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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512 Otto T. Solbrig

is overshadowed in importance by oil. Because Chapter 10 of Volume I

deals speciﬁcally with the production technology of sugar, we will only

indicate some historical characteristics connected with this crop.

Sugar, like coffee, is a high-value commodity. Sugar is extracted from two

very different plants: sugar cane and sugar beet. The sugar beet has been

cultivated for only two hundred years. It is a plant of temperate regions and

the costs of production and its yields make it uncompetitive with sugar cane,

the most efﬁcient crop known in converting sunlight into carbohydrate.

However, given the high value of sugar, countries that grow sugar beets

protect their domestic production with tariff barriers and import quotas.

Sugar is also the only agricultural food commodity that is not a necessary

ingredient of the human diet. Nevertheless, people crave it. Sugar is prob-

ably the agricultural commodity that is subjected to the greatest degree of

tariff and export and import controls. The United States sets strict import

quotas that are allocated to countries based on political and not economic

considerations. So, for example, Cuba, the principal exporter of sugar in

the world, lost its U.S. quota after 1960.

Sugar is also the raw material for the production of ethanol used in

the elaboration of alcoholic drinks. This alcohol has also been hailed as

a sustainable alternative to gasoline. Alcohol is a better fuel than gasoline

from an environmental standpoint because it burns cleaner – that is, with-

out harmful byproducts other than carbon dioxide. The use of alcohol as

fuel made the city of S

ao Paulo, with its ﬁfteen million inhabitants and

enormous ﬂeet of cars, almost smog-free.

In the 1970s, and following the world oil crisis, Brazil adopted a very

ambitious program to replace half the gasoline used by automobiles with

alcohol. For this purpose, a comprehensive production technology was

developed that industrializes the entire sugar cane plant. The sugar is fer-

mented into ethyl alcohol, whereas the bagasse is used for making paper

and cardboard. The remaining part of the plant is then used as fuel in the

sugar factories. In order to encourage this program, the government guar-

anteed a minimum price. The program has been technically very successful

and Brazil replaced about half its gasoline consumption with alcohol for a

ﬂeet of cars equipped with special carburetors. However, the program has

never been competitive in price, especially when oil prices have been low.

The government is in the process of reducing the subsidies to the alcohol

program that will eventually be phased out. This will almost certainly mean

the end of this experiment.

However, it is Cuba – and not Brazil – that is most dependent on sugar.

At one time, Cuba was the largest producer of sugar in the region, with more

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Structure, Performance, and Policy in Agriculture 513

than eight million tons, but after the loss of much of its overseas markets

in the 1990s, its production has plummeted as land has been turned over

to food production.

Cuba is the best example of the strategy of export-led growth.

Sugar

was produced extensively until the middle of the nineteenth century. The

cane was cut by hand and taken to the factory (ingenio) and pressed in

mills (trapiches) that were moved by animal or waterpower. The cane juice

was then concentrated in large copper kettles over open ﬁres. Starting

in the middle of last century, this process was replaced by steam-driven

mills (centrales) capable of crushing huge amounts of cane, which was then

concentrated in vats under vacuum and then reﬁned by passing it through

charcoal ﬁlters. This process allowed the recovery of much more sugar

from the cane than before and resulted in a product of higher quality. In

the second half of the nineteenth century, the European and U.S. markets,

together with an appetite for more foodstuffs, also developed a sweet tooth.

In the United Kingdom alone, the consumption of sugar rose from 16.3

pounds per person in the 1840–4 period to 82 pounds in the 1895–9 period.

Supplying this market became a huge business. The new large and efﬁcient

mills replaced and eliminated the old ones. Between 1846 and 1890, while

sugar production in Cuba increased from three hundred thousand tons to

one million, the number of mills was reduced from 14,421 to 400,a12,000

percent increase in the capacity of individual mills.

The new factories had to be fed enormous quantities of sugar cane

to be made to pay, and this required a better system of moving sugar

from ﬁeld to factory. Oxen carts were replaced by narrow-gauge railroads.

At the beginning of this modernization process, cane was produced by

smallholders (colonos) that sold the cane to the factories. But the need to

count on a steady and reliable supply led the centrales to start acquiring

the land of the colonos, who became, in fact, sharecroppers and eventually

employees. Inevitably, a very small number of estates dominated the sugar

industry of Cuba.

The cane continued to be harvested by hand with machetes, and this

became the bottleneck in the new system. New immigrants ﬂocked to

Cuba primarily from other Caribbean Islands but also from Europe and

even China. Over half a million persons moved to Cuba in the second

half of the nineteenth and ﬁrst half of the twentieth century. Capital for

the construction of ingenios and infrastructure came from abroad, primarily

the United States. Land became increasingly concentrated as estates tried to

Roberto Cort

es Conde, The First Stages of Modernization in Spanish America (New York, 1974), 29.

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514 Otto T. Solbrig

capture the entire process from sugar cane ﬁeld to the commercialization of

the resulting product. The proﬁtability of the industry attracted foreigners

and, increasingly, U.S. interests acquired the industry.

Labor conditions were dismal. Contrary to the situation in Brazil and

other tropical regions, where sugar cane is harvested in ten out of twelve

months of the year, in Cuba, a subtropical country, the sugar harvest is

concentrated in four months, from August to November. At that time,

the demand for labor is very high. There is also a demand for labor at the

beginning of the growingseason in the spring, but it is minor. Consequently,

work in the cane ﬁelds is very seasonal. And, as Cuba became increasingly

a monocrop economy, almost 50 percent of its labor force became seasonal,

with few work opportunities during the remainder of the year.

Nevertheless, economic growth was rapid for a while. Cuba soon became

the world’s principal exporter of sugar, primarily to the U.S. market. The

process of modernization required capital that came from abroad. Slowly,

local, inefﬁcient mills were displaced by the more modern ones, ﬁnanced

or owned by U.S. ﬁrms. Centrales became bigger and fewer as time went

by. When, after World War I, demand diminished, many mills were forced

into receivership.

The increasing dependency of Cuba on sugar created a vicious cycle of

dependency. The capital inputs needed by the sugar industry came from

abroad, especially the United States. The raw sugar was exported to be

reﬁned in the recipient countries. Cuba provided the raw material and

labor. The latter was poorly paid and was employed for only a few months

of the year. In turn, the monocrop agriculture degraded the land.

When Fidel Castro came to power in 1959, one of the aims of his gov-

ernment was to decrease Cuba’s dependence on sugar by industrializing

and diversifying the economy. Ironically, Cuba’s increasing need for oil

and industrial inputs made Cuba as dependent on sugar exports as before.

It was only after the collapse of the Soviet bloc that Cuba reduced sugar

production and turned land over to the growing of foodstuffs.

the development of the grain and cattle economy

in the argentine pampas

Argentina is known the world over as a major producer and exporter of

cereals and meat. This correct perception is based entirely on the produc-

tion of the fertile pampas. However, the pampas occupy only thirty million

hectares – about one tenth of the country – and only about half of the

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Structure, Performance, and Policy in Agriculture 515

pampa surface is used to produce crops. Much of the rest of the Argentine

territory is too dry for agriculture without irrigation. This includes Patago-

nia and the center and western part of the country. Only the northern and

eastern provinces have sufﬁcient humidity for rain-fed agriculture. How-

ever, irrigated enclaves in Mendoza, San Juan, and Rio Negro are home

to a thriving production of grapes and fruits. Tucum

an, Jujuy, and Salta

grow subsidized sugar cane, as well as tobacco, cotton, and, increasingly,

soybeans.

Hides, tallow, and salted meat were the low-value exports of the nascent

Argentine Republic in the ﬁrst half of the nineteenth century. Herds of very

primitive cattle were raised in open ranges in a coastal strip in the pampas

approximately 100 miles wide that extended from 400 kilometers south of

the city of Buenos Aires to some 500 kilometers north and northeast of

the city. A very extensive agriculture was practiced around the few cities

and served strictly the local market. At times, following bad harvests, the

country was forced to import ﬂour.

Starting around 1830, sheep were introduced and they slowly started

to displace cattle in the regions close to the harbors.

Wool increasingly

became an important export product, slowly displacing the traditional

products. Raising sheep required more infrastructure and more care than

raising cattle in open ranges. Sheep prepared the rural society to think in

terms of improving earnings by investments. A number of improvements

were introduced, such as windmills and, above all, wire fencing to delimit

properties and within them paddocks, because sheep could not be raised

in open ranges. Fencing created a great deal of initial resistance in a rural

population that was accustomed to roam freely over the open range. It also

consolidated property rights, an important condition in the establishment

of a landed oligarchy.

