Food for Profit

September 25, 2007

Malnutrition is the most serious health problem in the underdeveloped
world. Of all people dying in the poor nations, more than 40 percent are
children under five years of age. And most of these childhood deaths are
caused by the interaction of malnutrition and infection.l
The malnutrition-infection complex begins with the weaning of the child
from the breast. At that time, the child often fails to receive sufficient
quantities of the high quality proteins which were available to him in
breast milk. 2 This nutritional deficiency makes the child more susceptible
to severe infections, particularly of the gastro-intestinal tract. 3 The
infection, in turn, increases the child's protein and calorie requirements
and produces a deterioration of the nutritional state. This downward spiral
of malnutrition and infection all too often ends in death.
Latin America is certainly no exception to this health problem. Forty
percent of deaths are in pre-school children, largely caused by the
nutrition-infection complex. In two Central-American countries, Costa Rica
and Guatemala, children under five make up 50 percent of all deaths. 4
According to surveys taken by the Institute of Nutrition of Central America
and Panama (INCAP), 48 percent of Costa Rican children under five are mal-
nourished, as measured by retardation in weight gain. 5 In Guatemala this
figure climbs to 75 percent. 6 The chief nutritional deficiency is protein,
particularly high-quality protein with an adequate content of essential
amino acids. Other nutritional problems in these two countries include
caloric deficiency, vitamin A lack and anemia due to insufficient iron and
At the age of two years the average child in these countries has
reached the weight of a normal one-year-old North American. The average
five-year-old weighs the equivalent of a normal child of two years.
The principal problem of the underdeveloped world, then, can be solved
in only one way: the production and distribution of adequate amounts of
high-quality protein food. Yet many governmental and public health people
in the United States and the poor nations have an entirely faulty conception
of the food problem. Some prevailing beliefs about this problem are
summarized in the following four postulates:
1. There is an imminent, inevitable collision between the world's
capacity to produce food and the growing population. 7
2. The United States is helping, at least in the short run, to solve
the feeding problems of poor countries. 8
3. For a permanent solution to the food shortage, large amounts of
private capital must be invested in the production of food within poor
4. What poor people of underdeveloped countries most need is education
so they will learn which types of food are healthy.10
In this article we will seriously question these four beliefs, at
least for the case of Latin America. In doing so, we will examine a
single commodity -- milk -- in two countries, Costa Rica and Guatemala.
After presenting the facts of this limited case study, we will discuss the
four postulates in light of these facts, making generalizations about Latin
America as a whole.-9-
Costa Rica has a relatively well-developed
milk industry with alyer capita consumption of
0.85 pounds per day. Milk is Costa Rica's fourth
largest agricultural industry, following the export
commodities of coffee, bananas, and beef cattle.
In 1948, many milk producers joined together in the
Dos Pinos cooperative, which built a modern proces-
ing plant, and now supplies pasteurized milk to
the entire country. Dos Pinos also produces non-
fat dry milk, which is sold to the Costa Rican
government for distribution to children in schools
and nutrition centers.
While Dos Pinos was developing its powdered
milk processing plant, it pressured the Costa
Rican government into stopping the donation of
powdered milk from the United States through the
organization CARE. However, in 1963 a volcanic
eruption temporarily destroyed part of the milk-
producing area of the country, causing an acute
milk shortage. CARE was then asked to bring in
non-fat dry milk, which it has done up to the
present. (CARE is a U.S. voluntary agency which
receives foods from the U.S. government under
Public Law 480, and arranges the transport and
distribution of these foods in recipient nations.)
Milk bought by the Costa Rican government from Dos
Pinos and CARE reaches 90 percent of Shool chil-
dren and 20 percent of pre-schoolers.
The main opposition to CARE has been from the
Costa Rican milk industry, especially Dos Pinos.
In 1968, when milk was in excess in Costa Rica,
the milk producers again forced CARE to stop its milk
shipments; the national industry felt that CARE's
competition was harmful. CARE in Costa Rica is
thus switching from milk to CSM, a high protein
mixture of corn, soya and milk.
