A NEW IRRIGATION MODEL FOR THE SEMI-ARID

NORTHEAST OF BRAZIL
1
Francisco Mavignier Cavalcante França
2
Rubens Sonsol Gondim

Banco do Nordeste – Developement Bank

PARTE INTEGRANTE DOS ANUAIS DO

CONGRESO INTERNACIONAL DE SISTEMAS DE RIEGO
MAZATLÁN, MÉXICO. 2 A 9 DE ABRIL DE 2000
Abstract
In order to define a new conceptual model for irrigation agriculture, Brazilian
Government created the “New Irrigation Model Project”. The general objective of
the project is to develop a legal and regulating structure, as well as an “investment
model” aiming the expansion of private investments in irrigation. A proposal for the
New Conceptual Model, containing alternative addressing legal aspects; irrigation
projects; production, post-harvest, distribution and market; financial-economics
aspects; irrigation project management and support services related to irrigation. The
National Irrigation and Drainage Policy has considered irrigated agriculture as a
business inserted in a global market, which needs to be economic and
enviormentally sustainable, promoting the water use efficiency, as well as small
holders organization. A new Irrigation Law has been proposed and is being dicussed
before submetting to the Brazilian Congress. We beleive that the economic success
of the irrigation business given by a new modus operandis will allow the
government to play a new role on the irrigation subsector, while private actors hold
new responsabilities allowed by a profitable and sustainable economic result.

Resumen
Con el fin de definir un nuevo modelo para la agricultura irrigada, el Gobierno
Brasilero creó el Projecto Nuevo Modelo de Irrigación. El objetivo basico del
Projecto es desarrollar un esboso legal y reglamentado, como también un Modelo de
inversiones objetivando la expansión de recursos privados en la irrigación. Una
propuesta para el Nuevo Modelo Conceptual, contiene alternativas dirigidas a los
aspectos legales, projectos de irrigación, pos-cosecha, distribución y mercado;
aspectos económico-financieros; gerenciamento de projectos e servicios de apoyo
relacionados con la irrigación. La Politica Nacional de Irrigación y Drenaje
considera la agricultura irrigada como un negocio inserido en el mercado global, el

1
Development Policies Manager, Economist, Master in Rural Economy.
2
Business Analyst, Development Policies, Agronomist, Master in Irrigation and Drainage
cual necesita ser económica y ambientalmente sostenible, promoviendo la eficiencia
del uso del agua, como también la organización de los produtores. La nueva Ley de
Irrigación fué propuesta y está siendo discutida antes de ser sometida ante el
Congreso Nacional. Creemos que el éxito económico del agronegocio de la
irrigación permitido por un nuevo modus operandis facilitará al Gobierno
desempeñar un nuevo papel en el sub-sector de la irrigación, mientras los actores
privados abrazem las nuevas responsabilidades permitidas por un lucrativo resultado
económico sostenible.

1 - Introduction
Brazil has around 620 million hectares of potential agriculture lands. It is not
surprising that the agriculture sector has traditionally played a key role in the
economy. The semi-arid region in the Northeast of Brazil is held in an area of
778.000 km2, which is 9.3% of the country and live 26 million people (41% of the
region’s population live in the rural area). The weather can be characterized by
insuficient rain (600 mm unevenly distributed along the years) and high rates of
evaporation, resulting in a negative water balance. The Region is considered a grave
risk for agriculture without irrigation, so it has been considered one of the
sustainable economic alternative, which has a potention to irrigate 5 millions
hectares, but there is enough water for only 2.4 millions hectares, considering the
existing technology. It has only been irrigated 0.6 million hectares at the present,
while the whole country irrigates only 2.8 millions hectares. In Table 1, we may
observe the irrigated area evolution from 1970 to 1998.
Table 1 – Evolution of the irrigated area in Northeast of Brazil from 1970 to
1998
Public Proportion %
Total irrigated
Year irrigated area Public
area (ha)
(ha) Irrigation
1970 115.972 8.100 2,60
1975 163.359 12.100 7,40
1980 256.738 38.600 15,00
1985 366.825 71.700 19,50
1995 404.250 115.800 28,65
1996 427.434 123.400 28,86
1997 456.020 135.100 29,62
1998 495.410 139.200 28,01
Source: IBGE and MMA, 1999 apud Banco do Nordeste.

