The Colombian Coffee Experience:
Discrimination, Disorganization and Calls for Diversification in
Over a Century of Coffee Farming
by Sabrina A. Badwey
1)
Introduction: Contextualizing Colombia’s Coffee History
Modern Colombian history is characterized by a volatile imbalance of power
existing between different forces that are working in tandem to arrest development. Latin
American sociological scholar, Carlos Alberto Montaner, explains that these forces have
managed to “transform” Colombia “into a series of urban islands, precariously connected
by airplanes [where] at least three armies impose their law: the central government army,
the communist guerrilla army, and the paramilitary groups’ army . . . these three armies
are penetrated by a fourth power, the narcotraffickers, who buy consciences and weapons
and control the actions of hundreds of hired killers” (1). The societal divisiveness
perpetrated by these actors is facilitated by “rugged mountain ranges [that] obstruct
transportation and internal travel and have split the country into regions which have
evolved into relative isolation” (Garcia 20). Isolation, and the human insecurities it
engenders, is exacerbated by the weak protectionary capacities of the state; for example,
currently 160 of Colombia’s 1,100 municipalities have no police or army presence, and
250 municipalities operate without a mayor (Forero 4). Rapid urbanization that has
significantly outpaced initiatives to develop industries and housing accommodations in
cities has been a byproduct of the terror reigning in rural areas, currently over 70 percent
of Colombians live in cities. It is onto this stage, set by relatively lawless rural areas,
internal displacement1 and urbanization motivated by fear and an unreliable export
agricultural sector that any study of Colombia’s coffee industry unfolds.
Currently Colombia is engaged in a period of decreased dependency on coffee as
a commodity for international trade, it is the objective of this paper to place this trend
into historical perspective and analyze the significance of the coffee industry as a factor
1
influencing Colombian development. A September 2001 article in The Economist
summarizes much of what is occurring in Colombia’s coffee sector when stating that
“Coffee enjoys booms and busts, and it will continue to be a main source of income for
many of the region’s farmers. Improved marketing and diversification could reduce the
pain of future slumps. But they take time. Meanwhile, the coffee bust is bringing misery
to millions, with little sign of recovery in sight” (3). Analyzing the history of this
commodity in the Colombian context reveals the story of a volatile product whose most
poignant and problematic attributes are symbolism for the larger issues of instability
facing Colombian society. In this story, it is the Colombian peasants and small land
holders who secured coffee’s prominent position within the country’s agricultural sector,
continue to contribute a significant proportion to its output, and remain most vulnerable
to its drastic and frequent price busts. Long term sustainable development and sociopolitical stability in Colombia requires attention to the ways in which coffee has
historically, and contemporarily, left producer communities susceptible to the vagaries of
the world market; the ways in which this has happened will be discussed here in the
sequence explained below.
This exploration on how coffee production has been implicated in Colombian
under-development and social unrest will involve reviewing coffee’s defining attributes
as a commodity and its historical experiences in both Latin America generally and
Colombia specifically, with particular attention to the evolution of the industry’s
regulatory institutions. From this overview, human development, as it relates to Coffee
cultivation, will be analyzed from the perspectives of labor conditions and land holding
realities in Colombia. After considering how coffee is connected to human development,
1
Refer to Appendix, Graph #1 on Internal Migration.
2
and vise versa, issues facing the industry, and Colombian society as a whole, will be
placed into the larger contexts of contemporary international trade matters and illicit
economic activity in Colombia. Policy recommendations, specifically those related to
how diversification initiatives fit into larger development frameworks that are seeking out
a more secure and independent future for Colombia will be included in the conclusion.
2)
The Coffee Commodity: A “Problem Product”
Coffee, as a primary product produced for international markets, has defining
characteristics that have shaped its role in Latin American development history. Coffee
consumption, widely considered the manifestation of ‘habit’, “falls significantly only if
high prices are maintained for prolonged periods and demand tends to be inelastic.”
Despite high inelasticity with regard to demand, coffee is a problem commodity for
supplier countries because it “suffers from considerable short run price instability, . . .
[and] is also subject to a longer cyclical pattern, which derives its dynamic essentially
from the interplay between prices and production” (Streeten 15). For example, it is
estimated that between 1902 and 1950, the average year to year price variation for
Brazilian coffee was around 21 percent.2 A September 2001 article from “The
Economist” explains, “High prices cause a surge in planting, followed by a glut and
market collapse” (2); price volatility, coupled by the fact that, once planted, coffee plants
take years to produce marketable beans, makes appropriate planning and planting a
challenging task for coffee producers.
Sutti Oritz explains that because of frequent price fluctuations, “The conversion to
coffee agriculture was as risky as it was dramatic. Farmers required considerable initial
3
capital and a waiting period of several years before profiting from the sale of beans.
Landlords and large farmers became indebted to foreign commercial houses and thus
were very vulnerable to price fluctuation” (33). Although Oritz’ words here refer
specifically to coffee trade in the 1800s, as long as delayed production of marketable
crops, price instability and international loaning are fixtures of the coffee economy, they
will also describe timeless conditions.
