Mining and agriculture in municipalities with mineral-based economy in Brazil

Abstract

Agriculture is an important investment alternative for productive diversification and food security in municipalities with mineral-based economies. Agricultural activities can benefit from improvements in infrastructure and availability of resources generated from the mineral industry, adopting technological innovations in production systems and expanding market opportunities. Given this context, the objective of the article was to identify whether the main mining municipalities in the states of Pará and Minas Gerais, the largest ore producers in Brazil, are exhibiting growth in agricultural production and production systems of higher technological level. Factor analysis was used to estimate the Index of Agricultural Modernization (IMA) and a log-linear regression model to estimate production growth rates. Although these municipalities receive a high amount of the Financial Compensation for Exploitation of Mineral Resources (CFEM), the activity has shown an incipient performance evidenced by low levels of modernization of agricultural production systems and low production growth rates, leaving clear signs of the occurrence of Dutch disease in these territories.