Unlocking Bahia’s Green Potential: Rethinking Farm Support for Climate-Smart Growth

The World Bank’s report finds that Bahia’s agriculture sector is dynamic and export-driven but receives minimal state support, especially for climate-smart and inclusive initiatives. It urges increased investment in public goods and a shift toward greener, more resilient agricultural policies.

A new World Bank report presents an in-depth evaluation of the state’s agricultural support policies between 2017 and 2021. The study draws on methodologies from global institutions including the OECD, the Brazilian Institute of Geography and Statistics (IBGE), the Ministry of Trade, and Bahia’s own Secretariat of Agriculture (SEAGRI). Using the internationally standardized OECD framework for evaluating public support, the report quantifies the monetary transfers from Bahia’s taxpayers and government to its agricultural producers, services, and potential consumers. It presents a nuanced portrait of a sector that is dynamic, increasingly market-driven, but under-supported in both financial and environmental terms.

Growth Against the Odds: Bahia's Agricultural Surge

Despite sluggish national GDP growth, Brazil’s agricultural sector has surged ahead, posting a 39.9 percent growth in value added in 2020 alone. In Bahia, the trend is even more pronounced. From 2011 to 2020, the share of agriculture in the state’s GDP grew from 6.9 to 9.2 percent. The COVID-19 pandemic did little to slow this momentum. Crops such as soybeans, cocoa, and cotton achieved record outputs, buoyed by a solid export strategy. Between 2017 and 2022, Bahia’s agricultural exports expanded at an average rate of 11.6 percent, and the state emerged as Brazil’s ninth-largest exporter. This expansion was driven by both local production and demand from key international partners such as China, the United States, and Argentina.

Yet behind this strong economic performance lies a surprisingly minimal level of state support. The report shows that Bahia’s total annual agricultural support measured through the OECD’s Total Support Estimate (TSE) averaged just R$192.4 million, or 0.87 percent of the state’s agricultural GDP. This level is far below the OECD average and even lags behind other Brazilian states like São Paulo and Santa Catarina. While the sector grows, it does so largely under its momentum, not through robust public investment.

Minimal Direct Support, Modest Green Gains

Bahia’s Producer Support Estimate (PSE), which reflects direct transfers to farmers, averaged a mere 0.2 percent of producers’ gross income over the five years. This is minuscule when compared with OECD countries (17.4 percent) or Brazil as a whole (2.2 percent). Most of Bahia’s support was input-based programs that provided seeds, tools, and machinery alongside extension services. Payments linked to production levels, such as those distributed through PRODEAGRO and PROALBA, represented just 14.3 percent of total support. Notably, 21.7 percent of direct support came through decoupled payments transfers not linked to production volume, which are considered environmentally friendlier. The flagship initiative in this category was the “Environmental Regularization of Rural Properties” program, signaling Bahia’s tentative steps toward green agricultural policy.

For major crops like soybeans, cotton, and cocoa, the state’s support never exceeded 0.6 percent of gross income, and the trend over time was downward. As production increased more rapidly than subsidies, the relative weight of government support shrank. There were no price support mechanisms in place no minimum prices or purchase guarantees highlighting Bahia’s deliberate non-interventionist stance on price setting.

Public Goods, Private Gaps

General Services Support Estimate (GSSE), which encompasses public investments in infrastructure, R&D, inspection, and sector-wide promotion, made up the bulk of Bahia’s agricultural support, 69 percent of the total. Annual GSSE spending averaged R$132.6 million. While most of this went to infrastructure (52 percent) and agricultural knowledge services (40 percent), the overall figure was low when measured against the state’s agricultural GDP. At 0.57 percent of AgGDP, Bahia’s GSSE was far below São Paulo’s 1.2 percent and the OECD average of 5.3 percent.

Still, these investments provide a foundation for long-term gains. Public spending on R&D and extension services can enhance productivity, reduce emissions, and build resilience. However, the report warns that current spending levels are insufficient to meet the challenges posed by climate change, especially for small and medium-sized producers who face growing climate-related risks.

Toward a Competitive and Sustainable Future

The report’s environmental analysis raises concerns about the structure of Bahia’s support. Input-based and production-tied subsidies, while helpful in the short term are often inefficient and environmentally detrimental. They encourage overuse of natural resources, intensify emissions, and perpetuate unsustainable practices. In contrast, decoupled payments and investments in green innovation are seen as instruments that can align production with environmental goals. In Bahia, just over one-fifth of direct support qualifies as “green,” suggesting room for improvement.

The absence of consumer support programs is another gap. The Consumer Support Estimate (CSE) was zero across the board no subsidies, no food assistance, and no safety nets were implemented during the study period. As food insecurity continues to affect vulnerable populations, especially in rural regions, the report suggests that well-targeted consumer support could be both inclusive and impactful.

To drive the sector forward, the World Bank outlines a series of recommendations: significantly increase investments in public goods, especially agricultural R&D and rural infrastructure; repurpose direct support schemes to promote climate-smart practices and decoupled payments; and develop risk management and consumer safety net programs tailored to the needs of smallholders and vulnerable communities. Without such reforms, Bahia risks falling behind in the global shift toward sustainable and resilient agriculture.

The report concludes on a forward-looking note. Bahia’s agriculture is thriving, but policy support must evolve. By shifting the focus from short-term inputs to long-term innovation and environmental stewardship, the state has the opportunity to lead Brazil’s agricultural transformation in a way that is competitive, climate-resilient, and inclusive.