The Colombian Coffee Experience:
Discrimination, Disorganization and Calls for Diversification in Over a Century of Coffee Farming
bySabrina 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 displacement[1] 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 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 socio-political 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, 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 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 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 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 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).
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 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 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 countries”(Ortiz 46). These roles were expanded in 1940, with the signing of the Inter-American 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.