The Impact of Rural Credit on Agriculture and Land Use

The report analyzes how rural credit affects Brazilian agribusiness, finding that increased credit supply generally boosts agricultural production and productivity. In the Amazon and Cerrado biomes, credit specifically encourages the conversion of pasture to crop land, which reduces deforestation pressures and increases the area of native forests. The impact varies by biome and product, with grain production showing significantly larger increases in production and productivity compared to other crops.

• In the Amazon biome, increased rural credit leads to an expansion of crop area and a reduction in pasture area, which results in a net reduction of total agricultural area and a corresponding increase in native forest area, thereby alleviating deforestation pressures.
• In the Cerrado biome, rural credit has a similar effect to the Amazon by expanding crop area over pasture, which reduces deforestation pressure on native vegetation. While crop production increases, crop productivity remains stable, likely because the region already employs highly productive techniques.
• In the Mata Atlântica, rural credit is associated with a reduction in crop area and an increase in planted forests, while generating productivity gains for both crops and cattle.
• In the Pampas, rural credit leads to an expansion in crop area, production, and crop productivity, but it does not have a significant effect on cattle production.
• In the Caatinga, increased credit is linked to a small reduction in pasture area and significant increases in both crop and cattle productivity, suggesting that producers in this biome face credit restrictions that hinder modernization.
• Rural credit has a substantially larger positive impact on the production and productivity of grains compared to other crops. For grains, a 1% increase in municipal credit supply increases production value by 0.28% and land productivity by 0.38%.
• The overall impact of rural credit in Brazil is characterized by increased productivity and reduced deforestation, primarily driven by the substitution of less productive activities (like cattle ranching) with more productive ones (crops) through the conversion of pastures to crop land.

APA

Souza, P., Mourão, J., & Assunção, J. (2021). The Impact of Rural Credit on Agriculture and Land Use. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/DQ-The-Impact-of-Rural-Credit-on-Agriculture-and-Land-Use.pdf

Chicago

Souza, Priscila, João Mourão, and Juliano Assunção. The Impact of Rural Credit on Agriculture and Land Use. Climate Policy Initiative, 2021. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/DQ-The-Impact-of-Rural-Credit-on-Agriculture-and-Land-Use.pdf.

Wikipedia

{{cite report |last1=Souza |first1=Priscila |last2=Mourão |first2=João |last3=Assunção |first3=Juliano |title=The Impact of Rural Credit on Agriculture and Land Use |publisher=Climate Policy Initiative |date=January 2021 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/DQ-The-Impact-of-Rural-Credit-on-Agriculture-and-Land-Use.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{souza2021impact, author = {Souza, Priscila and Mourão, João and Assunção, Juliano}, title = {{The Impact of Rural Credit on Agriculture and Land Use}}, institution = {Climate Policy Initiative}, year = {2021}, month = jan, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/DQ-The-Impact-of-Rural-Credit-on-Agriculture-and-Land-Use.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }