Nicaragua
The <i>“Revueltos”</i>: Just the Tip of the Iceberg
Envío team
In recent weeks, thousands of "revueltos" have taken over farms, villages and cities and blocked roads and highways throughout the country. The aim of these former contra and Sandinista soldiers, most of them of peasant origin, who joined forces after months of separate operations as "recontras" and "recompas," is to pressure the government to keep its promises to ease their re-entry into civilian economic life. The government insists that it has made significant advances in complying with the original accords, but each new action has forced it to negotiate anew.
Is the government generating a vicious circle of demands-agreements-noncompliance-demands, which could lead to a social explosion of far greater proportions? Or will it really be able to address the roots of the revueltos’ problem and bring them into its national development project?
The roots lie in the devastating and recessive impact on peasants and agricultural workers of the stabilization and structural adjustment measures themselves. The revueltos’ demands are thus a genuine expression of the most deeply felt needs of the rural population as a whole, but these needs have only found a place in the national debate through the drastic actions of this unorthodox rebel movement.
Minister of the Presidency Antonio Lacayo and former President Daniel Ortega would have us believe that the lack of "success" in assisting the reinsertion of thousands of former combatants is just the government's lack of operative ability and/or ineptitude. COSEP, the rightwing business association, and like-minded politicians, in turn, promote the idea that the revueltos are nothing more than a "Sandinista conspiracy" to blackmail the government. They, it seems, cannot even imagine the peasantry and rural unemployed having any initiative of their own.
The real crux of the problem, however, is that the government's current economic policy excludes the new social subjects who emerged as a result of the transformations of the 1980s. Up to now the government has clung to the absurd belief that, by coopting a few former contra leaders and offering limited participation to the Farmworkers Association (ATC) and the Union of Farmers and Ranchers (UNAG) in the privatization of rural state enterprises, it could control these sectors and proceed with its exclusionary economic project.
Clearly, these half-measures have not even begun to resolve the problem of rural poverty, much less to adequately respond to the more organized and militant peasants and agricultural workers. It is precisely these two groups, key actors in the military conflict of the 1980s, that are engaging in a struggle for survival, using the organizational experience they gained during the last decade.
The National Peasant Coordination, a new body that has brought together ex-contras, former army and Ministry of the Interior troops and UNAG, defines economic democratization as the centerpiece of its struggle. For these sectors, democratization would be concretely expressed in a more extensive agrarian reform, greater access to credit and support in marketing their agricultural products. The immediate expression of democratization for the ATC would be the alleviation of runaway rural unemployment. Its current mobilizations are aimed at pressuring the government to implement emergency job programs.
How, in the country's current economic context, can the rural recession be turned around and these sectors massively incorporated into the national development project? Today, more than ever, Nicaragua has exceptional conditions for carrying out an equitable development project; along with having the greatest relative abundance and least concentrated distribution of agricultural land in all of Central America, it also has the strongest peasant and farm worker organizations.
This article contributes elements for defining an agricultural policy whose focal points are the reactivation of production and a frontal attack on rural poverty. The first part analyzes the current situation of national agriculture and the second proposes alternative policies and an institutional framework in which to implement them.
Another year of recessionThe explosion in the countryside is closely related to the terrible results of the 1991-92 agricultural cycle. According to official statistics, 1991 agricultural production posted its sharpest decline of recent years (-6%), dipping to the production levels of 30 years ago.
The recession has been severest in the country's Pacific plains. The poor cotton yields in this cycle were the weakest link in reactivating capitalist agroexports. After nearly four years of efforts to pull this crop out of its stagnation, the government and most growers have now decided to throw in the towel on what has long been the country's second most important crop. The delay in reaching this consensus was very costly for the country, as it diverted state resources and energy away from the task of supporting production conversion in this region.
Sugar cane is another important traditional agroexport crop and a major source of seasonal employment in the Pacific. After several years of reactivation, falling international prices and a cut in the US sugar quota make its future bleak.
Only bananas seem to be a viable alternative for capitalist agroexport recovery in this region. Any attempt to pull off this conversion, however, will meet with serious obstacles. Substantial investments are needed in plantation and irrigation infrastructure, as is technical knowledge about crop management. Moreover, the main market for Nicaraguan bananas in recent years has been Europe, particularly Belgium and the Netherlands. These two countries will become full members of the European Common Market this year, thus adopting the European Community's trade and tariff policies. For all purposes, these policies will force Central American banana producers out of that market.
Peasant production of sesame fell for the first time in the last four years, even though international prices were fairly good. The main factor behind this drop was the lack of liquidity in the peasant economy, which also caused negative repercussions in basic grain production in the Pacific region.
Nonetheless, the area planted nationally increased in 1991 over 1990, as did the areas in basic grain production, although levels are still far below those of recent years (see Figure 1). This expansion is due to non-economic factors such as the coming of peace to the so-called agricultural frontier zones and the redistribution of lands to demobilized Sandinista and contra troops over the last two years. This expansion could have been even greater were it not for the lack of credit available for reactivating peasant farms abandoned during the war. This limited recovery in peasant areas on the agricultural frontier compensated for the strong contraction in basic grain production in the Pacific and the drought in the country's central dry zone.
Coffee cultivation and cattle ranching in the country's central regions have continued their slow reactivation, particularly at the medium and large production levels. This trend has not yet translated into greater export volume: the most recent coffee crop (875,000 quintals) is larger than the disastrous 1990-91 season (700,000), but still far under the levels reached in the early 1980s. Similarly, beef exports for the past year dropped significantly (20%) in relation to 1990, but the recuperation of pasturelands and greater retention of cows indicates that the national cattle stock is being reconstituted.
Both coffee and cattle could experience a sustained expansion over a period of several years, as long as the fall in international prices does not continue. The possibility of improved prices seems more feasible in the cattle sector, given the recent reopening of the US market for Nicaraguan beef.
This differentiated development by geographic zone, crop, and social and productive sector also shows a close link with the structural adjustment policies being implemented in the agrarian sector. Their impact on credit and agricultural prices is pulling the rug out from under peasant production and speeding up distribution of the existing resources in favor of private business.
Anti-Peasant Credit PoliciesRestrictive credit policies are one cause of the country's current recession. The bank's new credit conditions, which include presenting agrarian land titles, and high interest rates have slowed the demand for credit by peasants. Requests fell by half from the previous year (see Figure 2).
The increase in loan paybacks, particularly by small and medium farmers and the state enterprises being privatized, has meant a much greater money flow from producers back to the bank than in previous years. Net credit—cash out less payments back—has fallen 40% in relation to 1990 and represents barely a third of 1989 levels (see Figure 3).
Small and medium farmers, who produce for domestic consumption but also for agroexport, have suffered the greatest cuts in credit access. Their participation in the overall distribution of short-term credit has been reduced from 52% in 1989 to 36% in 1991, while that of the large private farmers has increased to 55%. They have gotten the lion's share of the credit previously earmarked for the state enterprises (see Figure 4).
The new credit rules strengthen a trend in which the peasantry, particularly the poorest peasants, simply cease to be subjects of state financing. This retrenching of the state banks towards medium- and large-scale production became evident at the end of 1991 when the National Development Bank closed 16 branch offices in small towns throughout the country's central regions.
The recently established private banks will also emphasize medium and large farms, given that they have very favorable investment and recapitalization prospects. The void in which the peasantry has been left has been filled to some extent by different nongovernmental and other international organizations able to grant small amounts of credit or outright subsidies. Additionally, traditional financing mechanisms such as usury credit, futures sales and sharecropping—whose cost to the peasantry is well known—are coming into use again.
"Free" and falling pricesThe cash crisis in the peasant economy due to lack of credit worsened with the fall in prices of crops for domestic consumption and a consequent reduction in peasant income (see Figure 5). The elimination of the price-regulating role played by the state grain agency ENABAS has favored a fall in grain prices to levels far below international prices. Prices to producers of corn and rice have fallen 30% and 10%, respectively, while that of beans has fallen a full 66%. Private commercial capital has also paid no attention to storing basic grains and has been unable or unwilling to link up with national production to effectively take over from ENABAS.
The trade opening and consequent massive imports of these products from other Central American countries at prices much lower than in previous years have affected other peasant products for domestic consumption such as fruits, vegetables and plantains. Based on sample surveys, prices to local growers this year have fallen as much as 60% for yuca and 53% for plantains over last year's prices. Only sesame has shown an upward swing, of 33%.
Finally, the dismantling of the state's foreign marketing agencies has not brought better prices to the peasantry for export products. Privatization supposes that intermediary costs will diminish, and thus the price to the producer will increase. What seems to have happened, however, is a mere change of owner in the lucrative agroexport business, and the only beneficiary has been private big business.
To illustrate, the average coffee price paid to small producers in Carazo fell by 50%, though international prices went down by 30%. The new private intermediaries absorbed the difference.
The high short-term profitability of agroexport production is facilitating the reactivation of old networks of financial and commercial intermediaries that existed before 1979. Thus, the return of commercial capital gives the dominant groups the possibility of once again seizing control of the key economic links and absorbing the peasants' surplus production.
To sum up, restrictive credit policies and the wholesale freeing up of agricultural markets has meant less access to financing for the peasants and depressed prices for their products. This combination has worsened their levels of decapitalization and indebtedness, seriously reducing their productive capacity and income levels.
Subsidies for big businessWhile the government has strictly applied free market rules to the peasant sector, it continues to significantly subsidize large private business.
First, the successive currency devaluations—beginning in 1988 and including the 400% devaluation of March 1991—have, given the way price readjustments favored agroexports, systematically constituted a transfer of resources from the peasant sector towards the private agroexport sector.
Second, the new credit policy, in addition to meaning more advantageous credit distribution to large farmers, has also functioned as an instrument of unequal subsidy distribution. Examples include the preferential debt treatment given cotton and coffee growers' debts with the March 1991 devaluation, and the recently announced new debt restructuring for these same growers.
Third, marketing and pricing policies have benefited significant sectors of large production. While the peasantry competed in disadvantageous conditions with imports from around Central America, large sorghum and rice growers enjoyed national prices relatively protected from the international market through restrictions on the importation of rice and yellow corn.
These unequal transfers among different agricultural sectors, associated with the overvaluation of the córdoba, have given a shot in the arm to the most inefficient sectors of agricultural capital. The exceptional treatment, outside the market rules so frequently and religiously invoked, has only slowed down a general and sustained productive conversion of the agricultural sector. In addition to artificially prolonging the life of economic sectors that have contributed little to the national economy, the transfers have deprived small and medium production from making a clear contribution to economic reactivation.
Resource concentrationThis phenomenon has speeded up social differentiation in the countryside, touching off a process of resource concentration that is reversing the "democratization" of agriculture achieved from 1979 to 1987.
The ATC and UNAG as well as demobilized combatants from both sides have urged forward a de facto agrarian reform, and have benefited to some degree from the privatization of state cattle, cotton and coffee corporations (HATONIC, AGROEXCO and CAFENIC). It is undeniable, however, that a wealthy stratum of large businessmen has been reconstituted, able to increasingly concentrate land, cattle and credit in its hands, as well as control marketing and processing networks.
This concentration process, which began with the first structural adjustment programs in 1988 and continued with the "Sandinista piñata," has accelerated with the new freeing up of prices, sale of some state farms and return of others to their former owners. It is currently feeding off the impoverishment of the poorest peasants, who are decapitalizing, selling their lands and returning to sharecropping, tenant farming or wage labor for better-off economic groups. All indicators suggest that the collapse of the peasant economy is increasingly giving way to this economic polarization.
In only a few short years, the inability of some major agrarian reform beneficiaries to become economically viable has created the conditions to roll back the reform and reconcentrate land in the hands of a few. This process has already begun with the sale of land by cooperatives and even by demobilized combatants who only recently got it. The most indebted cooperatives and state enterprises, as well as new landowners unable to stabilize their situation due to lack of resources, offer a potentially enormous source of land to be recovered within two or three years by the large private sector.
In conclusion, the recession and poverty that have taken hold in the countryside over the last several years is getting far worse.
While extreme poverty levels affect ever greater sectors of the peasantry, there has been no productive "takeoff' as would be suggested by the concentration of land and resources. To the contrary, the amount of land lying fallow has increased, and unemployment has jumped dramatically. It is precisely these conditions that have given rise to the revueltos.
Is there an alternative?The root problem in both the short and medium term is how to incorporate both peasants and agricultural workers in an alternative strategy of agricultural reactivation and conversion of the country's productive structure. The implementation of this alternative strategy also requires defining a new institutional framework to make it operational. The concrete negotiation mechanisms between the state and the diverse social and productive sectors in the countryside must be clearly identified, together with the areas of state intervention in the agricultural sector. The alternative also leans towards a redefinition of the state's role and its link to civil society.
What would be the basic terms of an alternative development strategy incorporating the popular peasant sectors? What policies would make up such a strategy? And can they be implemented within the current institutional framework, or is another one necessary?
Braking the recessionAn agricultural reactivation policy must respond differently to the problems in the country's different regions and among the distinct social and productive sectors. There is no single recipe for a complex problem that, while sharing basic elements such as the fall in prices and lack of liquidity, demonstrates structural differences linked to geographic location, access to land and infrastructure, and levels of capitalization and technology. In general terms, an alternative policy would focus on braking and then reversing the recession in the peasant economy, and containing the rollback of the agrarian reform.
The government's policy to respond to the crisis in the Pacific, particularly the western region, has so far been to insist that bananas and nontraditional crops such as melons are the way out of the cotton crisis. In reality, the short-term potential of expanding bananas and nontraditionals is insufficient to respond to the sheer magnitude of the problem caused by unemployment in the Pacific. The response goes beyond the search for other "miracle" crops to replace what has long been called "white gold." The answers to the crisis are multiple and necessarily involve the region's diverse social and productive sectors.
Among those sectors, the peasantry—whether traditional, or benefited by the Sandinista land reform or by land in the last two years—has the short-term potential to respond because it has diversified its production in recent years, incorporating export crops such as sesame or yuca, and improving its technological level. Thus, a strategy of promoting alternatives directed toward these sectors would contribute to immediate productive and employment solutions.
The current tendency in the country's central highland region, on the other hand, is toward small agricultural "takeoff" points in the large coffee and cattle sectors, while the peasantry in this region is undergoing a very slow recovery. In these areas, where thousands of ex-combatants with neither land nor resources are concentrated, the economic crisis translates into the country's highest levels of social and political conflict.
The solution here cannot come only from the big cattle and coffee sectors which, despite being affected by low prices for coffee and beef, have been able to reactivate their farms and invest. "Pacification" and sustained growth must be based on a massive rehabilitation of the production structures affected by the war, decided support for the sector newly benefited with land and a broadening of the agrarian reform.
The advantages of this particular peasant economy lie in its ability to offer a short-term productive response, with possibilities of contributing growing volumes of basic grains, coffee, milk and beef. An increase in basic grains prices is thus determinant to offering income and investment possibilities.
Institutionalize participationThe significant shrinkage of state participation in financing, research and technical assistance, along with collecting, processing and marketing crops, has created institutional voids in the agricultural sector. The magnitude of the state's role in the 1980s makes this reduction quite abrupt and the holes left have been very unevenly filled by the private business sector, nongovernmental organizations (NGOs) and popular initiatives such as UNAG's peasant stores.
Private big business has partially replaced the state in high-profit, short-term economic activities such as agroindustrial processing, foreign marketing of agricultural products and supply of agrochemical products. In some cases, it has even attempted to recreate its 1970's purchasing and marketing links with peasant production. However, this has not happened with financing, research and technical assistance services. The National Development Bank (BND) and the Ministry of Agriculture and Livestock have substantially cut back their coverage and only some NGOs such as CEPAD and the John XXIII Institute have provided this kind of service in some zones. This can be seen clearly in basic grains, as the withdrawal of ENABAS has not meant an automatic reactivation of old intermediary networks. As mentioned above, the consequence has been a dramatic fall in grain prices.
In this context, the strategy implemented to date by UNAG has had two prongs. The first is to try to prevent even greater disarticulation of the roles previously played by the state (BND and ENABAS), but it is only slowing, not stopping, its forward motion. Second, UNAG has also attempted to quickly consolidate business forms of organization to compete with private capital. Within this logic comes the effort to strengthen ECODEPA, the struggle to gain access to processing plants (slaughterhouses, coffee farms, sesame processing plants), the proposals to buy silos from ENABAS, and a project to form a Peasant Bank that would fill the gap created by the departure of the state banks.
The ATC's strategy, given the dismantling of the state sector rural enterprises, has been to exact the highest possible share of the privatized state enterprises, through both negotiation and takeovers of farms given back to their former owners. The ATC has obtained sizable shares in CAFENIC, HATONIC and AGROEXCO, with which it has formed the Area of Workers' Property (APT).
Nonetheless, ATC's participation in the privatization process took a back seat, at least initially, to buying cattle, machinery and existing infrastructure. The problem is that it leaves the APT economically strapped from the outset. The ATC has also decided to preserve, with very few modifications, the old form of business organization of its new enterprises. The high administrative costs of this structure relative to other forms of organizing production in the agricultural sector are another big disadvantage. This form was viable in the 1980s only because of the preferential financial treatment and technological assistance from the then-Ministry of Agricultural Development.
Thus we see that the reduction of the state has not been compensated for by new "institutions" springing from civil society. The loss of social regulations by the state has not been replaced with new participation in the concertación forum, which retained its formal character. All of this has been a detriment to the interests of the great majority of peasants and agricultural workers, dividing them and weakening their capacity to economically resist the structural adjustment. They have not gained greater participation in determining the path of the government's economic program.
A genuine alternative development strategy requires new institutions whose focal points are renovating the state and creating spaces for democratic participation and organization in the economic terrain. This new institutional model should be built gradually, and the state's role should be to support and promote sectoral and local organizations that can slowly assume a greater role in administering credit, generating and distributing technology, and processing and marketing their products.
Alternative credit policyThe credit program announced by the government for the 1992-93 cycle will not be able to contain the generalized recession in the agricultural sector. It can be predicted that, as in last year's cycle, what has been programmed is far under what is actually financed and thus ends up being a sort of mirage to calm popular demands at the moment of concluding negotiations. In the 1991-92 cycle, only half of the amounts programmed were actually financed.
The amount we would recommend for the peasantry's credit portfolio represents a third of all programmed by the BND for this year. But the number of recipients should increase by more than 100%, since the peasant recipients would be more than 100,000 and the BND currently has only some 45,000 clients.
Financing Methods. The methods of financing to be promoted should be substantially different than the BND's historic practices of rigidly defining the crops it will finance, the credit amounts and terms of repayment. The flexibility that could be achieved is the only valid recipe for responding to the complexity of the situation. The BND cannot serve peasant groups with credit programs by crop, because this corresponds neither to productive structure or credit needs. The different aspects that an alternative policy should take into account are:
* Participation of peasant groups in defining financing methods in a framework of credit ceilings and a range of possibilities (land area, crops, time periods and others) established on a local basis;
* Assignation of small amounts per family to permit the greatest coverage possible while reducing the recovery risks;
* Association of bank financing with maximum utilization of self-financing;
* Diversification of crops and activities to be financed to give producers the option of choosing the most advantageous economic alternatives;
* Definition of amounts based on real monetary costs, according to the thriftiest technologies.
Short-term Credit. The following are some ideas for credit that would generate immediate productive employment and avoid an even greater recession than in the 1991-92 cycle.
* "Emergency productive credit" would be earmarked partly for cooperatives and small indebted producers from the Pacific and dry central zones, who have suffered drought and will be ineligible for credit according to the BND's current lending parameters. It would also go to groups recently provided land or who have taken over farms. This emergency credit consists of a minimum package for producing just under two acres per family of sesame, peanuts, beans or corn, depending on the location. It takes into consideration the financing the cost of seeds, fertilizers and soil preparation services. Parallel to this, the government could assist these peasant families with food through existing networks such as CIAV and CEPAD until the crops come in.
* "Animal retention on peasant farms credit." This package attempts to limit decapitalization through the sale of breed cows in the cattle-raising peasant sector. By providing the producers greater liquidity, they could put off discarding animals for a year to get more calves and thus increase the national stock. We propose retaining a ceiling of three animals in 20,000 small breed farms.
* "Basic 'mountain' grains credit." The lack of liquidity in the country's central mountainous regions limited the increase in basic grain production in the last agricultural cycle. Small amounts of credit should permit greater production and better income in the short term. Prices for grains—corn and beans—to supply the domestic market as well as exports to the rest of Central America must rise, however. This credit would be earmarked for "traditional" peasants, those who have recently been given land and repatriates. The basic amount will assure five months of sustenance for a family of six.
Special Programs. These longer-term credit packages are aimed at providing appropriate infrastructure and improving crop quality.
* "Animal traction and transportation credit." This consists of oxen for the Pacific region, to partially replace the use of machinery and thus reduce production costs. It would be directed primarily to the cooperative sector, where mechanization services prevailed in the last ten years, as well as to those benefited by land in the 90-92 period. In the mountainous zones, the financing of mules is closely linked to the reactivation of coffee cultivation.
* "Rehabilitation of peasant coffee cultivation credit." This credit would support the recovery and renovation of small coffee farms in the country's most mountainous regions (Matagalpa-Jinotega), which to date have received no assistance from the funds going to coffee cultivation nationally. This credit package should be linked to acquiring equipment, such as pulping machines. Two separate packages are proposed for renovating about an acre per family, depending on whether the renovation is traditional or semi-technified.
* Cattle credit for the country's central regions. This is credit for families to acquire cows or calves, which would allow them to begin to make use of available pasture land. This credit is aimed at former contras and ATC members who have recently received land—particularly those benefited by HATONIC pasture land—as well as the poorest small producers. This credit would make it possible to slow their current tendency to decapitalize, rent their pasturelands or even sell parcels.
It should be pointed out that the HATONIC farms recently converted into the Area of Workers' Property (APT) have not received credit for two years and are in an advanced state of decapitalization: some 30% of their stock is gone and many posts and fences, not to mention the forests, have been dismantled for firewood and charcoal. In turn, agricultural workers and former contras who received land have had to sell off any cows they got with their land and are now facing great difficulties in consolidating their production units. It is estimated that, if the current policies continue, more than a third of this sector will be forced to sell even their land within two or three years.
* "Funds for colonizing remote mountain areas credit." In a manner complementing the other programs, the repatriates and demobilized with farms that were completely abandoned during the war should be assisted, as should those who have decided to try to recolonize some of the country's more remote mountainous areas. To permit effective rehabilitation of these farms, we propose a basic package consisting of two cows, a mule, zinc roofing, along with a basic subsistence package for one year.
* "We're going to our land credit." Targeting the sector newly receiving land, this package aims at moving these families to the land they have received. It consists of financing for roofs, rehabilitation of basic infrastructure, including wells and electrical facilities, and fence repair. This credit could be promoted in the context of a massive mobilization that contemplates, among other things, activating short-term productive and organizational alternatives; promoting more profitable crops and technologies; moving to the farms; investing in infrastructure and permanent crops; and the National Plan for Individual Titling, which will be explained further on. This mobilization should join forces with the APT enterprises facing similar profitability problems and which may need alternatives that lean toward "peasantizing," rather than structures that continue to perpetuate the old APP in new forms.
Financial intermediationThe remodeling underway in the national banking sector implies that credit expansion in the countryside must be based on new financial actors agreeing to assume the function fulfilled for the past decade by the BND. Within the current logic of financial restructuring, the BND—as well as the new private banks—will continue to marginalize the peasantry, satisfying only the credit needs of the most comfortable sectors involved in agroexport production.
In the last two years, the peasantry, particularly the poorest sectors, has received less and less state financing due to the state's new credit rules. While some were able to obtain small donations from different NGOs and international organizations, others have had to turn to usury credit, sharecropping and futures sales to get out of their acute cash bind. None of these options are sufficient to avoid the recession among the peasantry. With many foreign aid donors questioning the old subsidy scheme, even less aid can be expected in the future.
UNAG's solutions do not appear to be sufficient either. UNAG's participation in the departmental credit institutions did not impede their weak management of the credit portfolio. And UNAG's plan to create a Peasant Bank, if it has to function with the same rules of profitability, would not risk financing the peasant sector.
A strategy of expanding credit coverage to those sectors and areas abandoned by state policies would have to be based on making the fullest use of financial intermediation for the greatest possible spectrum of organizations with a local presence, thus complementing the use of the BND's installed capacity. The BND could even play a key role in promoting alternative credit organizations, granting them seed money and offering technical assistance. This is not foreign to the BND's experience; BND helped promote the formation of rural credit cooperatives in the 1970s.
A new financing network could include those old cooperatives, the newer units combining productive cooperatives (known as UCAs), peasant stores, national or regional NGOs, producer associations and ATC union groups. The success of this framework, which should be more decentralized than in the past, lies in the social cohesion of each group and its degree of participation in the distribution, management and recovery of credit.
Agricultural researchThe government's policy has centered around transferring its own capacity for technological experimentation and improvement to the private sector, so as to reduce state spending. But this is taking place at the same time that the country's agricultural production systems are reeling from their rapid and forced submission to the framework of an "economy without subsidy." Precisely when there is most need to generate and distribute new technological patterns adapted to the new economic context, the state's privatization policies take this capacity away.
The recommendations of a recent joint mission of the World Bank, Inter-American Development Bank and Food and Agricultural Organization are pertinent in this context. They refer to the need to bring the state's technological support for small and medium producers together into a new research and extension institute. Such an institute would be called upon to play a key role in supporting the conversion of peasant production, in coordination with NGOs, local peasant organizations and universities.
Alternative technologies should be based on an authentic movement of "peasant innovators" searching to bring down costs by using animal traction, greater efficiency in the use of purchased inputs, and new fertilization methods. This last element should not be limited to promoting "organic fertilizer," but should spring from more rational use of chemical fertilizers and making better use of the potential agriculture-cattle ranching link. It is also essential to look for a broad range of varieties, as a key condition for adapting to the existing diverse agroecology.
On the Pacific plains, the need for productive conversion is the greatest. It is also the region with the best conditions to carry this out. Those conditions include soil quality and rainfall, the country's best road infrastructure and the largest urban population.
In the country's central regions, the challenges are to promote crops and technologies in economically viable and ecologically sustainable production systems that break with the logic of indiscriminately hacking back forests and allowing soil erosion that prevailed as the agricultural frontier was pushed back during the 1960s and 1970s. The ecological damage that often accompanies current agricultural production, particularly on the most fragile soils, makes the challenge of new technologies and crops that preserve natural resources more urgent.
In both regions, export crops—traditional or nontraditional—need to be introduced or developed. Some of these crops could be:
* Sesame in the Pacific, and potentially in some of the dry central zones, helping the "historic" peasant sector find the most advantageous varieties to plant and teaching basic management of the crop.
* Root crops such as yuca and quequisque, through species improvement and learning packing techniques. These crops could be grown for the US "ethnic market," and could compete favorably with similar production in Costa Rica. It could be developed in both of the country's two main agroecological regions. The Pacific would have the additional advantage of access to existing infrastructure. Moreover, yuca could serve as feed for the national cattle and poultry stock.
* Plantain varieties could offer a similar alternative in the Pacific's most humid zones, by taking advantage of access to infrastructure and the relative absence of sigatoka-a plague that affects many of Central America's exporters.
* Cocoa is a nontraditional product that has been developed in the country's central peasant zones virtually without state assistance. A "monilia" plague is currently destroying cocoa zones such as those in Matiguas-Río Blanco, but this can be controlled by adopting better management techniques and by planting varieties that are more resistant. Cocoa could be exported to other Central American countries as well as to markets outside the region.
* There are also alternatives for the peasantry in basic grains, particularly with the opening of the Central American market. Both red and black beans could be highly profitable export crops in traditional zones of bean cultivation, especially in the central regions. Non-irrigated peasant rice could supply the national market, bringing a net foreign exchange savings to the tune of $6 a hundredweight. Together with large-scale irrigated rice production—less susceptible to climatic variations—it could play a complementary role in stabilizing supply.
Prices and marketingThe freeing up of markets and the privatization of state marketing and agroindustrial processing enterprises have affected in a differentiated way the prices peasants receive for their basic grains and export products such as coffee and sesame. The key to this differentiation has been the speed with which private intermediary networks and the processing of export products have been reconstituted. Private enterprise has not filled the hole left by the withdrawal of ENABAS in the area of basic grains, causing a sharp fall in basic grain prices.
The government has established a fixed price range to stabilize basic grain prices in the country. This system, which takes international grain prices as a reference point, is being used in other Central American countries in the context of freeing up the regional agricultural market.
However, price stabilization is being looked at primarily from the perspective of final prices to the urban consumer, and will be regulated through grain imports. In other words, if prices are very high, the government will import or facilitate imports by private business. But if prices are very low, the government will not import or authorize imports. In practice, this means that the government feigns ignorance of the fall in basic grain prices to producers during the harvest season, when the market is flooded and prices register a substantial seasonal decline. This promotes merchants to speculate with this abundance and the peasantry's acute cash shortage.
Local organizationGiven that state intervention in the last decade was supported by national enterprises without peasant participation, peasant producers lack the managerial capacity to handle their own intermediation mechanism in the short term. Thousands of peasants in the country thus have no economic alternative if ENABAS does not receive the credit necessary to buy grains at harvest time and thus apply its pricing mechanism to benefit the producers. Alternative marketing mechanisms, managed by producers, also need to be promoted. Peasant stores, for example, could establish agreements with ENABAS.
UNAG's alternative to compete with the private sector has concentrated on establishing a marketing and processing model inspired by the one the Sandinista state used in terms of business character, degree of centralization and capitalization level. The problem lies in the fact that UNAG's intermediary costs are higher than the average of private enterprises because of a large administrative apparatus, additional transportation costs due to centralization and the lack of administrative experience. By the same token, the capitalization needed to compete through greater volume tends to even further lower the prices to the grower, or raise supply prices. Even if it generates a lot of capital and experience, this organization will cannot offer a real competitive alternative to the bourgeoisie without a significant and continuous flow of outside subsidies.
For this reason, UNAG is framing this alternative in medium-term processes that will move away from state and institutional schemes such as ECODEPA, its national peasant store project, towards local peasant organizations that participate in collecting and storing, processing and marketing. Thus, the networks in crops such as coffee and sesame need to be decentralized, starting with small territorial groups of cooperatives and producers, perhaps around an organization whose foundations already exist, such as the agricultural cooperative units, or UCAs.
It would initially be a question of promoting local experiences with small-scale equipment—processors, storage units—that would allow for grassroots oversight and participation. In the case of sesame, processing could be limited at first to cleaning and classifying. The location and size of these units would have to be selected according to each zone's potential production level, procuring, as much as possible, to reduce transportation costs to the producers.
National initiatives similar to ECODEPA are worthwhile for exportation, given that greater volumes are needed to assure profitability, but should be based on more direct relations between the exporting firm and the local organizations.
