Peter Goldsmith Director, Food and Agribusiness Program, University of Illinois Lemann Dialogue

1. “Understanding Agricultural Intensification and the Environmental Tradeoff Question: The Case of Mato Grosso Brazil” Peter Goldsmith Director, Food and Agribusiness Program, University of Illinois Lemann Dialogue November, 2013

2. A scientific debate • Green et al. (2005) • Feeding the planet in 2050 • Relieving poverty and malnutrition among developing countries • Agricultural Intensification and Tradeoffs: A Faustian Bargain? • Direct effect • Biome change- plant and wildlife • Pollution • Indirect effect • Medium term • Land sparing local • Land sparing global • Long term development allows for investment in wild nature • Indirect effect • Human development index • Van Wey et al, 2013 • Indirect effect • Positive Feedback from profitability and productivity • Get more when more productive • Negative feedback • Greater productivity from other inputs, besides land P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

3. P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

4. P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

5. Mato Grosso as a Laboratory • Fastest Growing and Largest agricultural state in the world • Rain forest biome accounts for 25% of the state land. • Dominant biomes are dryland forest and cerrado • Public and third part institutions are central to the Mato Grosso intensification story P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

6. P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

7. Various Biomes of Mato Grosso Key Issues for Tradeoff Analysis Ranking biomes Not distinct boundaries Hard to enforce Source: Arvor et al. 2010 P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

8. P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

9. For agricultural businesses where will they find growth: a relentless economic force • Grow through • Lower costs • Technology adoption • Capital intensification • Costly • Prices are exogenous • Soybean yield increases • Flat • Costly • Land expansion • “MAPITOBA” • But extensive, non land sparing • Intensification through succession cropping • Generally only available to tropical zones P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

10. Agricultural Intensification through Safrinha Production • Double cropping system for humid low latitude regions of the world • Important welfare question about the land sparing effects of safrinha • Specific questions as to the factor productivity of: • Land • Labor • Capital • Chemicals • Energy P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

11. P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

12. Land Factor Productivity: Total Starch/Protein/Oil per HectareMato Grosso (Low Lat) vs. Illinois (High Lat) P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

13. Safrinha/Intensification Implications • Profitability leads to land use • High prices “fence rows to fence rows” • A case where demand outstrips supply • So significant pressure to expand production • But the price elasticity of supply is elastic • Prices will fall • Investment will slow • Capital will shift • Land (ceteris paribus) will be spared • Comparable Biomes in Africa • Significant increase in HDI with intensification • Van Wey et al, 2013 • Land sparing • Forested lands • So do we bring these technologies to Africa? • University of Illinois' “FEED THE FUTURE INNOVATION LABORATORY FOR SOYBEAN VALUE CHAIN RESEARCH” • 5 year/$25m USAID Project 2013-2018 • Is it a Faustian bargain? P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois