Wim Pelupessy

The Impact of Increased Consumer-orientation in Global Agri-food Chains on Smallholders in Developing Countries

The economic position of small-scale developing country farmers has been observed to weaken in many global agri-food chains. Several studies in the global commodity chain tradition suggest that recent consumer trends in developed country markets are the ultimate cause. However, these studies have not come up with a conceptual framework in which the effects of changing consumer preferences on farmer earnings can be explicitly analysed. This paper makes a first attempt towards building such a framework by drawing mainly on Lancasters product characteristics approach. Within this framework it is shown how enhanced consumer-orientation in the global food system leads to adverse power shifts for small farmers in low-income countries. As signalled by previous global commodity chain studies, smallholders in developing countries will face growing inequality in intra-chain surplus distribution as well as a higher risk of exclusion from global agri-food chains. We discuss how thinking in terms of product characteristics may also help smallholders to reap a larger share of the surplus in the chain.

Economic Adjustment Policies in El Salvador during the 1980s

In the preceding two chapters we have discussed the three main sectoral interventions of the government in the new strategy of the 1980s. The analysis of the results of the reforms already indicates some contradictory effects of the implemented macroeconomic policies. In other cases these measures strengthened the sectoral ones, but not in a systematic way. The following citation from a very authoritative spokesman is revealing in this context: “It is difficult to design a development plan for the government, and that is why one–year operating plans, which are little more than firefighting operations, are developed instead,” declared Alberto Benitez Bonilla on resigning from the presidency of El Salvadors Central Reserve Bank (La Prensa Grafica, 12 May 1987).

The Limits of Reform in an Agro–Export Economy

The previous chapters examined the agrarian development and economic policies of the 1960-90 period in El Salvador, a Central American country that underwent important processes of change during those years. Detailed conclusions can be found in the final section of each chapter, so it is not necessary to repeat them in the present one.

Historical and Political Background: The Stages of Development

The nature of postwar development in Central America is described by the United Nations Economic Commission for Latin America as superimposed, externally determined and exclusionary (ECLAC, 1986: 13-22). This pattern of development followed the country’s successful agricultural recovery and growth after the international economic crisis of the 1930s, which was associated with regressive tendencies in the distribution of, and access to, income and land (Williams, 1986; Brockett, 1988; Torres-Rivas, 1991).

The Agrarian Structure in the 1960s and 1970s

It is commonly accepted that the state had played an important role in the agrarian transformation of the 1980s, but its actions cannot be divorced from the preceding evolution of the rural economy, which itself may have been affected by state intervention. In this context, land distribution and agricultural practices, as well as social class relationships and interest- group organizations, are the key variables to be considered. As we have seen in Chapter 2, changes in the socioeconomic structure affected the emergence and development of a variety of organizations in El Salvador, as well as the efforts of the state to control their struggle for an increased share of national income and wealth. It is necessary to pay particular attention to the efforts of rural workers to organize themselves, despite the official proscription of their organizations.1 Political processes affect bargaining positions, and the struggle to increase the share of the surplus may give rise to institutional clashes or cause changes of government.

Agrarian Policy and Export Producers’ Responses in the 1980s

In this chapter attention will be paid to the supply side of the export economy and the way this was influenced by changes in policies and the external environment. The impact of three structural reforms and other sectoral policies on the behavior of the agro–Export producers will be the main subject treated. Even before the crisis of the 1980s, the postwar development of the Central American region was described as superimposed, externally determined, and of an exclusionary nature (ECLAC, 1986: 13-22). Another longer–term study pointed more explicitly to a probable breakdown of social and economic relations as a consequence of what was called oligarchic-based agricultural export growth (Bulmer–Thomas, 1983: 271).

Agrarian Reform in the 1980s

In a country where a major part of the population depended upon agriculture, the pressure for access to land became one of the most important demands of an increasing number of worker and peasant organizations at the end of the 1970s. The introduction of a land reform marked the beginning of a new stage in the development of the state and its intervention in the economy. The reform was accompanied by the application of a series of new policy instruments intended to affect the generation and distribution of real income in the countryside. During this reformist stage, policymaking was directed not only towards providing public goods or stimulating efficient production, but also at the correction of rural market failures. As we have seen in previous chapters, the skewed land distribution, lack of productive demand for labor, and concentrated input and product markets characterized this sector. The reform was one of the instruments of state intervention to improve the access to land of peasants and the landless, and it affected the interests of the big landowners who had benefited most from rapid agro–Export growth and related policies in the past.1

The Agro–Export Economy in the 1970s

Ever since the Spanish colonized El Salvador, its economy has been closely tied to the world agricultural commodity markets. The cultivation of crops such as cocoa and indigo at first and coffee later, as well as extensive livestock farming, required increasing amounts of agricultural land, forcing peasants growing food crops onto ever smaller plots. As we have seen in Chapter 3, the rise of coffee led to the concentration of a large proportion of the countrys fertile agricultural land in the hands of a small group of landowners who were proponents of private land ownership and free foreign trade. From the middle of the nineteenth century, these large producers used the Salvadoran state to ensure increasing economic control for themselves over coffee and other productive activities.