The success of a peasant processing and marketing alternative will depend on its ability to make full use of a truly decentralized organization, with smaller scale management that allows for lower costs, greater efficiency, better use of the local work force and fewer links in the chain. This assumes greater real participation by the peasantry and guarantees greater retention in peasant hands of the fruits of their labor.
Land policyAn alternative land policy should look to legally guarantee all structural changes in land tenure effected during the Sandinista years and in the first two years of the UNO government. This is a recommendation from the joint FAO, IDB and World Bank mission, which can hardly be labeled "extremist" or "anti-private property." In contrast to their recommendations, however, continuing land redistribution is needed in the short term to combat unemployment in the Pacific region and ease social and political tensions in the country's central zones. It is also a condition for reorganizing national production in a way that would allow this sector to grow.
The legalization of all peasant and worker property has been a generalized demand by those sectors who received land through the agrarian reform or the privatization of state holdings, and is particularly loud in those cases where properties are still in litigation or are held as a result of spontaneous land takeovers in the last two years. These demands include some cooperatives established under the Sandinista administration that never got their deeds, but are mostly coming from peasants and ex-combatants on both sides with farms assigned to them or taken over for more than a year, as well as the "colonos" from the reformed haciendas in Boaco and Chontales.
This legalization would ease the pressure that former owners and other groups demanding land are putting on the peasants currently in possession of these lands. When it is a question of farms that have been taken over, compensation for the former owners or a negotiated agreement between both parties is the only feasible solution.
While legalization does not resolve the viability of these new production units, which face the fundamental challenge of turning a profit, it may well give greater "institutionality" to the correlation of local forces and/or negotiated agreements between political and union groups. It is an important condition for an authentic appropriation that could lead to the new owners' sustained investment in labor and capital.
Individual deeds—such as those given in the past to the urban settlements—take on special relevance, particularly for the Sandinista production cooperatives. After six or more years of existence, a majority of those in such cooperatives still do not feel that the land or organization really belongs to them. This is demonstrated by the fact that they have not gone to live on the land received nor have they really invested their labor.
The internal readjustments carried out in this sector beginning in 1988 have not been sufficient to make the cooperatives fully viable. In spite of efforts at "peasantization"—diversifying production, abandoning highly technified models used previously, greater self-financing, partial or total parcelization of collective farms—the cooperatives face real limitations, expressed in a recession and increasing indebtedness.
In addition to the legal issue and the attempt by former owners to recover their lands, there are also other internal and external obstacles to economically consolidating this sector without subsidies so it can resist the offensive of large landowners. Democratization of the cooperative movement is an unfinished process, with only limited advances. If obtaining a title or deed in 1990 relatively diminished the sense of insecurity, this does not guarantee, in the eyes of many, the lasting possession of land, nor is it sufficient to contain the rollback of the agrarian reform.
Privatize to the popular sectorsThe agrarian reform is another important pivot point of both a short- and medium-term policy. In immediate terms, land redistribution permits land values that are much more beneficial to the country than lands for large-scale production, which, due to the profitability crises, use only extensive production or are left partly idle. Agrarian reform is the best way to resolve the employment problem and increase production. A study of several cases from last year’s cycle in the country’s western cotton-growing region provides convincing evidence that the transfer of farms from AGROEXCO to former agricultural workers or demobilized combatants has had a positive impact on production. In the country's central regions as well, the idle lands of big cattle ranches affected by the decimation of the national cattle herd could be broken into parcels and used advantageously to produce basic grains during the move towards intensive production of grains, plantains and root crops as well as nontraditional crops such as cocoa and ginger.
In the Pacific region, the land demand comes mainly from seasonal or full-time farm workers made unemployed by the cotton crisis; former state farm workers who did not receive land through the agrarian reform and are not among the new worker stockholders of the privatized units; demobilized combatants; and unemployed farmhands on private properties in general. Some 4,000 families have recently become involved in farm takeovers and this number will grow as the planting season nears. In the country's central regions, more than 10,000 families of demobilized contra troops who did not receive land are demanding a parcel, along with an equal number of repatriated refugees.
In the longer term, agrarian reform can contribute to converting the national structure of production, in that it constitutes an alternative to the low investment levels foreseeable for large landholdings. In contrast to what has taken place since 1990, the redistribution of lands must be conceived of as more than a mere safety valve for the country's socioeconomic problems. It is rather a question of envisioning a reactivation strategy based on creating a new, viable productive subject. Thus, it should be linked to policies dealing with credit, technological promotion and organization of profitable processing and marketing chains. Without these policies, land redistribution will offer only a temporary solution, and one without much positive economic impact.
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a monthly magazine of analysis on Central America