When the country became organized along democratic and republican

lines in 1853, the government adopted a policy of encouraging immigration

through the establishment of agricultural colonies. The early colonists at

ﬁrst grew cereals and found a ready market at home and abroad in spite of

very low yields. A conjunction of factors followed. Europe at the end of the

nineteenth century was in need of foodstuffs and became a natural market

for Argentine cereal surpluses. As word of the existence of fertile land spread

J. C. Garavaglia, Pastores y labradores de Buenos Aires (Buenos Aires, 1999).

Hilda Sabato, Capitalismo y ganaderia en Buenos Aires: La ﬁebre del lanar 1850–1890 (Buenos Aires,

1989).

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516 Otto T. Solbrig

through Europe, many peasants immigrated to Argentina in search of work.

Yet, although some found land in the agricultural colonies, most found the

land in the hands of landed families (the oligarchy) that controlled huge

estates dedicated to the raising of livestock, known as estancias.Somost

immigrants became sharecroppers in the estancias instead.

The reason why not more immigrants became owners is a matter of

debate. As Cort

es Conde has shown, there was an active land market in the

pampas and many immigrants became landowners.

An alternative expla-

nation for the persistence of the large estate and sharecropping is that the

immigrant was not interested in settling in Argentina, but was interested in

earning capital to return home. He therefore was not particularly interested

in investing his capital in land.

By the end of the century, refrigeration made it possible to send frozen

and eventually chilled meat to Europe. The European market demanded

good quality and this led to the improvement of the cattle herds by crossing

them with European breeds, especially two English breeds: Shorthorns and

Herefords. By then, the export of salted meat was a dying industry. The

landed elite then became ranchers importing the best English animals to

improve their herds and Argentina soon became known for the quality of

its cattle herds.

Agriculture, especially wheat agriculture, produced profound changes in

Argentine rural society. Whereas extensive cattle raising required almost no

infrastructure or equipment, agriculture demands a minimum of imple-

ments. Extensive cattle raising requires little labor and much of it on a

seasonal basis, whereas extensive agriculture requires much more labor,

especially at harvest time. Although cattle can move to points of elaboration

and export on the coast on their own hoofs, cereals require a transportation

network. It was primarily the lack of labor and of cheap means of trans-

portation that had held back agriculture in the pampas. Finally, although

some knowledge is required to raise cattle extensively, agriculture requires

much more.

A conjunction of forces favoring agriculture came together at the end of

the nineteenth century to spur the spectacular growth of pampean agricul-

ture. In the ﬁrst place was the development of a European market for cereals.

The wave of immigrants arriving in Argentina in increasing numbers after

1880, most of them experienced farmers, provided the needed labor. Finally,

the development of a railroad network ﬁnanced by English interests and the

Roberto Cort

es Conde, El progreso argentino 1880–1914 (cited previously).

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Structure, Performance, and Policy in Agriculture 517

invention of the refrigerated steamship provided the needed transportation

network.

Economic growth between 1880 and 1914 was spectacular and Argentine

living standards, particularly in the city of Buenos Aires, rose to rival those

of Europe. The world depression of the 1930s dealt a mortal blow to the

export-led development strategy and exposed the vulnerability of Argentina

to foreign markets. Although Argentina was affected by the depression less

than some other Latin American countries, it nevertheless switched to an

import substitution strategy that was to prove very ineffective.

The original plan was for the government to appropriate part of the

agricultural surplus from exports and use it to subsidize import-substituting

industry. To that effect, the Per

on government (1946–55)devised a scheme

by which the state bought the agricultural crop at a ﬁxed price and exported

it at world prices. The reaction of the agricultural sector was to switch from

export to domestic production and to favor meat production over cereals.

As agricultural production stagnated, it soon became obvious that it was

necessary to introduce new technologies to increase productivity. In the

1960s, a new research and technology transfer organization – the National

Institute for Agricultural Research (INTA) – was created and ﬁnanced by

a 1 percent tax on agricultural exports. INTA introduced High Yielding

Varieties of wheat from Mexico and quickly developed a strong program of

agricultural research and diffusion. Soon yields and production began to

increase and Argentine agriculture was again on an upward growing curve.

Nevertheless, agriculture continued to be burdened with export taxesthat

reduced proﬁtability and discouraged investment. In the 1960s, Argentina

entered into a vicious cycle of inﬂation and devaluation that would last

thirty years and that was very detrimental to the development of agricul-

ture. In order to keep domestic food prices down, export taxes would be

assessed on agricultural exports to reduce incentives to produce for export.

