New Internationalist

The Modern Way

Issue 99

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CENTRAL AMERICA [image, unknown] Growing rural landlessness

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The modern way
Large plantations growing export crops rather than local foodstuffs have shaped the lives of Central America's peasants for more than a century. Now, with the introduction of modern agribusiness, conditions for the rural poor have taken an unexpected turn for the worse. Roger Burbach and Pat Flynn investigate.


For decades, international experts have been analyzing Latin America's 'agricultural backwardness'. Most have argued that up-to date farming methods and new technology would steer Latin American agriculture on the path travelled by the advanced industrial countries.

Unfortunately, the change of the last few decades has meant only a deepening crisis of hunger and poverty for the vast majority of peasants in the countryside.

While export crops have boomed, local food crops like corn have stagnated as population increases. As a result staple food grains are imported and prices have increased dramatically. The root of the crisis, however, lies not in what is produced, but rather how it is produced: because agricultural modernization in Latin America means more than technological change. It also re-shuffles social relationships in a way that profoundly transforms people's means of livelihood and the very fabric of their lives.

In Central America agricultural modernization began with two main crops: coffee and bananas. In the late nineteenth century, in response to an expanding European market for what once had been a luxury drink, a new planter class moved into large-scale coffee production. The planters had close links with the new nation states freed from Spanish colonial rule. They enjoyed the benefits of state investment in railways and roads and had access to cheap credit. In addition, governments legalized the wholesale takeover of remaining Indian communal lands. New forms of coercion like the law requiring Guatemalan Indians to work a minimum of 100 days each year for the large landowners were also introduced.

At the same time, the US-based United Fruit Company acquired a vast network of banana plantations in Panama, Honduras, Nicaragua and Guatemala - buying up large tracts of the most fertile land. In Guatemala alone the company owned close to half-a million acres. The company built irrigation systems on its plantations, constructed railways, ports and road systems, and imported machinery and fertilizer. But it had no interest in developing the rest of the economy. United Fruit also controlled the country's only network of railways which ran straight from the plantations to the company port.

After the Second World War, Central 2 American governments began to actively promote modern agriculture and to encourage local commercial farmers. In Nicaragua, some of the country's most productive agricultural lands along the Pacific coast were grazing pastures until the government opened the region to cotton production in the 1950s with a massive programme of road construction.

In Guatemala, the government set up a National Agrarian Bank for state financing of agriculture - 87 per cent of government agricultural credit from 1964-1973 to finance crops grown for export. In contrast, the staple food crops of rice, corn and beans, grown mainly by small farmers, received only three per cent. Many of these modernization programmes were helped out by international financial institutions like the World Bank and the Inter-American Development Bank.

Along with the modernization drive came changes in the social order. New entrepreneurs took over from the old landed elites. Many are wealthy tenant farmers: in the early 1970s, 60 per cent of all cotton produced in Nicaragua and El Salvador was grown on rented land. The largest and wealthiest of the new entrepreneurs are agro-industrialists who grow, process and market commodities like coffee and cotton.

Modernization has also been accompanied by some social reforms. For instance, new legislation has quickened the breakdown of archaic labour systems where workers were permanently tied to estates. In El Salvador, the proportion of rural landless soared from 12 per cent in 1961 to 29 per cent in 1971. By 1975 it had reached 41 per cent.

Foreign investment too has changed and kept pace with the new developments. Today the reach of multinational agribusiness extends deep into Central America. Old-time banana companies such as United Fruit have been joined by a host of companies intent on capturing a profitable share of the emerging agribusiness system. Corporate giants like Pillsbury, Standard Brands, DuPont, and International Harvester are far more active in Latin America than in any other Third World region - over three-quarters of all U.S. agribusiness subsidiaries in the Third World are now located in Latin America.

The multinationals are shifting away from direct investment in agricultural production, where the danger of nationalization always lurks, to supplying Central America's growing market for agricultural inputs - fertilizers, tractors, pesticides, and processed food.

Under the former Somoza regime, Nicaragua was the main pesticide producer for the Central American Common Market and was known as the 'pesticide capital'. Through licensing agreements and direct investments, multinationals controlled Nicaraguan pesticide production. Few controls were placed on sales and labels gave little or no warning about the impact of pesticides on the environment or the dangers involved in their use.

Searching for new markets, US food processing industries rapidly expanded their operations in Central America in the 1960s. Even though the six countries of the region have a combined population of only 21 million, special financial incentives offered by both the US and local governments made the area especially appealing to foreign investors.

Through full-scale advertising campaigns, companies promoted expensive, highly processed 'junk' foods such as Kool-Aid, candies, gum and soft drinks. Although most of these processed foods are designed for the elite urban markets, many end up in the bellies of the poor. For millions on subsistence incomes, every penny spent on products like Heinz ketchup, Pillsbury cookies and Coca-Cola leads to further deterioration of already meagre diets. Although multinationals have diversified from directly owning land many foreign controlled plantations still exist. The Del Monte Corporation, one of the world's agribusiness giants with sales of over $1 billion, took over United Fruit's Guatemalan banana plantations in 1972. These plantations are the most productive in Central America, assuring Del Monte's position as a major force in the world banana trade. As Del Monte's chairman Alfred Eames mused, banana trees 'are like money trees. I wish we had more of them.'

Del Monte is Guatemala's largest single private employer and like United Fruit runs its plantations as an independent enclave within the country. Del Monte pays no tax on its lands and has only 9,000 acres under cultivation. The remaining 48,000 acres are grazed by company cattle, not to produce meat but to keep squatters off the property and to prevent the government from expropriating it as idle land.

Most of Del Monte's 4,500 workers live on the plantation itself, isolated from even the small company town of Bananera. The workers' housing is spartan and barely adequate, a far cry from the luxurious company compound. The only access to the outside world is the company-operated rail wagon, which no one can board without a special pass given out daily by the company office. There is a Guatemalan army post in the middle of the plantation.

The bulk of the workers were once peasant farmers who were forced off the land or were unable to survive by farming. Like other multinational banana companies, Del Monte pays slightly higher wages than local employees to ensure labour peace. Bananas are a highly perishable commodity and a work stoppage of even a day could mean the loss of hundreds of thousands of dollars in over-ripe bananas.

Still, wages are far from adequate. According to a recent study in Guatemala, plantation workers and their families spend an average 64 per cent of their income on food, clothing and fuel, and 17 per cent of the families do not make enough for a minimum healthy diet. Workers are paid on a piece rate basis and working conditions are arduous.

Guatemala: testing coffee beans. Photo: Peter Stalker
Guatemala: testing coffee beans.
Photo: Peter Stalker

However, the banana workers are relatively privileged compared to the miserable living conditions of the rest of the Guatemalan people. Most peasants cannot sustain themselves and their families on their small plots of land. So they migrate two or three times a year to harvest coffee, sugarcane and cotton on the rich coastal commercial farms.

In Central America as a whole, the living conditions of the poor continue to deteriorate as agricultural modernization proceeds. Formerly, plantation owners employed permanent workers, 'colonos', who had the right to till small plots of land for their own needs. Now modern farmers find it far cheaper to hire seasonal labourers only at planting and harvest time. Moreover, as land increases in value, farmers are reluctant to give subsistence plots to colonos when the same land could be used to grow lucrative commercial crops. In El Salvador, between 1961 and 1971 the number of colono plots declined by 70 per cent.

Small peasant farmers, in spite of their apparent independence, are no less vulnerable. Central America is replete with stories of the violent seizure of peasant plots and small farmers who physically fought to hold on to their lands in the face of expanding commercial farming.

In Nicaragua, under Somoza, thousands of peasants in the rich coastal province of Chinandega lost their lands during the cotton boom of the 1960s. Many of them had farmed the land for decades without any formal title. Suddenly entrepreneurs, many of them Somoza s friends, produced registered ownership papers. When the peasants refused to abandon their lands, they were evicted by the National Guard.

It is not only blatant force which pushes peasant farmers into the ranks of the landless. Many small farmers have lost their land in the competitive struggle which characterizes commercial agriculture. Larger and wealthier farmers scoop up the best lands and have the capital and credit to finance expensive machinery. Small farmers, on the other hand, have the least fertile lands, without irrigation facilities. They have neither the collateral nor political clout to qualify for credit.

The options for the many thousands forced from the land are few and bleak. Some are drawn to the larger towns and cities in the hope of finding work. Others migrate from region to region searching for seasonal farm work. People who desperately need jobs are forced to accept rock-bottom wages and inhumane conditions.

The lack of unions and peasant organisations also plays a crucial role in stacking the deck against farm workers. Only a tiny percentage of agricultural workers are unionized. In Guatemala, out of an agricultural workforce of over 300,000 only 12,000 workers were formally members of unions in 1975.

Farm workers also have few legal rights. In Guatemala, the labour code prohibits strikes during harvest season - the only time a farm workers' strike can be effective. In El Salvador, rural unions have no legal status whatsoever. Without effective unions, farm workers have no lever to bargain for better wages and working conditions, for job security or for a work day of reasonable length.

Despite these obstacles, the campesinos of Central America are organizing. In Nicaragua, rural workers and peasants in the Sandinista Rural Workers Association were an important force in the overthrow of the dictatorship. In Guatemala, in early 1980, over 50,000 workers on the coastal plantations carried out a two-week strike which won more than a doubling of wages for all agricultural workers.

Such movements are increasingly demanding higher wages, shorter working days, better working conditions and the recognition of rural unions - instead of land redistribution and agrarian reform.

These new demands for the first time unite the concerns and interests of the rural poor with those of urban workers in opposition to existing regimes. Such an alliance could become a powerful force for social change in Central America.

Adapted from Agribusiness in the Americas by Roger Burbach and Patricia Flynn. See also Worth Reading.


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