EFFECTS OF LAND LEGALIZATION IN THE AGRARIAN DYNAMICS OF THE INDIGENOUS COMMUNITIES OF ALTA VERAPAZ, GUATEMALA

A thesis presented to The Center for International Studies of Ohio University

In partial fulfillment

of the requirements for the degree

Master of Arts

Francisco Jose Perez June 2005 This thesis entitled EFFECTS OF LAND LEGALIZATION IN THE AGRARIAN DYNAMICS OF THE INDIGENOUS COMMUNITIES OF ALTA VERAPAZ, GUATEMALA

BY FRANCISCO J. PEREZ

has been approved for the Program of International Development Studies and The Center of International Studies by

Thomas Walker Professor of Political Science

Josep Rota Director, Center for International Studies PEREZ, FRANCISCO J. MA. June 2005. Rural Development Effects of land legalization in the agrarian dynamics of the indigenous communities of Alta Verapaz, Guatemala (128 pp) Director of Thesis: Thomas Walker

ABSTRACT This study identifies current access to productive services for families whose land titles were legalized by FONTIERRAS with USAID funds between 2002 and 2003 in Alta Verapaz, Guatemala. The methodology is developed in two stages: building homogeneous socioeconomic environment and identifying the effects of the land legalization program through types of indigenous rural families. The study identifies three socioeconomic types: Subsistence Families, Poor Peasants with Land and Peasant to Farmer. In general, Subsistence Peasants and Poor Peasants with Land are labor suppliers whose net agricultural income is below the poverty line. It also found that families have been using their land as an asset to obtain external resources. In general, there has been a reduction of credit access since the regularization process due to the credit market terms. Finally, the study recommends supporting the Poor Peasants with Land and Peasant to Farmers based on Agriculture families due to their dynamic economic mobility and vulnerability.

Approved: Thomas Walker Professor of Political Science Dedication

To: Marina and Gabriel

And to

Central American peasants, priests, students and professors disappeared, tortured, and killed for dreaming of a democratic and equitable society

Acknowledgements

My gratitude and indebtedness to the many individuals who have helped me in this professional and academic stage cannot adequately be conveyed in a few sentences. I am grateful to the Fulbright Program which gave me the opportunity to study in the United States. Special thanks go to Mrs. Mayra Vargas in the US embassy in Managua. The LASPAU Faculty Program for grant me this scholarship. Special thanks go to Renee Hahn, Isola Spence and Erin Brownlee. The IIE for located me on the English Training Program. Special thanks go to Andrea Mercean.

My gratitude goes also to Ohio University, Center for International Studies for granting me a full tuition waver. Special thanks go to my academic advisers and members of my thesis committee: Dr. Ann Tickamyer and Dr. Elizabeth F. Collins. I want to thank Jill McKinney for her care of the Fulbright grantees. My indebtedness to Dr. Thomas Walker is profound. Dr Walker has devoted his life to building a better understanding of Central America and firmly denounced injustices there, and I had the privilege of having him as my thesis director.

I am grateful to the Research Program at the University Rafael Landivar for a summer internship and for allowing me to use data and study cases for this thesis. Special thanks are due to Dr. Peter Marchetti and Maria Aracely Lazo.

Special thanks go to Patricia Black for editing my drafts.

6 Table of Contents

Abstract...... 3 Dedication...... 4 Acknowledgements...... 5 List of Tables ...... 7 List of Figures...... 9 Abbreviations and Acronyms ...... 10

I. INTRODUCTION...... 11 II. LITERATURE REVIEW...... 17 2.1 Rural Development: from Central Planning to Rural Territories ...... 17 2.2 Land Legalization and Family Income: the Trigger Effect ...... 21 2.3 Research Questions...... 25 III. METHODOLOGY ...... 26 3.1 Building Rural Territories: Agrarian Zones...... 27 3.2 Understanding the Family’s Decision-Making Process: Types of Families...... 28 3.3 Data Analysis...... 33 IV. RESULTS...... 35 4.1 The Legalization Process ...... 35 4.2 Localization of Beneficiaries ...... 44 4.3 Types of Benefited Families in the Regularization Program...... 48 4.4 Access to Rural Credit Market and the Legalization Process...... 77 V. CONCLUSIONS AND RECOMMENDATIONS ...... 87 5.1 Conclusions...... 87 5.2 Recommendations...... 91 VI. REFERENCES ...... 93 Appendix I. Building Rural Territories in Alta Verapaz ...... 98 Appendix II. Land Price Calculations...... 127 7 List of Tables

Table Page 3.1.1 Logic framework of the study effects of land legalization in the agrarian dynamics of the indigenous communities of Alta Verapaz, Guatemala...... 26 3.2.1 State of the legalization files in Alta Verapaz ...... 28 3.2.2 Distribution of communities by agrarian zone, type of contract and state of payment ...... 30 3.2.3 Communities included in the study by agrarian zone, type of contract, state of payments and ethnicity...... 31 4.1.3 Prices of land fixed by INTA and FONTIERRAS in Alta Verapaz ...... 40 4.1.4 Payments of the INTA contracts in Alta Verapaz (2003’s US$)...... 42 4.3.1.a Resources of the subsistence peasants in Alta Verapaz...... 50 4.3.1.b Agrarian production systems of Subsistence Peasants in Alta Verapaz...... 51 4.3.1.c Intensity, efficiency and profitability of the subsistence peasants in Alta Verapaz ...... 53 4.3.2.a Resources of the poor peasant with land in Alta Verapaz ...... 54 4.3.2.b Agrarian production systems of poor peasant with land in Alta Verapaz ...... 56 4.3.2.c Intensity, efficiency and profitability of the poor peasant with land in Alta Verapaz ...... 57 4.3.3.a Resources of the interior peasant to farmers based on agriculture in Alta Verapaz ...... 59 4.3.3.b Agrarian production systems of the interior peasant to farmer base on agriculture in Alta Verapaz...... 60 4.3.3.c Intensity, efficiency and profitability of the interior peasant to farmer, based on agriculture in Alta Verapaz...... 61 4.3.3.d Resources of the interior peasant to farmers with cattle production in Alta Verapaz ...... 62 4.3.3.e Agrarian production systems of the interior peasant with cattle production in Alta Verapaz ...... 63 8 Table Page

4.3.3.f Intensity, efficiency and profitability of the interior peasant to farmer with cattle production in Alta Verapaz ...... 64 4.3.3.g Resources of the cattle producer peasant to farmers in Alta Verapaz ...... 65 4.3.3.h Agrarian production systems of the cattle producer peasant to farmer in Alta Verapaz ...... 66 4.3.3.i Intensity, efficiency and profitability of the cattle producer peasant to farmer in Alta Verapaz ...... 67 4.3.3.j Resources of the river banks peasants to farmers in Alta Verapaz...... 69 4.3.3.k Agrarian production systems of river banks peasant to farmer in Alta Verapaz ...... 70 4.3.3.l Intensity, efficiency and profitability of the river banks peasant to farmers in Alta Verapaz ...... 71 4.3.4.1 Intensity, efficiency and profitability of the beneficiaries of FONTIERRAS in Alta Verapaz per type of family ...... 76 4.4.1 Access to credit and conditions from the credit institutions in Alta Verapaz...... 80 4.4.2 Demand for credits of the FONTIERRAS beneficiaries in Alta Verapaz...... 86 9 List of Figures Fig. Page

1.1 Location of Guatemala in Central America...... 16 2.1 Relationship among land tenure, agricultural markets, income and economic rationality in rural families...... 24 4.1.2 Percentage of paid communitarian contracts in Alta Verapaz by municipalities and as a region...... 39 4.1.3 Land prices fixed by INTA and FONTIERRAS in Alta Verapaz per community and year (in 2003 US$)...... 41 4.1.4 Relationship between time taken to pay for land and saving due to currency devaluation...... 43 4.2 Agrarian zones in Alta Verapaz...... 47 4.3.1 Types of benefited families by the Regularization Program, FONTIERRAS-USAID (2002/2003) in Alta Verapaz, Guatemala...... 49 4.3.4.1 Relationship between capital and land access per beneficiary in Alta Verapaz ...... 72 4.3.4.2 Relationship between income per familial labor day and land access per type of beneficiary in Alta Verapaz...... 73 4.3.4.3 Relationship between income per area and land access per type of beneficiary in Alta Verapaz ...... 74 4.3.4.4 Relationship between income per familial labor unit in agriculture and land access per type of beneficiary in Alta Verapaz...... 75 4.4.1 Families’ access to credit services in the Peripheral Production Zone before and after the legalization process per type of families ...... 82 4.4.2 Families’ access to credit services in the Agricultural Frontier of the 1950s before and after the legalization process per type of families ...... 83 10 Abbreviations and Acronyms

BANRURAL: Rural Bank, public institution CDP Civil Defense Patrols CPPF: Cattle Producer Peasant to Farmer CPZ: Coffee Plantation Zone FLU: Familial Labor Unit INAB National Institute of Forestry INTA: National Institute of Agrarian Transformation IPFA: Peasants to Farmer based on Agriculture IPFC: Peasant to Farmer with Cattle Production FONTIERRAS: Fund for Land. Guatemalan Government LCC: Land Capability Classification LD: Labor Day NAI: Net Agrarian Income NAV: Net Added Value NGO: Non-governmental Organizations NTI: Net Total Income OAFZ: Agricultural Frontier of the 1950s PM: Invested production means PPL: Poor Peasants with Land PPZ: Peripheral Production Zone PSIZ: Productive Services and Infrastructure Access Zone RBPF: Peasant to Farmers from River Banks SP: Subsistence Peasants TAP: Total Agricultural Product TPZ: Traditional Peasant Zone URL: University Rafael Landivar

11 I. INTRODUCTION

Guatemala is the only Central American country in which 21 Mayan communities maintain their traditions and language. From the Spanish colonial era to 1996, these communities had been demanding their rights to own the land. According to INE (2004), the Guatemalan population is approximately 11 million, with an annual growth rate of 2.64%, while 66% of the total population belongs to a Mayan community. At the same time, 60% of the families are rural, and most of them are indigenous as well. (MAGA, 2002)

The country is organized into 22 states and 331 municipalities. The capital is home to 2.541 millions inhabitants, which is 22.6 % of the total population, and more than half of Guatemala’s urban population (CEPAL, 2001; Fig 1.1). According to SEGEPLAN (2004), 56.4 % of the population is below the poverty line, and 27.8 % live in extreme poverty. The UNDP (2004) estimates that 72.2 % of low-income families are rural and 73.8 % are indigenous population; most of the poor are indigenous, rural and female- headed families (UNDP, 2003). The GINI coefficient for Guatemala is 0.582, the third highest in the world after Brazil and South Africa. Consequently, 40 % of the population has access to merely 12.8 % of the national income, while the richest 10 % have access to 40.3 % of Guatemala’s wealth (CEPAL, 2002 b).

The fight of indigenous communities to own their land and the Civil war The land issue has been source of conflict to the Guatemalan society for centuries. From the colonial era to present times, the Mayan communities were despoiled. Kobrack (2003) and Brockett (1998) state that land was the indigenous communities’ main demand in the early 1960s when the guerrilla movement started. However, their demand to own their land goes back to the Colonial period. It took more than five centuries fighting against a legal system that recognized neither the indigenous communities as human beings nor their legal ownership of the land.

12 In the colonial period, social class co-related with land ownership, and within each class there was an ethnic subdivision: European with complete individual property rights, indigenous with collective property rights, and ladinos (mixed) had no clear status, since they were neither European nor indigenous. Urban property owners had individual property titles; however, the rural property was not registered, which was a mechanism for the Crown to retain their rights on the land, and at the same time was a source of multiple land conflicts. In 1549 and 1571 the Crown created laws to protect the indigenous community lands; however, since there were no control mechanisms before 1578, most of the indigenous land was concentrated in Europeans hands (Bertrand, 1992).

Las Verapaces was the first region in Guatemala to establish ejidos (public and common land) in 1540-1550. The Reserve or Indigenous town comprised a core form of approximately 1,700 hectares called Royal Mercedes. In order to isolate these indigenous lands from the land market, the Crown created the ejido: an area surrounding the indigenous towns to guarantee enough land to work. These areas were stable between 1540 and 1700; however, the property system failed between 1750 and 1821, when ladinos started to buy and accumulate huge amounts of land and started to threaten the ejidos. In this era, the Ladinos-Mayan conflict for land started to have national scale.

By 1800 the Catholic Church (The Dominicans) was the ruler in Verapaz, with large properties and political power given by the Crown; a fact that was rejected by ladinos and indigenous. This situation was changed by the liberal revolution in 1871 when coffee production was defined as the route for development, and private individual property was enforced as a paradigm of development. Wagner (2001) reports coffee plantations and exports by 1860 at 39 farms in Coban and 32 in San Pedro Carcha. By 1871 the liberal revolution expropriated the Church’s land to be used in private coffee production. Between 1880 and 1940 the region was developed by German investment in coffee, cardamom, railroads and waterways to move agricultural exports to Izabal on the Atlantic coast. The German community benefited from two laws (1876 and 1934) that forced the indigenous population into their workforce. They also benefited from laws to eliminate 13 the communal properties and ejidos (1876, 1871, 1891, and 1898). However, in the 1940s, during World War II, the military government expropriated the German community (Brockett, 1992).

Before the 1950s, the northern areas of Alta Verapaz were uninhabited; the first movements to colonize it were from the southern municipalities and Baja Verapaz towards Fray Bartolome. Alta Verapaz was barely affected by the 1954 Agrarian Reform; according to Handy (1992), the agrarian reform in 1952-54 affected mainly Escuintla, Izabal, Quiche, Baja Verapaz, and San Marcos. The Arbenz Administration wanted to reform the national economy and recognize the indigenous community’s rights; however, a coup d’etat in 1954 ended this national project. After the coup, the military government started the contra-agrarian reform and despoiled the indigenous communities again.

After the Cuba revolution and under the Kennedy Administration, Central America embarked on agrarian reforms with colonization projects in the agricultural frontiers. In this context, the National Institute of Agrarian Transformation was created. The colonization of northern Alta Verapaz was the way to release social pressure and control antigovernment movements. According to Brockett (1992), by 1962 approximately 140,000 families were landless. At the same time, in the early 1960s petroleum exploitation was established in Rubelsalto, Chisec. The petroleum company started hiring a large number of peasants to clear areas in order to construct buildings, extracting machines, and pipes to connect Rubelsalto with Izabal. As a result, families migrated from Baja Verapaz, Zacapa, Jalapa and Retauleu seeking jobs. Once in the zone, they found a huge amount of public land, which could be bought through the INTA. This land was an incentive for a great number of families to migrate from the south and central regions of Guatemala. By 1970, Fray Bartolome and Chisec were colonized, and Ixcan and Peten were the next territories to be settled at the early 1980s.

By 1978 the civil war started in Alta Verapaz, when a peasant protest against land policies to the benefit of agrarian capitalists resulted in a massacre by militaries. This created local support for the guerrillas. In 1981, the Burned Land Policy, a military 14 response in which indigenous people was killed and their properties burned, was implemented in Quiche, Huehuetenango, Alta and Baja Verapaz in order to eliminate the guerrilla movement’s support. From 1982 to 1986, the Civil Defense Patrols (CDPs) were implemented. This was a paramilitary organization designed to fight against guerrillas. Families who joined the CDPs had land possession rights sponsored by the army. This situation split the indigenous communities. On one side, were families willing to be part of the CDP in order to maintain their land possession rights, and on the other, were families who refused to support a government which destroyed and burned approximately 600 indigenous communities (MINIGUA, 1999). Between 1981 and 1992 families received titles signed by presidents: Romeo Lucas, Efrain Rios Mont, Vinicio Cerezo, and Leon Carpio; however, none of them was registered in the property register, which made all the them invalid. Families who stayed in the agricultural frontier supported by the militaries were able to access credit services and create their credit record at BANRURAL between 1986 and 1995.

After the Peace Agreements in Nicaragua and El Salvador, and the awarding of a Nobel Peace Price to the Mayan leader Rigoberta Menchu Tum in 1992, Guatemala was under an enormous pressure from the international community for peace negotiations and indigenous rights recognition. After peace negotiations in 1995, the Peace agreements were signed in 1996. Guatemala recognized itself as a multicultural country in which the indigenous communities have rights to develop along their traditional cultural lines. The socioeconomic agreement guarantees the indigenous communities’ rights to the land. In order to facilitate access to land and legalize the 1954 -1980 process of colonization of the northern region of the country, the Guatemalan government created FONTIERRAS (Fund for Land). 15 The legalization process is carried out by the Regularization Program in states such as Huehuetenango, Alta Verapaz, Baja Verapaz, Izabal and Peten. Most of this area comprises the agricultural frontier of the 1950s. Currently, there are some reserves of the frontier land only in the Peten area. In the Regularization Program most of the beneficiaries are families who obtained lands between 1960 and the 1980s from the INTA. At this stage the legalization process is finished with the inscription of the land title in the property register. This program has been legalizing land for the rural families in the Franja Transversal and Peten. However, once these families’ lands are legalized, their cases are considered terminated. These families have no complementary programs; it is assumed that once they have obtained their titles, they have access to productive services. But, are they accessing them? This study explores the current socioeconomic situation of families who were regularized between 2002 and 2003 in the Alta Verapaz region.

This text is organized into five chapters. The first is the introduction, and the second explores the literature with two topics: Decentralization of planning and land as the trigger factor of development. In the third, the methodology of the study is presented in order to describe how communities and families were selected. The fourth presents three levels of results: the legalization process, the beneficiaries by type and localization, and access to credit since there was no access to agricultural technology services. In the fifth, conclusions and recommendations are presented. There are two important appendixes for people interested in how the rural territories were built and how land prices were calculated. 16 Fig. 1.1 Location of Guatemala in Central America

http://www.lib.utexas.edu/maps/americas/guatemala_pol00.jpg 17 II. LITERATURE REVIEW

2.1 Rural Development: from Central Planning to Rural Territories.

After the Marshall Plan in the 1950s, most of the developing countries embarked on a wave of public intervention to modernize their economies based on the Harry- Domar, Rostow and Lewis models that predict that investment in industrialization will generate economic growth and development (Easterly, 2002). Guatemala was no exception, and through history has used several models to achieve economic growth. The Structural Changes or Lewis model was applied in the 1950s under World Bank recommendations (WB, 1951). Ten years later (1963–1978), Guatemala shifted to the Import Substitution Model which was an important process for developing its manufacturing sector and gaining the Central American market (Foster and Araujo, 2004.) In 1983, the neoliberal economic reforms were applied (Robles, 2000), but 1977’s growth rate was reached only after 1987 when Nicaragua and Guatemala started to trade again (WB, 2004). Nowadays, Guatemala has the highest GDP in Central America (18.6 1995’s US$ Billions1), and it is the fifth economy in Central America with a GDP per capita of US$ 1,7502. Along with this economic growth, several inequalities were developed. In general, Latin America has had the highest level of income inequality in the world since 1960 and Guatemala has been second only to Brazil (Morley, 2001). Guatemala also has the highest index of land concentration in Latin America with a Gini index of 0.785 in 2003 (UNDP, 2004b), the lowest indicators of health and education, and the highest level of poverty in Central America. In 2003, Guatemala reported 56.2 % of its population below the national poverty line and 16.2 % living with less than US$ 1 a day (UNDP, 2004c).

At the macroeconomic level, Guatemalan benefits from its comparative advantages in agricultural exports to the USA, and at the same time, uses its comparative advantage in

1 Data 2002, source WDI, WB 2004 2 Data 2002, Atlas Method, WDI, WB 2004 18 manufacturing for exporting to Central America (GCB, 2004). There is a floating exchange rate and inflation is controlled at between four and six percent per year (GCB, 2004b). A soft devaluation of the local currency throughout the year manages prices and wages. In the last five years, the gross capital formation has been equal to or higher than 17 %, which means that investment has been growing every year; however, the actual GDP growth rate have been decreasing, from 5.8 % in 1999 to 2.1% in 2003 (WB, 2004). As with the rest of the Latin American countries, it seems likely that macro economic policies and planning have had results controlling only macro factors, but have not answered local demands for development. (Elizalde, 2003; De Janvry, Araujo and Sandoulet, 2002; Easterly, 2002; Echeverry, 2001)

Guatemala’s development can be classified as dualistic, since there is a highly educated urban elite sharing the country with a functionally illiterate rural population which accounts for 53 % of the total population. The richest 10 % of the population has access to 56 % of the national income while the poorest 10 % can access only 0.9 % (PNUD, 2004c). This is a chronic issue, since in 1979 the land concentration index was 0.814; therefore, Guatemala has had 26 years with a GINI index higher than 0.78. A similar level of income inequality might be expected since Guatemala is an agrarian economy. Iradian (2005), citing Galor and Moav (1999), stated that income inequality drives fixed capital accumulation since the return on human capital is lower than that on the physical; therefore, the gap between rich and poor tends to expands. Between 1996 and 2002 the index of land concentration was reduced thanks to the peace agreements, not through economic reforms or any development model. Based on the paradigm that the business growth of the high-income class will bring development, the high income-class has pressured the Guatemalan government to maintain low-level intervention. Consequently, the Guatemalan State had refused to intervene in the economy in the last 40 years. 19 Due to labor market dynamics, the Guatemalan government should intervene in the economy in order to reduce education and land access inequalities. According to the WDI (WB, 2004), since the industrial sector has stagnated and tends to be reduced, it will not absorb the migrating unskilled rural labor force. The service sector is growing; however, it demands skilled labor with at least a high school diploma. In this context, there will be no alternatives for the displaced population from rural areas. Regulation of land concentration and rural wages is necessary to contain the rural migration process. If the Guatemalan State chooses not to intervene, it will face a huge expansion of the informal sector and poverty will shift from rural to urban areas.

Guatemala needs to develop its rural areas to avoid a demographic and economic crisis in the urban areas. The endogenous growth theory is an interesting framework to use in the policy-making process. Public intervention might enforce a multiple equilibrium system, a condition in which more than a macro equilibrium exists, in economic relationships between rural and urban markets. The multiple equilibrium system would create an environment in which the economic agents respond to government intervention, generating positive externalities at the local level. Depending on the role of agriculture and its productive services, these equilibrium points might be different around the whole country. Todaro and Smith (2002), based on the Benerjee and Newman studies, stated that inequality might be harmful to development, since the middle class tends to have higher saving rates than those of richest class. In addition, in the presence of financial market distortions, the low-income class has little opportunity to start businesses and overcome poverty traps.

Based on this context, there are two complementary ways to stimulate these multiple equilibrium points. The first is through education, mainly focused on the indigenous population. Investing in these communities would facilitate their incorporation into the formal sector of the economy, and/or improve their agricultural production technology. The second way to stimulate new equilibrium points is through the financial or credit market. Todaro and Smith (2002; p 169) stated that families who are unable to access the credit market “may get stuck in subsistence or wage employment.” Families who own 20 land might have access to credits, with specific amounts depending on the size and value of the land. In the Guatemalan agrarian structure 67.8 % of the rural families who own land, access only 7.8 % of the national agricultural land. This can be explained by the fact that these families’ farms are only between 0.7 and 1.4 hectares. Families who own less than 3.5 hectares tend to establish subsistence production systems and represent 86.9 % of the total proprietors. In Guatemala, the middle agricultural class represents only 11.2 % of rural families owning farms with 3.5 to 45 hectares, and access 27.2 % of the total agricultural land. (PNUD, 2004b)

Achieving a multiple equilibrium system will depend on different institutional, economic and social conditions in Guatemala. Therefore, it is necessary to stimulate a bottom-up flow in the planning process. The central planning process should match local priorities and development paths. (Romero and Ferrero, 2004; Echeverry, 2001). The Guatemalan State might expect proposals with a set of local policies that the macro policies should complement, creating a stable economic environment. Klibanoff and Morduch (1995) argue that a decentralized planning system reduces the inefficiencies due to negative externalities caused by the coordination problem in a central planning process.

A decentralized planning process includes a participatory process with rural families in their local environment. Baulch and Hoddinott (2000) and Upton (1996) argued that rural families are embedded in a complex mix of settings. Physical settings defined by environmental conditions, social settings defined by the social networks as an institution, legal settings defined by the legal system at the national level, political and economic settings which define the conditions for trade, assets value and the level of return of resources. Consequently, rural families face a wide variety of background conditions. Baulch and Hoddinott (2000) also point out that rural families allocate their resources, such as capital and labor, based on the perception of the returns they can obtain. The perception varies depending on the specific mix of settings that a family might be facing. As a result, the basic unit for public policy planning should be the rural territory; a term that needs to be redefined. 21 The definition of rural territories includes a revision of what rural means. “Rural territories” does not involve only a geographical unit; it is the institutional network that performs economic, social and political activities. Rural territories are systems that include urban cores and their hinterlands, which share a common combination of social, political, legal, physical and economic settings. (Romero and Ferrero 2004; Echeverry 2001, De Janvry and Sandoulet, 1999.) This wide vision of rural territory allows policy makers to support not only agricultural production, but environmental services, rural tourism, and rural craft as well. (De Janvry, Araujo and Sandoulet 2002; Romero and Ferrero 2004). This new concept of rural economic activities has several policy implications, the principal one being the decentralization of the planning process.

2.2 Land Legalization and Family Income: the Trigger Effect.

Several authors (Baranyi et al, 2004; CEPAL, 2002, 2003; Field and Fisher, 2001; Merlett, 2000; De Soto, 2000; and Strama, 1999) agree on that land tenure is a key factor for rural development and poverty reduction. Indeed, multilateral organizations such as the United Nations and the World Bank have programs to stimulate the land markets. There are different viewpoints about why this issue is so important. In the Guatemalan case, Kobrak (2003) and Brockett (1998) stated that the 36 years of war were caused by the land tenure issue. It is also supposed that land legalization reduces poverty. Land legalization has been identified as the key policy for Guatemalan rural development (Grunberg, 2003; Cabrera, 2002; Hernandez, 2000; Palma et al, 2002; Brockett, 1998). Indeed, Cabrera, a high level public official, stated that the base of the agrarian policy should be the land issue: “Lack of land property restrains families from formal organizations, and generation of wealth due to the lack of collateral for the credit markets.”3 However, there are several factors between the land legalization and rising income effects.

3 Cabrera, 2002 p 4 22 Based on the free market theory, it is supposed that once land is legalized, families can gain access to financial markets (Hernandez, 1998). It is also supposed that prior to land legalization families have no access to credit. Collateral is presented as the major restraint on credit access. Based on this hypothesis, once families resolve the legal issue of property, they have access to credits and can generate wealth. However, this hypothesis does not consider family risk behavior: Are families willing to use their land as collateral? The answer depends on the financial market’s conditions: interest rates, terms and mortgages, annual incomes and vulnerability to different kinds of shock (environment, illness, and prices).

Technology is considered a key factor for reducing the environmental and market related risks. Depending on what is produced, for which market and the annual risk to harvest, families might decide to accept or reject new techniques. The typical rural family is risk adverse, and “prefers a certain given income to a risky income with the same expected value” (Pindyck and Rubinfeld, 2000 p 157). Agricultural technology is one of the best ways to reduce the variability of yield and income between seasons and years when there is no agricultural insurance market (Levard, 2001). However, new technology has to match families’ economic rationality and local settings (Dumazert et al). Families might access technological assistance or acquire new skills, but they might lack complementarities such as infrastructure, machinery and market information. In this case, families would not use their new skills to increase production or add value to their agricultural products (Easterly, 2002)

Investing in technology and changing a crop depend on the dynamics of the agricultural goods markets. These markets have several dynamics: they can be natural monopolies, oligopolies, monopsony or competitive markets. Depending on which dynamic is part of the local setting, and the rural territory’s place in the commercialization chain, prices for buying peasants’ products would be higher or lower. Families with road infrastructure can charge a higher price for their products. Families near cities can diversify their production with fresh vegetables. Conversely, families near cities can buy production inputs such as seeds and agrochemicals cheaper than can families in the hinterland. 23 Families with more than one possible supplier will buy agricultural inputs at lower prices than those with only one supplier (monopoly). Families with more than one buyer will sell their products at higher prices than those with just one buyer (monopsony). Coffee production is an example of one seller and one buyer in communities with deficient productive infrastructure.

These relationships between production and trade determine the families’ annual net agricultural income. According to Morduch (1995), families that cannot cover the family reproduction costs (food, clothing, schooling, health and inputs for production) with agriculture use complementary income strategies. In the case of the Alta Verapaz region, families that cannot cover their reproduction costs tend to be inserted into rural labor markets as a first option and into the land markets as a final option. When income from non-farm work is higher than 60 %, families tend to be at an extreme poverty level. If this extreme poverty situation becomes chronic, with scarcity of rural jobs and low rural wages, families will use the second alternative, the land markets. When a family decides to sell its land, it is because the rural territory does not offer alternatives of income. If they sell their land, the next step is migrating to urban areas or to the USA.

From the literature, a chain of causes and effects linking land, poverty, food security, rural labor, goods markets, environmental practices and migration can be drawn (Fig. 2.1). However, there is no direct relationship between land legalization and each of these factors. In a complex decision-making process, families, depending on their resources and market’s formation, decide what, when and to how produce. They organize their labor and capital in order to efficiently use scarce resources such as labor, land or money. (Dufumier 1988; Marchetti and Maldidier 1996; Marin and Pawels 2001; Levard 2001 and Dumazer et al 2002). As a result, they might diversify, invest in technology, request credit or even sell their land. 24 Fig. 2.1 Relationship among land tenure, agricultural markets, income and economic rationality in rural families

Services sector Land Markets INCOME

Labor Markets Non Agrarian Strategies

Agrarian Strategies

Agricultural Markets (inputs and products) Family’s Traditional Traditional Economic Diversification Production Production Rationality

Investment

Short Long Technical Own resources Term Term Assistance

Credit

Land RESOURCES Security

25 2.3 Research Questions.

The main goal in this study is to identify the current situation of the families legalized by FONTIERRAS with USAID funds between 2002 and 2003 in Alta Verapaz. The study was designed to verify if families have access to services such as credit, and technical assistance. Moreover, the study sought to verify if the beneficiary families remain in their previous condition or, in the worst case, if they have sold their land through the informal land market. Hence, the research questions were based on the effects of the legalization process as the trigger factor for rural development: 9 Do families which benefited from the Regularization program constitute homogenous socioeconomic group for policy recommendations? 9 If there are different socioeconomic groups for policy recommendation, which are they? 9 Does access to productive services change after land legalization? Which are the factors that restrain or facilitate this access?

26 III. METHODOLOGY

The study of the agrarian dynamics and the effects of the legalization process in Alta Verapaz presented goals to be developed at the family, community and regional levels (Table 3.1.1). The region is understood to be the socioeconomic settings in which rural families perform their economics and social activities. Depending on this institutional and economic environment, families decide what, when and how they will produce, and allocate capital and labor in either the short or the long run (Levard, 2001). Therefore, it is necessary to develop a systematic methodology which allows understanding how this environment influences the family’s decision-making process.

The agrarian system theory uses a hierarchical model which links the family decision- making process and its local economic and institutional environment (Dufumier, 1988). Rural families tend to use several social networks to trade, to acquire knowledge and for productive services. In order to understand these social networks this study proposed two stages: first, the construction of a homogeneous socioeconomic environment (rural territories) and second, identification of the effects of the land legalization program through understanding the economic rationality of indigenous rural families in Alta Verapaz.

Table 3.1.1 Logic framework of the study effects of land legalization in the agrarian dynamics of the indigenous communities of Alta Verapaz, Guatemala Objectives Indicators Tool

Access to productive services, Identify the socioeconomic Rural productive infrastructure and social conditions for the rural production Territories services Efficiency in the use of land and Evaluate the rural families’ economy labor Study Case Efficacy of the use of land and labor Identify the effects of the Changes in the use of land and Study Case legalization process access to new services 27 3.1 Building Rural Territories: Agrarian Zones.

The approach used in this research is the Regional Agrarian Diagnoses (Dufumier 1988) and the aim is to identify and classify sources of variation in Alta Verapaz. Five relatively homogenous zones were identified: Coffee Plantation Zone, Peripheral Production Zone, Traditional Peasants Zone, Agricultural Frontiers of 1950s and Productive Services and Infrastructure access Zone. The key factors for variability within the region were: 9 Ecological conditions: using this variable Alta Verapaz can be divided into three sub regions – coffee plantation, cardamom farm and grain. The ecological conditions are related to the height above the sea level, type of soil and slopes. 9 Agrarian history: in this variable there are four sub regions –colonization of 1870s, colonization 1930-1960, colonization after 1960s and the area affected by the 1980’s conflict. The colonization process from 1960 to 1980s created several social networks depending on the origin and their ethnic group. 9 The agrarian social structure: the dominant social sector in a region rules the agrarian dynamics in labor, trade, credit and land accumulation. In this variable there are two sub regions –the agrarian capitalist and peasant predominance 9 Finally, the variables of population and extreme poverty were useful to define borders for each agrarian zone.

The sources of information for population, poverty and ecological variables were mainly official documents from the Ministry of Agriculture, the National Institute of Statistics and the Secretary of Planning. The sources for the agrarian history and social structure were interviews with local leaders and secondary information from the UN Commission for Indigenous Rights, and the University of San Carlos. 28 3.2 Understanding the Family’s Decision-Making Process: Types of Families.

Identification of the economic rationality of the families was performed in three steps. Files on land legalized by FONTIERRAS with USAID funds in 2002 and 2003 were obtained in each of the local offices of Ixcan, Chisec, Fray Bartolome and Coban. Once the files were obtained, the communities were classified and eight representative ones were selected. The selected communities were visited and six case studies were developed in order to build the local agrarian structure.

According to the official list, 78 communities were legalized in 2002 and 2003 with USAID funds. This list was facilitated by the Regularization Program at FONTIERRAS. Due to organization aspects, legalization files are not centralized at headquarters, but are instead stored in the regional and municipal offices. However, once the families’ land is legalized, files are not longer important in the local office. As a result, it was not possible to find 23.1 % of the files, and the 76.9 % of checked files had some level of missing material (Table 3.2.1). The data base comprises 60 communities’ files that were analyzed, but 32 % did not have the Land Capability Classification (LCC) study, 60 % did not have the socioeconomic study, and 23 % did not have the FONTIERRAS’s legalization supports. The price and payment information was completed with the FONTIERRAS central electronic data base, but such data as ethnicity, production, and income were unavailable.

Table 3.2.1 State of the legalization files in Alta Verapaz % of Number of Missing missing Offices Communities Analyzed Files files Coban 15 8 7 46.7 Chisec 12 8 4 33.3 Fray Bartolome 16 13 3 18.8 Ixcan 35 31 4 11.4 Total 78 60 18 23.1 Source: FONTIERRAS files 29

Files were classified by type of contract with two levels: communitarian and individual titles. Communitarian is when land is owned by a group of families with individual plots, but with a single title. Individual titles were offered by INTA in the early 1980; in this cases the land price was double than a communitarian. Files were also classified by payments with two levels: paid contracts and paying contracts. Finally, files were allocated in each of the five agrarian zones in order to calculate proportional distribution (Table 3.2.2).

The number of communities was fixed at eight mainly by budget limitations. There were no beneficiaries in either the Coffee Plantation Zone or the Productive Services and Infrastructure Access Zone, which is consistent since these zones have a high concentration of land with agrarian capitalists as the predominant social sector. The Traditional Peasant Zone was not included because of the selection of Nueva Jerusalem. This community was important to support the hypothesis of a Peripheral Production Zone. Even though it is located in Ixcan, this community matches the features of La Trinidad II at San Pedro Carcha. A second strong consideration was the fact that since Nueva Jerusalem was a Kaq’chikel community, it would enrich the study. As a result, the eight communities were selected from two agrarian zones: Agricultural Frontier of the 1950s and Peripheral Production Zone. 30

Table 3.2.2 Distribution of communities by agrarian zone, type of contract and state of payment Type of State of Agrarian Zones Contract payments Communities % Paid 0 0 Communitarian Paying 0 0 Coffee Plantation Zone Paid 0 0 Individual Paying 0 0 Paid 2 3.3 Communitarian Paying 1 1.7 Peripheral Production Zone Paid 0 0.0 Individual Paying 0 0.0 Paid 3 5.0 Communitarian Paying 0 0.0 Traditional Peasants Zone Paid 0 0.0 Individual Paying 0 0.0 Paid 31 51.7 Communitarian Agricultural Frontier of the Paying 16 26.7 1950s Paid 2 3.3 Individual Paying 5 8.3 Total 60 100.0 Source: FONTIERRAS files

Six of the selected communities are located in the Agricultural Frontier of the 1950s and four of them are currently paying their land. They do not yet have full property rights; FONTIERRAS owns these property rights until the total contract is cancelled. Two communities have individual family contracts, and some families have already paid for their land and some have not. The other two communities paid for their land before 2003; and thus, own their land with complete property rights. The ethnic variable was important in the study cases, so they were performed with Achies, Q’eqchies, Poq’omchies, Mames, Ixiles, Q’anjobales, Kaq’chikeles and Ladinos (a mix of European and indigenous) (Table 3.2.3). 31 In the Peripheral Production Zone, two communities were selected; the first near the coffee production capital of San Pedro Carcha, the second largest city in the region, populated exclusively by Q’eqchies. The second community was Nueva Jerusalem near Ixcan, in the Agricultural Frontier, with cattle and cardamom production systems. The population was mainly Kaq’chikeles with some Ladinos.

Table 3.2.3 Communities included in the study by agrarian zone, type of contract, state of payments and ethnicity. Agrarian Type of State of Zone Contract payments Ethnicy Community Peripheral Paid Q'eqchi La Trinidad II Production Communitarian Nueva Zone Paid Kaq'chikel + Ladino Jerusalem Paid Achi+Ladino El Sauce Santo Paid Q'eqchi Domingo Communitarian Las Mercedes Agricultural Paying P'oqomchi+Q'eqchi II Frontier Paying Q'eqchi Sesajab of 1950s Paying Mam+Ixil+Kaq'chikel Santo Tomas Individual Paying Q'anjobal+Q'eqchi Salacuim Source: FONTIERRAS files and study cases

The last step in the selecting process was selecting individual families. This was done through interviews with the communitarian leaders, who were the key informants about the communities in their social and economic aspects. They were open-minded and not only facilitated information about the legalization process, but also introduced the researcher to the families selected to perform the study cases. 32 The variables for selecting families were: 9 Agricultural production systems with three main outputs -grains, cardamom/coffee/vegetables plus grains, and grains plus cattle production. 9 Labor force management with three levels -work outside the farm, no work outside and no hired workers and no work outside and hired temporary workers 9 Ethnicity 9 Gender: female and male owners were included for the study.

As a result, 48 families were studied. Only four land owners out of 48 were women (8 %) while 44 owners (92 %) were males. This is a clear-cut picture of the gender inequalities in land access in Guatemala.

33 3.3 Data Analysis.

The core of the methodology was based on the types of families and their efficacy and efficiency in managing resources such as land, labor, and capital. In order to determine the intensity and efficiency of the use of resources, it was necessary to calculate the following ratios:

9 Intensity of use of labor: Labor day per area (LB/Ha) 9 Invested production means: Fixed capital/ area (US$/Ha) 9 Production means used/ area (US$/Ha) 9 Net added value / area; (US$/Ha) 9 Net added value / Invested production means; (US$/US$) 9 Net added value / used production means (US$/US$) 9 Net added value/ Familial labor day (US$/FLD) 9 Net agrarian income/ area (US$/Ha) 9 Net agrarian income/ Familial labor day (US$/FLD)

Two key concepts were used to calculate these indicators. Net added value (NAV) and Net agrarian income (NAI). According to Levard (2001) and Dumazert et al (2002), the NAI is the family income from agricultural activities; it excludes incomes from commercial or outside labor force activities. The NAV is the value that labor and capital added to the agricultural products. For calculating these values, the following process was used. The first was determination of the Brut Product (BP), which is the income obtained by selling the product in the markets for the crops. In the case of animals, it includes sales, buys, and category changes in the inventory. The Total Brut Product is the sum of all the activities performed in the production system. The Brut Added Value is obtained by subtracting the input cost. The amortization as subtracted, as well, in order to obtain the Net Added Value. 34

Crops Brut Product= Production * Price (a) Animal Brut product= Sales – Buys + (current inventory – initial inventory) Total Brut Product=Crop Brut Product + Animal Brut Product Brut Added Value= Total Brut Product – Inputs cost Net Added Value= Brut Added Value – amortizations

In a second step, monetary annual proportional costs are subtracted from the NAV and the family remuneration is obtained. The annual proportional costs include wages, credit interest, rent of land or machinery, taxes and payment for services. The Net Agrarian Income is the family remuneration plus subsidies. The Total Income is the NAI plus the Net Income from Non Agrarian Activities.

MAPC=Wages + interests + payments for services + taxes+ land renting Family remuneration= Net Added Value – MAPC Net Agrarian Income= Family remuneration + Subsides Familiar Total Income= Net Agrarian Income + Extra Agrarian Income

In order to compare land prices and credits, the 2003 year was selected as a base year; therefore, prices, payments and costs were adjusted to 2003’s Quetzals, using the Consumer Price Index. The Quetzals were converted to US$ with the ratio of US$ 1 = Q$ 7.940846 35 IV. RESULTS

4.1 The Legalization Process. 4.1.1 From INTA to FONTIERRAS.

The land distribution policy can be divided into three stages. The first started with the Franja Tranversal Colonization Policy in 1960-1979 which promoted rural migration to the northern lands. This policy set up the current procedure to access land with slight differences. The second stage was the Franja’s consolidation with the establishment of rural communities and the civil conflict, and finally, the third stage is the current regularization process by FONTIERRAS under the Peace Agreements. The national policy for land access defines a procedure to claim property: 9 Claims of non-registered lands ought to be made to the National Institute of Agrarian Transformation/FONTIERRAS; this claim has to be supported by the local government. 9 Once the INTA/FONTIERRAS has accepted and confirmed the claim, a team will be sent to measure the land. The measurement and mapping of the area has to be paid for by the claiming families. 9 Once the INTA/FONTIERRAS has the map and measurement, a contract between the families and the Guatemalan government is signed. This contract cover the following conditions: 36

o Families must produce every year. o 10 % of the area must be covered with forest o For communitarian contracts the prices were fixed at 15, 30 or 50 Q$/Ha. For individual contracts prices were fixed at 30 and 50 Q$/Ha; the main factor deciding prices was road access. o Families must pay 5 % of the total amount when signing contracts. o Families must pay the total amount in ten years o A 5 % interest of the land value will be charged on the total amount. o If families pay the total amount before the 10th year, they will qualify for a 10 % discount. o An Agrologic/Land Capability Classification (LCC) study (using the USDA systems) o A Community census/ Socioeconomic study

This policy encouraged rural migration from central and southern municipalities to Alta Verapaz, Ixcan and Peten. This was the expected process of transferring land from common to private ownership started in Alta Verapaz in the 1870s with the coffee plantation policy. Early payment was encouraged with a 10 % discount, equivalent to saving the interest and 5 % of the land value if families cancelled the whole amount before the agreed term.

From 1980 to 1996, this policy had two key changes. First, communities were no longer under INTA’s control but instead were under the Army’s jurisdiction. Due to the armed conflict, the National Army started to organize self-defense patrols against the indigenous guerrilla movement. Anyone who resisted or protested was considered a guerrilla, and therefore, would lose her or his civil rights, and in most cases, her or his life as well. Land became a political matter. Communities on the Army’s side had access to land and trade protection, while 430 communities were burned, 130,000 civilians were executed, and 45,000 persons disappeared, accused of cooperating with guerrillas (MINUGUA, 1999). Most of the legalization process was stalled during these years. There were also reallocations of families among communities responding to military goals. The second important change related to land prices. In these years, the Guatemalan government increased them to 300, 400 and 600 Q$/ha, so the required initial 5 % and the first payment due when the contract was signed were higher. 37

The third stage of the land distribution process started with the peace agreements in 1996 and the creation of the FONTIERRAS in 1999 as a result of the Socioeconomic and Agrarian Situation Agreement (COPREDEH, 1997). This agreement created a fund to facilitate access to land for indigenous communities, focused on women. This fund also had to address regularization under the INTA intervention. Surprisingly, FONTIERRAS honored the contracts from 1980s without adjusting prices to actual value. Obviously, with the urgency to meet the peace agreement as a way to demonstrate government goodwill, legal aspects took priority over financial ones. Thus, families whose land was valued at 50 Quetzals in 1986, paid with 50 Quetzals in 2001; despite the fact that 50 Quetzals in 1986 were equivalent to 300 Quetzals in 2001. As result 78 % of families paid less than 50 % of the initial land price. The later families paid for their land, the less they paid.

Two changes were introduced by FONTIERRAS and the International Cooperation in the land access and regularization procedure. Two of INTA’s basic tools were substituted. The Agrologic study was replaced by the Land Capability Classification (LCC), and the community census was replaced by the Socioeconomic Study. INTA’s agrologic study, designed in the 1970s, was influenced by the green revolution movement. In general, INTA’s final report was a technical evaluation of a family’s production system; an agronomist had to present recommendations to improve yields, reduce risks, and to diversify the production system. The LCC has a quite different scope with forestry conservation as its main objective. The LCC is done by forestry major professionals and the final report is just a map with the soil classifications according to a national map of Potential Uses. There are no recommendations to improve yield, protect soil fertility or diversify the production system. The LCC is performed by the National Institute of Forests (INAB) and the report is just a requirement. However, these reports can cost between US$ 425 and 705. If there is no recommendation for families’ production systems, FONTIERRAS might use these funds for technical assistance or to fund other community regularization. The LCC could also be redesigned in order to be useful for technical assistance support. 38 The socioeconomic study was established in order to give local committees information for deciding land prices and the terms of contracts. There is no common form or guidelines for writing the final report. The information varies from one team to another, and, in most of the cases, the information is surprisingly shorter than the INTA’s census. Moreover, local commissions are applying prices according to a national tariff; thus, the socioeconomic study became only a requirement like the LCC. This study can cost to the FONTIERRAS between US$ 320 and 430, and there is no worthy information for the local commissions or to the rural families. This study has to be redesigned and enforced as a common form with specific information to be used in the price setting process; otherwise, it is just a waste of money.

In general this land policy had two key restrictions. The first is the fact that families had to pay for the measurement. This was very expensive in 1986; and thus, migrant families needed to gather a large amount of money to start the legalization process. The second restriction was the 5 % payment at signature. Depending on the size of the farm this amount could be between Q$ 2,000 and 3,000, which is between 1,700 and 2,500 in today’s US dollars. Therefore, it could be inferred that benefited families were not landless. They might be families which sold their original land in order to migrate to the agrarian frontier. Nowadays, some displaced communities benefit from international cooperation, institutions which fund measurement and subsidize the LCC and the Socioeconomic Study. None of them is located at the research sites.

4.1.2 Repayment for the Land.

In general, 68 % of communitarian contracts had been paid as of 2003 (Fig. 4.1.2). Families from the Traditional Peasants Zone paid for their land between 1987 and 1990. The pressure for land and the fact that this area did not suffer strong effects from the armed conflicts in the 1980s might be key factors for paying off contracts in the short term. Ixcan and Coban in the agricultural frontier have similar percentages of 67-76 %. This is a corridor that starts at Coban and ends at Ixcan, where cardamom and cattle are produced and traded. In this corridor families tend to obtain enough income from 39 agriculture to cover their reproduction costs and pay for their land. However, this was one of the areas most affected by the armed conflict. In Chisec and San Pedro Carcha less than 50 % of communitarian contracts have paid. In the case of Chisec, this is explained by the fact that several communities obtained contracts in the 2001 -2003 period.

Fig. 4.1.2 Percentage of paid communitarian contracts in Alta Verapaz by municipalities and as a region.

Alta Verapaz

Ixcan

Fray

Coban

Chisec

Carcha

Cahabon

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

% of total communitarian contracts

Source: FONTIERRAS files

Since an inflationary process began in 1983, a crisis occurred in 1985-1988, and a constant inflationary process existed from 1989-2003, prices were adjusted. They were first adjusted to 2003 Quetzals using the Consumer Price Index ratio. A second converted Quetzals to the 2003 US dollar. Prices and payments in this section are given in 2003 US dollars in order to compare periods and zones. (For price and value adjustment calculations, see Appendix II) 40 4.1.3 Prices, INTA Contracts.

INTA land prices between 1975 and 1996 match with the agrarian zones. Farms in San Pedro Carcha are priced higher, since they are near cities and also have access to paved highways. These farms comprised the Peripheral Production Zone and their price was higher than US$ 650/ha; currently, their market value is approximately US$ 4,500/ha. Farms in the Traditional Peasants Zone reached a price between US$ 50 and 60/ha. This is a zone with a road infrastructure and commercial chains to Chamelco and San Pedro Carcha. Indeed, there was no clear governmental interest in attracting families to this zone; moreover, a lot of families migrated from this zone to the agricultural frontier of the 1950’s. Finally, the Agricultural Frontier Zone of the 1950s had attractive prices because it was far from cities. Prices at Ixcan were around US$ 21.5/ha while in Coban’s hinterland was around US$ 40/ha (Table, 4.1.3). In the second period this price was double in Ixcan, and for the third period it was triple. Currently, the market prices for land in Ixcan are approximately US$ 380/ha.

Table 4.1.3 Prices of land fixed by INTA and FONTIERRAS in Alta Verapaz (in 2003 US$/ha) Municipality 1977-1985 1986-1996 1996-2003 Cahabon 56.54 58.13 Carcha 654.44 Chisec 25.09 55.15 Coban 39.79 235.49 68.52 Fray 37.18 44.16 Ixcan 21.43 54.20 87.423 Source: FONTIERRAS files 41 In Fig 4.1.3 the land prices in each stage of the land legalization process are presented. Farms at San Pedro Carcha were the most expensive through the whole period of 1980- 2003, which is explained by their location in communities at the urban periphery. There is a clear tendency to increase prices over time, due to price adjustments. Ixcan before 1986 was below US$ 50 and by 1986 it was above this price, with some cases where families obtained discounts due to their poverty level. Fray Bartolome has the same tendency. Before 1986 land prices were below US$ 50 and after 1986 prices were increased. There, too, families obtained discounts due to their poverty level. In the three stages, there is a trend that the farther a community is from cities, the lower the land price.

Fig. 4.1.3 Land prices fixed by INTA and FONTIERRAS in Alta Verapaz per community and year (in 2003 US$)

1000.00

300

100.00

$ 50 S U s 03' 20

10.00

1.00 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Year Cahabon Carcha Chisec Coban Fray Ixcan Source: FONTIERRAS files 42 4.1.4 Repayments to FONTIERRAS.

The legalization process on average took 14 years ranging from 10 to 22 years, including a total of 16 years of armed conflict with six years of massacres and displacement. Migrating to the Agricultural Frontier in the 1980s was a high risk not only for the chance of losing money, animals or land, but also a risk of lives of the whole family. However, in the long run families who stayed on their assigned land through the armed conflict benefited from the inflationary process. In the Traditional Peasants Zone, for families who paid off in the short term (one to five years, 19 % of communities), the final price of land was around US$ 55/ha after the 10 % discount; while for families who paid in the 1990s (81 % of communities) the final land price was around US$ 11/ha. The latter obtained an 80 % reduction due to inflation. In the Peripheral Production Zone families paid in 2003. Due to the fact that they paid the 1984 nominal price, their reduction due to inflation was the equivalent of 90 % of the land value. However, due to their location respect to cities, families in the PPZ paid the highest price for their land and families in the Agricultural Frontier of the 1950s paid the lowest (Table 4.1.4).

Table 4.1.4 Payments of the INTA contracts in Alta Verapaz (2003’s US$) Municipality 1987-1990 1991-2000 2001-2003 Cahabon 55.10 11.10 4.2 Carcha 80.9 Chisec 10.23 8.30 Coban 24.67 Fray 11.80 7.64 0.2 Ixcan 7.56 22.00 11.16 Source: FONTIERRAS files 43 There was a clear tendency for families who took longer to payoff their contracts, to benefit more from the inflationary process. Families from Fray, Ixcan, San Pedro Carcha, and Coban, whose contracts were signed between 1977 and 1984, and who paid in the period 2000-2003, paid only 10 % of the initial value of the land. In the Fig. 4.1.4 the relationship between years to pay and percentage of savings due to the inflationary process is presented.

Fig. 4.1.4 Relationship between time taken to pay for land and saving due to currency devaluation

100

90

80 y = -0.2407x2 + 8.7695x + 12.336 2 70 R = 0.8942

60 ue l a v

nd 50 a l of

% 40

30

20

10

0 0 5 10 15 20 25 years to pay

Source: FONTIERRAS files 44 4.2 Localization of Beneficiaries.

The Alta Verapaz region was divided into five agrarian zones: the Coffee Plantation Zone (CPZ), the Productive Services and Infrastructure Zone (PSIZ), the Traditional Peasants Zone (TPZ), the Agricultural Frontier of the 1950s Zone (OAFZ), and the Peripheral Production Zone (PPZ) (Fig. 4.2). The study cases were located 22 % in the PPZ and 78 % in the OAFZ. This section describes the socioeconomic environment of the families who were part of the research. For in-depth information, the building of the agrarian zones process is presented in Appendix I.

4.2.1 Agricultural Frontier of the 1950s.

The old agricultural frontier is located in the northern areas of Alta Verapaz. It includes Ixcan, northeast Coban, north Chisec, Fray Bartolome and Chahal (Fig. 4.2). Its soils belong to two main geological formations: Sedimentary and Crystalline Highlands. The region includes six river basins, two of which cover most of the zone: La Pasion and Salinas Rivers. At the west border, two small river’s basin, Ixcan and Xacibal, can be found and to the east there are portions of the Moho and Sarstun river basins. This zone is relatively flat with an altitude of less than 200 masl.

Before the 1950s, this was an uninhabited area; the first movements to colonize it were from the southern municipalities and Baja Verapaz towards Fray Bartolome. In the early 1960s, petroleum exploitation was established in Rubelsalto, Chisec. The petroleum company started hiring a large number of peasants to clear areas in order to construct buildings, the extracting machines, and pipes to connect Rubelsalto with Izabal. Therefore, families migrated from Baja Verapaz, Zacapa, Jalapa and Retauleu seeking jobs. Once in the zone, they found a huge amount of public land which, through the INTA’s process could be assigned to them. This was a lure for a great number of landless families in the south and central region of Guatemala. 4 By 1970, Fray Bartolome and

4 Families’ personal histories 45 Chisec were colonized and Ixcan and Peten were the next territories to conquer. At the end of the 1970s and in the early 1980s Ixcan was colonized. In the mid-1980s, Ixcan was a war zone, with guerrillas and the Army’s special force called “Kaibil” in dispute over governing this area.

After the peace agreements, the old agricultural frontier developed its productive potential and became one of the most productive areas in Guatemala. The municipalities which are part of this zone have a high percentage of rural population. Ixcan has 90 %, Chisec’s is 81.6 %, and Chahal has 76.9 % (INEC, 2004; MAGA, 2002). This zone also includes most of the rural areas of Coban. There are several ethnic groups in Chisec, Coban, Ixcan, and Fray Bartolome; however, the region is dominated by the Q’uechi ethnic group. Depending on the facilities for agricultural production and access to markets, families tend to have high or medium incomes. Consequently, the poverty level is medium to high in most of the zone (MAGA, 2002).The families who settled the Chixoy River banks can harvest double the amount of product per area than can families in the rest of the zone. Fray Bartolome is a municipality in which cattle production has been growing and the land concentration seems to be a side effect that boosted extreme poverty. It has the highest percentage of extreme poverty in Alta Verapaz (MAGA, 2004).

There are two main ways to access this zone. The first one is the Coban highway which connects Ixcan and Chisec, and then on to Fray Bartolome. There is also the northern transversal belt that connects Peten with Ciudad Guatemala. It goes from east to west, reaching first Fray Bartolome, then Chisec with Ixcan in the extreme west. A second way to access the zone is by air. There are small airports at Fray Bartolome, Chisec and Ixcan. Fray Bartolome is the only municipality with storage facilities, with a total capacity of 38 tons of corn. 46 AVANCSO (2001) called this “The Corn and Cardamom Zone”, but it does not include Ixcan. The name came about because AVANCSO was focused on crops, and not on the agrarian process as a whole. The name “Agricultural Frontier of the 1950s” gives first the idea of a migration from different areas of the country, then sets up a dynamic scenario of settlement and production, since the urban area is used mainly for marketing and services access functions. Finally, because the migration path started with Fray Bartolome and Chahal and followed to Chisec, Ixcan and Peten, this zone shares a common agrarian history in the struggle for land access and civil conflict.

4.2.2 Peripheral Production Zone.

This zone is not compact. It is a peripheral ring around cities such as San Pedro Carcha, Chamelco, Santa Cruz, Tactic, Coban and Ixcan (Fig. 4.2), and is the result of urban enlargement. Farms which ten years ago were located in rural areas are now considered suburban or marginal neighborhoods. These properties are expensive and relatively small due to the city enlargement and pressure for building new residences. In the Coban, Chamelco and San Pedro Carcha peripheral areas, these properties cover less than a hectare each. Families tend to produce small amounts of corn, beans and vegetables which they sell to the local market. At the same time, they expand their total income with extra agrarian economic activities from the urban informal sector such as; construction or in the service sector in areas such as gardening, security, carpentry, and sales. These families create a poverty belt around the cities. Because they are defined as neither rural nor urban, they are not covered by any urban or rural project or institutions. This zone is not identified by AVANCSO (2001) or any similar studies because these areas are included in the Coffee Plantation Zone or the Cardamom Zone with a labor supply labor role.

Fig. 4.2 Agrarian zones in Alta Verapaz

Source: Adapted from IARNA, 2004

48 4.3 Types of Benefited Families in the Regularization Program.

The INTA did not distribute the same amount of land to all families. The first source of variation of the FONTIERRAS beneficiaries is the land access process. The process was driven by families identifying and claming unregistered land; thus, the size of the individual property depended on the size of the found property and the number of families demanding its legalization. The second source is the location of the community; whether the property is located in the PPZ or in the OAFZ. As a result, there are variations in access to infrastructure (highways, rural roads or waterways), and access to services (technical assistance, credit, education and health) and there are also variations in the effects of the armed conflict. The infrastructure, economics, social and political settings plus the physical worth (land’s agriculture potential) created several conditions for family evolution, confirming arguments of Levard (2001), Baulch and Hoddinott (2000) and Upton (1996). Even though families belong to the social sector called peasants, there are interesting variations. Three types of peasants were identified in the study (Fig. 4.3.1). The first two types, Subsistence Peasants (SP) and Poor Peasants with Land (PPL), share the feature of supplying labor force to other farms. The third type of family does not supply labor force, but rather hires temporal workers. They maximize their familial labor force. Base on different agricultural potentials and the families’ emphasis on production, four subtypes were identified in this third family type. Two of them emphasize cattle production and the other two emphasize crop production. This section discusses the economic rationality of each type and subtype of family and it also explores the relationship of land to capital, labor and income per type of family. 49 Fig. 4.3.1 Types of benefited families by the Regularization Program, FONTIERRAS- USAID (2002/2003) in Alta Verapaz, Guatemala

Cattle Producer Peasant to Farmer

River Bank Peasant to Farmer s e Interior Peasant to Farmer with ili

m Cattle Fa f

o Interior Peasant to Farmer pe Ty

Poor Peasant with Land

Subsistence Families

0 5 10 15 20 25 30 % of families in the study

Source: Study cases

4.3.1 Subsistence Peasants.

Subsistence peasant families are located in the Periphery Production Zone (PPZ), and to a minor extent can be found in the Agricultural Frontier of the 1950s Zone (OAFZ). They are located around cities such as San Pedro Carcha, Coban, Chisec, and Chamelco. In the PPZ the Subsistence Peasants (SP) own less than 1.5 hectares (ha) and the ratio between labor and land is a range of 0.4 and 0.7 ha per familiar labor unit (FLU). In the OAFZ, this ratio is higher with a range between 1.5 and 2.6 ha/FLU. These families are referred to as, precarious wage-earner peasants by Le Bot (1995). They own a very expensive land due to their location around the main urban cores in both zones. The Net Agricultural Income (NAI) represents 20 – 40 % of the total income. The remaining 60 to 80 % is achieved by working in urban services in the PPZ or working for farmers or agrarian capitalists in the Zone. In general, these families represent 11 % of cases; within the PPZ they represent 40 %, but only 3 % in the OAF. 50 Resources.

The land owned by these subsistence peasants has limited fertility; and thus, the families realize low yields in corn and bean production. The market price of the land is around US$ 5,000 to 6,000/ha in the PPZ, where families face a huge pressure to sell their land to urban projects. In the OAFZ, the land market price between US$ 3,000 and 4,000/ha and the peasant owners face the same pressure from families who want land around the urban core. These family farms are labor intensive, with 42 – 57 labor days per ha, and 92 % of them are familial labor days, the rest are familial cooperation days. The labor division responds to maximize the outside working labor force, with adult males working in the city or for other farms, and women and children working within the production unit. In young families, women also work outside the production unit. The main source of capital is the land. These families do not invest in machinery, and they have low intensity of agrochemicals (Table 4.3.1.a).

Table 4.3.1.a Resources of the subsistence peasants in Alta Verapaz Resource Quantity Characteristics Land with low fertility, with a high Land 0.4 to 1.5 ha/agricultural FLU price in land markets Labor force comprises children, 1 to 3 FLU, 42 to 57 labor days per teenagers, and adults. In the Labor hectare division of labor, male adults work outside the production unit. Machinery Mostly machetes, hoes, fumigation Basic tools and Tools manual pumps It is not common, however due to some NGO projects it is possible Cattle 1 or 2 animals to find a cow with a calf. It is also used as a savings account In the PPZ The high levels of capital are due US$ 2,500 – 7,800/ FLU Capital to the market price of the land in the OAFZ (US$ 5,400/ha) US$ 1,000 – 1,500/ FLU Source: Study cases 51 Production System and Economic Rationality.

The production system is based on crop production, mostly in corn and beans (Table 4.3.1.b). Corn represents 60 -80 % of the total agricultural income; however, due to low yield and small areas, families have to meet their corn requirements by buying 130 to 230 kg per year. The areas of bean production are minuscule, and cover only family consumption. In the PPZ some families have began to produce coffee, but due to their low income, it takes a lot of time to establish 0.35 ha. In the OAFZ, peanuts are the commercial crop, but available fertile land is a serious restriction (Table 4.3.1.b). The combinations of agrarian systems are: • Corn + Beans + labor force • Corn + Beans + coffee +poultry + labor force • Corn + beans + peanut + poultry + labor force

Table 4.3.1.b Agrarian production systems of Subsistence Peasants in Alta Verapaz Contribution to Role in the the Total Crops Area Agrarian Limitations Agricultural System Product Available land, familiar 60 to 80 % of 0.7 to 1 ha labor force, prices, Corn TAP twice a year Consumption interest rates of credit 0.2 to 0.35 Fertile land, high prices 5 to 20 % of the ha for land rent Beans TAP twice a year Consumption 0.2 to 0.35 Commercial Available fertile land, Coffee 0 to 40 % ha product interest rates of credit Available fertile land, FLU, technology for Commercial pest management, Peanuts 0 to 15 % 0.7 to 1 ha product interest rates Consumption Vaccines, low 20 to 30 and productivity of land Poultry 0 a 25 % of TAP animals Commercial (corn deficit) Source: Study cases 52 Morduch (1995) stated that families cope with the risk of unstable income through production and employment. For these families, agriculture’s role is to provide basic grains so they do not have to be bought. Since agriculture is not the main activity in the system, resources such as capital and labor are not allocated in this sector. Women, children and teenagers tend to perform the agricultural activities; male adults work on key activities such as sowing, fertilizing and harvesting. The adult male labor force is allocated either to urban jobs or to large farms, and young women tend to work as maids for urban families. Since a subsistence family obtains more income per day working outside its production unit, the economic rationality is to ensure having jobs for the whole year and allocate the familial labor force to this sector. Having a large number of children is rational for these families, since every one of them will be used as labor force in the production unit until the age of 13, and after which they are incorporated into the urban labor force.

Efficiency and Efficacy.

These family farms are labor intensive, therefore they have a low level of agrochemical use averaging US$ 38/ha per year. But this fact is due to limited cash flow; when they resolve their cash deficit, they will use more herbicides in order to release labor force for working outside the production unit. Another factor is that the production system is based on consumption products; therefore, increasing yields is not a main goal. As a result, they establish areas only sufficient to guarantee the family’s grains consumption. The agriculture income per hectare is only US$ 160 while a labor unit working outside for four months earns US$ 300. Therefore, it is more rational to release a labor unit for work outside instead of adding a hectare to production. The net agrarian income per familial day within the production unit will generate only US$ 2.4, and the money will be only obtained after harvest, while a labor day outside will generate US$ 3.15, paid every Saturday. Thus, it is rational to prefer work outside since families obtain more money per day and with no associated risk (Table 4.3.1.c). 53 Table 4.3.1.c Intensity, efficiency and profitability of the subsistence peasants in Alta Verapaz Intensity of resources Agriculture’s System's (capital and labor) Agriculture’s Profitability Efficiency Efficiency NAV/S= PM/S= US$ 481/ha NAI/S= US$ 160/ha US$ 179/ha NAI/FLD= US$2.4 NAV/LD= pM/S= US$ 38/ha /familial labor day US$ 2.5 /labor day NAI/FLU= NTI/FLU= LD/S= 69 LD/ha US$ 236/FLU US$ 546/FLU NTI/CU= NAI/CU=US$ 89/CU US$ 221 /CU Source: Study cases

4.3.2 Poor Peasants with Land.

Poor peasants with land families are located mostly in the OAFZ in Ixcan, Chisec and Coban; though, there are cases in Ixcan’s PPZ. Land is not a restriction to these families; however, land fertility is an important problem. There two origins for this type of families. First are families who receive land with low fertility and are basically grain producers. In this kind of family the capital accumulation is slow, thus even when they have land they cannot exploit it. Cattle production is the alternative for exploiting their land, but this means a high initial investment. The other origin is families who were cattle producers but due an economic shock or a family medical setback, they have had to sell their cattle and became undercapitalized. These families match the economic mobility argument presented by Baulch and Hoddinott (2000). Even though they have an important amount of land, their income and economic rationality are closer to the Subsistence Peasants. They complement their income by working outside the production unit by seasons or by renting their land to cattle producers. The agricultural income represents 60 to 70 % of the total income. In general, these families represent 28 % of the cases. In the PPZ they represent 30 % of cases and 28 % in the OAFZ, where they represent the higher percentage. 54 Resources.

Total land of a typical PPL farm unit is between 10 and 45 hectares, most of them with cattle production potential, and small fractions for agriculture. The families are neither labor nor agrochemical intensive producers. Male adults are the main labor force; however, females take care of poultry, and children take care of cattle. The familial labor units are 1 to 3 depending on the family size. Since this type of family includes a commercial crop, there is capital investment in wagons and animals to transport products. Depending on their origin, families can own up to ten animals, undercapitalized families tend to own cows; and families which accumulate assets slowly own calves (table 4.3.2.a)

Table 4.3.2.a Resources of the poor peasant with land in Alta Verapaz Resource Quantity Characteristics Land with low fertility for agriculture, Land 3.5 - 28 ha/FLU, and with potential for cattle production

Mostly adults are in the labor force, 1 - 3 FLU and 8 -24 labor Labor some income from renting land allows days per hectare parents send to their children to school Machinery Machetes, hoes, wagons and manual Basic tools and Tools pumps for pesticides Cattle Up to 10 animals Mainly calves and few adults In the PPZ The main source of capital is the land. US$ 15,000 - In case of families who have had 19,000/Agricultural FLU, Capital negative economic shock, cattle are in the OAF also an important source of fixed US$ 1,200 - 6,000 US$/ capital Agricultural FLU ha Source: Study cases 55 Production System and Economic Rationality.

In these families, there will be one or more commercial products. Since more than 60 % of their total income depends on agriculture they tend to establish more crop areas. In the case of corn and beans, they use extensive production systems; they increase volume through adding more land instead of increasing yields with agrochemicals. In the case of coffee and vegetables, they tend to use agrochemicals: fertilizers on coffee plantations and pesticides with pepper (Table 4.3.2.b). The agrarian systems established by these families are: • Corn + beans + labor force, • Corn + peanut +labor force. • Corn + beans + cardamom • Corn + beans + pepper • Corn + beans + cattle 56 Table 4.3.2.b Agrarian production systems of poor peasant with land in Alta Verapaz Role in the Crops Contribution Area Agrarian System Limitations Fertile land, credits for 0.7 - 2.3 ha, Consumption and inputs, low prices and Corn 20 - 100 % twice in a commercial long distant to year markets. In the PPZ it is necessary rent land. Consumption in the 0.2 - 2.3 ha, There are limited PPZ and Beans 5 -45% twice in a techniques for commercial in the year fertilizing, doses and OAFZ moment of application. roads and Commercial transportation cost, Coffee up to 10 % 0.1 - 0.25 ha product in the management of OAFZ fertility, interest rates and prices Roads and transportation costs, Commercial Peanuts 0.1 - 0.7 ha variety and product in the PPZ management of fertility Roads and transportation costs, Commercial variety and Cardamom up to 60 % 0.4 -1 ha product in the management of OAFZ fertility, interest rates and prices Irrigation, fertile land, Commercial pest management, low Vegetables up to 35 % 0.1 - 0.25 ha product in the volumes for price OAFZ negotiation Rent of land, cattle Investment funds, Cattle up to 40 % 8 - 43 ha production as a management of savings account fertility and nutrition. Minor Consumption and Shortage of corn, 10 - 25 % species commercial vaccines Source: Study cases 57 These families cope with the risk of having no income in specific seasons. Morduch (1995) stated that families cope with the risk through production and employment. Since the scarce resource is financial capital, these families use two main strategies of extensive agriculture to increase the volume of products, and financing the agriculture cycle and family necessities. The latter has two options: first, working in the harvest season and, second, renting their land to cattle producers. These non-agricultural activities represent 30 to 40 % of the families’ total income. Despite the fact that they have enough fixed capital to access the financial market, their behavior is risk adverse to the credit offer which is basically short term (8-12 months) with an annual interest rate between 21 and 24 %.

These families are extensive in the use of their resources. The ratio labor day per hectare is low due to the amount of area out of the production process; between 85 and 95 % of the land is pasture or secondary forest. The same reason explains lower ratios for capital and agricultural inputs per hectare. Families obtain US$ 6.2 per labor day in their production unit, which is why they prefer to work on the production unit and work outside only in seasons that do not match with the agricultural activities (Table 4.3.2.c).

Table 4.3.2.c Intensity, efficiency and profitability of the poor peasant with land in Alta Verapaz Intensity of resources Agriculture’s Agriculture's System's (Labor and Capital) Profitability Efficiency Efficiency PM/S= US$ 34/ha NAI/S= US$ 38/ha NAV/S=US$ 43.5/ha NAI/FLD= US$ NAV/LD= pM/S= US$ 7.2/ha 6.2/familial labor day US$ 6.2/labor day NAI/FLU= US$ NTI/FLU=US$ LD/S= 9.5 LD/ha 380/FLU 613/FLU NTI/CU= US$ NAI/CU=US$ 144/CU 328/CU Source: Study cases 58 4.3.3 Peasant to Farmer.

Peasant to farmer is a transitional stage to the next social sector in which families are able to accumulate capital from agriculture. Families’ total income depends on agriculture, and these families invest whether in cattle, land, the services sector or trading agricultural products. Due to the variety of agricultural conditions in the OAFZ, these families were classified into four sub-types: River Bank Peasants (families located along the Negro River with fertile land and transportation through waterways); Interior Peasants based on crop production (located in the OAFZ, with agrarian systems are based on crops and with few animals. In the long term, the accumulation of cattle is reflected in the total product as cattle brut product as result an animal category changes). The Interior Peasant with cattle type (families who own between 5 and 20 animals and include animal production as part of the agrarian system); and the last level of capital accumulation in animals is the Cattle Producer Peasant (families who own more than 20 animals, and cattle production accounts for more than 50 % of the total product). Le Bot (1995) called these Peasants to Farmers “Medium Peasants”. In general, these families represent 61 % of the cases, and thus, are the predominant social sector in the Alta Verapaz agrarian regularized areas. These families represent 30 % of cases in the PPZ, and 69.4 % in the OAFZ.

4.3.3.a Peasant to Farmer based on Agriculture.

The From Interiors Crop Based families (IPFA) are located mainly in the OAFZ. This sub-type also includes families who are not labor suppliers in Ixcan’s PPZ. An average of 95 % of their total income derives from agricultural activities and 68 % of the labor days are covered by the family. This sub-type is the lowest level of accumulation of fixed capital of the Peasant to Farmers families. Beans, rice and cardamom are their main commercial crops, and corn becomes a commercial product. In general, these families represent 26 % of the cases; in the PPZ they represent 30 %, and 25 % in the OAFZ. 59 Resources.

These families own between eight and 70 hectares of total land. However, these lands have serious deficiencies for agriculture, and fertilizer supplies are necessary. These are families with a low level of financial capital, and therefore use a low level of agrochemicals in the production process. The labor force is familial and includes mainly adult males; children generally do minor labor and attend school. Since 2000, 45 % of the families have received credits from the Rural Bank (BANRURAL) and microfinance NGOs (Table 4.3.3.a).

Table 4.3.3.a Resources of the interior peasant to farmers based on agriculture in Alta Verapaz Resource Quantity Characteristics Low-fertility land, most of the bean Land 8 - 70 ha/FLU, areas are rented outside the communities Familial and temporal labor force, allocation of labor force in the Labor 1 - 2 FLU, 10 - 20 LD/ha services sector, however 95 % of total income comes from agriculture Machinery Machetes, hoes, wagons and Basic tools and Tools manual sprayers for pesticides Minor species with poultry and Cattle - pork Mostly includes land, and In the PPZ US$ 25,000 – 30,000 cardamom plantations. In the PPZ Capital In the OAF Zone US$ 7,000 - capital is high due to the land 9,000 market price. Source: Study cases 60 Production System and Economic Rationality.

In respect to the Subsistence Peasants there are several differences. Corn and beans are not only consumption crops, they are commercial as well. Therefore, these families have incentives to increase corn and bean yields. Corn represents up to 90 % of income, families sow up to 3.5 ha. The minimum area for beans is 0.7 hectare which produces for consumption (20 %) and trade (80 %); families might plant up to 3.5 ha. Cardamom is crop that has low recourse demand and its price is three times that corn. Families with two hectares have up to 85 % of their income from cardamom. This sub-type of family has a different approach to allocate resources and labor (Table 4.3.3.b). The LACHUA project facilitates credits and technical assistance for diversification and the most successful incorporation has been honey production. Families who have established this production have increased their income significantly. The agrarian systems established by families are: • Corn + beans + cardamom +honey • Corn + beans + cardamom +pepper • Corn + beans + cardamom • Corn + beans + rice • Corn + cardamom

Table 4.3.3.b Agrarian production systems of the interior peasant to farmer base on agriculture in Alta Verapaz Role in the agrarian Crops Contribution Area system Limitations 0.7 -3.5 ha Consumption and Prices, fertile land, Corn 20 - 90 % twice in a commercial fertilization techniques year 0.7 - 3.5 Consumption and fertile land Beans 5 - 50 % ha commercial weed management, labor Commercial Rice up 24 % 1.4 - 3 ha force, interest rates available land, prices, Cardamom 20 - 85 % 0.3 - 2 ha Commercial interest rates Poultry up to 10 % Consumption Vaccines Road connection, interest Honey up to 85 % Commercial rate, short-term credits Source: Study cases 61 The scarce resource for these families is cash; thus their rationality is to increase yields in order to have an income that allows them to finance the productive process and the family needs for the whole year. These families are open-minded; they have an interest in technical assistance and to improving their production technology. The income per labor day in agriculture is around US$ 12, almost three times the rural wage. As a consequence, there are no incentives for working outside the production unit (Table 4.3.3.c). The income per familial labor unit is 3.6 times higher than the Subsistence Peasant, and 1.9 times higher than the Poor Peasant with Land.

Table 4.3.3.c Intensity, efficiency and profitability of the interior peasant to farmer, based on agriculture in Alta Verapaz Intensity of resources Agriculture’s Agriculture's System's (Labor and Capital) Profitability efficiency efficiency PM/S= US$ 31/ha NAI/S= US$ 125/ha NAV/S=US$ 162/ha NAI/FLD= US$ NAV/LD= pM/S= US$ 16/ha 12/familial labor day US$ 11/labor day NAI/FLU= NTI/FLU=US$ LD/S= 19 LD/ha US$ 1088/FLU 1117/FLU NTI/CU= US$ NAI/CU=US$ 397/CU 418/CU Source: Study cases

4.3.3.b Peasant to Farmer with Cattle Production.

The From Interior with Cattle Production families (IPFC) can be considered to be at an investment stage. Cattle production starts to be an important component for the total agricultural product. Profits from crop production are invested in better-quality cattle, infrastructure for cattle management and, at the same time, a new technical schedule is added. The rationality of the families is based on increasing production as a way of increasing profits to invest in animals. This family sub-type is found only in the OAFZ, where these families represent 17 % of the zone. In general, they represent 13 % of total cases. 62 Resources. These families tend to not use credit for investment; thus, the capital accumulation process is slow. Their land has potential for cattle production and small fractions are fertile enough for agriculture production. They are extensive in labor with only four to 10 LD/ha. This can be explained by the fraction of land that is covered with pastures and demand little labor. Cattle, cardamom plantations, and land value are the main components of their fixed capital. (Table 4.3.3.d)

Table 4.3.3.d Resources of the interior peasant to farmers with cattle production in Alta Verapaz Resource Quantity Characteristics Low fertility land, with a small Land 15 to 58 ha/ FLU fraction for agriculture, and the rest with pastures Adult males perform agricultural 1 to 3 FLU, 4-10 labor Labor work, females tend to run small day per hectare stores, children attend schools Machinery and machetes, hoes, wagons and manual

Tools sprayers for pesticides Cattle start to demand allocation of Cattle 10 - 15 animals resources, and generate part of the agricultural product land, animals, fences There is an extension in land and Capital for pastures, animals. Source: study cases

Production System and Economic Rationality.

Corn and beans are the key crops for trade and consumption. Families who establish 2.1 ha of beans have a significant income; beans in these cases are a capitalization route. The production system and the total income depend on crops. Cattle production generates capital through changes in animal categories, gaining value from one animal category to another. Cocoa and cardamom are commercial crops that demand low levels of agrochemicals and labor. Families who establish 1.4 to 4.2 ha of cardamom might obtain higher income than bean producers (Table 4.3.3.e). 63 Credits with a long-term payback and investment interest rates might accelerate these families’ transition to cattle producers. The agrarian system combinations are: • Corn + bean + cocoa + cattle + poultry • Corn + beans +cattle • Corn + beans + rice + cardamom + cattle • Corn + beans + cattle • Corn + cattle

Table 4.3.3.e Agrarian production systems of the interior peasant with cattle production in Alta Verapaz Role in the Crops Contribution Area agrarian system Limitations Fertile land tends to 20 -40 % of Commercial and Corn 0.7 - 1.4 ha be a consumption TAP consumption crop up to 46 % of Commercial and Fertile land, price of Beans TAP 0.3 to 2.1 ha consumption renting land Low volume of production, distance Commercial to markets, road Cocoa up to 15 % up to 0.3 ha infrastructure Labor force, prices up to 35 % of and appropriated Cardamom up to 4.2 ha Commercial TAP land, credit interest rate Labor force, prices up to 20 % of and credit interest Rice TAP up to 0.7 Commercial rate Credit interest rate, 20 to 60 % of Capital management of Cattle TAP accumulation health and fertility of cattle Source: Study cases

64 The economic rationality of these families is based on increasing crop production in order to increase accumulation of cattle and land. The increase of production volume is obtained through adding more areas to the production process; the investment in agrochemicals is only US$ 6.2/ha. It is an expansive family sub-type with interest in buying land for future productive process. The familial labor units are allocated in the cattle schedule, and temporary workers are hired for crop-related activities. In general, these families use a low amount of hired labor, and generate US$ 11/ familial labor day. For this reason they prefer to work in the production unit and only hire 23 % of the total labor (Table 4.3.3.f). Their income per familiar labor unit (FLU) is 15 % higher than that of the IPFA and the fixed capital per FLU is 5.2 times than that of the IPFA.

Table 4.3.3.f Intensity, efficiency and profitability of the interior peasant to farmer with cattle production in Alta Verapaz Intensity of resources Agriculture’s Agriculture's System's (Labor and Capital) Profitability Efficiency Efficiency PM/S= US$ 192/ha NAI/S= US$ 63/ha NAV/S=US$ 72.5/ha NAI/FLD= US$ NAV/LD= pM/S= US$ 6.2/ha 11/familial labor day US$ 9.3/labor day NAI/FLU= NTI/FLU=US$ LD/S= 9 LD/ha US$ 1259/FLU 1262/FLU NAI/CU=US$ NTI/CU= US$ 428.6/CU 447/CU Source: Study cases

65 4.3.3.c Cattle Producers.

The main feature in this type of family is that cattle production becomes the principal source of income. There is trade of animals on a regular schedule. They invest in cattle production using bank loans, and crop production represents less than 45 % of the agricultural income. There is allocation of labor to extra agricultural activities, specifically to buy animals in order to gather a herd that allows the family to negotiate a better price. This type of family can be found only in the OAFZ and represents 11 % of the cases. In general, they represent only nine percent of the total cases.

Resources. These families had access to credit with relatively low interest (21 %) and long-term to payback (36 months). As a result, their herds have between 30 and 65 animals. They also have transportation facilities such as trucks and pickups. They are labor extensive since cattle production demands low quantity of labor per hectare. Temporary workers perform 40 % of labor days. Cattle production families (CPPF) are more efficient than the IPFC, since their ratio animal/hectare is higher. CPPF sub-type of family’s land has potential for pastures, and it is exploited in an extensive mode (Table 4.3.3.g).

Table 4.3.3.g Resources of the cattle producer peasant to farmers in Alta Verapaz Resource Quantity Characteristics Most of the areas are converted to Land 29 - 50 ha/FLU pastures, a small fraction with agricultural capabilities Only the head of the family and a son are 1 UTF, 4 - 10 labor part of the production system, the rest of Labor day/ha the labor is hired. There is a time investment buying animals Machinery and Includes trucks and Machetes, wagons and manual sprayers Tools agricultural equipment for pesticides Cattle production for is meat, few Cattle 30 - 65 animals families emphasize milk production There is investment in transport for cattle Capital Land, animals, trucks, trading Source: Study cases 66 Production System and Economic Rationality.

Cattle production represents up to 70 % of the agricultural income; however, there is a need to improve techniques of animal health care and management of fertility. This management of cattle fertility is a priority in order to increase the number of animals in the short term. The complementary nutrition and health care are key factors for the weight gain process and to increase the amount of milk per cow. Corn and beans are basically consumption crops, either for families or for poultry. Cardamom is a commercial crop that allows the families to resolve cash deficits. Cardamom demands a low level of resources and produces high revenues (Table 4.3.3.h). The agrarian system combinations are: • Corn + beans + cardamom + cattle • Corn + beans + cattle + trade • Corn + beans +cattle + money remittances • Corn + cattle + trade

Table 4.3.3.h Agrarian production systems of the cattle producer peasant to farmer in Alta Verapaz Role in the Crops Contribution Area Agrarian System Limitations Fertile land. It is a consumption crop, 25 - 30 % of 1.4 - 3.5 Consumption and Corn therefore with low TAP ha commercial priority in the allocation of resources Fertile land. They are consumption crop, Consumption and therefore with low commercial 10 - 18 % of 0.7 - 1.4 priority in the Beans TAP ha allocation of resources 0.7 - 1.4 Labor force, prices and Cardamom up to 15 % Commercial ha interest rate Management of health Cattle 40 to 70 % Commercial and fertility of cattle Source: study cases 67 The economic rationality of these families is to increase their fixed capital, expanding their ownership of land and increasing the amount of cattle. Trade of cattle contributes up to 25 % of the total income. Cattle production increases the revenue per hectare to US$ 112 which is 78 % higher than the IPFC. Every familial labor day invested in the production unit represents US$ 13, 5.4 times the rural wage (Table 4.3.3.i). It also increases the net total income to 1.9 times higher than IPFC. Families of this sub-type demonstrate how low interest rates and long-term credit can raise fixed capital, and at the same time the efficiency and profitability of agriculture. This is the type of family with higher investment in capital.

Table 4.3.3.i Intensity, efficiency and profitability of the cattle producer peasant to farmer in Alta Verapaz Intensity of resources Agriculture’s Agriculture's System's (Labor and Capital) Profitability efficiency efficiency PM/S= US$ 651/ha NAI/S= US$ 112/ha NAV/S=US$ 152/ha NAI/FLD= US$ 13 NAV/LD= pM/S= US$ 44.7ha /familial labor day US$ 11/labor day NAI/FLU= NTI/FLU=US$ LD/S= 13.2 LD/ha US$ 2465/FLU 3636/FLU NTI/CU= US$ NAI/CU=US$ 787/CU 1284/CU Source: Study cases

68 4.3.3.d From River Banks.

These families are located along the Negro River, and they have to sow depending on the water level. Their land is divided into four or five small plots depending on flooding and the harvesting time. Due to this dynamic, they have to manage four or five production processes at the same time. In order to manage these five technical schedules, they use agrochemicals intensively to manage weeds, and hire temporary workers at harvest time. Peasants to Farmers from River Banks (RBPF) obtain the highest yields of corn in the region, 5.2 ton per hectare, while in the rest of the zones families obtain only 2.2 ton per hectare. Another specific condition is that they use water transportation. By using the river they access not only national markets, but also the Mexican border. This type of family can be found only in the OAFZ, where they represent 17 % of cases. In general the RBPF represent 13 % of cases total cases.

Resources. Fertile land is the main resource. Although the usual farm size is nine to 14 hectares, they can obtain high revenues from agriculture. They are not labor intensive. Even though they manage several productive calendars, they only hire temporary workers for harvest time. Rural wages on the river banks are the highest in the zone (US$ 4/day). Boats and grinders are basic equipment in this zone. Having a boat means the ability to transport product to the markets and having a grinder facilitates processing the 5.2 tons of grain for the market, relieving the labor force. This land has no potential for cattle production; however, families tend to buy animals as a form of saving accounts. Animals gain value every year and can be sold in emergency or economic shock. Whole families in the studied community have had accessed to credit from BANRURAL since 1998 (Table 4.2.3.j). 69 Table 4.3.3.j Resources of the river banks peasants to farmers in Alta Verapaz Resource Quantity Characteristics River banks with high fertility and humidity for corn production, with Land 7 - 24 ha/FLU, limited potential for beans and vegetables 47 % of the labor is familial. This type of family is agrochemical Labor 1.5 - 3 FLU, 10 - 50 LD/ha intensive, and hire temporary workers for harvesting Since transportation is by waterways, having a boat with an engine is a key Boats (1-2), grain grinders (1), Machinery element for trading. Due to the mechanical sprayers for and Tools volume of production grain grinders pesticides (2), mills (1) are important to reduce the time of harvesting Mainly calves and 2-year-old bulls. It Cattle up to 15 animals is an investment, some families have started buying pastures areas Includes land, boats, machinery and Capital US$ 10,000 and 20,000 animals Source: Study cases

Production System and Economic Rationality.

Corn production is the main commercial product and source of income. It represents more than 60 % of the agricultural income. Bean production is the second source of income; but has the restriction of appropriated land. For bean production, families have to rent areas outside the production unit, which is a problem due to the necessity of taking care of corn production on their own land throughout the year. Some families prefer to use the flooding time to produce rice and some have started to diversify their production with tomato, pepper and watermelon for trade on the Mexican border. Families that are not producing vegetables are mostly without a secure water supply (Table 4.3.3.k). The combinations in the agrarian system are: • Corn +beans • Corn + rice • Corn + beans + tomato • Corn + beans + pepper + watermelon • Corn + beans + pepper + cattle 70 Table 4.3.3.k Agrarian production systems of river banks peasant to farmer in Alta Verapaz Role in the Crops Contribution Area agrarian system Limitations Flooding, labor force, 60 - 98 % of inputs such as Corn 6 - 10 ha Commercial TAP fertilizers and risks of water transportation Appropriated (high) Commercial and up to 40 % of land, prices for land consumption Beans TAP 0.7 to 3.5 ha rent, up to 10 % Risks of water Commercial Rice of TAP up to 2 ha transportation Risks of water Commercial with transportation, Vegetables up to 15 % up to 0.7 ha Mexican border flooding and pest management Pastures, price of land rent, availability for Cattle up to 20 % up to 10 ha Savings account buying land and interest rate Source: study cases

Since the scarce resources are land and labor force, families have two main strategies: save labor through technology, and use credit to finance harvesting and agrochemicals costs. Their economic rationality is to increase yields as a way to increase income for investing in land and cattle. This is a family sub-type in expansion and is the most efficient sub-type of benefited families in the study. Due to the volume of production, they are able to negotiate high prices for their corn. The fact of year-round production is an advantage since they can sell their corn in different months with different prices; these families sell their corn at prices 100 % higher than the rest of the OAFZ. 71 The favorable price situation is reflected in profitability of the agriculture, with an average income of US$ 629 per hectare and US$ 162 per every familial labor day added to the production process. Expenditures in agrochemicals are US$ 227 per hectare on average, 40 % higher than the Net Agricultural Income of the Subsistence Peasants (Table 4.3.3.1). These families tend to expand their agricultural system by buying land and cattle to become Interior Farmers, a social sector which is present in the zone, but no benefited family meets its characteristics.

Table 4.3.3.l Intensity, efficiency and profitability of the river banks peasant to farmers in Alta Verapaz Intensity of resources Agriculture’s Agriculture's System's (Labor and Capital) Profitability Efficiency Efficiency PM/S= US$ 641/ha NAI/S= US$ 629/ha NAV/S=US$ 940/ha NAI/FLD= US$ NAV/LD= 63.2 pM/S= US$ 227/ha 162/familial labor day US$ /labor day NAI/FLU= NTI/FLU=US$ LD/S= 27 LD/ha US$ 4022/FLU 4184/FLU NAI/CU=US$ NTI/CU= US$ 1725/CU 1987/CU Source: Study cases

72 4.3.4 Land and Its Role in the Agrarian System, A Reading Through Type of Family.

Land and Capital. There is a tendency for families to have more capital as long they increase their amount of land. The land price is the principal factor that creates distortion in this relationship. The difference between land prices in the PPZ and the OAF is high, and within the PPZ there are significant price differences. The price of a hectare in the San Pedro Carcha PPZ is 2.2 times the price of a hectare in Ixcan PPZ. Types such as SP, PPL, and IPFA tend to be dispersed since they include families from both zones. In the case of PPL, the price of a hectare in the PPZ is 19 times higher than a hectare in the OAFZ. In the case of the RFPF, IPFC, and CPPF there is a clear tendency of increasing capital when families increase the amount of land (Fig. 4.3.4.1, Table 4.3.4.1).

Fig. 4.3.4.1 Relationship between capital and land access per beneficiary in Alta Verapaz

100000 CPPF y = 10.324x1.8206 R2 = 0.8482 IPFC RBPF y = 1102.6x0.6192 y = 677.73x + 3573 R2 = 0.7032 R2 = 0.584 10000 ) $ S U ( FLU / K

1000

100 0.1 1.0 10.0 100.0 1000.0 Ar e a/FLU (Ha)

CPPF IPFA IPFC PPL RBPF SP Power (CPPF) Power (IPFC) Linear (RBPF) Source: study cases 73 Land and Labor.

There are three trends in the relationship between land and income per familial labor day. The first is related to the labor force suppliers: SP and PPL. Families in these types tend to be under or around the rural wage per day. This confirms the idea that for these families it is rational to work outside the production unit since rural salaries are higher, with lower risk, and they are obtained in a relative short time. Second, for RBPF and IPFC there is a positive tendency: increasing land allows increasing income per familial labor day. In the case of the IPFA, which has the lowest level of investment, there is no clear tendency influenced by low yields and low prices, which generates a low marginal product of agriculture. Finally, the CPPF have a diminishing return curve, initially an increase in income, but after 87.5 ha the income per familial labor day starts to decrease. This can be explained by the extensive cattle production in which families increase production by adding land (Fig. 4.3.4.2, Table 4.3.4.1).

Fig. 4.3.4.2 Relationship between income per familial labor day and land access per type of beneficiary in Alta Verapaz

1000.0 RBPF y = 0.0592x2.8228 R2 = 0.5152 ) S$

U 100.0 ( y a

D IPFC r

o y = 0.9709x0.64 b a R2 = 0.6434 L r ilia m a 10.0 CPPF

I/F 2

A y = -0.0082x + 1.3082x - 35.863 N R2 = 0.7538

Rural wage

1.0 0.1 1.0 10.0 100.0 1000.0 Area/FLU (ha)

CPPF IPFA IPFC PPL RBPF SP Power (RBPF) Poly. (CPPF) Power (IPFC)

Source: study cases 74 Land and Income.

In the relationship between land and income per hectare, the tendency is different than the relationship with capital. In this case, the labor force suppliers tend to have a clear tendency while the wealthy types have a wide range of results. In the case of SP there is a clear tendency that increasing land per familial labor unit means decreasing income per hectare. Since familial labor work off the farm, the tendency is to use extensive practices to cultivate corn which brings along low yields. The case of IPFA is similar; however, the range of land access is different. In the case of PPL there is a diminishing returns curve. Up to seven hectares PPL increase their income per hectare, however, after this threshold it starts to decrease. This is consistent since PPLs have large fractions of unexploited land (Table 4.3.4.1, Fig. 4.3.4.3).

Fig. 4.3.4.3 Relationship between income per area and land access per type of beneficiary in Alta Verapaz

10000.0

1000.0

IPFA y = 1131.8x-0.8036 ) R2 = 0.8042 S$ U (

a 100.0 e r SP I/a -0.9965 A y = 318.34x N R2 = 0.7953

10.0 PPL y = 62.672e-0.0266x R2 = 0.4412

1.0 0.10 1.00 10.00 100.00 1000.00 Area/FLU (ha) CPPF IPFA IPFC PPL RBPF SP Power (SP) Expon. (PPL) Power (IPFA) Source: study cases 75 On the other hand, the relationship between land and net agrarian income per labor unit seems to a have tendency similar to that of capital. Subsistence Peasants are families with small plots of land and the lowest incomes from agriculture, and are below the World Bank’s poverty line for Guatemala. That is the primary explanation for the strategies that include working outside the production unit. The Poor Peasants with Land have an income from agriculture similar to SP; however, the PPL are closer to the poverty line, and families with cardamom production are above the poverty line. The Interior Peasant to Farmer based on agriculture is the lowest level of investment of its type of families. Their income tends to be above the poverty line. But there is no clear tendency that adding land means an increase in their income; mostly because they have extensive production systems. For the other three sub-types -River Bank, Cattle Producer and Interior with Cattle- there is a clear tendency that increasing land means increased income (Fig. 4.3.4.4; Table 4.3.4.1). As a general conclusion, it can be stated that income is an issue not only of land, but also of technology and capital. A family might own legalized land, but it is not sufficient to raise their income and generate a capital accumulation process.

Fig. 4.3.4.4 Relationship between income per familial labor unit in agriculture and land access per type of beneficiary in Alta Verapaz

100000

10000 CPPF RBPF y = 32.771x + 872.85 ) $ y = 209.62x1.2491 R2 = 0.5024 S

U R2 = 0.5136 ( IPFC y = 61.739x0.8779 FLU / I R2 = 0.7044 A N

1000

Guatemalan Poverty Line

100 0.1 1.0 10.0 100.0 1000.0 Area/FLU (ha)

CPPF IPFA IPFC PPL RBPF SP Power (RBPF) Linear (CPPF) Power (IPFC) Source: study cases Table 4.3.4.1 Intensity, efficiency and profitability of the beneficiaries of FONTIERRAS in Alta Verapaz per type of family Labor Suppliers Temporary Labor Demanders Type SP PPL IPFA IPFC CPPF RBFP Net Agricultural Income/Total Income (%) 33 63 95 94 75 86 Familial Labor Days /Total Labor Days (%) 93 87 68 78 61 47 Labor Day /Ha (Units) 69 9.5 19 9 13 27 Fixed Capital/Ha (US$) 481.2 34.3 31 192 651 641 Input Expenses/Ha (US$) 37.7 7.2 16 6 45 227 Added Value /Ha (US$) 173.2 43.5 162 73 152 939 Added Value/Labor Day (US$) 2.5 6.2 11 9 11.0 63.2 Net Agricultural Income/Familiar Labor Unit Used in Agriculture (US$) 236 380 1088 1259 2465 4022 Net Agricultural Income/Consumption Unit (US$) 89 174 397 429 787 1725 Net Agricultural Income/Ha (US$) 161 38 125 63 112 629 Net Agricultural Income/Familial Labor Day (US$) 2.4 6.2 12.3 10.9 14 162.0 Total Income/Familial Labor Unit (US$) 547 614 1118 1262 3636 4184 Total Income/Consumption Unit (US$) 221 328 418 447 1284 1987 Source: Study cases

77 4.4 Access to Rural Credit Market and the Legalization Process.

Hernando De Soto’s (2000 p 40 and 210-211) conclusions about dead capital in Latina America, and developing countries as a whole stated:

Dead capital exists because we have forgotten (or perhaps never realized) that converting a physical asset to generate capital requires a very complex process ….More people cannot participate in an expanded market because they do not have access to a legal property rights system that represents their assets in a manner that makes them widely transferable and fungible.

De Soto assumes that families in Latin American countries cannot use the value of their land as collateral or an asset to generate capital due a complex and incomplete legal system. However, De Soto’s conclusion can be challenged. In rural areas, increase in wealth is a function of increasing production, and there are three ways to increase production: adding capital, adding labor, improving technology. For improving technology, capital is a restriction which creates an internal cycle in the production function. Families with a high level of capital, such as RBPF and CPPF, use their capital to improve their technology; a positive cycle. Families such as SP and PPL, who have a low level of fixed capital and technology, are stuck in a poverty trap. Families such as IPFA and IPFC, which depend on their own resources, might need a long-term process to accumulate enough fixed capital to create the positive circle. Poverty traps and a slow accumulation process can be resolved by investment through an external capital inflow. This external inflow or credit might be the pull factor for these families. However, depending on the credit conditions and families’ economic rationality, it might be rational to be indifferent to the credit offer. As a consequence, the credit conditions become the main restriction on generating capital rather than the legal status of the property. 78 4.4.1 Credit Access Before and After.

Since USAID approved funds for this legalization process in 2001, and some actions such as measurement, socioeconomics studies, and Land capability studies were undertaken, 2001 was selected as the base year for this section. Most communities (82 %) were legalized in 2003, and few communities (18 %) were legalized in 2002. However, since 2001, it has been clear that the legalization process was a reality and created a lot of expectations. In this section “before” refers to the period 1980-2000 and “after” refers to 2001-2003.

Before the regularization process 23 % of PPL, 25 % of IPFA, 75 % of CPPF and 100 % of the RBPF had access to credit using their land as collateral, despite the fact that they only had possession rights, but no legal support. The SP families did not have access because they did not request credits. The credit offer had a 24 % interest rate and “the production of corn was not enough to assume this kind of compromises.5” Therefore, it was rational for these families to avoid credit institutions since their production system was so fragile that they feared failure and loss of their possession rights over the land. The PPL families in the PPZ accessed credits from NGOs, at an average amount of US$ 93 due in six months and with 30 % interest rate. The amount and the terms were not designed for an investment loan; they were more likely for a cash flow relief loan. In the OAFZ, 15 % of the PPL accessed credit with an average amount of US$ 489, and an annual interest rate between 21 -30 %, due in 12 months. The surprising fact is that these credits were offered by NGOs, and these non-profit institutions had higher interest rates than the commercial banks. In order to pay their loans, families had to sell their land and animals. In the end, credit services undercapitalized these families.

The IPFA families in the PPZ did not request credit, based on the rationality that it was a high-risk practice due to the high interest rate and short term repayment. In the OAFZ, 25 % of the IPFA families accessed credit with an average amount of US$ 618, due in six to 12 months at a 27 % annual interest rate. Due to the high interest rate and the short term

5 Study cases of families at San Pedro Carcha and Nueva Jerusalem 79 for repayment, these credits were used to resolve cash deficits, whether buying inputs or paying labor force at harvest time. The IPFC families did not request credits and that is why their accumulation process has been slow. They are investing profits from cardamom, rice, beans and corn in cattle. It is a safe way, but not efficient in the long term.

The case of the CPPF is interesting because 75 % of them access to credit with a relatively low interest rate of 21-23 % and 36 months to pay. Those were long term credits for investing in cattle production. Either there was a clear policy to enforce investment in this sub-type of families, or they were able to negotiate better conditions of credit since they had the highest level of fixed capital, including not only land, but also animals and trucks. Finally, the River Bank Peasant to Farmer had access to credit before the 1990’s, and 100 % had accessed it between 1998 and 2000. Though, this was short term credit with a high annual interest rate of 24 %. In this case, the credit was used for solving cash flow deficits to pay labor force and inputs. In both cases, despite the fact of a high interest rate, credit allowed them to generate and accumulate fixed capital. In general, 32 % of the families covered by the study had accessed to credit before the legalization process, and the rest had risk-adverse behavior due to the interest rate and terms of payment (table 4.4.1).

There is no evidence that families had restrictions in access to credit markets due to the legal situation of their land. There is evidence that families knew their land value, and thus, were unwilling to accept credit when conditions were so adverse that the barrowers could easily lose their land. This risk-adverse behavior was reduced as long as annual income and fixed capital increased. There is no evidence that families considered their land dead capital despite the fact that they did not have legal security or registered property rights, 32 % of families accessed to credit before the legalization and 65 % were no willing to risk their possession rights in a risky credit. 80 Table 4.4.1 Access to credit and conditions from the credit institutions in Alta Verapaz Average Families with approved credit access amount Terms to Interest Type of Zone Type before (%) US$ repay rate (%) Institution PPZ 0 SP OAF 0 PPZ 8 93 6 mo. 15 NGOs PPL OAF 15 489 12 mo. 21 - 30 NGOs PPZ 0 IPFA OAF 25 618 6 -12 mo. 27 Banks OAF IPFC 0 OAF CPPF 75 3654 36 mo. 21-23 Banks OAF RBPF 100 2434 8 mo. 24 Banks

Average Families with approved credit access amount Terms to Interest Zone Type after (%) US$ repay rate Institution PPZ 0 SP OAF 0 PPZ 7 126 12 mo. 24 Banks PPL OAF 0 PPZ 0 IPFA OAF 25 670 6 -12 mo. 27 Banks/NGOs OAF IPFC 17 378 8 mo. 24 Banks OAF CPPF 0 OAF RBPF 100 1574 8 mo. 24 Banks Source: study cases

After the legalization process, the situation for SP families has not changed. None of them has requested credit from banks or NGOs. The argument has not changed that credit offers have a high interest rate. For these families legalization gave opportunity for sons and daughters to inherit the land from their parents, or for owners to get a better price in case of the selling land. There is no evidence, however, that they are selling or intend to sell their land in the short term. 81 In the case of PPL families, after the legalization seven percent of families located in the PPZ are accessing credits with an average amount of US$ 126, due in six months with a 24 % annual interest rate. However, in the OAFZ there is no family with credit. This situation cannot be linked to the legalization process, but rather it is related to the undercapitalization suffered by these families in the period 1998 - 2000. In general, this type of family reduced its access to credit from 23 to seven percent (Table 4.4.1). According to Murdoch (1995), in a context of no insurance, imperfect credit markets, and high variability of income, families tend to be vulnerable to shocks in the rural economy. The Subsistence and Poor Peasant families with Land meet these features and therefore are vulnerable as well. For both types of families it is rational to use their non-financial assets and personal loans as the primary way to fund their productive process and reproduction costs.

The IPFA maintained 25 % of families with credit access at the OAFZ, and no family in the PPZ. The average amount of credit has an eight percent increment. In 2003, these families obtained an average of US$ 670 at 27 % annual interest, due in six to 12 months. There were 17 % of IPFC families accessing credit in 2003, with a 24 % interest rate, due in eight months. This is an indicator that some families are heading into the next stage as Cattle Producer and that they have reached a level of income that allows them to reduce their risk-adverse behavior. Both sub-types accessed credit to solve cash deficit funding. Most of these funds were used to pay labor at harvest time or to buy agrochemicals.

There was no CPPF with new loans. They were paying former loans from 2000 and 2001, and did not request more. However, they count as having credit access; therefore it can be stated that 75 % of the CPPF maintained their credit access. The RBPF maintained their credit access as well. In a new feature, they were trying to organize a credit cooperative with all families along the river in order to reduce interest rates. The credit amount for these families tend to be low due to inflation; they have been requesting the same nominal amount from 1998 to 2003 (table 4.4.1). 82 As a general conclusion, there is no evidence that the legalization process has influenced the access to or request for credit. Families accessed financial institutions three to 10 years before the legalization process, and already had credit records that supported them for any request for money. In general, 30 % of benefited families have accessed credit after legalization; a two percent reduction in respect to their access before the land regularization process. (Fig 4.4.1; 4.4.2)

Fig. 4.4.1 Families’ access to credit services in the Peripheral Production Zone before and after the legalization process per type of families

8 7 6 s 5 ilie m

a 4 f f 3 % o 2

1 0 SP PPL IPFA Type of families

Before After

Source: Study Cases 83

Fig. 4.4.2 Families’ access to credit services in the Agricultural Frontier of the 1950s before and after the legalization process per type of families

100 90 80 70 s e 60 ili m

a 50 f f

o 40 % 30 20 10 0 SP PPL IPFA IPFC CPPF RBPF Type of families

Before After

Source: Study Cases

84 4.4.2 Demand of credit.

In the study case, there was an exercise with families to identify their credit demand using their land as collateral. Based on a low interest rate (16 to 20 %), and longer term to pay (24 to 36 months), families calculated their credit demand. In the case of SP, 83 % of families rejected the idea of using their land as collateral, and only 17 % calculated an amount of US$ 250, which is equivalent to 5.1 % of their land value and 16.1 % of their annual total income (Table 4.4.2). The indebtedness capability for this 17 % base on 30 % of their total income and 24 % interest plus inflation, is US$ 350, and for long-term credit, 36 months and 21 % interest rate plus inflation, their indebt capability increased to US $ 750. This is a picture of how risk-adverse these families are. Their credit demand is equivalent to 70 % of their indebtedness capability for short term credit and 33 % over the long term.

