The London School of Economics and Political Science The Power and the Peril: Producers Associations Seeking Rents in the Philippines and Colombia in the Twentieth Century Charmaine G. Ramos A thesis submitted to the Department of International Development of the London School of Economics for the degree of Doctor of Philosophy, London, September 2013 1 Declaration I certify that the thesis I have presented for examination for the MPhil/PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without my prior written consent. I warrant that this authorisation does not, to the best of my belief, infringe the rights of any third party. I declare that my thesis consists of 91,864 words. 2 Abstract This thesis investigates the collection of levies by the state from Colombian coffee and Philippine coconut producers and the delegation of authority, to mobilise and regulate the uses of the levies, to producers associations in these sectors. The thesis suggests that these activities constitute an “institutional framework” for state-engineered rents, whereby public authority is appropriated by private agents. It asks why similarly-designed institutions for allocating rents yielded different outcomes: Colombian coffee levies are associated with growth- enhancing and producer welfare-promoting investments in coffee production and marketing, while Philippine coconut levies are depicted as non-developmental rent capture by associates of a president. The thesis explains the variation in outcomes by examining the basis in political economy of the power exercised by the leading sectoral organisations, FEDECAFE in Colombia and COCOFED in the Philippines, and how they articulated this power in the mobilisation of the levies. It finds that the conditions for collective action and the exercise of power were more robust for Colombian coffee than Philippine coconut producers. This meant that while FEDECAFE directly intermediated between coffee producers and the state in the mobilisation of rents associated with coffee levies, COCOFED shared the power of mobilising rents with other individual political brokers. This variation led to differences in rent mobilisation: a process that was production-enhancing in Colombia but not in the Philippines. This work thus shows how variations in the political organisation of rent-seeking may be linked to variations in the developmental outcomes associated with the collection and deployment of such levies. Doing so, it seeks to contribute to the understanding of the political conditions under which state-engineered rents may be production-enhancing – an important question in late developing countries, where corruption may be endemic, but state-allocated rents nevertheless necessary for promoting development. 3 Table of Contents List of Tables.................................................................................................................. 6 List of Figures ................................................................................................................ 7 List of Acronyms ........................................................................................................... 8 Acknowledgements ........................................................................................................ 9 Chapter 1. Rents, producers associations and the politics of rent-seeking: a framework for analysis ................................................................................................. 11 Why and how politics matters ..................................................................................... 13 Objects of analysis ...................................................................................................... 15 ‘Rents’ as an analytical framework ............................................................................. 22 Methodology ............................................................................................................... 37 Structure of the thesis .................................................................................................. 42 Chapter 2. Producers’ power and organisation in Colombia and the Philippines: comparative history and political economy ................................................................. 43 Political economy writ large: struggles in late development ...................................... 44 Micro- and historical foundations of collective action and political power ................ 49 Political drivers of the rent settlement ........................................................................ 67 Conclusion .................................................................................................................. 81 Chapter 3. The mobilisation of coconut levies in the Philippines: rents, wealth and their claimants ....................................................................................................... 83 Purposive rent allocation by a strongman president: an overview .............................. 84 An accounting of the coconut levies ........................................................................... 89 Rents from state-engineered concentration of market power ..................................... 99 Purposive allocations for the “coconut king” ........................................................... 114 Coconut levies as extractions in aid of capital accumulation ................................... 124 Conclusion ................................................................................................................ 131 Chapter 4. ‘From the producers, for the producers’: The Colombia coffee rent settlement as counterpoint .......................................................................................... 133 Purposive rent allocation for a federation: an overview ........................................... 134 Resources for stabilising producers' income ............................................................. 146 Investing to benefit the contributors ......................................................................... 165 Conclusion ................................................................................................................ 178 4 Chapter 5. Regulating the rent settlement in the Philippine coconut sector: capture and contest ..................................................................................................... 180 Rent settlement codified by executive fiat in the name of coconut farmers ............. 182 Delimiting administrative control ............................................................................. 189 Rent settlement contested: the post-Marcos period .................................................. 198 Conclusion ................................................................................................................ 217 Chapter 6. State-led, producer association-anchored mechanisms for rent regulation in the Colombian coffee sector ................................................................. 219 Rent settlement codified in contractual form ............................................................ 220 Associational avenues for voice and legitimisation .................................................. 225 A role in determining coffee policy .......................................................................... 232 Conclusion ................................................................................................................ 238 Chapter 7. Conclusion ................................................................................................ 240 On the ‘power and the peril' of producers associations seeking rents ....................... 242 On the study of ‘rents’ and their role in development .............................................. 247 Bibliography ............................................................................................................... 253 Appendix 1. List of Interviewees ............................................................................... 266 5 List of Tables Table 2.1 Average growth of per capita GDP (in percent) 46 Table 2.2 Gross Domestic Savings as % of GDP 46 Table 2.3 Share of Philippine coconut and Colombian coffee export earnings in total 52 (in per cent): selected years, 1900-2000 Table 2.4. Farms and coconut hectarage shares, by farm size, before the imposition 54 of coconut levies (in percent): 1948, 1960, 1970 Table 2.5. Farms and coffee hectarage shares, by farm size, (in percent): 1955-56 56 and 1970 Table 2.6 Distribution of Philippine ‘coconut farms’ and Colombian ‘coffee estates’, 58 by size: 1970 Table 2.7. Ten-year average Philippine exports and US share, by type of coconut 63 product: 1900-2000 Table 2.8 Coffee production (in tons), by size of coffee farms and geographic zone, 64 1923-1932 Table 3.1 Four Coconut Levies Collected during the Marcos Years: Legal Basis and 85-86 Key Elements of the Relevant Laws Table 3.2 Total Coconut Levies Collected (excluding CIF Levy), as of 1997, by 86 Type of Levy Table 3.3 Audited Disbursements of the Coconut Levy Funds: 1970-1982 91 Table 3.4 CIIF Investments: