By contrast, negotiated land reform in South Africa has been adopted in the context of the national reconstruction program, in an environment in which productive small-scale agriculture was eradicated almost a century ago. This implies that, in its present form, the program bears many similarities to an urban settlement project and greater effort is required to establish the decentralized infrastructure necessary to implement land reform, to provide complementary services such as marketing and technical assistance, and to increase beneficiaries' agricultural and entrepreneurial capacity.

# 4.1 BRAZIL

With a land distribution among the most unequal in the world, Brazil's situation is similar to Colombia's in a number of respects. There is a very large and vocal political demand for land reform; a recent FAO study estimates the number of families who are potential candidates for land reform at 2.5 million. A land reform institute (INCRA) was established in 1969, distributing 10 million hectares to 200,000 families and colonizing about 14 million hectares for about 75,000 beneficiary families since then. Land reform has recently acquired considerable political importance; a federal Minister for Agrarian Reform was appointed in 1996 and the land reform budget tripled from US$0.4 billion in 1994 to $1.3 billion in 1995 with a further increase to $2.6 billion proposed in 1997.

The large majority of these federal funds will be spent according to the oldprocess which has been costly (about $30,000 per beneficiary) and bureaucratically cumbersome. However, state governments in the Northeast have been moving ahead and set up a decentralized market assisted pilot scheme. 32 This scheme (supported by a 90 million $ external loan) aims to speed up the land reform process, reduce costs, and provide the basis for a model that could eventually be adopted nation-wide.<sup>33</sup> The main differences from the old mechanism are the following (compare table 1):

- (i) Rather than relying on a lengthy process of expropriation, land is selected by community-groups on a willing seller-willing buyer basis. This is expected to reduce the price of land from currently

> **32** The steps involved in the process of expropriation, which is applicable to land that is utilized to less than 80%, are as follows: First there is a visit by an INCRA mission to assess the value of land and improvements, followed by expropriation through presidential decree and confirmation of expropriation through a federal court _(emissao de posse)_ in a process that takes about a year. Once this is accomplished, landowners are compensated with _Titulos da Reforma Agraria_ (with a real interest rate of 6%; bearing a discount of 25-40% in the market); anecdotal evidence of excessive compensation abounds. The necessary infrastructure investment is then included in the subsequent year's INCRA budget (it takes 1-2 years for the infrastructure to be established) and INCRA announces that the land is available, selecting beneficiaries based on agricultural skills, although in practice all cases are limited to regularization of existing squatter settlements. Once selected, beneficiaries are eligible for credit from PROCERA (max US$7,500; average US$4,500), a special program for land reform beneficiaries administered through INCRA (with an effective subsidy of about 70%).

> 3 The emphasis on land reform by the federal Government and the initiation of altemative approaches by state Governors (essentially in the hope of being able to demonstrate that they are able to deal with the problem more effectively) is certainly not unrelated to the political strength

22