The PPL were less risk-adverse. Since they already have land and pastures, cattle production is a real alternative. The credit demand of PPL located in the PPZ was US$ 2,519 which is equivalent to 9 % of the land value and 211 % of their income. For these families, paying the principal might take seven years. The demand for credit of the PPL families located in the OAFZ zone is US$ 2,019 which is 27 % of their land value and 170 % of their income. For these families, paying the principal for these families might take 5.7 years (table 4.4.2). In general, PPLs expect to raise their income with cattle production revenues. However, for a three-year plan, 21 % interest rate at balance plus inflation, and using 30 % on the total income as indebt capability, PPL in PPZ can only afford a US$ 1, 100 loan (44 % of their demand) and in the OAFZ they can afford only US$ 500 (25 % of their demand). In a short-term credit with current conditions, 24 % interest rate plus inflation, PPL’s indebt capability in PPZ is reduced to US$ 500 while in the OAFZ it is reduced to US$ 200. 85 The Peasants to Farmers families were very active in calculating their credit demand. Half of the IPFA families calculated their demand, eight percent of the demanding families are located in the PPZ, and their demand is very high -around U$ 3,148- which is equivalent to 11.4 % of the land value and 324 % of their income. These families would need 10.8 years to pay the principal. In the OAFZ, they calculated a lower amount, only US $1,461; however, due to the land price difference respect to the PPZ, this amount is equivalent to 34.4 % of the land value and 114 % of the total income. Therefore, these families would need 3.8 years to pay the principal (Table 4.4.2). Based on 30 % of the total income as indebt capability and a 21 % interest rate for a 36 months period, the IPFA’s indebt capability in PPZ is only US$ 450 (14 % of their demand), and for OAFZ the indebt capability is US $ 900 (62 % of their demand). For short term credit with 24 % interest rate, plus inflation, the IPFA’s indebt capability of in the PPZ is US$ 200, and in the OAFZ is US$ 450.

In the case of IPFC, their credit demand is US $ 1,679 which is equivalent to 16.2 % of the land value and 96 % of their income. Even though this amount is small in respect to the former sub-types, it is high for IPFC’s income. Their indebt capability for long-term credit, with 21% annual interest plus inflation and 36-month terms, is US$ 900 (54 % of their demand). For short term credit with a 24 % interest rate plus inflation, their indebt capability is only US$ 545 (Table 4.4.2).

For the CPPF families, the credit demand is US $ 3,358 which is equivalent to 19.4 % of the land value and 115 % of the total income; however, their indebt capability for a long- term loan is only US $1,700 (51 % of their demand). For short term credit, this indebt capability is reduced to US$ 750. In the case of the RBPF their interest is related to paying labor and input for corn production. Under this rationality, their demand is only US$ 1,600 equivalent to 14.8 % of the land value and 26.6 % of their total income. This case is a contrast, under the same conditions; their indebt capability for a short term loan is US$ 1,800, and for long term credit is US$ 3,900. Thus, the RBPF credit demand is equivalent only to 89 % their indebt capability in the short term and 46 % of the long 86 term. If a bank finances the RBPF credit demand as a long term credit, it can obtain a profit of U$ 340 concept of interest.

Table 4.4.2 Demand for credits of the FONTIERRAS beneficiaries in Alta Verapaz Families Average % of % of demanding amount Land Total Zone Type credits US$ value Income Observations PPZ SP 17 250 5.1 16.1 Credit for production PPZ 15 2519 8.8 211.0 Credit for cattle PPL OAF 46 2019 26.8 170.0 Credit for cattle PPL 61 Credit for buying fertile PPZ IPFA 8 3148 11.4 324.0 land, and cattle OAF 42 1461 34.4 114.0 Credit for cattle IPFA 50 OAF IPFC 50 1679 16.2 96.0 Credit for cattle Credit for cattle OAF CPPF 75 3358 19.4 115.0 (breeding) OAF RBPF 100 1616 14.8 26.6 Credit for production

Study 56 1968 21.0 114.0 Source: study cases 87 V. CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions.

5.1.1 About the Process.

The land legalization in Alta Verapaz has been a long-term process in which three institutions with different goals have been involved. The FONTIERRAS beneficiaries invested between seven and 21 years to obtain their legal documents; the time between land possession and legalization was an average of 14 years. Initially, the INTA was involved with the goal of relieving peasant pressure for land in the central and southern states. Between 1980 and 1994, the legalization process stagnated since the main goal of land distribution was military defense and the process was administrated by the National Army. After the 1996 peace agreements, FONTIERRAS became the main administrator of the process, and rather than an agrarian transformation, the regularization process is focused currently on resolving the legal aspects of property conflict. At this stage FONTIERRAS is registering families’ titles in the national property register.

The policy for setting land prices had two key variables: distance from Coban and access to road infrastructure. There were three periods of price setting. In the first period, 1980 – 1985, land with difficult access was valued at US$ 12 - 21/ha; land with rural road access and connections to San Pedro Carcha or Coban was valued at US$ 40 – 74/ha, and land located in the urban peripheries was valued at US$ 450 – 840/ha. In the second period 1986 – 1996, price for land with difficult access was raised up to US$ 90/ha, with an average price of US$ 50/ha, and lands with road access raised in price up to US$ 235/ha, with an average of US$ 146/ha. In the last period, 1997 – 2003, there was unification of prices, but an increase in the average price to US$ 125/ha. There has been the significant reduction of 40 % of the land prices for communities which demonstrated a weak economy. 88 In the long run, families have benefited from the duration of the legalization process. Since FONTIERRAS used INTA’s contract as the base for land regularization, the nominal price for land was the same whether settled in the 1980s or the 1990s. Thus, in real terms, families who paid their contracts after 2000 saved 40 – 91 % of the land price, since a 2003 quetzal is equivalent to 0.0832 of a 1981 quetzal; using 1981 as a base year, for every 100 quetzals, families paid only 8.32. However, since prices were settled in different years and families used different number of years to repay these price reductions in real terms varies from five to 90%. As a general rule, the longer time a family used to repay the land, the higher the reduction obtained.

Two instruments of the legalization process have a low added value for the regularization process, but with high costs in terms of funds and time. The Land Capability Classification (LCC) is a requirement to legalize a community. However, the communities do not have access to the final report, and the information presented does not include any technical recommendation for improving the families’ agrarian system. The Socioeconomic Study is also a requirement; however, there are several formats and lack of information. This study ought to provide the families’ indebt capability to the local FONTIERRAS board to set prices and terms of payment, but this study does not play this role.

5.1.2 About Families.

The communities benefited by the Regularization Program funded by USAID between 2001 and 2003 are located mostly in the Agricultural Frontier of the 1950s (90 %), but a small portion can be found in the Traditional Peasants Zone (5 %) and Peripheral Production Zone (5 %). Contracts were paid off by 62 % of benefited families. 89 The families belong to the peasant social sector, and can be classified in three socioeconomic types: Subsistence Families, Poor Peasants with Land and Peasant to Farmer. The Peasants to Farmer families represent 61 % of the cases and are the predominant type in the OAF zone making up 69.4 % of the families. In the PPZ this type only represents 30 %. The Peasant to Farmer type present four subtypes: River Bank Producers, Cattle Producers, Interior Peasant to Farmer based on Agriculture, and Interior Peasant to Farmer with Cattle Production. The IPFA can be found in the PPZ and the OAFZ, while the rest are located only in the OAFZ

In general, SP and PPL are labor suppliers and their net agricultural income is below the poverty line. Both types of families depend of wage-earning activities. In the case of the PPL families, it was demonstrated that despite of the fact that they owned more than 20 hectares of total land, without external financial capital these families tend to be stuck in poverty traps. Peasants to Farmer families maximize their familial labor force and hire temporary workers in labor peak activities. Peasants to Farmer families’ agricultural incomes are clearly above the poverty line. The sub-type IPFA is the most vulnerable to economic shocks, while CPPF and RBPF obtain the highest revenues from agriculture.

5.1.3 Land as Assets.

It can be stated that families have been using their land as an asset to obtain external resources. The RBPF have accessed credit since 1989, and the CPPF negotiated long- term credit before being regularized. Due to this awareness, SP and PPL tend to avoid credits with high interest rates and using land as collateral. Based on their income and fragile production systems, it is rational to fund their productive process with their own resources. SP, PPL and IPFC tend to have a risk-adverse behavior to the credit market. 90 No technical assistance project or private supply services were identified. The only productive service in the region is the credit offer, which varies depending on the term to repay. BANRURAL is the main institution offering credit service in both zones. Its short term credit, eight to 12 months, carries a 24 - 27 % interest rate plus inflation rate. The long-term credit, 24 - 36 months, carries a 21 % interest rate plus inflation rate. Two NGOs were identified in this process; their service was short term credit, six to eight months, with 30 % annual interest rate. Finally, a project to support women had a credit service with amounts lower than US $100 and 15 % annual interest rate. With interest rates higher than 21 % plus inflation rate, the credit offer seems to be appropriate only for high and fast-revenue economic activities which concentrate the credit on animal trade and high revenue crops.

In general, there has been a reduction of credit access since the regularization process. This is due to undercapitalization suffered by the PPL in 1998-2000, when they were forced to sell animals and land to pay back their loans. The RBPF, IPFA and CPPF maintained their same level of access to the credit market. It can be stated that land legalization was not enough to access the financial market, stable cash flow and other forms of capital are required as well.

Under the current conditions, 12 months and 24 % annual interest, the indebt capability for RBPF is US$ 1,800, for CPPF is US$ 750, for IPFA in the OAFZ is US $450, and in the PPZ is US$ 200, for IPFC is US $ 400, for PPL in the OAFZ is US$ 200, and US$ 350 in the PPZ, and for SP the indebt capability is US $350. Since the price of a cow is US$ 315- 441, 78 % of the families have not the indebt capability to purchase a cow with the current conditions of short term credit. With these low indebt capabilities, it is rational to avoid the risk of using land as collateral in the current financial market. 91 5.2 Recommendations.

5.2.1 For the Process. In order to increase the efficiency and efficacy of the regularization process the LCC and the Socioeconomic Study must be redesigned. The LCC should be a technical assistance report that evaluates a family’s technique of sowing, fertilization and pest management. It should also identify alternative crops for diversification, strategies to improve the management of soil fertility and water resources. This is an important input for the local Ministry of Agriculture (MAGA) offices to develop technical assistance programs. Families should have access to this report as feedback for their agrarian system. The Socioeconomic Study should include variables such as ethnic composition of the communities, gender roles, and sources of income, indebt capability and cash flows throughout the year. This information will be useful to define prices, conditions and discounts for rural communities at the local FONTIERRAS offices.

The LCC study coordination must be located at FONTIERRAS. This organizational change is in order to guarantee that the information reflected on the final report is useful for the rural communities and supporting programs.

Since families have ten to 20 years to cancel their contracts, FONTIERRAS should include the inflation rate in the land prices. Otherwise, the policy of a 10 % discount makes no sense since paying nominal prices for up to 15 years might reduce the nominal land value by 90 %.

5.2.2 For the Families.

Families who currently have contracts, should pay every year and cancel the contract the year before their term ends. In this way, they will benefit at the maximum from inflation and they will also qualify for the 10 % discount for paying before ten years. 92 5.2.3 For Agrarian Policies.

PPLs and IPFA types of families are the ones with the capacity for economic mobility, and at the same time they are the most vulnerable for shocks. Both groups represent 54 % of the total benefited families and they also own some level of fixed capital to intensify the production system. Due to the fact that interest rates are higher and credits must be paid in the short term, a public intervention is necessary or a USAID program is needed to create an investment fund. It could be expected that credit will play the pulling-factor role as it did with the CPPF. If these two types of families are kept in poverty traps for long term, they will sell their land to the local CPPF or IPFC expansive types and the process of the concentration of land will start again.

For SP it is necessary to promote income diversification. In the PPZ this diversification must be based on non-agricultural activities such as craft and textile production. In the OAFZ and some families in the PPZ, mini-irrigation projects for vegetable production might increase their incomes. Otherwise, these families will sell their land in the next five to ten years.

No technical assistance service, private or public, was found, except the Conservation Project La Chua. Families present serious limitations in areas such as crop fertilization, pest management, animal health and reproduction, and agricultural product market information. Since there is no private supply of technical assistance, FONTIERRAS must assist these families through the Agricultural Technology Office in the Land Access Program.

93 VI. REFERENCES

AVANCSO (1999) Por los caminos de la sobrevivencia campesina; Guatemala: Asociación para el Avance de las Ciencias Sociales en Guatemala. BARANYI S; DEERE C, & M. MORALES (2004) Study of the scope in the land policies research in Latin America. The North-South Institute, International Development Research Center, Centre de Recherches pour le developpement intenational (IDCR Canada). BAULCH AND HODDINOTT (2000) Economic Mobility and Poverty Dynamics in Developing Countries (Frank Cass Publisher; Portland OR). BERTRAND M. (1992) “The fight for land in colonial Guatemala; the land tenure in Baja Verapaz in the XVI–XIX Centuries.” IN: Castellanos C.J.C. (1992) 500 years fighting for land; studies of rural property and agrarian reform in Guatemala. Julio C Cambranes editor; Latin American Faculty of Social Sciences Guatemala. BROCKETT, CH D (1992) “Agrarian Transformation and Political conflict in Guatemala (1944-1986).” IN: Castellanos C.J.C. (1992) 500 yeasr fighting for land; studies of rural property and agrarian reform in Guatemala. Julio C Cambranes editor; Latin American Faculty of Social Sciences Guatemala. BROCKETT, CH D. (1998) Land, Power, and Poverty: Agrarian Transformation and Political Conflict in Central America. 2nd Edition (Boulder, CO and Oxford Westview Press). CABRERA, C. A. (2002) Agrarian Policies and Rural Development: Vision for a Public Agenda. Regional Workshop in Land Issues in Latin America & Caribbean Region 19- 22, 2002, Pachuca, Mexico. CEPAL (2001). Guatemala, Population and Development. A socio-demographic Diagnosis. Economic Commission for Latin America and Caribbean. (Santiago, Chile). CEPAL (2002) Access to the land for the indigenous communities in the legalization programs in Latin America; Study Cases. Jose Alwyn Editor Economic Commission for Latin America and Caribbean. (ECLAC, Santiago, Chile). CEPAL (2002)b Meeting the Millennium Poverty Reduction Targets in Latin America and the Caribbean. ECLAC, IPEA, UNDP Economic Commission for Latin America and the Caribbean. (Santiago, Chile). CEPAL (2003). Agricultural Land Markets in Latin America: an incomplete reality. Jose Tejo Editor. Economic Commission for Latin America and Caribbean. (Santiago, Chile). COPREDEH (1997) The Peace Agreements. Presidential Commission for Human Rights. COPREDEH; European Economic Community (EEC); Fund for Peace FONAPAZ-UN. (Guatemalan Government, Guatemala City). DE JANVRY, A & E. SANDOULET (1999) Rural Poverty and the Effective Design of Effective Strategies for Rural Development. IN: Changes in Thoughts and Practices of Rural Development in Central America. (WB, Workshop San Jose, Costa Rica). 94 DE JANVRY A., ARAUJO C. & E. SANDOULET (2002) Rural development as a territorial vision. University of California, Berkeley. DE SOTO, H. (2000) The Mystery of Capitals: Why capitalism triumphs in the west and fails in everywhere else. (Basic Books, New York). DUFUMIER, M. (1988) The importance of rural family typology in the agrarian diagnose. Agronomy Institute of Paris INA-PG Paris, France. DUMAZER P., MARIN Y. & F. J. PEREZ (2002.) Base Line and Evaluation System for the National Technology Program. Work Bank – IFAD – COSUDE. Ministry of Agriculture and Forestry. Managua, Nicaragua. EASTERLY, W. (2002) The elusive quest of growth: economist adventures and misadventures in the tropics. (Massachusetts Institute of Technology, Cambridge) 342 pp. ELIZALDE H. A (2003) Territorial Strategic Planning and Public Policies for Local Development. Latin America and Caribbean Institute for Economic and Social Planning (ILPES) ECLAC – Public Policies Department. (ECLAC, Santiago, Chile). ECHEVERRY P, R. (2001.) The New Rurality in Latin America and the Caribbean. Inter American Institute for Cooperation in Agriculture. IICA-CIDER Mexico. FIELD, M. & W. FISHER III (2001) Legal Reform in Central America: dispute resolution and property systems. FOSTER V & M.C. ARAUJO (2004) Does infrastructure reform work for the poor? a case study from Guatemala. World Bank. GRUNBERG, G. 2003 Land and Indigenous Territories in Guatemala. FLACSO- MINUGUA-CONTIERRAS. Guatemala. GCB (2004) Statistics of international trade 1994-2003. Guatemalan Central Bank, Ciudad de Guatemala. GCB (2004) Monetary, exchange and interest rate policy; evaluation by November 2004 and proposal for 2005. Guatemalan Central Bank, Ciudad de Guatemala. KOBRAK P. (2003) Huhuetenango; History of a War. Center of Studies and Documentation of the West Frontier of Guatemala. (CEDFOG, Guatemala) HANDY J. (2002) “Reform and Contra Reform: The Agrarian Policy in Guatemala (1952 -1957).” IN: Castellanos C.J.C. (1992) 500 years fighting for land; studies of rural property and agrarian reform in Guatemala. Julio C Cambranes editor; Latin American Faculty of Social Sciences Guatemala. HERNANDEZ, A. R (1998) The land issue in the peace agreement: summary of the government response. Inforpress CentroAmericana Interactive investigation Ciudad de Guatemala. HERNANDEZ, A. R. (2000) The land problematic demands effective solutions. Inforpress CentroAmericana Interactive investigation Ciudad de Guatemala. IARNA-URL (2004) Vision of the environment and agriculture; A new approach for Rural Development in Alta Verapaz. Institute of Agrarian and Enviromental Research. University Rafael Landivar-USAID. (URL-USAID, Ciudad de Guatemala). INE (2004) XI Census of Population and IV of Housing (2002) National Institute of Statistics. (Guatemalan Government; Guatemala City). 95 IRADIAN G. (2005) Inequality, Poverty and Growth: cross-country evidence International Monetary Fund. (IMF, Washington, DC). KLIBANOFF P. & J. MORDUCH (1995) “Decentralization, Externalities and Efficiency.” The Review of Economic Studies Vol. 62 No. 2 (April, 1995) 223- 247 pp. LE BOT Y. (1995) The war in the Mayan’s land: community, violence and modernity in Guatemala (1970-1992) (Fund for Economic Culture Mexico DF.) 327pp. LEVARD L.; GARCIA A.; MARIN Y, & F.J PEREZ (2001) Potential and restrictions for agricultural development in Somotillo, Chinandega. Research and Development Institute Nitlapan – International Fund for Agricultural Development. Managua, Nicaragua. LEVARD L. 2001 Agrarian Economy, The economic rationality of rural families. Agrarian Development and Agriculture Department. Central American University, Managua Nicaragua. MAGA. (2002) Cartography and analysis of the vulnerability to food insecurity in Guatemala. Ministry of Agriculture and Food – World Food Program. (MAGA- WFP; Ciudad de Guatemala). MAGA (2002)b. Thematic Atlas of Guatemala: natural social and productive resources, threats and vulnerability. Ministry of Agriculture and Food – Inter American Bank of Development. MAGA-BID. (Ciudad de Guatemala) MARCHETTI P. & C. MALDIDIER (1996.) The Peasant to Farmer and its importance in the Nicaraguan recovering economy. Research and Development Institute Nitlapan. Central American University, Managua Nicaragua. MARIN Y & S. PAWELS. 2001. The farmer Peasant II. The Including development of the Central Region in Nicaragua. Research and Development Institute Nitlapan. Central American University, Managua Nicaragua. MERLETT, M et al. (2000) Studies on Land Tenure, Part I. Institut de Recherches et d’ Applications des Methodes de Developpment. (IRAM, Managua.) MINUGUA (1999) Guatemala, Memory of Silence. United Nations Mission at Guatemala. Commission for the historical clarification. UNOPS, Guatemala. MORDUCH J. (1995) “Income Smoothing, Consumption Smoothing.” The Journal of Economic Perspective, Vol. 9, No. 3 (Summer, 1995) 103-114. MORLEY S. (2001) The income distribution problem in Latin America and Caribbean Economic Commission for Latin American and Caribbean (ECLAC; Santiago de Chile). PALMA M. G; TARACENA A. A. & J. AYLWIN (2002.) Agrarian Process since XVI Century to the Peace Agreements. FLACSO-MINUGUA-CONTIERRAS. (Spanish)(UNDP; Guatemala). PINDICK R. & D. RUBENFIELD (2000) Microeconomics Fifth Ed. (Prentice Hall; New Jersey). ROBLES E. (2000) Economic Growth in Central America: Evolution of Productivity in Manufacturing. Harvard Institute for International Development, Harvard University. 96 ROMERO, J.J. & FERRERO G. (2004) Rural development in Nicaragua: from a consensus in principles to an action plan. Ed. Declee J.J. Romero and G. Ferrero Ed. (ETEA; Bilbao). SEGEPLAN (2004.) The Drama of Poverty. Secretary of Planning and Programs http://www.segeplan.gob.gt/spanish/pobreza/dramap/index.htm STRASMA, J. (1999) Nicaragua, Land markets. Food and Agriculture Organization (FAO-UNO. Managua.) TODARO M. & S. SMITH (2002) Economic of Development Eight Edition Addison Wesley Pp 168-170. UNPD (2004) Guatemala: An Agenda for Human Development. Human Development Report, 2003. (United Nations System Guatemala). UNDP (2004)b Human Development and Rurality: statistics compendium UNDP. (United Nations System Guatemala). UNDP (2004)c Human Development Report 2004 Cultural Liberty in Today’s Diverse World. United Nations Development Program. (UNDP; New York) UNPD (2003) Towards a National Agreement on Human Development Human Development Report 2002. (United Nations System Guatemala). UPTON, M. (1996) The Economics of Tropical Farming System. Wye Studies in Agriculture and Rural Development. (Cambridge, University Press). WAGNER, R (2001.) The History of Coffee in Guatemala. ANACAFE. (Villegas Ed., Bogota). WB (1951) The Economic Development of Guatemala: Report of a Mission. International Bank for Reconstruction and Development. (IBRD). WB (1996) Guatemala: Building Peace with Rapid and Equitable Growth; Country Economic Memorandum. Central American Department. Latin American and Caribbean Regional Office. WB (2004) World Development Indicators. The World Bank Group. (Washington, DC). 97

APPENDIXES

98 APPENDIX I. BUILDING RURAL TERRITORIES IN ALTA VERAPAZ

A.1 Characteristics of Alta Verapaz A.1.1 Physical Aspects

Physiographic Units

According to MAGA (2002b) the Alta Verapaz is formed by five physiographic units (Table 1.1.a). The first unit is the Sedimentary Highlands which cover 88.3 % of the region including Alta Verapaz and Ixcan and where coffee-cardamom production systems are established. The second physiographic unit is formed with the internal lowlands from Peten. This unit is located on the northern border of Peten State. There are also important areas at the Coban hinterland, Chisec and Ixcan. It only covers 7.5 % of the region. This is a peasant production zone where the annual agriculture systems based on crops is developed.

The other three physiographic units are relatively small. The Crystalline Highlands are located on the southern border and covers 2.1 % of the region with latifoliados forests in Panzos and Tactic. The fourth is the Izabal depression which draws a V that crosses the northern areas in Panzos and it is inserted into Tucuru. These areas are used mostly in annual agriculture, and represent 2.1 % of the State. The last unit is the Lacandon Belt which only represents 0.02 %, and is located on the Peten-Alta Verapaz border (Map 1.1.a). 99 Table A.1.1.a Physiographic units, Characteristics and coverage in term of municipalities and percentage of the State’s area Weight Physiographic units Characteristics Municipalities % Border with Zacapa y Baja 300 - 3015 masl, slope >70%, 2.1 Crystalline Highlands Verapaz 200 - 2000 masl Northern Cobán and Ixcan 1000 - 2000 masl , slope <30% San Cristóbal, Cobán, Cahabón 100 - 2000 masl slope 25 - 40 % Tactic, Senahú, Tamahú 50 - 1300 masl slope 16-32 % West from Cahabón 88.3 Sedimentary Highlands Sierra Chama, slope <3% Central Región Alta Verapaz 200 - 600 masl, rounded valleys Chinaja 200 - 600 masl Chahal 250 - 460 masl, slope <20 % Northeast Alta Verapaz 50 - 100 masl, slope 4 % Belice’s Borderline Izabal depression 15 - 60 masl, Polochic River Panzós 2.1 Internal lowlands from Chisec and Ixcan 7.5 Peten Planas, Chixoy River Petén Borders 0.02 Lacandon Belt 125 - 230 masl, pendiente <3 % Based on MAGA 2002.b, IARNA-URL 2004 masl: meters above sea level,

Map A.1.1.a Physiographic and geomorphologic units in Alta Verapaz, Guatemala

Source: Adapted from MAGA 2002. 100 Hydrographic River Basins

Seven river basins can be identified in the Alta Verapaz region (Table A.1.1.b). Two of them cover a reduced percentage of the areas. The Moho River (0.1%) and the Motagua River cover only 0.1 % each; they are located in the borderlands. (Map A1.1.b) The Salinas River basin has the greatest coverage with 46.4 % of the region’s total area and is located in the west. In Coban and Ixcan agricultural production and natural pastures are mostly developed around roads and highways. The rest of the areas are covered with latifoliados and secondary forests.

The Passion River basin covers 17.6 % of the region area (Table A.1.1.b), and it is located in the central and northeast areas of the region. It is covered with cattle production systems, although there are agricultural production spots and secondary and latifoliados forests as well. The Cahabon River basin covers 15.4 % of the region’s area and goes from the southern region of Chahal on the east border to San Cristobal on the western border. It is used mostly in annual agriculture production, with small areas of coffee in San Pedro Carcha y Lanquin. The Polochic River basin covers 12 % of the region’s area. It is located at the southeast region, and it is mainly covered by annual agriculture production systems. There are small areas with coffee plantation in San Juan Chamelco, Tucuru and Panzos. In Tamahu there are important areas of secondary forest. Cattle production is predominant in Tucuru and Senahu.

The Sarstun River basin covers 5.1 % of the region’s area (Table A.1.1.b). The mainly production systems are related to cattle production, combined with small grain production. It is located in the eastern region, and includes areas from Chahal, Lanquin and Cahabon. There are two specific river basins in Ixcan: Xacibal and Ixcan. Xacibal covers the central region of Ixcan and represents 2.5 % of the region, and the Ixcan River basin is located in the border between Ixcan and Huehuetenango. In both river basins the agricultural systems are based on cattle production with spots of corn and cardamom production. 101 In a macro vision there are three main ecological zones. First, there is the Salinas River basin which is mainly covered with forested areas. Second, a zone formed by the Cahabon and Polochic river basins where annual agriculture is predominant. Finally, a third zone is formed by the Sarstun, La Pasion, Xacibal and Ixcan river basins with a predominance of cattle production combined with small grain production areas. (Map A.1.1.b)

Table A.11.b River basins and its coverage in terms of areas and percentage of the region’s area Weight River basins Municipality Area % Chahal, Cahabón, Senahú, Panzós, Lanquín, San Pedro Carchá, San Cahabon River 235480.2 15.4 Juan Chamelco, Cobán San Cristóbal, Santa Cruz and Tactic La Pasion Fray Bartolomé, Chisec, San Pedro 268378.8 17.6 River Carchá, Cahabón, Cobán Moho River Fray Bartolomé 1671 0.1 Motagua River Panzós 862 0.1 Panzós, Senahú, Tucurú, San Juan Polochic River 183088.6 12.0 Chamelco, Tamahú, Ixcan, Chisec, Cobán, San Pedro Salinas River Carchá, Santa Cruz, San Cristóbal, 709576.2 46.4 Tactic Chahal, Fray Bartolomé, Cahabón, Sarstun River 77632 5.1 Lanquín Ixcan River Ixcan 14360 0.9

Xacibal River Ixcan 38167.7 2.5 Source: Adapted from MAGA 2002b 102 Map A.1.1b Hydrographic river basins coverage in Alta Verapaz, Guatemala

Source: Adapted from IARNA, 2004

Precipitation and Drought Behavior

In general, Alta Verapaz is not affected by droughts. In the region, 94 % of the areas have no probability of a dry season (Table A.1.1.c). These areas receive an average 2000 to 4000 millimeters of rain in a year. However, there are two relatively small strips with a medium level of susceptibility to droughts in the south; they receive an average 1200 – 1800 mma of rain. In the southwest these areas are covered by annual agriculture and latifoliados forest. The second strip is at Panzos in the southeast region; it is covered with latifoliados forests. (Map A.1.1.c) 103 Table A.1.1.c Susceptibility to droughts and its coverage in terms of municipalities, areas, and percentage of the region’s area Susceptibility Areas levels Municipalities (Ha) Weight % Middle of Cobán, San Pedro Carchá, Lanquín, west at Cahabón, Senahú, south at Drought free Chisec, southwest at Fray Bartolomé and the southeast of Ixcan 555660.46 36.3 North and south Cobán, Cahabón Chisec, Fray Bartolomé, Chahal, south at Senahú, Low Panzós, Tucurú, San Juan Chamelco, San Cristóbal and the central and northern region of Ixcan 883402.37 57.8 Northwest at Fray Bartolomé de las casas, northeast at Panzós, Tactic, Santa Cruz, Medium Tamahú, south at San Cristóbal and Southwest at Tucurú 90154 5.90 Adapted from IARNA-URL, 2004

Map A.1.1.c Susceptibility to droughts in Alta Verapaz, Guatemala

Adapted from IARNA-URL, 2004 104 Current Land Use

At first sight, forestry seems to be the major use of land in the state with 48.73 % of the total area. However, there is no defined path or consistent forest clusters in the region. Forest covers what agriculture has not taken. There are also significant areas of secondary forests associated with pastures and cattle production. In the south small areas with conifer forest can be found (Map A.1.1.d). The annual crop production and pasture cover 33.29 % of the region’s area (Table A.1.1.d). These areas are located in a cluster that includes San Pedro Carcha, Lanquin, Cahabon, Chahal and Panzos. Coffee plantations are established in San Pedro Carcha, Lanquin, Senahu, Tucuru and Panzos. The pasture and cattle production areas are concentrated mostly in Fray Bartolome with significant clusters of pasture in Chahal, Chisec and Senahu. The pasture areas cover 16.45 % of the region’s areas (Table A.1.1.d, Map A.1.1.d).

Table A.1.1.d Current use of Land in term of areas in hectares and weight as percentage of the State’s area Category Area Weight % Infrastructure 1293.96 0.08 Crops and technical pasture 481638.9 31.5 Natural pastures 253236.9 16.56 Forest 778207.0 50.89 Water bodies 647.95 0.04 Wetlands 14192.11 0.93 Based on IARNA-URL 2004 105 Map A.1.1.d Current Land use in Alta Verapaz, Guatemala

Adapted from IARNA-URL, 2004

106 A.1.2 Agrarian Characteristics

Agrarian History According to the National Institute of Statistics (INE, 1994), the Alta Verapaz region is located in the Region II or northern region of Guatemala. Its regional capital is Coban City and the region shares borders with Peten State to the north, Zacapa and Baja Verapaz to the south, Izabal to the east and Quiche to the west. Its geographic localization is 15o 28’ 07” north latitude and 90o 22’ 36” longitude and during in the colonial period La Verapaces region was isolated due to its geographic characteristics (Palma et al, 2002). Therefore, the region was populated with indigenous communities where the ejidos (common land) was the main property status. This was changed by the liberal revolution in 1871 when coffee production was defined as the route for development and private individual property was enforced as a paradigm of development. Wagner (2001) reports coffee plantations and exports by 1860 with 39 farms in Coban and 32 in San Pedro Carcha.

According to Bertrand (1992), the social classes in the colonial period were related to land property, and within each class there was ethnic subdivision: Europeans had complete individual property rights while the indigenous people had collective property rights and ladinos (mixed of both) had no clear status, since they were neither European nor indigenous. Urban property was titled and was individual property; however, rural property was not registered. This was a mechanism for the Spanish Crown to retain rights to the land and, at the same time, was the source of multiple land conflicts. In 1549 and 1571 the Crown ruled for protecting the indigenous community lands; however, since there were no control mechanisms before 1578, most of the indigenous land was concentrated in the hands of the Spanish settlers. 107 Las Verapaces was the first region in Guatemala to establish ejidos, in 1540-1550. The reserve or indigenous town comprised a core formed by approximately 1,700 hectares, called Royal Mercedes. In order to isolate these indigenous lands of land market, the Crown created the ejido: a surround area to guarantee enough land to work. These areas were stable between 1540 and 1700. The property system failed between 1750 and 1821, when Ladinos started to buy and accumulate huge amounts of land and threat the ejidos. The Ladinos-Mayan conflict for land started in this era, and by 1800 the Catholic Church The Dominican) was the ruler in Verapaz, with larger properties and political power from the Crown. This fact was rejected by both ladinos and by indigenous people as well.

By 1843 the Belgium colonization Company started a second colonization process in the Alta Verapaz, and Wagner (2001) report that by 1861 75 there were french land-owners cultivating coffee in San Pedro Carcha. By 1871 the liberal revolution expropriated the Church’s land and it was promoted for coffee private production. Between 1880 and 1940 the region was developed by German investment in coffee, cardamom, railroads and waterways to move agricultural exports to Izabal on the Atlantic coast. The Germans benefited form with two laws (1876 and 1934) that forced the indigenous population into their workforce. They also benefited from laws to eliminate the communal properties and ejidos (1876, 1871, 1891, and 1898). However, in the 1940s, based on the World War II context, the military government expropriated the German community (Brockett, 1992).

According to Handy (1992), the agrarian reform in 1954 affected mainly Escuintla, Izabal, Quiche and Baja Verapaz, and San Marcos. Alta Verapaz was barely affected since the agrarian reform dealt with properties with more than 90 hectares, and the coffee plantation system did not have properties with that size, and in addition, the northern areas were covered by jungle. By 1962, approximately 140,000 families were landless and the answer to the people was the Franja Tranversal Colonization in the 1970s (Brockett, 1992). 108 War started in Alta Verapaz in 1978 when the army massacred a peasant protest against land policies which expropriated their land to the benefit of agrarian capitalists. In 1981, the Burned Land Policy was implemented in Quiche, Huehuetenango, Alta and Baja Verapaz in order to eliminate the guerrilla movement’s support. From 1982 to 1986, the Civil Defense Patrols (CDPs) were implemented, which split the indigenous communities. On one hand, were families willing to be part of the CDP in order to maintain their land possession rights, and on the other, were families who rejected support to a government which destroyed and burned some 600 indigenous communities (MINIGUA, 1999). After the 1996 peace agreement, Alta Veparaz became one of the most productive zones in Guatemala.

Land Tenure

The land concentration in Alta Verapaz is relatively lower than the national level which is 0.785 (UNDP, 2004b). According to the Nation Institute of Statistics (2004), and using the agrarian census data, properties with less than 1.5 hectares represent 45.4 % of the total properties, with access to only 3.2 % of the total agricultural land. The middle properties, farms with 1.5 and 45 ha, represent 52.7 % of properties with access to only 40.3 % of land. Finally, properties with more than 45 ha represent only 1.9 % of the total properties, but have access to 56.5 % of the agricultural land. (Fig. A.1.2.a) 109 Fig. A.1.2.a Land distribution in Guatemala, Lorenz Curve

Lorenz Curve for Land tenure in Guatemala

110

100

90

80

70

nd 60 Inequality La

of 50 %

40

30

20

10

0 0 102030405060708090100110 % of Families

Based on UNDP 2004b

In Alta Verapaz the GINI (inequity index) for land tenure is 0.647, which is lower than the national index (Fig. A.1.2.b). Properties with less than 0.7 ha account for 19 % of families and access to 1.5 % of the land. The medium properties, 0.7 to 45 ha, represent 80% of the properties and access to 66 % of the land. So, the medium and small farmers have access to 67.5 % of the total agricultural land. The large farms, more than 45 ha, represent 1.12 % and have access to 32.4 % of the land. In Alta Verapaz the medium sector has a higher percentage of farms and access areas than the national level. This is the main reason for having a lower GINI index and a different Lorenz curve. However, since Alta Verapaz has an agricultural frontier dynamic in the north and east, a land accumulation process could be expected in future years. 110 Fig. A.1.2.b Land distribution in Alta Verapaz*, Lorenz Curve

Lorenz Curve of Land Concentration in Alta Verapaz

120

100

80

60 nd

La Inequality of

% 40

20

0 0 20 40 60 80 100 120

-20 % of Families

Based on UNDP 2004b * Does not includes Ixcan

111 Population

According to the INE (2004), the Alta Verapaz region is home to 776,246 inhabitants, 79 % of them living in the rural areas. It is the region with the highest percentage of rural population in Guatemala. Between 1994 and 2002, the annual population growth rate was 5.4 %, double than national rate (2.6 %). San Pedro Carcha (19.1 %) and Coban (18.6 %) are the main municipalities in terms of population. (Fig. A.1.2.c)

Fig. A.1.2.c Distribution of the population per municipality in Alta Verapaz, Guatemala

Distribution of the Population in Alta Verapaz, Guatemala

Ixcan

Santa Catalina La Tinta

Tamahú

Lanquín

Chahal

Santa Cruz Verapaz

Tactic

Tucurú

San Juan Chamelco

Cahabón

San Cristóbal Verapaz

Fray Bartolomé de Las Casas

Panzós

Senahú

Chisec

Cobán

San Pedro Carchá

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0

weight %

Source: INE (2004) 112 San Pedro Carcha has a greater population than the regional capital. This can be explained historically. This city has been the main coffee production area since 1860. According to Wagner (2001) San Pedro Carcha was a European immigrant cluster and a key point to gather and deliver coffee through the Izabal port on the Atlantic Coast. Chisec is the third municipality in respect to population, and its position can be explained through the internal migration process of 1950-1970 with the Petroleum industry. Because of the petroleum industry and internal migration, Chisec has received rural workers form the southern areas and from Baja Verapaz and Retauleu. In this study Santa Catalina La Tinta is referred only in the population indicator because it is a new municipality. The other indicators are not disaggregated; thus, Santa Catalina is included in the municipality of Panzos.

The region’s population density is 89 inhabitants per square kilometer. Based on their population densities, municipalities can be classified in four categories. First is the highly dense category with more than 400 inhabitants per square kilometer, such as Chisec, San Juan Chamelco, Tactic, Tucuru and Santa Cruz. The second category is the “dense municipalities” with 200 to 399 inhabitants per square kilometer, such as San Pedro Carcha, Senahu and San Cristobal. The third is the low density category, 51 to 199 inhabitants per square kilometer, and includes municipalities such as Coban, Lanquin, Panzos and Tamahu. The last category is formed by the least dense municipalities, fewer than 50 inhabitants per square kilometer, and includes municipalities such as Cahabon, Chahal and Fray Bartolome de las Casas.

Coban is the regional capital and therefore, has the greatest urban population: 47,200 inhabitants, 29 % of the total region’s urban population. San Pedro Carcha can be considered the rural capital; its rural population reaches 136,400 inhabitants, which is 22 % of the region’s total rural population. On one hand, Coban is the center for services and the government; and thus, attracts urban population; on the other hand, Carcha is the coffee capital and is part of the Cahabon River basin with a predominance of the annual agriculture systems. 113 There is a group of municipalities which draw a curve from northeast to southwest, with a low-level highway infrastructure where the rural population is higher than the rest of the region. These municipalities are Chisec, Fray Bartolome, Lanquin, Cahabon, Senahu, Tamahu and San Pedro Carcha. This is consistent because Lanquin, Cahabon, Senahu and Tamahu are connected with Carcha, which was defined as the rural capital. Ixcan plays therole of mountain port. Most of the population (90.23 %) lives on their farms and the urban settlement comprises the local market, schools, and NGOs and public offices. Commercialization is the key word in this rural town. Families come here where they can sell cardamom, corn, beans, and cattle, and buy rice, cloth, and agricultural inputs, and have access to services such as credit, telephone, education and health. Ixcan has no connection with the rest of Quiche and therefore, its real capital is Coban. (Fig. A.1.2.d and Map A.1.2.e)

Fig. A.1.2.d Distribution of the rural and urban population in Alta Verapaz, Guatemala

Relationship Urban-Rural population in Alta Verapaz

Ixcan Santa Catalina La Tinta Tamahú Lanquín Chahal Santa Cruz Verapaz Tactic Tucurú San Juan Chamelco Cahabón 8 San Cristóbal Verapaz Fray Bartolomé de Las Casas

Panzós Senahú Chisec Cobán San Pedro Carchá Alta Verapaz

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

% of population

Urbana Rural

Source: INE (2004) 114 Map. A.1.2.e Inhabited areas in Alta Verapaz, Guatemala

Adapted from IARNA-URL, 2004

Ethnicity

According to the IARNA-URL (2004), there are four ethnic groups in the region. The Q’eqchi group is predominant; they cover a vast area including central, western, and eastern municipalities including Coban. However, it is possible to find important groups of Ladinos, Achies, Kaqchiqueles and Poq’omchies in municipalities such as Coban, San Pedro Carcha, Chamelco, Chisec, and Fray Bartolome. The northern area is a mixed due to migrations from Baja Verapaz, Retauleu, Chiquimula, Zacapa, El Progreso and Escuintla. In the southeast the Poq’omchies are predominant in Tactic, San Cristobal and Tamahu. Ixcan is the final destination of several attempts to colonize the northern region and thus, is composed of more ethnic groups including Mames, and Quan’jobales (Map. A.1.2.f) 115 Map. A.1.2.f Distribution of the ethnics groups in Alta Verapaz, Guatemala

Adapted from IARNA-URL, 2004

Extreme Poverty

Poverty is an important issue for this region because 36.3 % of the population suffers extreme poverty (MAGA 2002). Rural municipalities such as Senahu (48.8 %), Panzos (44.52), Fray Bartolome (43.59 %) and Cahabon (43.02 %) have a high level of extreme poverty. Fray Bartolome is located in the cattle production area and is an interesting municipality because its urban settlement is very dynamic with commerce and services which reflect a high level of inequality. Panzos and Cahabon, are municipalities with difficult access with a predominance of subsistence families and rice producers. (Fig. A.1.2.g; Map. A.1.2.h) 116 Seven municipalities have a mid-level incidence of extreme poverty. They are: Chisec (41.55 %), Tucuru (40.97 %), Chahal (40.55 %), Lanquin (37.44%), Chamelco (37.06 %) and Tamahu (35.81 %). Except for Chahal, all have a secondary road infrastructure which connects either with Coban or Carcha. All of them depend on agriculture; Chamelco, Lanquin, Tamahu and Tucuru have coffee production systems, Chisec and Chahal have a predominance of cattle production. Chisec and Chamelco can be considered secondary- importance settlements. (Fig. A.1.2.g; Fig. A.1.2.h)

The municipalities with low incidence of extreme poverty are San Cristobal Verapaz (28.59 %), Coban (26.8 %), Santa Cruz (26.04 %) and Tactic (24.16), all of which have an urban population over 32 %. In addition, they are all connected to Guatemala City by a paved highway. These cities create a services cluster and are linked with Coban and Nebaj in Quiche State. Coban tends to be not only the Alta Verapaz regional capital but Quiche’s highlands capital as well. (Fig. A.1.2.g; Map. A.1.2.h) 117 Fig. A.1.2.g Incidence of Extreme Poverty in the municipalities of Alta Verapaz, Guatemala

Extreme Poverty in Alta Verapaz

Ixcan

Tactic

Santa Cruz Verapaz

Cobán

San Cristóbal Verapaz

San Juan Chamelco

Tamahú

San Pedro Carchá

Lanquín

Chahal

Tucurú

Chisec

Cahabón

Fray Bartolomé de Las Casas

Panzós

Senahú

Alta Verapaz

0 5 10 15 20 25 30 35 40 45 50 % of population

Based on MAGA, 2002

Fig. A.1.2.h Levels of incidence of Extreme Poverty in Alta Verapaz, Guatemala.

Adapted from MAGA, 2002 118 Productive Infrastructure

Alta Verapaz has 61 km of paved highways connecting Tactic, San Cristobal, Santa Cruz, Coban and Chisec, 762 km are non-paved roads and 146 km are rural roads (MAGA, 2002). The non-paved road system covers three main areas. The First connects Coban with Ixcan and is the only access to Ixcan which is a cattle and cardamom productive zone. The road also connects to Chisec a cattle and corn productive zone. The petroleum exploitation area is located at Chisec as well. The second road system connects the middle-west region. It starts at San Pedro Carcha and connects Laquin, Chachal, Chahabon and Fray Bartolome. According to families’ individual histories, this was the colonization trend in the 1950s and 1970s. Finally, the third road system is through Chamelco and connects the south west region: Tucuru, Tamahu, and Panzos. Alta Verapaz has three small airports: Chisec at Rubelsanto Petroleum area, Coban in the regional capital, and Fray Bartolome in the northwest.

Alta Verapaz has built a local storage network. The principal storage infrastructure is public and its main goal is to collect corn, coffee and cardamom. The storage facilities are located in each extreme of the region. Tactic in the southeast has a storage capacity of 97 tons of corn. Panzos in the southwest has a storage capacity of 58 tons of grains, and Fray Bartolome in the northwest has a storage capacity of 32 tons of corn. The two key settlements, the regional and rural capitals, have storage infrastructure capabilities related to exporting products. Carcha has the higher capability with 14.5 tons of cardamom and nine tons of coffee, while Coban only has storage capacity for 8.5 tons of cardamom, and 8.5 tons of coffee. 119 A.1.3Agrarian Zones

Based on the physical, social-political and economical settings, Alta Verapaz can be divided in five agrarian zones or rural territories. In two zones there is a predominance of the agrarian capitalist and farmer social sector: Coffee Plantations Zone and Productive Services and Infrastructure Zone. In both, communication infrastructure and productive services have been developed. Three zones have peasants as the predominant social sector. They also have a deficient communication infrastructure and lack productive services. Poverty varies in each zone, the higher the rural population, the higher the level of poverty. The Agricultural Frontier of the 1950s is a dynamic zone with high potential to become the principal production zone in Guatemala.

A. 1.3.1 Agricultural Frontier of the 1950s

The old agricultural frontier is located in the northern areas of Alta Verapaz. It includes Ixcan, northeast Coban, north Chisec, Fray Bartolome and Chahal (Map A.1.2.i). Its soils belong to two main geological formations: Sedimentary and Crystalline Highlands. The region includes six river basins, two of which cover most of the zone: La Pasion and Salinas Rivers. At the west border, two small river’s basin, Ixcan and Xacibal, can be found and to the east there are portions of the Moho and Sarstun river basins. This zone is relatively flat with an altitude of less than 200 masl.

Before the 1950s, this was an uninhabited area; the first movements to colonize it were from the southern municipalities and Baja Verapaz towards Fray Bartolome. In the early 1960s, petroleum exploitation was established in Rubelsalto, Chisec. The petroleum company started hiring a large number of peasants to clear areas in order to construct buildings, the extracting machines, and pipes to connect Rubelsalto with Izabal. Therefore, families migrated from Baja Verapaz, Zacapa, Jalapa and Retauleu seeking jobs. Once in the zone, they found a huge amount of public land which, through the INTA’s process could be assigned to them. This was a lure for a great number of landless 120 families in the south and central region of Guatemala. 6 By 1970, Fray Bartolome and Chisec were colonized and Ixcan and Peten were the next territories to conquer. At the end of the 1970s and in the early 1980s Ixcan was colonized. In the mid-1980s, Ixcan was a war zone, with guerrillas and the Special Forces “Kaibil” in dispute over the area.

After the peace agreements, the old agricultural frontier became one of the most productive areas in Guatemala. The municipalities which are part of this zone have a high percentage of rural population. Ixcan has 90 %, Chisec’s is 81.6 %, and Chahal has 76.9 % (INEC, 2004; MAGA, 2002). This zone also includes most of the rural areas of Coban. There are several ethnic groups in Chisec, Coban, Ixcan, and Fray Bartolome; however, the region is dominated by the Q’uechi ethnic group. The poverty level is medium to high in most of the zone (MAGA, 2002). Depending on the facilities for agricultural production and access to markets, families tend to have high or medium incomes. The families who settled the Chixoy River banks can harvest double the amount of product per area than can families in the rest of the zone. Fray Bartolome has the highest percentage of extreme poverty (MAGA, 2004). It is a municipality in which cattle production has been growing and the land concentration seems to be a side effect that boosted extreme poverty.

There are two main ways to access this zone. The first one is the Coban highway which connects Ixcan and Chisec, and then on to Fray Bartolome. There is also the northern transversal belt that connects Peten with Ciudad Guatemala. It goes from east to west, reaching first Fray Bartolome, then Chisec with Ixcan in the extreme west. A second way to access the zone is by air. There are small airports at Fray Bartolome, Chisec and Ixcan. Fray Bartolome is the only municipality with storage facilities, with a total capacity of 38 tons of corn

6 Families’ personal histories 121 AVANCSO (2001) called this “The Corn and Cardamom Zone”, but it does not include Ixcan. The name came about because AVANCSO was focused on crops, and not on the agrarian process as a whole. The name “Agricultural Frontier of the 1950s” gives first the idea of a migration from different areas of the country, then sets up a dynamic scenario of settlement and production, since the urban area is used mainly for marketing and services access functions. Finally, because the migration path started with Fray Bartolome and Chahal and followed to Chisec, Ixcan and Peten, this zone shares a common agrarian history in the struggle for land access and civil conflict.

A. 1.3.2 Traditional Peasants Zone

The Traditional Peasants Zone covers a high percentage of the region (Map A.1.2.i). The main geological formation covering this zone is the Sedimentary Highlands. It has different platforms however. In Cahabon areas with 50 to 1300 masl and slopes of 16 - 32 %, are features that set hurdles to agriculture. Chahal, in the northeast, is located at 200 – 600 masl with slopes below 20 %. In the central region the slope is slight: less than 10 %. Two main river basins cover this zone. The Cahabon River basin has an annual agricultural system, and the Polochic River basin is where rice and cattle production systems have accumulated significant areas. This zone includes Lanquin, Cahabon, Panzos, Senahu, Tucuru, Tamahu, areas from Chahal in the east, areas from Carcha and Chisec in the middle region, and areas San Cristobal Verapaz in the west. Six percent of the region has a medium risk of drought, in areas located at Panzos in the east and Tamahu in the south. 122 This zone can be considered a natural extension of San Pedro Carcha. Since 1543, when the Dominican religious ruled Alta Verapaz, the conquest of the territory led from San Pedro Carcha to Lanquin and Cahabon in the northeast and to Senahu and Panzos in the southeast. The current road system follows this path. Development of the core cities of San Pedro Carcha, Chamelco, and Coban, created peripheries, and San Cristobal was not included in this developmental process since its size and topography are quiet different from those of Santa Cruz and Tactic. The coffee plantation policies stimulated by the government in the late 1880s attracted German and Belgian investors to this region which developed the economic setting of this cluster.

Lanquin, Cahabon, Senahu, Tucuru, and Tamahu are municipalities with more than 89 % of the population living in rural areas, and only eight to 11 % in the urban cores. It could be inferred that these municipalities have a port of mountain system in which the urban core is useful only for trading. San Cristobal, Panzos and Chisec have rural populations between 62 to 82 %; however, this zone does not include Chisec’s urban population. Most of the zone is populated with Q’ueqchies, with important Ladinos concentration in Panzos and a Poq’omchi territory at San Cristobal.

The main connection comprises only rural roads with two systems. The first system starts in Carcha and connects Laquin and the northern transversal belt. Through the tranversal belt, the road system connects to Chisec and Fray Bartolome, covering the northern region of the zone. Through Laquin, the road system runs through Cahabon, Senahu and Panzos, connecting the east and southeast parts of the zone. The second system connects Coban and Carcha with Tactic, and it connects Tamahu, Tucuru and Panzos. Since Panzos has rice production, it has built a storage capacity for 58 tons of grains. This is the tourist area of the region which could develop its infrastructure in the next years. 123 A. 1.3.3 Productive Services and Infrastructure Zone

This zone covers portions of San Pedro Carcha, Coban, Chamelco, and includes Tactic and Santa Cruz (Map A.1.2.i). Its most obvious factor is the paved highway which connects these urban cores with Guatemala City. It comes from Baja Verapaz through Tactic and Santa Cruz toward Coban. This zone comprises the Cahabon and La Pasion Rivers basins with annual and permanent production systems. There is only one geological formation -Sedimentary Highlands- with 1000 to 2000 masl and slopes between 25 and 30 %.

Colonization of this zone started in 1543 with the Dominican priests; the main cities were San Pedro Carcha and Coban. In the late 1880s this was an important region for coffee plantations and commercial mostly German investment. During WWII most of this German investment was confiscated by the government. A similar strategy was used in Nicaragua. San Pedro Carcha, Chamelco and Coban have been commercial and services centers since the 1880s when the coffee was collected and transported to the east coast across the Izabal Lake. Santa Cruz and Tactic have been beneficiaries of this development due short distance to the cores and because the main highway to the capital was built through them. Santa Cruz benefits from the connection to San Cristobal and Quiche State, while Tactic has the connection to the municipalities located in the southeast and to Guatemala City.

San Pedro Carcha is a rural municipality; the rest of zone has between 25 to 36 % of urban population. There are two predominant ethnic groups: Q’uechies in Coban, San Pedro Carcha, and Chamelco, and Poq’omchies in Tactic and Santa Cruz. All these cities have developed services and commercial sectors. Coban and Chamelco have university campuses. In these cities every kind of service can be found, all of them have several internet cafes, restaurants; tour operators; hotels; crafts markets; transportation companies with regular schedules to Guatemala City, Nebaj, and Coban; banks, commercial stores for electro domestics including computers. Thus, most of the exporting companies, NGOs and public projects offices are located in this zone. 124

There are two poverty levels in this zone. Municipalities with higher urban populations such as Coban, Tactic and Santa Cruz have a medium level, with 24-27 % of the population in extreme poverty, while municipalities with higher rural populations have a high level of poverty such as Chamelco at 31.84% and San Pedro Carcha at 37.06%. Coban, Santa Cruz and Carcha have storage infrastructure for coffee and cardamom. San Pedro Carcha has a storage capability of 14.5 tons of cardamom and nine tons of coffee, Coban has storage capacity of 8.5 tons of cardamom and 8.5 tons of coffee and Tactic has a storage capacity of 97 tons of corn.

A. 1.3.4 Coffee Production Zone

The Coffee Production Zone is located in the high area of the Cuchumatanes sierra (Map A.1.2.i). It comprises part of the municipalities of Carcha, Lanquin, Santa Cruz, Panzos, Chamelco, Tactic, Tucuru, and Senahu. In Panzos the coffee plantation starts at 400 masl; in Lanquin, Senahu and Tucuru between 400 and 600 and in San Pedro Carcha and Chamelco at 900 masl. The only geological formation is the Sedimentary Highlands. There are two river basins the Cahabon River basin serves Lanquin, Carcha, Chamelco, Tactic, Tucuru, Santa Cruz and Senahu, and The Polochic River basin is for Panzos.

Coffee plantation was introduced to Guatemala around 1747 in Jutiapa, Amatitlan, Villanueva, Santa Rosa in the southern part of Guatemala. In the 1840s the Guatemalan government promoted coffee plantation in the northern region, and approved a contract with the Belgium Colonization Company and this company brought French families to the Verapaz in 1861. In the next 40 years Europeans established coffee farms around Coban, Tactic, Santa Cruz and San Pedro Carcha. German immigrants brought development to the region in order to export their coffee, the build the railways, and a system to move the coffee production to Izabal Lake, whichs made Panzos an important port. 125 This zone has three main ethnic groups. Ladinos tend to be proprietors of big and medium size coffee farms, and two indigenous communities -Q’uechies and Poq’omchies- tend to be proprietors of medium and small coffee farms, or rural workers. This zone takes advantages of the Productive Services and Infrastructure Zone, and it is a specific zone because there is a different path of land concentration in each potential coffee zone. There are spots in the Traditional Peasants Zone; however, the rationality of the system is quite different than the other two zones where labor force not demanded hire. This zone seasonal attracts rural workers and profits from coffee are not reinvested in the area. Most of the proprietors live in Coban, San Pedro Carcha or Chamelco. This zone is called the Cardamom and Coffee Zone by ACVACSO; however, the AVANCSO proposal includes areas where cardamom is established in medium and small production units. This proposal is focused on isolating the coffee estate, with its own dynamic, from the peasant zones.

A. 1.3.5 Peripheral Production Zone

This zone is not a compacted zone. It is a peripheral ring around cities such as San Pedro Carcha, Chamelco, Santa Cruz, Tactic, Coban and Ixcan (Map A.1.2.i), and is the result of urban enlargement. Farms which ten years ago were located in rural areas are now considered suburban or marginal neighborhoods. These properties are expensive and relatively small due to the city enlargement and pressure for building new residences. In the Coban, Chamelco and San Pedro Carcha peripheral areas, these properties cover less than a hectare each. Families tend to produce small amount of corn, beans and vegetables which they sell to the local market. At the same time, they expand their total income with extra agrarian economic activities from the urban informal sector such as; construction or in the service sector in areas such as gardening, security, carpentry, and sales. These families create a poverty belt around the cities. Because they are defined as neither rural nor urban, they are not covered by any urban or rural project or institutions. This zone is not identified by AVANCSO (2001) or any similar studies because these areas are included in the Coffee Plantation Zone or the Cardamom Zone with a labor supply labor role. 126 Map A.1.2.i Agrarian Zones in Alta Verapaz, Guatemala

Adapted from IARNA-URL, 2004

127 APPENDIX II LAND PRICES CALCULATIONS

Appendix 2.1 Calculation of the amount paid per hectare in 2003 US$. Alta Verapaz 1987-2003 Year of Years to Amount paid % of the Municipality Community Payment pay US$ (2003)/Ha land price Cahabon Chitcojito 1987 0 55.1 94.74 Cahabon Chacte 1994 13 11.1 15.11 Cahabon Seasir 2000 16 4.2 10.48 Carcha La Trinidad II 2003 19 80.9 9.66 Chisec San Miguel 1993 6 14.5 33.16 Chisec El Sauce 1995 9 6.0 24.57 Chisec San Luis Tzontzul 2000 13 8.3 19.13 Coban Tierra Blanca 2002 18 4.0 10.02 Coban Sajacoc Xelazutzul 2003 14 45.4 19.26 Fray San Jose Chiyu 1990 8 11.8 27.54 Fray Rubel Cacao 1994 4 13.0 52.15 Fray Santo Domingo Cancuen 1995 13 6.0 13.98 Fray Sessacar 1995 13 6.0 13.98 Fray Chinaja 1996 12 5.4 13.61 Fray Rubel Saltul 1996 14 5.4 12.59 Fray Sesamat 1997 7 9.9 39.66 Fray Serrachic, Sejux 2000 23 0.2 7.21 Ixcan El Eden 1989 8 8.4 38.77 Ixcan El Prado 1989 3 8.4 68.32 Ixcan Atlantida 1990 9 5.9 27.45 Ixcan Cari 1991 5 4.5 36.33 Ixcan Darien 1992 11 4.0 18.73 Ixcan Ingenieros 1992 6 4.0 33.01 Ixcan Las Mojarras 1992 6 4.0 33.01 Ixcan Nueva Jerusalem 1992 6 4.0 33.01 Ixcan Las Minas 1993 5 3.6 36.75 Ixcan Punto Chico 1993 12 3.6 16.75 Ixcan Margaritas II 1994 0 109.6 90.06 Ixcan Athenas 1995 12 3.0 14.62 Ixcan Esmeralda 1995 5 37.9 48.11 Ixcan Las Flores 1995 1 37.9 87.39 Ixcan Nueva Maquina 1997 6 47.7 52.81 Ixcan Armenia 2001 7 39.3 56.30 Ixcan El Paso 2002 16 1.8 14.65 Ixcan Las Reformitas 2003 8 1.7 53.56 Ixcan Los Olivos 2003 22 1.9 8.76 128 Appendix 2.2 Calculation of the prices by hectare in 2003 US$. Alta Verapaz 1977-2003 year of land Price Adjustment 2003's Municipality Community 2003's Q valuation yofv'sQ Factor US$ Cahabon Chacte 1981 48.41 0.08 581.88 73.28 Cahabon Seasir 1984 28.52 0.09 316.11 39.81 Cahabon Chitcojito 1987 76.01 0.16 461.58 58.13 Carcha La Trinidad II 1984 600.00 0.09 6651.29 837.61 Carcha Sachaj Sapur 1985 400.68 0.11 3742.40 471.28 Chisec El Sauce 1986 28.50 0.15 194.42 24.48 Chisec San Luis Tzontzul 1987 57.02 0.16 346.25 43.60 Chisec San Miguel 1987 57.00 0.16 346.14 43.59 Chisec MonteCristi II 1994 28.52 0.52 54.69 6.89 Chisec Samaria 1994 28.50 0.52 54.65 6.88 Chisec Planada Corraltzul 2001 380.16 0.88 433.19 54.55 Chisec Agua Subterranea 2002 266.05 0.95 280.63 35.34 Chisec Las Mercedes II 2003 599.91 1.00 599.91 75.55 Coban Tierra Blanca 1984 28.51 0.09 315.99 39.79 Coban Sajacoc Xelazutzul 1989 380.15 0.20 1869.96 235.49 Coban Salacuim 2000 399.05 0.82 489.43 61.63 Coban Sesajab 2003 598.73 1.00 598.73 75.40 Fray Serrachic, Sejux 1977 0.95 0.06 17.01 2.14 Fray Agua Chiquita 1982 28.51 0.08 341.66 43.03 Fray Rubel Saltul 1982 28.50 0.08 341.59 43.02 Fray San Jose Chiyu 1982 28.51 0.08 341.69 43.03 Fray Santo Domingo Cancuen 1982 28.52 0.08 341.73 43.04 Fray Sessacar 1982 28.54 0.08 342.02 43.07 Fray Chinaja 1984 28.56 0.09 316.60 39.87 Fray Scolay I 1985 34.24 0.11 319.84 40.28 Fray La Esperanza 1986 28.51 0.15 194.47 24.49 Fray Chimenja 1988 57.04 0.18 312.52 39.36 Fray Rubel Cacao 1990 57.04 0.29 198.68 25.02 Fray Sesamat 1990 56.97 0.29 198.45 24.99 Fray San Pablo 1993 399.52 0.47 849.22 106.94 Ixcan Atlantida 1981 14.30 0.08 171.86 21.64 Ixcan Darien 1981 14.25 0.08 171.29 21.57 Ixcan El Eden 1981 14.27 0.08 171.52 21.60 Ixcan Los Olivos 1981 14.27 0.08 171.50 21.60 Ixcan Punto Chico 1981 14.26 0.08 171.40 21.58 Ixcan Athenas 1983 14.26 0.09 163.50 20.59 Ixcan Cari 1986 14.28 0.15 97.40 12.27 Ixcan El Paso 1986 14.27 0.15 97.34 12.26 Ixcan El Prado 1986 14.27 0.15 97.32 12.26 Ixcan El Recuerdo 1986 14.26 0.15 97.24 12.25 Ixcan Ingenieros 1986 14.26 0.15 97.27 12.25 Ixcan Kaibil Balam 1986 28.50 0.15 194.40 24.48 Ixcan Las Mojarras 1986 14.26 0.15 97.29 12.25 Ixcan Nueva Jerusalem 1986 14.25 0.15 97.20 12.24 Ixcan Santa Maria Tzeja 1986 28.50 0.15 194.40 24.48 Ixcan Santa Rosa 1986 14.26 0.15 97.27 12.25 Ixcan Santiago 1987 190.00 0.16 1153.81 145.30 Ixcan Las Minas 1988 14.26 0.18 78.15 9.84 Ixcan Santo Tomas 1988 285.00 0.18 1561.56 196.65 Ixcan San Juan 1989 190.00 0.20 934.61 117.70 Ixcan Esmeralda 1990 179.65 0.29 625.76 78.80 Ixcan Nueva Maquina 1991 274.39 0.38 717.70 90.38 Ixcan Armenia 1994 288.86 0.52 553.89 69.75 Ixcan Las Flores 1994 179.65 0.52 344.48 43.38 Ixcan Margaritas II 1994 504.00 0.52 966.41 121.70 Ixcan Patate 1994 399.11 0.52 765.28 96.37 Ixcan Santa Clara 1994 299.25 0.52 573.81 72.26 Ixcan Las Reformitas 1995 14.26 0.57 25.23 3.18 Ixcan San Jacobo II 1996 299.40 0.63 476.83 60.05 Ixcan La Ceiba 2001 800.00 0.88 911.59 114.80