‘Agroindustrialization’ comprises three related sets of changes: 1 growth of commercial, off-farm agro-processing, distribution, and input provision activities; 2 institutional and organizational change in the relations between farms and firms both upstream and downstream, such as a marked increased in vertical integration and contract-based procurement; and 3 related changes in product composition, technologies, and sectoral and market structure (Reardon and Barrett, 2000). The actual and potential environmental effect of these changes have been sparsely documented to date. There does not seem to have been any attempt at a reasonably general analysis of the pathways by which such effects might occur or of the instruments governments might have at their disposal to influence these pathways. This essay is meant to fill the latter gap while the articles and policy forum that follow provide more detailed findings and perspectives on constituent issues.

The rapidity of change has left scant opportunity for investigation of the consequences of adoption of transgenic crops on long-term ecosystem or economic system functioning. Economic theory suggests that, if the “Biotechnology Revolution” is left to market forces alone, there will be neglected public goods. Theory and limited empirical evidence suggests that there are significant incentives for private firms to discount and neglect certain environmental impacts and to develop products that meet mainly the needs of those able and willing to pay. Negative distributional impacts on rural societies and economies will not normally enter the private calculus nor will the long-term problems of insect and plant resistance. Thus, there is a strong case for enhanced public roles with respect to the use of transgenic crops. The adoption of the precautionary approach in public policies addressing transgenic crops is one alternative to better reflect public concerns.

This study examines the trend in pesticide use in Brazil in the 1990s in the context of agroindustrialization and globalization (trade liberalization). It also seeks to document the environmental costs and human health hazard associated with pesticide use in Brazil. Results from time series data indicate that agricultural trade liberalization has led to increased pesticide use in Brazil, particularly in export crops. Results from cross-section municipality-level data point to higher incidence of pesticide use in municipalities with high income, higher levels of education, large-size farms, predominance of export crops, and with high prevalence of sharecropping. Finally, the study finds that Brazil's agricultural growth in the era of trade liberalization has been clouded by serious human health problems and environmental damage caused by pesticide use.

Agroindustrialization and agricultural commercialization are both consequences of economic growth and urbanization. Commercialization of agricultural systems leads to greater market orientation; progressive substitution out of non-traded inputs for purchased inputs; and the decline of integrated farming systems. Agricultural commercialization can have both negative and positive impacts on the natural resource base. Higher opportunity cost of labor increases farmer reliance on herbicides for weed control, primarily for the staple crops. The use of insecticides and fungicides could also rise, especially for high value fruit and vegetable crops. Increased use of agricultural chemicals could lead to higher environmental and human health risks. On the other hand, global integration and the consequent rationalization of agricultural policies could have significant environmental benefits, especially in terms of a reduced rate of salinity build up and ground water depletion in irrigated environments. The extent to which positive environmental effects manifest themselves depends on both macroeconomic and microeconomic policy reforms.