto, R., Dias, FM, & Barros, AR (2006). The recent experience of PRONAF in Pernambuco: an analysis using propensity score. Applied Economics, 10(1), 57-74.         

[6] MAGALHÃES, AM; FILIZZOLA, M. The family farm program in Brazil: the case of Parana. In: BRAZILIAN CONGRESS OF ECONOMICS, ADMINISTRATION AND RURAL SOCIOLOGY, 2005, Ribeirão Preto. Proceedings.... Ribeirão Preto: Editora, 2005. 20 pages.

Brazilian Institute of Geography and Statistics (IBGE). SIDRA - IBGE Automatic Recovery System. Agricultural Census 2017. Accessed on 04/12/2023

Embrapa. Family Farming. Accessed on 04/12/2023

USDA. Family Farms. Accessed on 04/12/2023

CNA Brazil. Family farming vs agribusiness is a fallacy and nonsense. Accessed on 04/12/2023

Davis, J. H., & Goldberg, R. A. (1957). A Concept of Agribusiness. Boston, MA: Graduate School of Business Administration, Division of Research, Harvard University.

European Commission. Eurostat - Agriculture statistics - family farming in the EU. Accessed on 04/12/2023

Meirelles, Hildo & Souza Filho, Hildo. Family Farming and Technology in Brazil: characteristics, challenges and obstacles.

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