Like tea and certain fruit products, coffee is only produced in tropical climates
because of conditions required for its growth; this reality, in conjunction with the labor
intensity required to meet consistent demand, made coffee socially transformative in the
equatorial, and mainly underdeveloped, regions where it is produced. Furthermore, due
to requisites for its cultivation, “Coffee production has never been threatened by
competition from consumer countries” (Palacios 14), hence, coffee is a somewhat
specialized asset to growing regions when price declines are not devastating rural
economies. Climate related specialization, however, does not shelter producers from
production migration into other temperate zones. Production in Vietnam, for example,
has grown in recent years causing detrimental economic impact in the traditional coffee
zones throughout Latin America and Africa (this expansion will be discussed in latter
sections). Because of temperature requirements, Palacios explains that “Coffee is, and in
some degrees continues to be, a produit colonial and is largely cultivated in parts of the
world geographically removed from the centers of greatest consumption” (14). The
physical distance between coffee producers and consumers and the high degree of labor
intensity it requires, during its “natural cycle of both weeding and harvesting” have
2
Palacios, pg 299.
4
historically played into patterns of seasonal mass employment typical of rural economies
in developing and under-developed areas.3
3)
Coffee’s Early History in the Americas
In Latin America, coffee production burgeoned from 1830 to 1930, causing many
changes to happen upon the region’s nascent economic and political systems; in part this
was fostered by contemporary ideological goals. Roseberry et al. summarize, “it was a
period in which coffee production was associated with a profound transformation of
landscape and society in several Latin American regions . . . the expansion of coffee
cultivation coincided with territorial expansion, the movement of settlers into frontier
zones where tropical forests were destroyed . . . towns established, roads and railroads
built [and] regional identities forged” (3). Palacios describes this process as well suited to
the era’s values regarding foreign trade by saying that, “Crudely stated, a country had to
either export or sink into barbarism. No word was used as often or as emphatically as
‘civilization’, that century’s synonym for ‘economic development’. ‘Civilization’ meant
free trade and free trade became a science with which to analyze reality” (2). Roseburry
affirms Palacios’ symbolism when asserting that coffee production in the Americas was a
“product of free trade ideology and practice” (10).
Regionally, liberal land policies were pursued by nascent federal governments to
promote the growth of an export agricultural sector and attempt the achievement of the
ideological goals Palacios details. These policies advanced the concentration of wealth
and discriminated against the very peasants who would later secure the industry’s future
in Colombia. Palacios categorizes these policies as “(a) The expropriation of church
3
Palacios, pg 14.
5
lands, (b) The sale of communal Indian lands (resguardos) and that owned by the
municipios (ejidos), and (c) Policies aimed at developing a cash crop export sector
through the concession of baldios to settlers” (56). With social conventions, public policy
and the chance for prosperity aligned, coffee production boomed throughout the tropical
regions of the Americas in the second half of the nineteenth century.
Since inception, coffee has been a dominant figure in the export markets of
Colombia’s neighboring countries such as El Salvador, Guatemala, Costa Rica, Mexico
and Brazil who also produce other raw agricultural to earn critical foreign exchange for
the purposes of economic growth. For the years between 1946 and 1960, North and
Central America, and South America, produced 12.5 and 73.2 percent of internationally
traded coffee respectively. These numbers for the periods of 1951 to 1955, and 1956 to
1960, are 15.0 and 15.8 percents for North and Central America, and 65.0 and 57.7
percents for South America; remaining Coffee produced during this time period is
accounted for by African production taking place in equatorial countries such as Ethiopia,
Uganda and Tanzania. Coffee came to dominate these agricultural markets, and by 1965,
in El Salvador, Guatemala and Costa Rica, it accounted for 51, 50 and 42 percent of the
total values of all sectoral production respectively, and 233.7 million US Dollars in
foreign exchange earnings.4
4)
Coffee’s Beginnings in Colombia: How the Peasants saved “Civilization”
Heavy investing in coffee began in Colombia in the 1870s and 1880s,
significantly transformed traditional societies and production orientations because it
4
All heretofore information in this paragraph comes from graphs on pages 96 and 24 of Streeten & Elson.
6
depended heavily on the work of small holder peasants. Roseberry et al. explain the early
history of coffee ‘speculation’ as follows:
“three distinct regions (the Santanders in the northeast, the central cordillera of
Cundinamarca and Tolima, and the west of Antioquia and Caldas) turned to
coffee . . . with markedly different social and political structures. Cundinamarca,
for example, was characterized by large haciendas . . . The hacendados were often
Bogotá merchants who depended upon resident administrators and peasant tenants
who exported their coffee directly to the interior. While Antioquia also developed
large farms, small farmers growing their own coffee . . . constituted an important
segment of the population” (5-6).
The following paragraphs explain Colombia’s coffee industry’s development with respect
to increases in output and economic dependency as results of peasant involvement in the
production process, and key socio-political institutions and policies that emerged to
regulate the industry. Subsequent sections will be specifically aimed at analyzing effects
of the evolution of coffee production on labor practices and land distribution.
In Colombia, early investment in coffee was characterized both by the struggle to
overcome the challenging aspects of initiating its production, and the persistence of
peasant planters which led coffee to its key role in the Colombian economy. Financial
stress at the onset of cultivation motivated coffee growers to devise modes of production
“that allowed them to maximize returns and protect themselves from sudden economic
shifts” (Ortiz 33). Ortiz describes these modes as “precapitalist in nature” because they
entailed some form of sharecropping or service tenancy. Despite these efforts, Ortiz
continues, “large landowners remained vulnerable to market conditions . . . [and] only
peasant producers were positioned to withstand these pressures; as a result, their presence
persisted and remained significant through the first eighty years of the history of coffee
agriculture” (33).
7
Palacios reinforces Ortiz’ notions about the centrality of small planters in the
early stages of production, and explains how their primacy contradicted the overarching
philosophies, among nineteenth century elites, about coffee production as a ‘civilizing’
trend. Palacios explains that coffee’s labor intensity “accommodates itself to [a] basic
institution of traditional Colombian agriculture: the peasant family from the altiplano . . .
peasant families were the basic cell for the reproduction and geographical diffusion of
coffee” (13). He continues by saying, “The coffee plantations which were brought into
production so that Colombia would not deviate from the path towards civilization, were
created by borrowing from the systems of organization . . . existent in the colonial and
post colonial past”(13). Palacios attributes these throw-backs in plantation organization to
primitive technology, geographical isolation, and subsistence farming.5 It was
Colombian peasants in the late 1800s, therefore, which secured the market that the World
Bank, in 2003, deemed “instrumental in fostering much of the country’s industrial
development [as] many of its important industries today were funded by coffee earnings”
(517), yet as subsequent sections will explain, it is these individuals who are most harmed
by market instability.
Colombia’s coffee production, spurred by a decline in tobacco marketing, boomed
in the late 1800s; as a percent of total export value, it grew from 17 percent in the 1870s
to 40 percent in 1887, a proportion of the market which it maintained to the end of the
century and expanded in subsequent decades. 1870 to 1900 is therefore deemed coffee’s
‘take off” period, as production increased roughly five-fold.6 After 1900, coffee doubled
as a proportion of export value from 40 percent in 1900, to 80 percent in 1943. By the
5
6
All ideas here are synthesized from Palacios, pgs 12-13.
Refer to Appendix, Graph #2. Insert this from Palacios 18.
8
early 1950s, coffee generated about 70 percent of GDP, a figure which declined to 40
percent in the early1980s. The World Bank’s 1997 publication, Courting Turmoil and
Deferring Prosperity, claims that upon its publication, coffee production declined to
account for about 20 percent of the total export of goods and services “owing to an
expansion on the exports of oil, coal, flowers, and industrial and agricultural goods” (22).
Overall, the 130 year time period accounted for in this paragraph consists of an increase
in coffee as a portion of export value from 1870 through 1970, and a decrease thereafter.
Historically, however, this trend has been plagued by short-term booms and busts in the
international market price. These trends in the market have necessitated regulatory
institutions, and caused continual calls for export diversification on the part of
development practitioners.
5)
Dependency and the Great Depression: A New Role for Emergent Institutions
Rapid expansion of coffee production in Colombia during the early 1900s
coincided with the 1929 collapse of the international trading markets; this introduced a
more acute understanding of the significance of tying a significant proportion of national
income to the ability of foreigners to purchase one commodity, and new institutions to
the industry in Colombia. Palacios summarizes, “Coffee tied the Colombian economy to
the world market, and through coffee were expressed the limitations and possibilities of a
particular type of dependant capitalism” (200). In Colombia, the Great Depression
created “conditions that encouraged industrialization and greater diversification [but] did
not alter the liberal model fundamentally, although the economic function of the state
became increasingly multifarious” (Palacios 201). In the decades that have unraveled
9
since the beginnings of coffee market regulation in Colombia, many initiatives and
policies have been pursued or advocated by different actors. An explanation of these
efforts is presented here, and does not represent any success so substantial so as to
alleviate the social stresses caused by subsequent price declines.
5.1)
FNCC: Roles and Relationships for a Regulatory Agency
The Coffee Federation (FNCC) represents the major coffee market institution to
emerge from the depression era. Signing its first contract with the Colombian government
in 1927, and assuming rapidly evolving responsibilities in the ensuing years of crisis, the
FNCC is notoriously difficult to classify institutionally because of its varying functions
and affiliations. Palacios describes the FNCC as “the most difficult of institutions to
define . . . political scientists have asked themselves if it is a bureaucracy, an interest
group, or quasi official body” (217). Attempts at classifying the FNCC by Ortiz and
Pendergrast are similarly allusive; Ortiz describes it as “a private institution that fulfills a
public function” (46), and Pendergrast believes, “the Colombian Coffee Federation [is] a
private State within a not very public state” (185). The FNCC’s continually changing role
in controlling and abating the economic repercussions of a ‘trouble’ commodity are
presented below.
Originally, the FNCC was designed to “assume some administrative and industry
research responsibilities in exchange for access to coffee-tax funds” (46). More
specifically, its role was limited to “the management of the agencies that purchase coffee,
the control of name brands of beans, and the lobbying for special rates of exchange and
for appropriate currency devaluation to ease competition with other producing
10
countries”(Ortiz 46). These roles were expanded in 1940, with the signing of the InterAmerican Coffee Agreement, when the FNCC gained the ability to levy its own tax to
finance monitoring activities so that Colombia would adhere to the quota system put forth
by the treaty.7 From this point forward, the FNCC grew to become an institution which
the World Bank, in 1997, claims to have “exerted enormous influence on government
policies and on the country’s economic and political life” (24). In this report, the World
Bank explains the FNCC’s functions as follows: “[it] supports coffee prices, which it
agrees with the government, controls the domestic marketing of foreign trade of coffee
and approves export licenses for private coffee exporters” (24). In large part, the FNCC’s
evolution from a research and quota managing institution, to one that assists farmers in a
variety of ways including the regulation of market prices, has to do with its role as a
principal engineer of the 1965 International Coffee Accords.
5.2)
The FNC: An Influential Architect of the International Coffee Accords
Once able to exact taxes and fund itself directly from the coffee trade, the
FNCC’s fate became directly intertwined with industry success; this led the FNCC to
aggressively pursue the writing and passage of the International Coffee Accords (ICA),
whose chief objective was “price support rather than price stabilization” (Streeten 20).
The ICA, Streeten explains, was designed to “increase receipts from coffee exporters by
preventing world prices from falling below the 1962 level. . .This was to be achieved
primarily by imposing quotas on exports to traditional markets in North America and
Western Europe” (20). From inception, the ICA was an unwieldy beast in the sense that it
was always possible to trade above the quotas by either exporting substantial quantities of
7
Summarized from Ortiz, pg 47.
11
“tourist” coffee that changed destinations en route to its markets, or re-exporting the good
from an import country not regulated by quotas to one that was regulated.8 Because of
these dysfunctional attributes, and difficulties with regulating an unpredictable market,
the ICA was renegotiated many times before its final collapse in 1989. For its part,
however, the FNCC was able to leverage power through the ICA because the accords
called on it to hone its skills at helping farmers to finance, export, commercialize, and
research production of the bean.9
5.3)
Juan Valdez’ Ironical Identity and Relations between FNCC and ANUC
“Juan has a finca 5000 feet up in the Colombian Andes. The soil there is rich.
The air is moist. Two reasons for the extraordinary coffee of Colombia.
The third is stubbornness of growers like Juan.”
So goes a famous 1960 commercial produced by the FNCC to successfully
prevent Colombian exports from experiencing the same price decline facing other
markets. The commercial capitalized on the image of “a friendly, mustachioed coffee
grower who, with his mule, trundled his hand picked beans down from the Colombian
mountains” (Pendergrast 285), and ran steadily from 1960 through November 2001,
costing the Federation more than $1.3 billion over the 41 years.10 Pendergrast explains
that the image portrayed by the commercials as an “advertising hype that essentially
matched reality [for] most Colombian coffee indeed was produced on mountainside
fincas by some two hundred thousand families headed by men such as Juan Valdez”
(285). Despite the revenue generated for FNCC sustenance by Valdez, however, the
8
Streeten, pgs 20-21.
Ortiz, pg 20.
10
Forero #2, pg 1.
9
12
Federation is not widely believed to have championed the rights of the men and women
his character personified.
Historically, Ortiz explains, the FNC has been viewed as an adversary of workers
rights and labor unions such as the ANUC; the overall situation of labor and wealth
concentration will be discussed in latter sections, this paragraph is dedicated to revealing
Ortiz’s presentation of criticisms of the FNCC as elite-oriented. Ortiz claims that the
ANUC, a peasant league originally organized under the aegis of Restrepo’s government
in 1968, was the natural “archenemy” of the FNCC for the following two reasons: “First,
the higher administrative echelons are staffed by persons for well established coffee
families; Second, since the 1930s the FNCC has sided with landlords in confrontations
over wages” (54). She goes on to explain that the Federation, “opposed the government’s
attempt to mediate the labor disorders of the 1930s and proposed a later law that gave
farmers greater protection from tenants’ potential demands [and] while the FNCC
provides services to peasants, it is more attentive to their needs in areas of political
unrest” (54).” While Ortiz prefaces this discussion by noting that the ANUC has trouble
“identifying its enemy” (53), her book is littered with descriptions of instances in which
the FNCC’s policies have been counter-progressive because they have been unable to
accurately forecast and help varying scales of farmers to cope with industry price
fluctuations. Further analyses will expose fundamental aspects of the labor structure
which prevent it from enabling effective organization.
13
6)
Agricultural Labor in the Colombian Coffee Industry
Since the mid-1800s, when coffee was first planted in Colombia, peasants have
been discriminated against by large land-owners, and movements against discriminatory
practices have been hampered by inherent characteristics of the industry and Colombia’s
demographic realities. The following sections will present early organizational trends in
the coffee industry, impediments to labor organization and advocacy, and the present
situation of land-wealth concentration in Colombia. These descriptions are detailed here
to argue that, despite attempts at industry regulation by dominant forces such as the FNC
and the ICA, coffee cultivation still exposes a significant portion Colombia’s rural poor
to market instability, conditions that development specialists view as ill-fated and
ameliorable by output diversification and product differentiation.
6.1)
Colombia’s Rural Labor Force
Palacios defines the term ‘peasant’, as it is used with regard to the Colombian
coffee market, as referring to that portion of the agrarian population for whom “the
family is almost exclusively the only source of work on the finca; the finca produces
coffee and food for the basic diet; coffee is produced for the market, but as a means of
satisfying other necessities; in this sense only the finca provides the basic needs of the
family” (242). It is not enough, however, to think of the Colombian rural labor force only
as a mass of small-holding subsistence level family farm units, for they are a drastically
more dynamic entity than this image permits. Within this group of holders, existing
primarily in ‘marginal’ coffee departamentos such as Boyaca, Magdalena and the
14
Santanders, lye an estimated half of land owners who also work as day-wage-earners.11
The existence of these laborer-owners, Palacios hypothesizes, “counteract the tendencies
towards proletarization in the coffee municipalities” (243), indicating that social mobility
is impeded, even among asset owners, by the reality that these assets are not enough to
permit above-subsistence incomes.
Outside the realm of “peasant” coffee production, as it is defined and described
above, in more productive regions where coffee cultivation is relatively modern, “the
land market, the increase in productivity, and the impacts of modernization and
marketing are dissolving subsistence units” and increasing the numbers of landless
laborers who have comprised a class of their own since the late 1800s. Palacios describes
the early willingness of the merchant class to exploit these masses as Social Darwinism,
explaining that the worker “seemed to confirm his belief that three centuries of
encomienda, Catholicism, resguardos and poverty must necessarily find their expression
in a servile personality” (73). At present, the Colombian circumstances of political, social
and economic instability are exacerbated by the existence of a large rural underclass that
is less and less able to provide for itself due to farm mechanization, decreasing prices, a
market surpluss and decreased demand for labor. The following section will analyze
some problems that laborers have had with effectively organizing in Colombia.
6.2)
Impediments to the Organization of Coffee Labor
From the onset of coffee production in Colombia, elitism and the Colombian
terrain worked in unison to prevent the effective mobilization of the laboring class and
create a situation in which “laborers cannot behave as rational market actors” (Ortiz 215)
11
Refer to Palacios, pgs 242-243.
15
because they are not cohesive enough as a unit to compare their prospects and demands.
Ortiz explains, “During the harvest when laborers have some market power, the turnover
of personnel on farms is considerable. Laborers move from farm to farm searching for
better deals, knowing that their presence is needed only if there are ripe berries to be
picked. Furthermore, many harvesters have only a marginal commitment to the job since
they have another occupation the rest of the year” (54). Colombian laws to protect
laborers, Ortiz goes on to describe, are of little use to coffee workers generally because
they are only applicable to more consistently employed factions of the working class. The
majority of the year when small-land holders are working for themselves, their concerns
are focused on family and community level needs and they are disconnected, by distance
and preoccupation, from labor movements that might result in effective collective
actions.12
Roseberry et al., in their chapter entitled “At the banquet of Civilization: The
Limits of Planter Hegemony in Early-Twentieth Century Colombia”, provide further
insight into the disorganization which has raged in Colombia’s coffee sector by balancing
any understanding of what did inhibit rural labor from organizing by detailing the forces
which did not stand in its way. Their chapter affirms theses expressed earlier on how
peasants, although discriminated against and blocked from any increasing share in the
wealth provided by coffee, were essential to securing industry dominion in the region,
and goes on to explain that, at the same time, “coffee planters proved unable to articulate,
For these reasons and others, the World Bank’s 2003 publication on Colombian Development reports, “in
general, the relative importance of unions in Colombia . . . has remained stagnant over time – the percent of
unionized workers with respect to the economically active population remained at about 10 percent during
the 1990s” (759). Additionally, Berry summarizes, “In distant rural areas . . . where the land owners can
still be monopsonists and wages are lower, it is doubtful that the government can make the minimum wage
effective. . . the Government of Colombia, partly out of awareness of the presumably negative employment
12
16
much less enact, hegemonic vision capable of uniting various elite factions” (262). This
fractured hegemony on the part of haciendados had its legacy in a fragmented working
class, and engendered “Neither a bourgeois pluralist democracy, a populist regime, nor a
stable oligarcical order. . . Rather the economic political and ideological weakness of the
planters . . . helped usher in the successive violent contestations for power, elite
accommodations, and intense social conflicts of Colombia’s recent past” (285).
Therefore, owing to a lack of elite cohesion there was also experiential discontinuity
among workers, a condition which decreased their propensity for widespread social
movements.
6.3)
Concentration of Land Wealth in Colombia: 1960 to 2003
Colombia’s modern history is rife with violent demonstrations of discontent over
the concentration of wealth in the hands of an oligarchy, a process of consolidation which
began at nationhood and is fostered by the fluctuating value of land that results from
changing prices in export agricultural markets. Concentration of land holdings in the
hands of the wealthy few will be discussed here with reference to Albert Berry’s Income
Distribution in Colombia (1976), and The World Bank’s Colombia the Economic
Foundation for Peace (2003); these reports, published roughly 25 years apart, present a
problem whose solution is far from realized, and whose effects on rural inhabitants and
coffee workers are multifarious.
In 1976, Berry asserted, “land is quite unequally distributed, in terms both of
ownership and distribution . . . great inequality exists in the distribution of income
affects of raising the minimum wage, has seldom attempted to use this instrument for redistribution
purposes” (152)
17
generated in agriculture [and] there is evidence of some form of surplus labor, especially
in the highly populated Andean regions, where quite small farms (minifundios) are very
common” (53). From his research, Berry claims that about 10 percent of agricultural
families exploited 75 percent of the land in 1976. He also presents 1960 data which
disaggregates the distribution of income from Colombian agriculture by deciles; the
numbers here demonstrate that whereas the top 2 deciles reaped 65.25 percent of
agricultural income, the bottom 4 only received 12.18 percent.13
The World Bank’s 2003 publication, largely based on data from the 1990s, was
unable to report any marked progress toward the more equitable distribution of land in
Colombia. The book summarizes, “Colombia’s agrarian structure is characterized by
significant underuse of productive land, a long term trend towards reconcentration of
land, and serious environmental hazard . . . jointly these factors have historically led to
out-migration to the frontier for cultivation of fragile lands, resulting in serious
environmental hazard and social problems” (559). In 1989, Colombia’s Gini coefficient
for the ownership distribution of land was .86.14 Gini index value is substantiated by data
explaining that, from 1984-1987:
“While the number of “small” farms units . . . increased slightly, from 89.9
percent to 91.1 percent of all farms, the share of area cultivated by these shows a
slight decrease, from 23 percent in 1984 to 21.4 percent in 1987. A more
significant reduction in area, from 30.5 percent to 24.8 percent with almost
constant share in the farm units, is observed for medium sized farms. This implies
that large farms, even though their number slightly decreased, increased their
share of area from 46.3 percent to 53.8 percent over the period” (561).
13
14
Berry, pg 55. Refer to Appendix, Graph #3 on Mid-Century Income Distribution.
World Bank (2003), pg 560.
18
This general concentration of land, unabated in recent history, causes a situation in which
the majority of coffee farmers have been forced to eek their livings off of small plots and
supplement their incomes with day labor.
By wide margin, most Coffee farmers in Colombia are small land holders; these
growers however, produce the same proportion of total product output as significantly
fewer large land-owners. World Bank data explains that in 1973, 364,300 farms
consisting of one hectare or less produced 15 percent of coffee, while 2,800 farms
consisting of 20 or more hectares, accounted for the same proportion of production. From
this data, it is inferable that the masses of peasant small-holder workers who cultivate
coffee receive a significantly smaller share of market income than a drastically smaller
number of wealthy landlords; overall, these realities create a situation in which a
preponderance of small farm producers (90 percent of coffee farms are 5 hectares or
less)15 are frequently exposed and especially susceptible to fluctuation in the market
price. Concentration of wealth in this industry, however, is not characteristic of
Colombian production alone, it is a global trend as 5 traders, importers and roasters
control 48, 46 and 55 percents of the market respectively.16
7)
Current Situation of the Coffee Industry in Colombia
“These are Coffee People. They pick coffee to buy food.
They say the coffee price is bad. So the pay is too low to buy food.
This village is f***ed”
-Men With Guns, film by John Sayles (1997)17
15
Financial Times 2.
World Bank (2003), pg 522.
17
From Chapter 19’s Preface, Pendergrast, pg 389.
16
19
The last significant boom in the international price of Coffee ended in 1981 when
prices returned to the same level they were at in 1975, since then the market has been in
decline. This trend has been exacerbated in recent years by what a September 2001
Economist magazine article describes as a “glut”, caused “partly by surging production in
Vietnam but also by Brazil’s dramatic recovery from poor harvests in the mid-1990s” (1).
These conditions, the article continues, have led to “two years of sliding prices, causing
hardship for growers on a scale unseen for three decades” (1). In Colombia and Peru, this
problem is particularly conducive to social upheaval because of the preponderance of
coffee growers that have small farms and lack easy alternatives in extracting their
livelihoods from the land. The following sections will explain the recent price decline,
and the agrarian unemployment it is associated with, in greater detail.
7.1)
Plummeting Prices
Due to conditions in the coffee market, Colombian coffee prices are the lowest in
real terms that they have been since 1921. The World Bank explains: “Coffee’s
importance, especially among the rural population, has made the current price crisis
particularly difficult for some of the poorer segments of Colombian society” (518). 1997
estimates reveal that Colombia’s coffee zones had 556, 230 coffee farms containing
423,368 households, these numbers imply, according to the World Bank, that fully 18
percent of Colombia’s rural households depended on coffee for their income in that year.
An influential factor in the price decline is that in the last 20 years world production has
increased from 86 to 122 million bags, giving rise to surpluses of 10 million bags in 2002
and more (projected) in 2003. When analyzing reasons for coffee’s chronic oversupply
20
and under-pricing, the World Bank explains that “most fingers point to Vietnam whose
dramatic . . . production appears to have surprised the industry” (520). The Bank
continues, however, by explaining that “While Vietnam’s meteoric rise to number 2
producer, with 14.7 million bags in the 2000/2001 year, makes it the most visible
contributor to overproduction, it is by no means the only one” (520). Like the Financial
Times article quoted in the introduction to this section, the World Bank also purports that
Brazil’s increased production has contributed to price declines and commodity
surpluses.18
7.2)
Unemployment of the Colombian Work-Force
In their 1971 account, Diversification and Development: The Case of Coffee,
Streeten et al. assert: “Most of the major coffee-growing countries have what is
commonly described as a serious and growing problem of surplus labor, unemployment,
disguised unemployment and underemployment” (33). This claim, and their subsequent
call for attention to the sector, made at a time of relative prosperity in the industry, did
not call enough attention to the emerging plight of the coffee picking masses as to
engender a solution that would prevent the broadening of the market labor surplus. World
Bank publications from 1997 and 2003, therefore, concur that unemployment is rising in
Colombia and the coffee sector has been particularly affected. The 1997 report explains,
“structural, or long term unemployment has been on the rise. Between 1950 and 1986 . . .
the working age population grew by 3.1 percent per year, whereas employment grew only
2.8 percent” (25). The 2003 report elaborates on the problems caused by working age
18
World Bank (2003), pgs 517-522.
21
populations growing at faster rates than employment in a declining economy with
particular reference to the coffee sector; it explains:
“labor employed in the coffee sector during the last decade has
represented on average about 34 percent of total agricultural employment.
While at the beginning of the 1990s coffee was responsible for about
750,000 full time jobs in coffee growing areas . . . in 2000 coffee was
responsible for 515,000 full time jobs. The NCFG estimates that
approximately 100,000 more people may lose jobs in the sector” (528).
As a consequence of rising unemployment, the World Bank continues, “it is estimated
that the number of households in coffee-growing areas living under the poverty line rose
from 54.2 percent to 61 percent between 1997 and 2000” (528). Poverty and
unemployment in Colombia, resulting from the declining price of coffee, has caused
much speculation about further societal ramifications of dependent economic structures.