We may observe from Table 1 that the participation of the government

projects in the irrigated area has increased from 2.6% to 28.0% from the total
irrigated area. While government projects has increased 131.100 hectares, private
irrigation has increased 379.438 during the analysed period. In fact, projects
supported by the Government has allowed to irrigate areas located distant from
water supplies and helped to build a fruit cluster in the Northeast of Brazil, specially
in Petrolina/Juazeiro in the San Francisco Valley. The expansion in the use of
irrigation grew slowly and the public projects were implemented under a strong
social intervention investment model, which allowed the prevalence of more
subsistence agriculture rather than a market oriented one (IADB, 1997). Also, in
most of those projects, water fees have shown unable to cover the operation and
maintenance costs, while the scarce water is wasted and the users organizations are
lacking of administrative, techinical and financial skills. The existing irrigation law
has greatly contributed to the economic failure of the public irrigation projects. It
has been therefore, urgent to develop a new model, including a new legal and
operational framework for the irrigation. In order to define a new conceptual model
for irrigation agriculture, Brazilian Government created the “New Irrigation Model
Project”, which is one of the 42 projects constituting the “Brazil in Action Program”
and represents a new conceptual structure for the modus operandi of irrigation
agribusiness. It is sponsored by the Interamerican Development Bank. Banco do
Nordeste is the Executing Unit supervised by a Projetc Execution Coordinating
Committee, created by Interministerial Decree. The Coordinating Committee is
presided by the Manager of the New Irrigation Model Project and includes
representatives from the Secretariat of Planning and Evaluation, Secretariat of
International Affairs, Ministry of Agriculture, Ministry of National Integration,
National Department of Works for the Alleviation of the Effects of Drought
(DNOCS), San Francisco Valley Development Company (CODEVASF) and Banco
do Nordeste.

2. WORK DESCRIPTION
The general objective of the project is to develop a legal and regulating
structure, as well as an “investment model” aiming the expansion of private
investments in irrigation. There is a definition and validation of the conceptual
framework component and then the preparation and implementation of the new
regulatory framework to support the “New Irrigation Model Project”, which focus
on Brazil’s Northeastern Region. Such objectives will define a Conceptual Model
under the following basic premises: to generate all information necessary to
encourage private investments in the development of irrigated agriculture in all of
the production chain links; to adjust the development of irrigated agricultural
production based on opportunities and characteristics of national and international
markets and according to corporate characteristics of projects competitiveness;
redirect the government participation, emphasizing the definition of the role to be
played by a modern state (guidance, regulation and promotion); to strengthen
synergy between the private sector and the three spheres of the government (Federal,
State and Municipal); to identify irrigation monitoring systems applicable to
Northeastern Brazil, aiming the water use efficiency under environmental,
economic and social sustainability; to identify mechanisms and/or propose
legislation to control possible environmental and social impacts from investments,
and to propose mitigating strategies; A proposal for the New Conceptual Model,
containing alternative technical, economic, financial, environmental and legal
viability and management of projects of hydroagricultural and agroindustrial
exploitation in areas included in Northeaster Region, adopting the five (5) most
important irrigation clusters in the Northeast (Jaguaribe Valley, Petrolina-Juazeiro,
Açu-Mossoró, Alto Piranhas and West Bahia) and the irrigation area of Northern
Minas Gerais as reference, addressing the following aspects: i. legal aspects:
identification and description of specific instruments regulating the management of
irrigation projects; water use regulation and charging; assessment and qualification
of possible conflicts of land entitlement and tenure, and formulation of solutions;
evidence of the legislation applicable to the proposed model, as well as any
required changes; preparation of reports, notes, opinions, draft preliminary projects
of legal and regulating acts and technical-legal documents necessary for the
implementation of the proposed alternative. ii. irrigation projects: criteria for
eligibility of areas for implantation of public irrigation projects, under the following
aspects: market and competitive production conditions; producers’ technical,
managerial and organization capacity; technical requirements (water, soil) and land
situation; procedures and technical standards for the conduction of basic studies,
feasibility projects, basic and executive project; irrigation monitoring system,
aiming to define timing and intensity of water demanded by crops, including costs,
necessary technological apparatus and database applicable to the Northeastern
Region; forms of regulation and standardization of irrigation equipment, with the
purpose to ensure the performance, efficiency and operation specified by the
respective manufacturer; iii. production, post-harvest, distribution and market:
definition of scale and combinations/alternatives of long-term and short-term
exploration that would provide profitability and flexibility to the project; proposal of
an annual production schedule, properly established in accordance with identified
market niches, possibilities of production (mix of products, fresh, dehydrated and
processed products) and logistics (storage and transportation); corporate strategies
for identification of and access to specific consuming markets (traditional,
alternative and niches); proposal of the most adequate forms of trade organization
condominiums, (anchor companies, traders, cooperatives, among others), mainly
targeted to increase the level of small farmers’ production; identification of
mechanisms to reduce losses along the productive process, including the physical
and monetary quantification of such losses; design of an “organizational concept”
for information flow, from the market to the production site (Market Information
System); design of “education programs for agriculture” with private and
governmental participation; assessment of the most important potential
environmental problems, including salinization, drainage, compaction, erosion,
degradation and depletion of soils and proposal of related preventive actions; iv.
financial-economics aspects: identification and proposal of elements necessary for
financial design of the new model and analyses of key-components; analyses of
financial risk (investment, trade and foreign exchange risks); identification of
strategies to mitigate business risks from the investor’s view; description of return
rates expected by investors, based on different levels of risks; proposal of available
and potential investment sources and mechanisms (banks, investment funds,
producers, etc.); establishment of assumptions to regulate public sector participation
(federal, state and municipal spheres), including direct investments in infrastructure,
financial, fiscal and institutional incentives; v. irrigation project management:
identification and recommendation of Management Models, including roles and
responsibilities of each managing entity involved; definition of the scope of the
managing entity’s field of activity, vis-à-vis the size and complexity of the project;
definition of relationships between the main public and private actors to be involved
in and committed to the process; definition of types of institutions most adequate to
regulate all the particularities of the New Conceptual Model; location selection of
the irrigator’s home; definition of necessary supporting, physical and administrative
structures; vi. support services: recommendation about the responsibility for the
management of services such as water tariffs, distribution, award and use, rural
extension, technical advising (production, management and commercialization),
phytosanitary prevention, maintenance and operation in irrigation projects;
definition of the method of work of research institutions vis-à-vis demands arising
from projects; irrigators’ capacity, with emphasis on the efficiency of the productive
process, as a consequence of adequate management of soil-water-crop system, as
well as the introduction to the market; establishment of an educational model
associate with the projects; definition of the Public Sector commitment to support
services; vii. action plan and respective actors: proposal of an action plan to
implement the proposed model, including the parties responsible for each of the
tasks necessary for implementation and approval of the proposed alternative.