However, in the past year the Costa Rican milk
industry has undergone a crisis. Milk production
is dropping and farmers are leaving the dairy busi-
ness. The reason: dairymen are switching from
milk to beef cattle to take advantage of the lucra-
tive beef export trade to the United States. Pro-
fits on such exports are much higher than returns
from producing milk. Under strong pressure from
the milk industry, the government raised milk prices
by 10 percent. But many doubt that this measure
will induce farmers to remain in the dairy field;
already the population of dairy cattle in Costa
Rica has decreased by an astonishing 65 percent. 1 3
To summarize, then, Costa Rica developed a
strong dairy industry partly due to the denial of
cheap competitive milk imports by CARE. But because
of the recent U.S. policy to import beef from Cen-
tral America, Costa Rican milk farmers are leaving
the dairy industry in order to raise more profitable
beef cattle. Thus Costa Rica's milk production is
dropping, and the future of the industry is in doubt.
In Guatemala we do not find a strong national
milk industry going sour; rather, the industry has
always been poorly developed. Consumption of milk
is half of Costa Rica's average. 1 4 There is no
leader in the dairy business comparable to Dos
Pinos; six to eight companies serve only Guatemala
City (with just 15 percent of the country's people).
All milk in the countryside is raw, and is usually
distributed directly from the owner of the cows to
local consumers. Government-fixed milk prices have
not changed for 18 years, despite rising costs of
milk's raw materials, especially cattle feed. With
resultant declining profits, milk production in
Guatemala -- as in Costa Rica -- has started to go
down.l5 Other enterprises, such as exportation of
beef, are more lucrative. Two large dairy farmers
separately stated "If I could find someone to buy
my milk cattle, I would go out of milk production
The Guatemalan government buys almost no local
milk for nutrition programs. CARE, on the other
hand, has a large program, costing the Guatemalan
government over $300,000. Yet 75 percent of CARE
products go to school children, who are past the
nutrition crisis of the first five years; only
10 percent of pre-school children receive CARE milk.
The government set up a non-fat dry milk plant in
the country, but CARE milk was never shut off -- as
in Costa Rica -- in order to allow this plant to
grow. Thus the government plant has been a failure,
producing very little milk. The availability of
cheap CARE milk has taken the pressure off the
government to produce its own milk and develop a
national industry.
Yet milk is not the only product adversely
affected by the CARE program. Incaparina, a high
quality protein mixture based completely on vege-
table sources, is appearing as a milk substitute.
Developed by INCAP, Incaparina is made from corn
and cottonseed flour which are easily prepared
within Central America. By mixing the essential
amino acids of various plants, Incaparina has
attained a biological value equal to that of milk,
glass for glass. And its cost per glass is one-
sixth the cost of whole milk.
IHowever, in its ten years of existence
Incaparina has had a negligible impact on the
Central American nutrition problem. In several
countries, attempts to market Incaparina have failed
completely. In Guatemala, where it is produced by
a local company, Incaparina is a going concern, but
a small one. Whereas over 20 million pounds per
year would be required to feed all children under
five, Incaparina sales in Guatemala are under three
million pounds per year. And the greatest use of
the product is among middle class families rather
than the poor. 1 6 The company is pushing the
Guatemalan government to buy the product and dis-
tribute it to children in nutrition centers and
schools. But U.S. pressure to continue the CARE
program has stopped the government from doing so.
In Guatemala, then, the malnutrition problem
is enormous, and no solutions can be seen on the
horizon. CARE milk reaches very few pre-school
children, yet CARE's program prevents the distribu-
tion of.the cheaper, locally produced Incaparina.
The milk industry is small, and declining because
export crops are more profitable.
We have tried to give a brief picture of the
forces which affect one sector of the economy of
two small countries. This sector -- the production
of milk and a milk substitute (Incaparina) -- is
critical for solving the nutrition problem of these
countries. But in both countries, it is failing
because of considerations unrelated to feeding
people. As we return now to the four postulates
listed at the beginning of the paper, we will
broaden the discussion and look at Latin America in
general, referring back to the case studies where
1. The food-population collision. There is
no demographic-geographic reason why people must
be hungry or malnourished in Costa Rica, Guatemala,
or in Latin America as a whole_ Latin America, with
16 percent of the world's habitable land, has only
six percent of the population. The population
density is a sparse eight people per square kilo-
meter. 1 7 In contrast to Asia, Latin America is
underpopulated in relation to the land available. 1 8
Of the continent's 500 million hectares of arable
land, only 30 percent are presently being cultivated.
And many of the one billion hectares of forests
could be converted into farmland. 1 9
Yet even the proper use of land now under
cultivation would vastly increase food for internal
consumption. First, large areas of land are under-
utilized because the absentee owners of the large
plantations have no incentive for high productivity.
In Guatemala 2.1 percent of the farms contain
62 percent of the arable land. 2 0 These large hold-
ings produce only one-quarter the yield per hectare
of a small Guatemalan farm. Similar and more ex-
treme patterns are found in many Latin American
countries; in Peru, for example, one percent of the
farms cover 80 percent of the arable land, and in
Chile, large farms produce only five percent as
much per hectare as small holdings. 2 1 The Inter-
American Development Bank lists this land tenure
system as the number one obstacle to agricultural
development in Latin America. To remove this
obstacle would require a complete reform of the
land tenure system, taking away the huge holdings
from their owners.
Secondly, the most fertile areas of arable
land are not used to feed the Latin American popu-
lation, but are planted in crops for export to the
developed world, especially the United States. In
Costa Rica, more land is used to grow the three
main crop exports (coffee, bananas, and cocoa) than
to produce the three main foods for internal con-
sumption (corn, rice and beans). 2 2 In Guatemala,
the entire luxurious Pacific coast lands are taken
up in export commodities (cotton, coffee and beef
cattle), and the country must import corn and beans
to feed its people. For Latin America as a whole,
the amount of land used for export crops is enormous
By converting plantations of coffee, cotton, sugar
and bananas, Latin America could raise corn pro-
duction by 50 percent, double its wheat production,-11-
or increase rice by two and a half times. 2 3 Yet
many Latin nations are now importing basic food
items such as wheat, corn and beans.
Thus massive stretches of arable land are not
cultivated at all, are underutilized, or are planted
with export crops. It is this pattern of land use,
rather than a population-food collision, which is
the cause of inadequate food production in Latin
2. U.S. food policy. The United States is
widely believed to aid Latin America by sending food
supplies under Public Law 480 (Food for Peace).
Exactly the opposite is true. Looking at the total
agricultural sector, Latin America is actually aid-
ing the United States. In the first place, much
land in Latin America is used to export food to the
United States, thus enabling the United States to
procure food (as coffee and bananas) not grown in
temperate zones. Secondly, the shipment of food
under PL 480 primarily benefits American farmers,
who need an outlet for overproduced commodities such
as wheat, corn and milk.
Costa Rica and Guatemala are excellent examples
of this international food system which is so bene-
ficial to the United States. The richest land is
developed by a few large landowners to produce
commodities needed by the United States. When the
United States cut off the Cuban sugar quota, Costa
Rica started to produce and export sugar. When too
many bananas were being produced, plantations were
switched to new export needs such as cotton and
cocoa. Now, the United States needs beef and both
Costa Rica and Guatemala are turning their lands to-
ward this end. Since the United States can pay higher
prices for these products than Latin Americans can
pay for basic foods, landowners choose the export
crops over grains for domestic consumption. Thus
agriculture in Central America, and to some extent
in South America, develops in response to the de-
sires of the United States, and not to the needs
of its own people.
After acquiring millions of acres of land in
Latin America for its own use, the United States
then turns around and offers food to Latin American
countries under PL 480.
The PL 480-CARE program, however, is no
solution whatsoever to the feeding problem of Latin
America. It is a stop-gap measure which could be
supported as a response to temporary disaster
conditions such as floods, earthquakes or droughts.
But PL 480-CARE programs have the overall effect
of slowing the development of domestic agricultural
production, and thus are harmful rather than help-
ful to the recipients.
In the first place, the CARE program does cost
money to the recipient governments -- several
hundred thousand dollars in both Costa Rica and
Guatemala. This money could be placed into long-
range development programs for producing food.
Secondly, CARE products compete with local in-
dustries; the case of milk in Costa Rica is an ex-
ample. If CARE had not been barred from Costa Rica
in the mid-fifties, Dos Pinos would not have gotten
off the ground. 2 4 Thirdly, in its school feeding
programs, CARE accustoms children to foods -- e.g.,
milk and CSM -- which may never be produced in
sufficient quantity in Central America. Thus a
taste, and a dependency, is created for American
rather than local products. This dependency serves
the U.S. farmer who wishes to increase exports, but
it hurts the economy of the recipient nation.
Fourth, CARE competes with local experiments in
high-protein food production. Incaparina is an ex-
cellent case; this new food has not been distributed
by the Guatemalan or other Latin American govern-
ments because of the availability of CARE products.