7.3)
Coffee Industry’s Implications for other Social Problems
An absence of economic opportunity, particularly in rural areas, transforms
societies because it leads to landlessness, urbanization, criminality, and political unrest;
in the Colombian case, however, economic hardship also provokes consideration about
the expansion of narcotrafficking. This section briefly reviews statistics which indicate
that Colombian society remains challenged to overcome the problems poverty engenders
and goes on to assert that connections between the decline of coffee prices and
production in the illicit sector remain unsubstantiated despite the fact that they are held
dear by authors, politicians and other students of the Colombian situation.
Tying poverty to specific development conditions in Colombia reveals a web of
interrelated predicaments, some of these may be connected to difficult times in the coffee
22
sector, yet all are manifestations of the reality that the country’s resources are inequitably
distributed. Widespread violence, frequently traced to the 1948 assassination of the
populist presidential hopeful, Jose Elicier Gaitan, has led to over half a century of clashes
between the state, guerrillas and paramilitary units in Colombia. As an impediment to
Colombia’s economic and social development, the ramifications of unrelenting violence
have been multi-faceted, and its burden is felt by urban, rural, rich and poor Colombians
alike. The World Bank Poverty Report summarizes, “poor households bear most of the
burden of homicide and domestic violence, and young Colombian males face extremely
high risk of being murdered. . . uneducated women and spouses of uneducated men bear a
disproportionate share of domestic violence. . . the better off bear a disproportionate share
of the burden of property crime, extortion and kidnapping” (ix). Between 1985 and 1999,
an estimated 1.2 to 1.5 million Colombians were forced to leave their homes owing to
escalation of the military conflict, these Colombians remain internally displaced, and
many reside in the country’s cities.19 Colombia’s homicide rate is among the highest in
the world (it is three times higher than in other violent countries such as Jamaica and
Russia), and murder is particularly problematic in Colombia’s overcrowded urban areas
where it has been said to have taken on “almost epidemic proportions.”20 Overall, poverty
in the countryside, fostering urban migration, has led to poverty in Colombia’s cities.
Declining rates of urban poverty between 1978 and 1995 experienced a trend reversal in
the late 1990s when in 1999 they returned to the 1988 rate of 55 percent.21
Whilst violence, political instability and poverty may have caused Colombia’s
drug industry, according to the World Bank hard and fast evidence does not directly link
19
20
PRSP, pg 6.
World Bank (2003), pg 36.
23
coffee sector decline to this particular problem, despite the growing belief that it does.
The World Bank explains, “There is no clear evidence that the coffee crisis has induced a
process of illicit crop substitution in the coffee regions, although several news stories and
National Federation of Coffee Growers (NFCG) reports indicate the possibility is
ominous” (527). Among news stories alluding to illicit crop substitution as a worsening
trend, is an October 2001 Financial Times article by James Wilson entitled “Coffee or
Poppies.” This article asserts that “the latest price drop has let to a surge of kidnappings,
violence and farming of drug crops” (1); this occurs, Wilson explains, because “poppies
are four times as profitable as coffee per hectare . . . the coffee grower does not want to
get into illegal business, with a lot of risk . . . but he accepts that risk because there is
nothing else to do” (1). This article and Pendergrass Uncommon Grounds also treat the
causality between illicit sector expansion and coffee price decline as a preoccupation of
the Barco and Pastrana administrations. Pendergrast details, “Under pressure from the
Bush administration to crack down on cocaine processing and smuggling, Colombian
President Virgilio Barco Vargas complained that the drop in coffee prices imperiled his
fight against drugs” (363). The tendency is not to take it for granted that any economic
imbalance either does or does not spill over into illicit industries, and despite the fact that
data on the topic is naturally unreliable and largely nonexistent, illicit crop substitution
remains a preeminent concern amongst stake holders in Colombia’s development.
8)
Diversification within a Development Framework
Diversification is part in parcel of development, and is presented as such by
authors Paul Streeten et. al. and Danielle Giovanucci so as not to “give too narrow a
21
Refer to Appendix, Graph #4 on Poverty Indicators.
24
picture and . . . obscure the primacy of general development which. . . can in many places
proceed for some time without drawing on factors engaged in coffee growing” (31).
Alleviating the economic stresses caused by coffee dependency via diversification, these
authors recognize, can only be expected when alternative agricultural markets are healthy
and state institutions are both well-established and provident. These authors express their
ideas on sustainable diversification can be achieved, and augment the argument for it
already presented through data about how intensely poverty is experienced among
Colombia’s rural poor due to declining coffee prices.
Streeten et al. assert, “Diversification is not so much the condition of successful
development, it is the result. Adaptability and alertness in deriving benefits from trade are
the results of progress” (31). Like so many of the visions presented in this essay for a
better future for Colombia, those expressed by Streeten et. al. over twenty-five years ago,
and explained here, have not yet been realized as dependence on coffee continues to
wreak havoc in rural regions. Following the belief that diversification is part of a larger
state initiative, the authors look to answer the question: “what are the development
priorities for a country wishing to accelerate its growth if an increase in coffee production
is ruled out” (32). In seeking the answer to this question, the authors consider factors
facing politico-economic structures in countries such as Colombia, and recommend a
broad “recognition of the multiplicity of roads to development without doctrinaire
attachment to a particular pattern” (100). The ‘multiplicity of roads’ that the authors
propose highlight careful attention to enhancing employment capacities and consideration
of how foreign capital and investment can either help or hinder domestic growth
according to the objectives of different actors. The evolution of development stratagems
25
in the years since Streeten et al.’s work was published has been drastic, but the general
framework by which they structure thoughts on how to approach sustainable
diversification within larger initiatives remains unchanged.
Recommendations for diversification in the coffee sector by World Bank writer
Danielle Giovanucci are imbedded within a more holistic set of policy
recommendations22 that is similar to Streeten et al.’s in that it places priority on
institutional strength and responsiveness. Giovanucci explains that coffee’s role in the
economy cannot be scaled down blindly due to employment considerations, but instead
“Coffee has the distinct potential, as Colombia’s leading agricultural sector, to
demonstrate the methods and workable options available to farmers in other agricultural
sub-sectors, and in that way to facilitate more advanced and remunerative agricultural
development and options for diversification” (529). Giovanucci believes that
concentration in market sub-sectors can be beneficial to farmers where improved grades
and standards create market niches, differentiate products to earn a premium, assure
quality, help producers to communicate product characteristics necessary for efficient
transactions and protect consumer safety.23 Where working from within the industry does
not provide sufficiently for producers, Giovanucci explains that the state must help to
manage market transitions by helping farmers to assess potential markets for different
crops, risk, barriers to entry, needed skills and resources, environmental issues affected
by new crops and logistical challenges to commercialization.24 This process, Giovanucci
communicates, is best approached from a long term perspective and not phased out when
22
Refer to Appendix, Diagram #1, World Bank Policy Plan.
World Bank p. 529
24
World Bank p. 541
23
26
prices rise in the short-run, it should also “look beyond coffee growers to other rural
production systems as part of a more integrated strategy” (540).
8)
Conclusion
For Colombia, 2003 has meant headlines in international newspapers such as “UN
Still concerned about human rights in Colombia”, “Colombia: Irregulars killed more than
6,000 people in last three years”, “Colombia: Rights Abuses Growing, U.N. Says”,
“Colombia Rebels Admit Kidnapping 3 Americans After Crash”, “Rebels Keeping
Colombia on Edge”, and “Paramilitaries on the March”, all of which indicate that
stability and security have not yet been realized by Colombian society. 25 Coffee
volatility, therefore, is a metaphor for a larger problem facing Colombian society, and
alleviation of its ability to devastate rural economies holds the potential to bring
Colombia one step closer to being a more peaceful and equitable place. In no way does
this essay purport that solving the coffee problem will usher prosperity to Colombia’s
agricultural sector, at the very least, however, attention to its devastating potential, and
attempts to “put the last first” with regard to development initiatives, may create a
situation in which Colombians believe that they have allies in their struggle for a better
future.
These were collected by searching the word “Colombia” on the Americas pages at www.ft.com and
www.nytimes.com on 7 April 2003.
25
27
Appendix Materials: Graphs
Graph #1:26
Internal Displacement
1985
1990
1995
2000
2001
Number Accumulated
27,000
27,000
77000
423,000
89,000
809,000
317,000
2,160,127
341,925
2,502,052
Graph #2: 27
Colombian Coffee Exports: 1070-1900
Annual Export Average, Three Years (60-kg
Years
bags)
1871-73
75,403
1874-76
87,000
1877-79
100,744
1880-2
101,996
1883-5
96,000
1886-8
127,000
1889-91
195,000
1892-4
326,000
1895-7
266,000
1898-1900
273,000
Graph #3: Mid Century Income Distribution28
Personal Distribution of Income from Colombian Agriculture by Deciles, 1960
Decile
Percentage of Income
1
2.24
2
2.87
3
3.34
4
3.73
5
4.21
6
4.68
7
5.78
8
7.9
9
12.77
10
52.48
26
The World Bank, pg 830.
Palacios, pg 18.
28
Berry, pg 55.
27
28
Graph #4:29
Poverty Indicators, Urban
Colombia. 1978-99
Poverty Rate (percent)
Extreme Poverty Rate (percent)
1978
70
27
1988
55
17
1995
48
10
1999
55
14
Rural Colombia
Poverty Rate (percent)
Extreme Poverty Rate (percent)
94
68
80
48
79
37
79
37
Appendix Materials: Diagram
Diagram #1:30
Maximum
Benefits to
the grower
Diversification and Risk
management
Responsive
Policy
Competitiveness:
 The Brand
 Differentiation
 R&D
Accountability and
Efficiency =
Strong
Institutions
29
30
The World Bank, pg 91.
The World Bank, 539.
29
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1.
Berry, Albert and Miguel Urruita. Income Distribution in Colombia. New
Haven, Yale University Press, 1976.
2.
“Andean Crises: The US Also Faces Difficulties Near Home.” Financial
Times 3 March 2003: 22.
3.
Forero, Juan. “Rebels Keeping Colombia on Edge.” The New York Times
21 February 2003, www.nytimes.com/2003/02/21/international/americas
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New York Times. 24 November 2001. Online. Lexis-Nexis. 30 March 2003.
5.
Garcia, Jorge Garcia and Gabriel Montes Llamas. “Coffee Boom,
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6.
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7.
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name author of that section’s name, Daniele Giovannucci.
8.
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9.
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Palacios, Marco. Coffee in Colombia, 1850-1970: An Economic, Social
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Pendergrast, Uncommon Grounds: The History of Coffee and How it
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30
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31