3. Results (partial)
The study of the national and international state-of-the-art of institutional,
legal and technical framework as well as models of collective infrastracture,
financing, amortizing and operation and maintenance costs recovery gave the
subsides to concept the new model. It has been done interviews with 243 actors of
the irrigation agribusiness chain at the five (5) mentioned most important irrigation
clusters in the Northeast and they have suggested when answered the question: how
to implant new projects and how to rehabilitate the existing projects ones? The most
frequent answers were: focusing on the market opportunities, establishing criteria to
select new irrigators, developing capacitation programs and envolving them on the
project design since the early beginning. (Banco do Nordeste & Consórcio
Plena/FGV/PROJETEC, 1999). The New Irrigation Model has as basic strategy, to
use workshops as a tool to promote the discussion, adjustment and validation of the
results with different actors from the public and private sector representing all of the
different links from the irrigated agriculture chain as well as the presence of experts
with long term international experience on the subject, which will give basis to the
conceptual model. The National Irrigation and Drainage Policy has considered
irrigated agriculture as a business inserted in a global market, which needs to be
economic and enviormentally sustainable, promoting the water use efficiency, as
well as small holders organization (Secretaria de Recursos Hídricos, 1998). The
Project looks for off farm strategies to give the irrigation business economic
sustainabilty as they become profitable and attractive to private investors. A new
Irrigation Law has been proposed and is being dicussed before submetting to the
Brazilian Congress. The main charactersits of the proposed law is that it allows
private sector to construct a project or to buy a public project from the government.
Also allows the government to transfer public projects by leasing them or to have
hybrid projects (public and private, which are constructed in a parternership between
public and private sector). The government has four years to transfer the
management of the projects to users. Most of the other aspects of the new model
scope is under building discussions, specially how to atract all the chain links to the
irrigation business.

4. Conclusions
Brazil has great potention to expand its irrigated area and we expect that the
proposed law will be approved by the Congress. Also the new model will be tested,
adjusted and consolidated on a pilot experience, which is supposed to be the Salitre
Project in Juazeiro, state of Bahia. The success of the new model depends on the
political support to approve it by law and to get the government involved on the
promotion efforts to attract private investors who must act in a market competitive
way. We beleive that the economic success of the irrigation business given by a new
modus operandis will allow the government to play a new role on the irrigation
subsector, while private actors hold new responsabilities allowed by a profitable
sustainable economic result.

5. References
- Banco do Nordeste & Consórcio Plena/FGV/PROJETEC - Seminário de Nivelamento, Fortaleza,
1999.

- Banco do Nordeste & Consórcio Plena/FGV/PROJETEC - Relatório de antecedentes- versão

preliminar, Fortaleza, 1999.

- Ministério da Integração Nacional - Lei de irrigação, projeto substitutivo, Brasília DF, 1999.

- Interamerican Development Bank - IADB - Regulatory framework for private investment in the
irrigation sector. Washington DC, 14 p. 1997.

- Secretaria de Recursos Hídricos - Política Nacional de Irrigação e Drenagem, Brasília DF, 1998.