September 25, 2007

In 1959, the Cuban Revolution startled the U.S. government into realizing that the seething poverty of Latin America's peasant masses could cause socialist revolutions to sweep through the continent. The result was the Alliance for Progress, a progressive-sounding program whose agrarian reform and development projects rarely got beyond the rhetoric stage. But the real purpose of the Alliance was accomplished: the Hemisphere was made safe for private enterprise.

In the ensuing 20 years, the rapid expansion of U.S. agribusiness and investments by local capitalists have dramatically transformed the countryside in many parts of Latin America. Today, the highway through the rich Cauca Valley of southern Colombia passes through mile after mile of new sugar and sorghum fields, punctuated only by billboards advertising the latest in farm machinery and pesticides. In Mexico's northwest, the irrigated vegetable fields have come to resemble those of California's Central Valley, and millions of pounds of tomatoes financed by U.S. brokers are shipped to U.S. supermarkets every year. And in southern Brazil, more than a dozen multi-million-dollar soybean processing plants owned by U.S. companies are scattered through the region, surrounded by large-scale mechanized soybean farms, none of which existed twenty years ago. A new class of commercial farmers is beginning to consolidate its hold on the countryside, and U.S. agribusiness now looks to the region as a major source of profits.

But for the tens of millions of peasants in Latin America who depend on agriculture for their livelihood, the last two decades of capitalist development have done nothing to alleviate their misery. In fact, in the very countries where capitalist agriculture has advanced most rapidly, the plight of the peasantry has only worsened. In Mexico, the number of landless peasants has increased from 1.5 million in 1950 to 5 million today and approximately 3.5 million people in the agricultural sector live on less than five cents a day.' In Brazil, where 50 million people out of a total population of 110 million are still rural, four out of every ten people suffer from malnutrition. And every year, 500,000 people arrive in the city of Sao Paulo, fleeing the poverty of the countryside.(2)

How has the capitalist development of agriculture contributed to this massive rural poverty? It is with this question in mind that these articles attempt to provide an overview of the most important sectors of agribusiness in Latin America today, focusing on the dynamic of capital's expansion.

As a starting point, the tremendous diversity that exists within the region's agriculture should be mentioned - a factor which has to be the backdrop of any general discussion on Latin America. At one end of the spectrum are the Central American countries once known as the "banana republics," where U.S. companies still dominate plantation enclaves that are models of capitalist efficiency, while most peasants live on subsistence plots and farm with the same archaic methods used by their ancestors. Then there are the exceptional cases of Argentina and Uruguay, where capitalist agriculture has predominated in the countryside since the development of grain and beef export industries around the turn of the century. And within Brazil alone, there are several distinct agricultural regions: the highly modernized southern region, which bears little resemblance to the traditional sugar-producing area of the northeast, or the vast stretches of the Amazon frontier.

But in spite of this complex reality, there are two significant trends that apply to most countries in the region and that have had a profound impact over the past two decades: the growing penetration of U.S. agribusiness and the dramatic expansion of export agriculture. Both of these factors have integrated Latin America more tightly into a world economy dominated by monopoly corporations and the advanced capitalist countries. And both have only reinforced Latin America's dependent role in that world economy. As the pace of U.S. investment increases and agro-export industries expand, the region's agriculture becomes increasingly oriented to foreign interests rather than to the local population's needs. This is the fast food chains that have invaded Latin same pattern that exists in other sectors of Latin America's economies. But in the case of agriculture the consequences are particularly dire since people's most basic need - food - is involved.


The first wave of U.S. investment in agro-industry came at the turn of the century,then Northamerican banana and sugar companies set up operations in Latin America. A steady but small trickle of investments in the food processing industry followed over the next five decades until, in the early 1960's, there was a new surge of investments. Since then, in an ever-accelerating trend, U.S. companies have extended their operations into the most profitable and dynamic sectors of agro-industry - farm inputs (including machinery, fertilizers and pesticides), processing, and marketing (both for the internal and export markets). And commercial crop production - the one area where U.S. corporate investment is minimal (except in bananas) - is fast becoming subordinated to the rest of agro-industry. At the one end crop production is dependent on the input industry, and at the other end on processing and marketing.

What explains this surge of expansion? In part, the increased pace of investment in agro-industry reflects the general post-war shift in the focus of U.S. investment in the third world from raw materials to manufacturing. For the consumer-related sectors of agribusiness (such as food processors and fast food chains), the rapid growth of middle sector urban markets in Latin America has been a major stimulus to investments. Another important factor is the availability of cheap land, labor and raw materials which allows corporations to keep production costs down, thereby boosting their profits. At a time when profit rates in the U.S. are falling (from 15 to 16 percent in the early 60's down to 10 percent in the early 70's), 3 low cost production has become a major element attracting U.S. corporations to invest in the region. And for the input industry, an entirely new market has emerged as more and more commercial farms have adopted modern agricultural techniques.

Although the total dollar amount of U.S. agribusiness investment in Latin America is not available, a NACLA survey shows significant increases, especially in the food processing industry where the number of subsidiaries more than tripled between 1960 and 1975. (See investment chart on p. 34.) And in the last five years the pace of investment seems to have quickened. U.S. grain companies have invested more than $50 million in soybean processing facilities in Brazil since 1973, and the farm implement companies, which prior to 1960 dominated the market mainly through exports, have opened a number of production facilities. Ford, for example, has made a $100 million investment in a Brazilian plant. And, as any visitor to Latin America can attest, fast food chains like Kentucky Fried Chicken and McDonalds are springing up in cities throughout the region.


The orientation of Latin America's agriculture to foreign interests has been heightened by a second factor - the spectacular growth of export agriculture, an activity that has characterized the region's role in the world economy since colonial times. As in the past, the main impetus to this growth has come from expanding markets in the advanced capitalist countries. While per capita production of subsistence crops in Latin America decreased by 10 percent between 1964 and 1974, per capita production of export crops increased by 27 percent during the same period. (4) Export agriculture swallowed up new lands, so that by 1971, 15 percent of all arable land in Latin America was devoted to production of traditional export crops - cotton, coffee, bananas, and sugar (a percentage that would be much higher if only cultivated land were considered). (5) The most dramatic expansion has occurred in the case of sugar, where production has more than doubled since 1960 as Latin American producers have rushed to take advantage of the market opened up by the U.S. economic blockade of Cuba, which had supplied 35 percent of U.S. sugar imports.(6)

In some countries, "non-traditional" agricultural export industries have evolved in the last 20 years - beef in Central America, fruits and vegetables in both Mexico and Central America, and soybeans in Brazil. These changes in the international division of labor reflect a new feature in world capitalism: the tendency for certain types of agricultural production to shift from the developed countries to third world areas where production costs are lower. In the case of fruits and vegetables, Latin America's cheap, abundant and mostly unorganized labor gives producers there a competitive edge over the U.S., where the United Farm Workers' successful unionization drive has raised agricultural wages. And in the case of beef and soybeans, cheap land has been a major stimulus to the growth of these industries.


In the last several years export agriculture has taken on a new prominence in Latin American economies. Not only are agro-exports an important growth sector. They also provide a partial answer to the region's ever mounting foreign debt, an increasingly worrisome problem for the ruling elites (not to speak of their international creditors). This is especially the case in countries where "import substitution" has taken place - an industrialization strategy that was aimed at reducing the region's dependence on imports by manufacturing consumer goods locally. But this strategy had the opposite effect, as Latin America's budding industry became more reliant than ever on importing expensive capital goods and indus- trial raw materials from the advanced countries. To cover these growing import bills, Latin American governments borrowed heavily from international banks, further increasing their indebtedness.

By the early 197OYs, governments in countries like Brazil, with the backing of the World Bank and other international agencies, were promoting agro-exports as a way to pay their bills. And then, in 1973, the debt situation took a turn for the worse. The skyrocketing cost of grain and oil on the world market, coupled with increased dependency of some countries on staple food imports, caused Latin America's import bill to escalate. By 1975, most countries were left with staggeringly high record foreign debts.

The result? Many governments are now pushing agricultural exports more aggressively than ever as a cornerstone of their economic policies. A recent issue of Business Week speaks glowingly of Chile's aggressive devaluation policies meant to boost "non-traditional" farm exports; of Argentina turning its trade balance around by lifting the export controls that "fettered its rich agriculture"; and of Brazil's successful export strategy having "so impressed international bankers that they are willing to lend Brazil additional large chunks of money, totaling $6.7 billion this year."' And so the vicious cycle of indebtedness deepens.


For the people of Latin America, what is the price of this pattern of agricultural growth? In the U.S. we have already experienced some of the effects of capitalism development in agriculture - with more than four million small farmers pushed off their lands in the last 40 years; land concentrated in the hands of large-scale producers; the quality and kind of food we eat increasingly determined by corporations interested in profit, not in meeting people's nutritional needs; and the farmworkers who produce our food continuously exploited.

But in Latin America's dependent capitalist countries, the social costs are even greater: First, where the majority of the population has a bare subsistence income, capitalism presents an even more blatant contradiction to people's needs. In spite of the fact that one out of five Latin Americans suffers from malnutrition,(8) the growing productivity of capitalist agriculture has no effect on improving their diets. Instead, the continent's food resources go to where the profits are - to the affluent markets in the cities and abroad.

Second, the concentration of land and capital that always accompanies capitalist development further accentuates the already glaring inequalities that exist in Latin America's rural sector. As in the U.S., the expansion of capitalism into the countryside tends to expel people from the land that was their livelihood, forcing them to rely on the sale of their labor to survive. But unlike the U.S., the region's dependent industry can absorb only a fraction of this new proletariat.

Third, in agriculture, as in other sectors, capitalists are always driven to keep labor costs down. In Latin America, where there is a huge reserve of under- and unemployed labor, and general lack of unions able to protect field workers' rights, wages can be pushed down to subsistence levels, or even lower. In countries where capitalist agriculture is most developed (as in Brazil and Mexico), a new proletariat of dispossessed peasants is coming to form the backbone of the cheap pool of agricultural labor. In other regions (Central America, for example), the mass of the agricultural labor force is minifundistas, impoverished peasants who become seasonal proletarians to supplement the inadequate income from their subsistence plots.(9) But in all countries, capitalist agriculture is based on the same dynamic - the super exploitation of the rural work force.


The forces that benefit from this system have dealt harshly with the resistance of the peasantry to this exploitation. In one country after another, U.S.-backed regimes have brutally repressed peasant movements. In the 1960's, tie Peasant Leagues of Brazil's north-east and the peasant resistance led by Hugo Blanco in the Peruvian Andes were ruthlessly repressed. And in Guatemala, the rural guerrilla movement that had gained a foothold in the countryside in the 60's was decimated by a massive counter-insurgency campaign.(10)

Today, class conflict in the countryside is held in check by the military dictatorships ruling the region. And in most countries, peasant organizations and unions that can fight for the interests of agricultural workers are few and far between. But the class struggle continues in many forms, marked by both advances and setbacks. To cite only some recent examples: - In the last months of 1977, army troops in Ecuador moved against striking sugar workers, leaving more than 25 dead; while in Costa Rica, a hunger strike against one of the country's largest sugar exporters won recognition for a union; and in Guatemala, striking sugar workers at a large mill have been a militant force in recent massive labor demonstrations in thecountry's capital (see Update). - In the past two years, peasant unrest and land takeovers pressured the El Salvadorean and Honduran governments to propose land reform programs which have subsequently been abandoned in both countries because of moves to the right. But in spite of massive repression, El Salvadorean peasant organizations recently forced the government to increase the minimum wage for coffee workers. - And in Mexico, though the massive land invasions that left more than 100 peasants dead in 1976 have subsided, the anger of millions of landless peasants remains a constant threat to the established order. As capitalist agriculture continues to penetrate into the countryside, class conflict will inevitably intensify. It is against this backdrop that the following articles on agribusiness expansion are presented.

REFERENCES I. SEEDS OF HUNGER 1. NACLA Report, "Harvest of Anger-Agro- Imperialism in Mexico's Northwest," July-Aug. 1976. 2. New York Times, Sept. 16, 1976, and Nov. 6, 1976. 3. Socialist Revolution, Nov.-Dec. 1977. 4. U.S. Department of Agriculture, Agriculture in the Americas: Statistical Data, Washington, D.C., 1975. 5. James E. Austin, Agribusiness in Latin America, Praeger Publishers, New York, 1974. 6. D. Gale Johnson, The Sugar Program, American Enterprise Institute for Public Policy Research, Washington, D.C., 1974. 7. Business Week, Dec. 5, 1977. 8. William C. Thiesenhusen, "Current Development Patterns in Latin America, with Special Reference to Agricultural Policy," Land Tenure Center, University of Wisconsin, Madison, 1977. 9. See Carlos Figueroa Ibarra, El Proletariado Rural en el Agro Guatemalteco, Instituto de Investigaciones Economicas y Sociales, Universidad de San Carlos, Guatemala, 1976.

Tags: agribusiness, third world expansion, dependency, agro-exports, class struggle

Like this article? Support our work. Donate now.