WILL CENTRAL AMERICA'S FARMERS SURVIVE THE EXPORT BOOM?
Due to a variety of impediments, it is doubtful whether the small farmers can survive the boom of NTAE's: their profits swing with the unstable market; as they are not direct exporters, they receive only 42% of the value received by large producers; finally, governments have tightened credit policies considerably, making capital almost impossible to obtain.
By Edelberto Torres Escobar
The Central American peasantry is making its way through the current decade in the wake of three crucial events of the 1980s which changed, in one way or another, its position in society. To begin with, the long period of civil war altered the lives of many of the region’s peasants. The conflicts produced countless victims and caused a large number of peasants to migrate both within and beyond the borders of their respective countries. The number of displaced persons in the zones of conflict in Nicaragua, El Salvador and Guatemala reached–according to United Nations calculations–at least two million.
Second, the application of agrarian-reform laws–promoted in Nicaragua as part of a revolutionary program, and in El Salvador to pacify a rebellious peasantry–altered the traditional structures of land tenure in those two countries. In Honduras, an agrarian reform also took place, though the redistribution of the land was more modest. In the three countries combined, nearly seven million acres of land were affected by reform. In Guatemala and Costa Rica, agrarian reform consisted mainly of programs of peasant settlements, and had comparatively little effect on the broader structure of land holdings.
To the social and political turmoil of the 1980s, we must add yet another factor: the economic crisis which the peasantry suffered, due principally to the decline of incomes caused by the fall-off in traditional exports. In the 1980s, Central American agriculture suffered a marked decline in the rate of economic growth, which fell from an average of 2.7% between 1970 and 1980 to an average of 1.3% between 1980 and 1990. The agrarian sectors of Nicaragua and El Salvador, the two countries most heavily affected by war, suffered negative growth rates in the 1980s of -0.7% and -1.2% respectively.
While political peace seems to be returning to the region, agrarian reform has disappeared from the strategies of development. Beyond that, as conservative governments consolidate their power, measures are being implemented to reverse the land reform of the previous decades. The current policy consensus has also produced a series of economic programs that are attempting to reactivate national economies by promoting new “nontraditional” agricultural exports, thus ending a dependence on traditional exports. The Central American peasantry must adapt to the conditions imposed by the new political economy or risk being wiped out completely.
Policymakers throughout the region felt that agriculture–and therefore the peasantry–would benefit from trade liberalization and the application of economic stabilization and adjustment measures. Government planners argued that monetary restrictions and the high price of foreign exchange would promote the production of non-capital-intensive crops by small farmers for the internal market. The results, however, have not been uniform. Structural adjustment, by prioritizing the already dynamic export sector, has channelled scarce resources to the big agricultural firms, and only secondarily to the small producer.
The process of insertion into extra-regional markets gained momentum during the mid-1980s with the Reagan Administration’s Caribbean Basin Initiative (CBI) which opened the North American market to certain Central American products. In 1992, the European community also facilitated commerce by liberalizing a list of agricultural products comprised mostly of nontraditional products.
Nontraditional exports have thus become the most dynamic sector of Central American agriculture. During the 1980s, the value of traditional exports fell by about 17%, while nontraditional earnings rose 82%, principally in Costa Rica and Guatemala.[1] These products account, however, for barely 10% of export earnings–though only about 1% of farm land–and their growth has not made up for the fall in traditional exports. Moreover, since 1990 nontraditional production has been irregular.
In Central America, between 35,000 and 40,000 farmers participate in the production of nontraditional export crops. Of these, about 60% are small producers located on the central plateau of Guatemala.[2] These farmers sow 15,000 acres of plants in individual plots, most of which occupy less than two acres of land. These small producers had, for many years. been temporary workers on the coffee and cacao plantations on the Pacific coast. When production of these traditional crops decreased, they lost their part-time employment and began instead to plant a variety of nontraditional vegetables on their own holdings.
Among these Guatemalan cooperatives formed for the production of vegetables, it is worth singling out on called Cuatro Pinos, whose 1,500 members are among the principal exporters of snow peas on the world market. This cooperative enjoys an exceptional set of conditions that has permitted its success, making the repetition of its experience unlikely. It can rely, for example, on the support of a Swiss non-governmental organization (NGO) called Grupo Suizo, which financed an irrigation project. This project permits the cooperative to grow crops year round, thus supplying Northern markets during the winter. The support of a northern NGO differentiates Cuatro Pinos from other producers who rely on the intermediation of packing and exporting firms in order to sell directly to the external market.
In the majority of cases, small producers find themselves linked to the external market not directly, but by way of the agroindustrial and agro-exporting sectors. These, in turn, are dependent on the levels of trade established by external demand. In the case of products like ornamental plants, for example, demand is extremely volatile, and small producers are typically the last to receive market signals. It therefore requires great versatility to remain active in the market.[3]
With or without this kind of intermediation, small producers are a strong presence only in a minority of sectors.[4] One of those sectors is die farming of roots and tubers, whose export value rose to $18.6 million in 1990. Root and tuber farms are located principally in the Atlantic and northern areas of Costa Rica, and along the Nicaraguan border. What the root and tuber producers of Costa Rica and Nicaragua have in common is access to land. Their average farm size is about 25 acres.
In early 1993, Costa Rican sweet-potato exporters began to operate in Nicaragua’s Atlantic Coast region, one of the country’s last remaining areas of biologically diverse tropical rain forest. The area had recently been populated by Nicaraguan peasants–former refugees in Costa Rica–who had been settled there following the end of Nicaragua’s Contra war. The exporters, faced with a growing North American market and the declining productivity of their Costa Rican plots, decided to expand into Nicaragua’s Atlantic Coast. For their part, the peasant farmers of the region grow the sweet potatoes with little regard for the medium-term risks of soil depletion, or the risks involved in becoming dependent on a Costa Rican exporter. Lacking the capital or credit to grow and market anything else, these peasants now rely on sweet potatoes as their means of survival.
Another crop produced–though not exclusively–by small cultivators is melons. In El Salvador, melons are produced in plots averaging less than five acres, typically belonging to peasants who benefited from the agrarian reform. Many of these peasants are organized in cooperatives, but since they are not direct exporters, the prices they receive for their produce are about 42% of those obtained by the large producers who sell directly to the external market. Until 1990, they had received financing from El Salvador’s Bank of Agricultural Promotion. Now that the bank is slated to be privatized–as of late 1994 it remains in State hands–many producers are thinking of discontinuing cultivation.
Motivated principally by the desire to send more realistic signals to investors, governments have perceptibly tightened credit policies throughout the region over the past few years. Tight credit presumably avoids the risk of decapitalization of national financial institutions and promotes the “efficient allocation of scarce resources.” Under this logic, the role of private banks has been reinforced to the detriment of national development banks, which played a key role in the developmentalist policies of the previous decades. In El Salvador, for example, the participation of the Agricultural Development Bank in national finance has diminished from 17% of all public financial transactions in 1980 to 5% in 1990.
Interest rates have been steadily climbing throughout the region, rising above 20% for short-term credit. In Costa Rica, the annual rate of interest rose from 14.5% in 1978 to nearly 40% in 1991. In 1983, the Costa Rican agricultural sector got 60.6% of all authorized credit. In 1991, this relative participation fell to 17%. In El Salvador, only 30% of those who benefited from the agrarian reform have title to their land, thus disqualifying the remaining 70% from eligibility for credit. A similar situation applies in Nicaragua. The direct consequence is a drastic decline in access to credit, placing the small producer at a clear disadvantage. In addition, the banks have scaled back programs of technical assistance and other services. In Nicaragua, for example, only branch offices with greatly reduced services have remained in the district capitals.
The use of new technologies is directly linked to credit. For instance, crops like snow peas and melons require the use of costly special inputs and soil management techniques before and after the harvest to achieve the quality standards desired by Northern consumers. The incorporation of small producers in these new sectors is conditioned, in large part, by whether or not they can afford new, frequently unsustainable technologies like intensive pesticide use, and–as in the case of Cuatro Pinos–permanent irrigation.
Meanwhile, the peasant movement carries on throughout the region in the face of a desperate lack of resources, and–in all countries but Costa Rica–the constant threat of expropriation. The lack of access to credit and technical support, and the threat to basic food security impel the movement to search for better ways to insert itself into the national dialogue, and into the broader economy. In this context, the search for peasant consensus and joint action goes beyond the struggle for land and better working conditions, to the projection of farmer-based visions of development which are sustainable both in social and environmental terms.
Peasant movements do not, of course, operate on the same political terrain in each country in the region. In both Guatemala and Honduras, for example, peasant demands go beyond questions of land to the defense of ethnic identity. In Guatemala, where labor rights–as part of a broader human rights agenda–also take priority, negotiations between peasant organizations and farmowner groups resulted in the granting of a rural minimum wage for the first time in the country’s history.
In Costa Rica, the priority of the peasant alliances is to directly improve the position of small farmers in the market, and to participate directly in discussions with the government over the implementation of adjustment measures. In Nicaragua, the National Union of Farmers and Ranchers (UNAG) has prioritized political stability in the countryside, the defense of the gains made under Sandinista agrarian reform, and the elaboration of a coherent model of development.
In the three countries that went through an agrarian reform in the 1970s and 1980s, the removal of the state from rural-development programs has been noticeable. In Honduras the peasant movement has been atomized by the dismemberment of the cooperatives established in the 1970s and 1980s. Peasant demoralization made possible the rapid privatization of cooperative land in the banana-growing areas and the incorporation of many small farms–by 1992, more than 30,000 acres–by the banana transnationals. In Nicaragua, the reprivatization of the farms which were redistributed by the land reform is still a credible threat under the Chamorro Administration.
Small producers have yet to find their bearings in the new economic environment. They have not yet participated in the export sector in large numbers or to great advantage. The successful cases have occurred where the need for capital has not been a limiting factor, and where trade is guaranteed. Few cases exist, however, where peasants have had control of both capital and trade. If the region’s democratic process ever really flowers, small-farmer organizations will no doubt grow and strengthen. But in the near future, we are likely to see a real battle for the survival of the Central American peasantry.
ABOUT THE AUTHOR Edelberto Torres Escobar is a rural-development consultant based in Guatemala, and a contributor to the Salvadoran magdzine Tendencias. Translated from the Spanish by NACLA.
NOTES
1. Jürgen Weller, “La generación de empleo e ingresos en las exportaciones notradicionales agrícolas: el caso de los pequeños productores en Centroamérica,” in J. Weller, ed., Maíz o Melón? Las respuestas del agro centroamericano a los cambios de la política económica (San José, Costa Rica: OIT PREALC, 1993). 2. David Kaimowitz, “Las exportaciones agrícolas notradicionales de América Central: su volumen y estructura,” in Ana Beatriz Mendizabal and J. Weller, eds., Promesa o Espejismo? exportaciones no tradicionales del istmo centroamericano (San José, Costa Rica: CADESCA, 1992). 3. David Kamowitz, “Las exportaciones agrícolas notradicionales de América Central.” 4. J. Weller, “La generación de empleo e ingresos en las exportaciones notradicionales agrícolas.”
