Bulmer-Thomas V., Coatsworth J., Cortes-Conde R. The Cambridge Economic History of Latin America: Volume 2, The Long Twentieth Century
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STRUCTURE, PERFORMANCE,
AND POLICY IN AGRICULTURE
otto t. solbrig
Agriculture is the most important and basic human economic activity.
Without food, life is not possible. Yet, paradoxically, as a country devel-
ops, the economic importance of agriculture diminishes and its contribu-
tion to the Gross National Product (GNP) is reduced. This is because the
income elasticity of demand for agricultural products is low. Once people
have satisfied their basic needs, their attention moves to the satisfaction of
other wants. Yet, as an economy develops, the productivity of agriculture
increases, lowering the costs of production and freeing labor that moves to
the industry and service sector.
A corollary of this fact is that a high contribution of agriculture to
GNP implies a low level of development. However, agriculture can be
the motor that energizes the economy. A modern agriculture, in contrast
with traditional farming, has many linkages with industry, both as a user of
industrial products (e.g., fertilizers, machinery, and agrochemicals) and as a
source of materials for industrial enterprises (e.g., fibers, raw food products,
and industrial oils). Modern agriculture is also a consumer of services (e.g.,
banking, transport, and research). Few countries have developed without
developing first a strong agrarian base.
Latin American agriculture is very heterogeneous, reflecting the enor-
mous diversity of landscapes, climates, soils, and local circumstances. Yet,
there are some common features. The first and most striking is the impor-
tance of agriculture in the economies of Latin America. Since colonial times,
the region has depended on agriculture and livestock as major sources of
exports and employment. A second feature is the uneven allotment of land,
the well-known latifundio-minifundio distribution. A final characteristic is
the persistence of a large sector of small farmers poorly integrated into
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484 Otto T. Solbrig
the economy and producing primarily food staples for local markets. They
often are referred to as self-sufficient. Strictly speaking, very few farmers in
Latin America are self-sufficient because they are tied to a market economy,
albeit not very strongly or efficiently.
All through the long twentieth century, agriculture has been the prin-
cipal source of foreign earnings in most Latin America countries. Mineral
extraction (including oil) is the only other sector that rivals agriculture and,
in some countries, most notably Venezuela, Mexico, Chile, and Bolivia,
extractive industries have dominated the economy.
One characteristic of the Latin American agricultural export sector has
been the prevalence of one or a very few products in each country: coffee
in Brazil and Colombia; coffee and bananas in Central America; sugar in
Cuba;wheat, maize,and cattle in Argentina. This dependence on few export
products has made countries very contingent on the vagaries of external
markets and vulnerable to price fluctuations. It also has led to boom and
bust cycles, such as those of natural rubber in Brazil or henequen in Mexico
at the beginning of the century.
Yet, in spite of the importance of agriculture in most Latin American
countries, it has not been able to energize the rest of the economy and
help develop other sectors. One possible reason for this situation is the
concentration of the land in the hands of a small landed elite at the start
of the long twentieth century.
The uneven land distribution in Latin America – the latifundio-
minifundio duality – is a colonial heritage that became consolidated in
the nineteenth century and is a persistent characteristic of the region. Land
concentration endures in spite of repeated attempts at land reform. How-
ever, land concentration has many and different forms, such as the typical
large hacienda that is labor rich and capital poor, the plantation that is also
labor and land rich but also is better capitalized and more efficient than
the hacienda,orthe more capitalized large estate that prevailed in areas
with labor shortages such as Argentina or northern Mexico, where there
was investment in labor-saving machinery.
Traditional latifundios are known by different names – hacienda, fundo,
estancia – but all share similar characteristics. Productivity per hectare or
per worker is low and they normally concentrate on one product. Neverthe-
less, during the long twentieth century, the importance of the traditional
latifundio has diminished significantly. A new kind of large estate domi-
nates the rural scene in many countries, notably Argentina and Brazil: the
capital-rich and labor-poor estate that takes advantage of the economies of
scale of modern agriculture.
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Structure, Performance, and Policy in Agriculture 485
The traditional hacienda of the eighteenth and nineteenth centuries, with
its powerful control over labor and quasi-independence from national law,
has disappeared in Latin America.
1
Coercive labor was eliminated by the
end of the nineteenth century (Brazil, the last country in the continent to
abolish slavery, did so in 1888) but, for some time, debt peonage, company
towns, and payments by chit kept people tied to the land. Labor laws
in most countries have improved working conditions for farm workers
even though salaries continue to be low. Also, inheritance laws and poor
management led to the breakup of many estates, and market pressures
forced modernization in the form of greater capital investments on most
of the rest. Government attempts at land reform in many countries broke
up some large estates and put pressure on others to modernize. Yet land
concentration continues to be a characteristic of the rural sector in Latin
America.
For the rural population, the transformation of the latifundios into mod-
ern production units was not always benign because it increased unem-
ployment and often led to the eviction of workers from small plots they
occupied in the haciendas and latifundios. The result has been an exodus of
rural workers to the cities, where they often swell the mass of unemployed.
Such migration was not exclusively caused by the modernization of agricul-
ture because higher wages in cities were also a powerful attraction. In other
cases, displaced farmers and farm workers migrated to the newly opened
lands in the interior of the continent where there is an active agricultural
frontier. Deforestation and land degradation has been a much deplored
characteristic of these areas.
The precise extent and economic role of peasant agriculture in Latin
America are matters of debate among scholars and social activists. It is
undeniable that such a sector is an important component of the rural
environment in Latin America. Yet, from the very beginning of Spanish
and Portuguese colonial days, rural enterprises have been tied to the market,
albeit often very weakly. Another characteristic of agriculture in the long
twentieth century is the increasing marginalization of peasant agriculture.
Throughout the world, the twentieth century has created more changes
in the rural sector than at any other time in history. From a tradition-
driven and very conservative craft, agriculture has been transformed
into a knowledge- and science-based enterprise. These developments have
1
Tulio Halperin Donghi, “The Buenos Aires Landed Class and the Shape of Argentine Politics (1820–
1930),” in E. Huber and F. Safford, eds., Agrarian Structure and Political Power (Pittsburgh, PA, 1995),
39–66.
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486 Otto T. Solbrig
augmented productivity and helped agriculture expand production to keep
up with an increased demand from a growing population. They also have
altered the relation of people to the land, introduced a more industrial
approach to farming, increased the linkages and dependence on indus-
try, made it more vulnerable to the vagaries of markets and commodity
prices, and increased the environmental impact of farming. A majority of
the population lives today in cities, another change that took place in the
last fifty years. These changes in the rural environment are driven by a
growth in demand resulting from population and economic growth. How-
ever, Latin America has not been able to benefit greatly from these changes
in demand. The reasons and consequences are discussed throughout this
chapter because they vary by commodity and by country.
In this chapter, I present an overview of the development of agriculture
in Latin America during the long twentieth century, emphasizing the struc-
tural changes that have taken place. I describe the boom–bust character of
some production (i.e., rubber, henequen) and its dependence on changing
markets; the problems of overproduction (i.e., coffee, sugar); the vulnera-
bility of Latin American agriculture to overseas economic conditions (i.e.,
meat, linseed); and the impact of modernization of the agricultural sec-
tor (i.e., fruits and vegetables). I also describe and comment on some of
the transformations that have occurred during the long twentieth century.
Space does not allow for a detailed, country-by-country, or commodity-
by-commodity discussion of these changes, their causes, and consequences.
Thus, the discussion is along general lines.
I first discuss land use and land-use changes in the last hundred years,
including attempts at land reform. I follow with a discussion of the prin-
cipal crops, their characteristics, and impact, including a consideration of
technological change in Latin America. I close with a discussion of present
trends and problems.
LAND USE IN LATIN AMERICA
Of all human economic activities, none is more intimately connected to
the land than agriculture. Land use is almost synonymous with agriculture.
Yet agriculture is increasingly more dependent on technology and capital
than on land and labor.
But land still matters. In the first instance, soil and climate determine
the type of crops that can be cultivated efficiently in any one area, and
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Structure, Performance, and Policy in Agriculture 487
the technologies that have to be employed to bring them to harvest eco-
nomically. The geographical location of an area in relation to markets sets
transportation costs and affects land values. Finally, the topography, type
of soil, climate, and technology employed combine in determining the
environmental impact of agriculture.
The geography of Latin America has been an important determinant in
its history of land use. A backbone of mountains runs along the western part
of the area from northern Mexico to Tierra del Fuego, interrupted only in
the Darien area of Panama. In South America, the Andes Mountains divide
the continent into a Pacific group of countries (Ecuador, Peru, and Chile),
an Atlantic group of countries (Guyana, French Guyana, Suriname, Brazil,
Uruguay, and Argentina), and a group of Caribbean countries (Colombia
and Venezuela). Two countries (Paraguay and Bolivia) are landlocked. In
North and Central America, the presence of interior mountain chains were,
for a long time, a barrier in the process of uniting the Pacific and Atlantic
sections of the countries of the region (Mexico, Guatemala, Honduras,
Nicaragua, and Costa Rica). Panama, because of the canal, is an exception,
and so are El Salvador and Belize, which face only one ocean. The moun-
tains have affected availability of overseas markets and transport costs and
have acted as barriers for inter-American trade and integration. Finally, the
Caribbean islands present their own peculiar characteristics.
South America extends from the Northern to the Southern Hemisphere.
Consequently, it has an enormous diversity of climates that range from typ-
ically temperate climates with cold winters and hot summers in its south-
ern end, to tropical climates close to the equator with even temperatures
throughout the year and only a wet and a dry season. Furthermore, the
presence of mountains creates new climatic regimes, with a tropical rainfall
pattern but cool and even temperatures throughout the year, such as in the
highlands of Colombia and Ecuador. Central America and Mexico repeat
the South American pattern in a northerly direction, with a wet, tropical
climate in Panama and temperate dry climates in northern Mexico.
The principal determinant of crop yield is water availability. Plants con-
sume enormous quantities of water that they extract from the soil. This soil
water is replenished periodically through rainfall. Water shortages reduce
crop productivity. Yet excess water in the soil can also be detrimental because
it deprives roots of oxygen and leads to reduced growth or even death. Sun-
shine is also necessary for good growth and excessively cloudy climates such
as mid-altitude in mountains can also reduce growth. In Latin America,
a gamut of precipitation regimes is encountered, from some of the most
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488 Otto T. Solbrig
extreme deserts in the world, such as the Atacama desert in Chile and Baja
California in Mexico, with less than fifty millimeters of rainfall a year, to
some of the wettest areas in the world, such as the Choc
´
oinColombia or
southern Chile, with more than seven meters of rainfall.
Tr opical rainfall regimes create special problems for agriculture with their
alternation of a rainy season with an excess of precipitation followed by a dry
season with a large water deficit. The length of the dry season can vary from
afew weeks in the wettest part of the Amazon Basin and the Choc
´
oregion
of Colombia to seven months in the savanna regions of Brazil, Colombia,
and Venezuela. The length of the dry season is the determining factor in the
kind of agriculture and the type of crops grown in tropical regions. In areas
with marked dry seasons, crop agriculture is only possible during the rainy
season, eliminating the possibility of growing high-value perennial crops
such as coffee, sugar, or cocoa unless supplemental irrigation is available
during the dry season.
Te mperate regions offer a more even distribution of rainfall throughout
the year. Agriculture is limited in these regions by the total amount of
rainfall and by winter temperatures. The Southern Hemisphere, with a
higher proportion of ocean in relation to landmasses, has a more temperate
climate than similar areas in the Northern Hemisphere, conditions that
favor grain agriculture.
The soils in Latin America are very diverse, as is to be expected in such
avast region. The type of soil reflects the underlying geology and past and
present climate. The physical and chemical characteristics of the soil affect
their capacity to retain water and provide plants with needed nutrients.
They also determine to a large extent their susceptibility to erosion.
Soils in the upland areas and mountain slopes of the Andes and in Central
America are young soils of good quality. Soils in lowland tropical areas are,
for the most part, old soils that are almost completely devoid of nutrients
and quite fragile. The best soils are those of the Argentine pampas, which
is an area of deposition of sediments of Andean origin. The chemical and
physical characteristics of the soil can be a major constraint to agriculture
in Latin America. This problem is especially serious in lowland tropical
regions.
Constraints of water, slope, and soil can be overcome with technology –
basically, irrigation, drainage, terracing, and fertilization. These techniques
have their roots in antiquity but have been perfected over time. Their appli-
cation requires capital that has been a limiting factor in the development
of Latin American agriculture. They also increase production costs. They
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Structure, Performance, and Policy in Agriculture 489
are often not applied, leading to soil erosion and land degradation. A very
promising new technology to control erosion is No-Till agriculture (also
known as direct seeding), which has spread very fast in Argentina, Paraguay,
and southern and central Brazil in the last ten years. This consists of plant-
ing the seed directly into the stubble of the previous crop using special
machinery and without plowing. It is the modern version of the Maya
planting stick. It now is used in more than 50 percent of the cultivated area
of Argentina, Paraguay, and southern and central Brazil.
As long as there was ample land and labor, extensive agriculture, which
uses a minimum of technology, prevailed in Latin America. With the closing
of the agricultural frontier in many Latin American countries (the exception
being areas with remaining tropical forests), attention has increasingly been
paid to ways to augment yields through intensification and replacing land
and labor with capital. The history of Latin American land use during the
long twentieth century, but especially in the second half, is the history of
the change from extensive to intensive agriculture or, if you wish, from
an agriculture based on land and labor to one that uses more capital and
knowledge.
Reliable data on land use at the beginning of the long century are not
available for Latin America as a whole, and individual country data are
quite uneven. There are good data for the Southern Cone countries and less
reliable data for the rest of the Latin American area. Good data maintained
by FAO exist only since 1961.Ithas been calculated
2
that in the period
between 1860 and 1919, 4.5 million hectares were converted to crops in
Central America and 35.4 million in South America. Since then, 18.8 million
hectares in Central America and 65 million hectares in South America have
been transformed into cropping land. This is considerably below the 761
million hectares of potentially arable land in Latin America but close to the
133 million being cultivated in 2000.Ifthese estimates are correct, only 10
million hectares were cultivated during colonial times. Table 12.1 lists the
cultivated land by countries from 1961 to 2000 in ten-year intervals, and
Table 12.2 shows land in permanent pastures.
Tables 12.1 and 12.2 show some very distinct patterns. The Southern Cone
countries (Uruguay, Argentina, and Chile) show very modest increases in
agricultural surface since 1961. Argentina and Uruguay, known for their
cattle and sheep, show a very slight decrease in pastures, whereas Chile
2
J. F. Richards, “World Environmental History and Economic Development,” in W. C. Clark and
R. E. Munn, eds., Sustainable Development of the Biosphere (Cambridge, 1986), 53–74.
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Table 12.1. Cultivated surface 1961–2000 (in 1,000 hectares) and percentage
change since 1961
1961 1970 1980 1990 2000 1961–2000 % change
Argentina 18,277 23,851 25,000 25,000 25,000 6,723 36.78
Bolivia 1,280 1,525 1,875 1,900 1,944 664 51.88
Brazil 20,751 26,000 38,632 45,600 53,200 32,449 156.37
Chile 3,640 3,902 3,836 2,802 1,979 −1661 −45.63
Colombia 3,532 3,572 3,712 3,305 2,818 −714 −20.22
Costa Rica 285 285 283 260 225 −60 −21.05
Cuba 1,550 2,310 2,630 3,250 3,630 2,080 134.19
Dominican
Republic
720 820 1,070 1,050 1,096 376 52.22
Ecuador 1,705 1,725 1,542 1,604 1,574 −131 −7.68
El Salvador 488 450 558 550 560 72 14.75
Guatemala 1,100 1,100 1,270 1,300 1,360 260 23.64
Haiti 410 505 545 555 560 150 36.59
Honduras 1,295 1,330 1,484 1,462 1,068 −227 −17.53
Mexico 22,420 21,688 23,000 24,000 24,800 2,380 10.62
Nicaragua 1,030 1,040 1,151 1,963 2,457 1,427 138.54
Panama 438 432 435 499 500 62 14.16
Paraguay 700 805 1,620 2,110 2,290 1,590 227.14
Peru 1,796 2,558 3,220 3,500 3,700 1,904 106.01
Puerto Rico 224 152 74 65 35 −189 −84.38
Uruguay 1,330 1,380 1,403 1,260 1,300 −30 −2.26
Venezuela 2,830 2,840 2,850 2,700 2,440 −390 −13.78
Latin America 85,801 98,270 116,190 124,735 132,536 46,735 54.47
Source: FAOFAOSTAT Database (Rome).
shows an increase of 35 percent. Of the countries bordering on the Amazon
Basin, three (Colombia, Ecuador, and Venezuela) show a loss in agricultural
area and one, Bolivia, shows a 50 percent increase in agricultural surface
and modest increases in pastures. The remaining three (Paraguay, Brazil,
and Peru) show substantial increases in agricultural surface and pastures
(106 and −4%inPeru; 156 and 52% for Brazil, and 227 and 60%inthe
case of Paraguay). In Central America, Costa Rica doubled its agricultural
surface in the last forty years and increased its grazing surface by 155 per-
cent. The other countries in that region show increases between 20 and
70 percent in agricultural surface and in pastures except Honduras, which
shows a loss of agricultural surface. Mexico (9.2 and 7.4 %) shows very little
change.
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Structure, Performance, and Policy in Agriculture 491
Table 12.2. Natural and planted grasslands (1,000 hectares)
1961 1970 1980 1990 2000 %
Argentina 147,000 144,500 143,200 142,200 142,000 −3.4
Bolivia 28,600 28,600 31,500 33,200 33,831 18.3
Brazil 122,135 154,138 171,414 184,200 185,000 51.5
Chile 9,550 11,000 12,800 12,850 12,935 35.4
Colombia 35,000 38,000 40,100 40,083 40,920 16.9
Costa Rica 915 1,363 2,010 2,330 2,340 155.7
Cuba 1,900 2,410 2,607 2,900 2,200 15.8
Dominican Republic 2,092 2,092 2,092 2,090 2,100 3.8
Ecuador 2,200 2,300 4,016 4,921 5,107 132.1
El Salvador 604 610 610 640 794 31.5
Guatemala 1,110 1,200 1,300 2,500 2,602 134.4
Haiti 585 635 509 497 490 −16.2
Honduras 1,500 1,500 1,500 1,500 1,508 5.3
Mexico 74,499 74,499 74,499 77,500 80,000 7.4
Nicaragua 3,900 4,100 4,600 4,815 4,815 23.5
Panama 1,060 1,100 1,260 1,400 1,477 39.3
Paraguay 13,600 14,000 15,100 17,995 21,700 59.6
Peru 28,191 27,120 27,120 27,120 27,100 −3.9
Puerto Rico 312 330 336 232 210 −32.7
Uruguay 13,847 13,697 13,630 13,520 13,543 −2.2
Venezuela 15,750 16,030 16,768 18,240 18,240 15.8
Latin America 504,350 539,224 566,971 590,733 598,912 18.8
Source: FAOFAOSTAT Database.
In summary, it is clear that the overall increase of 25 percent in agri-
cultural surface and close to 20 percent in pastures in Latin America since
1960 was very unevenly distributed, being concentrated primarily in tropi-
cal countries. Two countries – Costa Rica and Paraguay – show the greatest
increase in percentage of land allotted to agriculture and livestock raising,
whereas Brazil shows the greatest absolute increase in surface dedicated to
these activities. Since 1961, 246 million hectares of new land were incorpo-
rated into agriculture and livestock raising, of which 162 million hectares,
66 percent of the total, were in Brazil.
We can divide land use in the long century into two distinct periods that
correspond with the time before and after World War II. During the early
period, agricultural and livestock area expanded primarily in the temper-
ate and subtropical regions (Southern Cone and southern Brazil, Mexico)
and coastal tropical regions, and a second period when agricultural and