Producing a modern agricultural frontier: Firms and cooperatives in Eastern Mato Grosso, Brazil

Abstract

In economic geography, explanations of emerging agricultural frontier regions are dominated by two theoretical perspectives: land-rent theory and political economy. This article advances current research by applying concepts from new institutional economics to reconcile these models. Drawing from a case of frontier expansion in eastern Mato Grosso state, I focus the debate on an institutional perspective. Two organizations, a colonization firm and an agricultural cooperative, are examined. The combined activities of cooperatives and firms reduced the overall costs of production in regions that are defined by high transactions costs (for example, land-tenure insecurity, poor links to the market, and imperfect information) and risk. Each organization linked individual farmers to necessary resources for commercial farming (for instance, land, capital, technology, and markets) and provided an organizational context for farmers to respond to land-tenure conflict and land degradation. The consequence was an increase in the marginal productivity of land, which translated into an expanded commercial agricultural frontier.