And fifth, P1 480-CARE imports have brought down
the prices for local wheat and rice in some
countries such that local farmers have no incentive
to increase their production. 2 5
Thus PL 480-CARE programs have adverse effects
on the development of food industries in under-
developed countries. And in addition, the programs
fail to make even a temporary impact on the
nutrition problem. Whereas the most severely mal-
nourished group is under five years of age, most
CARE food goes to school children. Costa Rica and
Guatemala have a relatively high coverage of pre-
schoolers -- from 10-20 percent. Worldwide figures
in underdeveloped countries have received PL 480
commodities. 2 6 So PL 480 has little immediate
effect, and in the long run, it aggravates rather
than solves the nutrition problem of underdeveloped
3. Private investment in local food industries.
It is universally agreed that underdeveloped
countries -- individually or in regional groups --
should attempt to become self-sufficient in feeding
themselves. The method of agricultural growth re-
commended by the United States is development by
private investment. This means reliance on wealthy
individuals, companies and banks to invest in profit-
making ventures. However, from the experience of-12-
the milk industry and Incaparina in Costa Rica and
Guatemala, such faith in private investment must be
questioned. In both countries, milk producers are
squeezed between rising costs of raw materials and
stable milk prices. The dairymen are responding by
leaving their industry and investing in beef cattle
or other commodities. Costa Rica and Guatemala are
not exceptional cases: on a worldwide basis, per
capita milk production is currently declining. 2 7
In the case of Incaparina, the price is fixed
by INCAP, and the company producing the food in
Guatemala has been losing money. Consequently,
there has been insufficient promotion of the new
product and its distribution is limited. 2 8 Incapa-
rina provides a prime example of how a good, in-
expensive protein source is caught between the self-
ishness of U.S. food policy and the inability of the
profit motive to solve the nutrition crisis. In
order to feed poor people, Incaparina must be sold
more cheaply; yet to generate profits, Incaparina
must be sold less cheaply. The only answer is
government subsidy of Incaparina for the poor; yet
that solution has been prevented by U.S. pressure
to use American milk and CSM.
In general, high-quality protein foods are
expensive relative to the staple corn, beans and
rice. Only by keeping down the prices of these
protein sources will malnourished families be able
to buy them. Yet if prices are artificially low,
production of meat, eggs and milk will not be pro-
fitable, and private investors will stay away. It
seems clear that reliance on the profit motive will
not feed the underdeveloped world. Only a high-
priority public decision to place money into the
production and distribution of high protein foods
for domestic consumption will allow these countries
to nourish their own people.
4. Poor people need nutrition education.
Many nutritionists, doctors, government officials
and food producers in the developed and under-
developed worlds believe that poor people are mal-
nourished because they do not know what foods to
eat. 2 9 In the words of one publication, "Lack of
knowledge of the simplest facts of nutrition is at
the root of a high proportion of the cases of mal-
nutrition today." Many dollars for nutrition educa-
tion are spent on the basis of this view.
Yet the belief is largely fallacious. Peasants
in Central America generally choose their foods in
the most intelligent manner possible; that which
best satisfies hunger at lowest cost. The diet of
the Guatemalan Indian is an example -- corn
tortillas and black beans. One pound of corn costs
four cents, and can fill up two people for a day.
One egg, on the other hand, costs five cents and
fails to satisfy one person for one meal. Given
that choice, who would not eat corn. No wonder that
an Indian, finding that his hen has laid an egg,
sells rather than eats the egg. Nutrition programs
teaching him to do otherwise will not (and should
not) succeed. Education inputs (new seeds,
fertilizer, pesticides) may be more expensive than
the increased yields are worth. 3 0
The Guatemalan Indians, descendent from the
great Mayan culture, were not always malnourished. 3 1
Before the Spanish conquest they had plenty of land,
and ate fruits, small forest animals, and fish.
Now, however, the European colonists own most of
the land, having forced the Indians into smaller
and smaller areas and eliminated many of their old
food sources. The indigenous people have nowhere
to migrate, and their soil is depleted by constant
corn harvests. And because they now need money to
survive, they sell rather than eat the small amounts
of meat, eggs and milk produced by their few animals.
Clearly the solution to the nutrition problem
of these two million Indians, and tens of millions
of peasants throughout Latin America, is to give
them back their land. With moderate rather than
tiny holdings they could feed both themselves and
the cities of their countries. Land reform, not
education, can solve the feeding problem in Latin
The major health problem in Latin America stems
from a deficiency of high quality protein in early
childhood, resulting in many deaths from the mal-
nutrition-infection interaction. This problem is
not caused by an overabundance of people relative
to the potential food supply, nor is it related to
the poor dietary education of malnourished families.
Rather, malnutrition in Latin America is rooted in
two politico-economic facts. First, the countries
underproduce food because of the nature of the land
tenure and food export systems. And secondly, the
masses of malnourished people can not afford to buy
sufficient protein because they have no land and no
The nutrition problem cannot be solved by U.S.
food aid programs or local private investment.
The solution lies in land reform, redistribution of
wealth, and high-priority governmental action to
develop low-cost, high-protein food industries for
domestic consumption.Calendar: published by La Clinica del Pueblo Rio
Arriba, Tierra Amarilla, N.M. 87575 ($2.50)
1. Brown, R.E. Medical Problems of the Developing
Countries. Science 153: 271-5, 1966;
Scrimshaw, N.S. and Behar, M. Malnutrition
in Underdeveloped Countries. New Eng. J. Med.
272: 137-144, 193-8, 1965.
2. Jelliffe, D.B. Infant Nutrition in the Sub-
tropics and Tropics (Geneva: World Health
Organization, 1955).
3. Gordon, J.E. Social Implications of Nutrition
and Disease. Arch. Environ. Health 18: 216-
34, 1969.
4. Las Condiciones de Salud en las Americas 1961-
1964 (Washington: Organizacion Panamericana
de la Salud, 1966).
5. Evaluacion Nutricional de la Poblacion de Centro
America y Panama: Costa Rica (Instituto de
Nutricion de Centro America y Panama, 1969).
6. Evaluacion Nutricional de la Poblacion de Centro
America y Panama: Guatemala (Instituto de
Nutricion de Centro America y Panama, 1969).
7. Paddock, William and Paul. Famine -- 1975
(Boston: Little, Brown and Company, 1967);
President's Science Advisory Committee.
The World Food Problem (Washington: Govern-
ment Printing Office, 1967).
8. U.S. Department of Agriculture. 12 Years of
Achievement under Public Law 480 (Washington:
Government Printing Office, 1968).
9. Williams, S. Private Investment in World
Agriculture. Harvard Business Review
Nov./Dec. 1965; also President's Science
Advisory Committee, footnote 7.
10. Education and Training in Nutrition (Rome: Food
and Agriculture Organization, 1962); as well
as several interviews.
11. Tecnica Agropecuaria S.R.L. Estudios de
Mercados en Centroamerica y Factibilidad de
Production en Costa Rica (San Jose, Costa
Rica, 1970).
12. Interview with Dr. Carlos Diaz Amador.
13. Data from Costa Rican Government Dirreccion
General de Estadistica y Censos.
14. See footnote 11.
15. Interviews with Carlos Matheu and Eduardo
16. Incaparina Highlights, December, 1968.
17. de Castro, J. Hambre y Desarrollo Economico
en America Latina. Economia, July-December,
18. Cook, R. Population and Food Supply, in
Mudd, S. (ed.) The Population Crisis and the
Use of World Resources (The Hague: World
Academy of Art and Science, 1964).
19. Agricultural Development in Latin America: The
Next Decade (Washington: Inter-American
Development Bank, 1967).
20. Amaro, N. (ed.) El Reto de Desarrollo en
Guatemala (Guatemala: Editorial Financiera
Guatemalteca, 1970).
21. The State of Food and Agriculture 1967 (Rome:
Food and Agriculture Organization, 1967).
22. Production Yearbook 1968 (Rome: Food and
Agriculture Organization, 1969).
23. Ibid.
24. Interview with Warren Bonilla.
25. Schultz, T.W. Economic Crises in World Agri-
culture (Ann Arbor: University of Michigan
Press, 1966).
26. President's Science Advisory Committee, foot-
note 7.
27. See footnote 23.
28. Interview with Paolo Vestini.
29. Kotz, N. Let Them Eat Promises (Englewood
Cliffs, N.J.: Prentice-Hall, Inc., 1969);
as well as several interviews.
30. See footnote 25.
31. Behar, M. Food and Nutrition of the Maya before
the Conquest and at the Present Time.

Tags: malnutrition, milk industry, Guatemala, Costa Rica, US role

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