Reform Programs: Some Latin American Experiences

Peasant Cooperation in Land- Public Disclosure Authorized Reform Programs: Some Latin American Experiences SHLOMO ECKSTEIN and THOMAS F. CARROLL Public Disclosure Authorized One of the key issues in the implementation of land-reform programs is finding an adequate postreform model of property-management systems. Clearly, such systems should be based on the equitable and socially more satisfactory tenure arrangements inherent in land reforms, and at the same time should meet expectations of higher production and economic efficiency. The degree to which land reforms have been success- ful in improving peasant income and welfare and in raising output has often depended not so much on the land redistribution process itself, as on the organizational models chosen. Public Disclosure Authorized Fundamental, and hence by their very nature drastic, land reforms have amply demonstrated their capability for creating a more open, permeable rural system in which former inequities in power and status are narrowed. However, such gains can be severely limited and rapidly eroded if the new ways in which the reallocated land holdings and farm production are organized do not insure a more effective use of resources, developed technological possibilities, and, therefore, provide the basis for sustained income growth. In other words, destroying the old feudal sys- The substantial collaboration of Anna Lehel and Douglas Horton is gratefully acknowl- edged. This paper is an attempt to identify the main issues related to group farming and joint services in agriculture that are emerging from a broader comparative study of land reform in Latin America being carried out by the authors. The study focuses on Public Disclosure Authorized the experiences of five countries which have undertaken large-scale land reforms: Bolivia, Chile, Mexico, Peru, and Venezuela. Shlomo Eckstein is Professor of Economics at Bar Han University in Israel. Thomas Carroll is a staff member of the Inter-American Development Bank in Washington, D.C. They have drawn liberally on their previous work in this field. The views ex- pressed in this paper are those of the authors and do not necessarily reflect the position of the institutions with which they are associated. Brought to you by | provisional account Unauthenticated Download Date | 3/11/20 12:14 PM 234 SHLOMO ECKSTEIN, THOMAS F. CARROLL tem is not enough; new and better land systems must be invented and put into effective use. Basically, there are three types of postreform organizational models: (1) owner-operated family units, (2) centrally managed state enterprises, and (3) cooperative or collective farms. The first two represent the ideological prototypes of liberal capitalism and statist socialism, respectively; the third, while being paid lip service by both, remains essentially a Utopian vision of the "participatory society." The cooperative model of rural property-management systems has lately gained popularity in Latin America.1 Rural cooperatives, whether they stress group farming or joint services, are increasingly looked upon as "solutions" to the postreform organizational problem and ways to "optimize" equity and productivity objectives. Cooperativization or collectivization has become an attractive ideological postion, appropriate to growing "Third-World" consciousness. Cooperative farming is supposed to offer the following advantages: (1) an institutional framework for modernizing agriculture and inte- grating the peasant into the national society and economy; (2) a scale of operation which is large enough for efficient production under a variety of circumstances; (3) active social participation and community improvement through joint pursuit of group, rather than individual, objectives; (4) mobilization of idle and latent resources; (5) building upon existing forms of traditional peasant cooperation; and (6) assuring a wide distribution of benefits from economic gains. In short, "cooperatives, as ideally conceived, cannot be described as anything but noble" (Lele 1972). However, the great enthusiasm of social philosophers and theoreti- cians for rural development through collective endeavor is severely dampened by the skepticism of field workers and public officials, whose practical experiences lead them to question the operational viability of cooperative systems. Rural cooperatives have functioned well and attained important achievements in Israel and some countries in Western Europe; but they failed, on the whole, to show significant results in less-developed countries. In spite of the vigorous support of international agencies (especially the U.N. family), the record of successes is discourag- ingly poor and stands in no proportion to the magnitude of the change cooperatives had been expected to bring about over the last three decades. 1 A recent expression of this Latin American interest in participatory models is the collection of papers presented at the Expert Consultation on Development of Agrarian Structure in Latin America, held in Berlin in November 1973, sponsored by FAO and by the German Foundation for Developing Countries. Brought to you by | provisional account Unauthenticated Download Date | 3/11/20 12:14 PM Peasant Cooperation in Land-Reform Programs 235 The present paper presents evidence from Latin American experience which sheds light on the potential viability of cooperative farming systems. Among others, it deals with the following issues: (1) the actual economic and social advantages of joint action in farming; (2) the main practical problems encountered in implementation; (3) the sensitivity of participatory systems to some of their basic components, and the inter- action among these; (4) the dependence of such systems upon social, economic, and political conditions and changes that occur outside the system. It will be attempted to offer some explanations for the great gap between theoretical expectations and empirical realizations and to derive some operationally meaningful lessons for future programs. Before proceeding, it should be useful to clarify the meaning of a number of concepts used in this paper. The term "peasant" is broadly interpreted to include both small farmers and farm workers; no distinc- tion is drawn between independent cultivators and estate laborers. Hence, when the term "peasant group" is used in conjunction with land-reform programs, this may refer to a group of smallholders, or of ex-laborers of ex-estates, or a combination of the two. The term "peasant cooperative," as used herein, includes all types of enterprises which are owned and operated by groups of peasants (often with the assistance of hired specialists or government agencies). Following these definitions, this paper is concerned with all types of joint action on the part of peasants, in farming (collective operation of part or all of their land) or in joint provision of services (such as credit, supply of inputs, marketing, and processing). The specific form of such joint action varies greatly between countries and over time and includes loosely organized peasant groups and associations, pre- or para-cooperatives, cooperatives proper, and similar units, such as ^//do-societies (Mexico), and asentamientos (Chile, Venezuela); both "base-level"and "second-level" institutions (e.g. federations and central cooperatives) are considered. There are numerous typologies of peasant cooperatives and cooperative-like institutions (Schiller 1968). One of the simplest and most widely used typologies separates peasant cooperatives under two major headings: (1) Production-Oriented Cooperatives: in which productive resources (especially land) are held and operated collectively; (2) Service-Oriented Cooperatives: in which members continue to farm individually, and the joint features are in the input/output matrix (e.g. credit, marketing, and processing). In many cases, however, the differences between these two broad types may be more ideological or philosophical than real. As an illustration, group decisions made by a strong marketing cooperative Brought to you by | provisional account Unauthenticated Download Date | 3/11/20 12:14 PM 236 SHLOMO ECKSTEIN, THOMAS F. CARROLL may influence the production and investment decisions of individual members in important ways. RETURNS TO SCALE Arguments for group action in agriculture generally hinge on the issue of "return to scale." Proponents of group action usually argue that strong economies of scale characterize agricultural production, and that social and political advantages of collective effort complement the technical advantages of large-scale production. Arguments against group systems, especially in farming proper, are generally based on the assumption of diseconomies of scale and stress some of the social and political disadvantages of collective effort. What is the balance? Let us begin with the economic aspects. The Importance of Economies of Scale Until recently the existence of economies of scale in farming was almost taken for granted, at least up to sizes of about 50 hectares of cropland,2 based on advantages related to better use of land, capital, and human resources.3 For farms below this limit, as size increased, production costs per unit of output were believed to fall. Beyond the range of some 50-100 hectares (depending on the type of activity and technology), average production costs were assumed to stabilize at a minimum level. At much larger scales, average costs were assumed to rise as managerial difficulties began to outweigh any

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