As exports stagnated, Argentine industry, heavily dependent on imports

of materials and technology, soon would create a foreign exchange crisis.

To spur exports and reduce imports, the government would devalue the

currency and reduce export taxes. Soon domestic food prices would start

to rise and the government would again raise export taxes and the whole

cycle would be repeated once more. Finally, after two episodes of hyper-

inﬂation in 1989 and 1990, the country adopted a currency board, ﬁxing

the value of the peso at parity with the dollar and lifting almost all export

taxes and controls on agriculture. An agricultural boom followed that saw

agricultural production double in the last ten years, with great increases

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518 Otto T. Solbrig

in yields and adoption of new technologies. Argentina is today one of the

leaders in the use of biotechnology

(so-called GMF, genetically modiﬁed

food) and direct seeding (also known as No-Till), an erosion-suppressing

technology.

the evolution of chile’s agriculture with an

emphasis on the new sectors of vegetables and fruits

Chile is a country squeezed between the Andes and the Paciﬁc Ocean. The

northern third of the country is extremely dry and not ﬁt for agriculture

unless there is artiﬁcial irrigation. The center of the country has a Mediter-

ranean type of climate with winter rains and summer droughts. Irrigation

here is also necessary for growing summer crops. Below latitude thirty-eight

degrees south, the climate is increasingly wet, with up to seven meters of

rainfall in certain places and cold winters, the duration and harshness of

which increase with latitude. Therefore, agriculture is concentrated in val-

leys in the center of the country where the rivers that bring the melting

waters of the Cordillera are used for irrigation, or in the south-center area

where there is sufﬁcient rain throughout the year and where we ﬁnd a dairy

industry. Forestry, especially in the south of the country, is also important.

Chile was one of the ﬁrst Latin American countries to become stabilized

after independence, civil wars having been very brief. As in the rest of the

area, a landed oligarchy took hold of the government and embarked on a

path of export-led development. Mining rather than agriculture emerged

as the principal export sector. Nevertheless, for a short period in the mid-

nineteenth century, the country exported wheat, ﬁrst to Peru and then to

California and Australia, but that activity was short-lived and was over

by the end of the nineteenth century. During most of the time under

consideration, agriculture was primarily directed at the domestic market.

The large hacienda, known as fundo in Chile, was the principal production

unit. Labor was captured by offering plots of land to workers in the hacienda

in exchange for work.

Mining of ﬁrst gold and silver, later salitre, and ﬁnally copper was the

mainstay of the Chilean economy prior to World War II. Copper still

continues to be the principal export, but it no longer is as dominant as

before. There was the usual foreign investment in railroads and utilities,

E. Trigo et al., Los transg

enicos en la agricultura argentina (Buenos Aires, 2002).

Arnold Bauer, Chilean Rural Society (Cambridge, 1975).

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Structure, Performance, and Policy in Agriculture 519

but also in the mining sector, especially copper that was totally foreign

owned. The mining sector that was concentrated in the north and center

of the country constituted an enclave with limited interaction with the

domestic sector. Foreign mining concerns paid better salaries and offered

better working conditions than other sectors of the economy.

In Chile – as in all areas of the world where agriculture depends on

irrigation – access to water is more important than access to land. The

Cordillera, with huge snowﬁelds, is the source of irrigation water. Streams

coming from the Andes are dammed and a network of canals, perfected

and increased over time, distributes that water to the ﬁelds. Fundos in areas

without access to irrigation were huge, often in the tens of thousands of

hectares, and were dedicated to livestock raising, primarily sheep and goats.

In the irrigation areas, however, fundos never exceeded 5,000 hectares, and

usually were smaller, in the 500-to-1,000-hectare range. They coexisted

with many independently farmed small plots of less than 10 hectares.

Because agriculture sold only to the domestic market, Chilean farm-

ing provided a great diversity of products, including cereals, vegetables,

fruits, and vineyards that gave rise to a wine industry of good quality. The

Mediterranean climate is particularly well suited for the production of wine.

Livestock was (and still is) raised in the nonirrigated areas of the country.

In winter, it is fed on the natural grasses that thrive in the wet winter months

along the hills in the coast and in the foothills of the Andes. In summer

months, when these areas become parched because of the lack of rain and

there is no fodder, animals are moved to the meadows at high altitudes in

the Cordillera, and some of them are even transshipped to similar areas

on the other side of the border. This transhumance has been going on for

close to two hundered years. Nevertheless, Chile is not self-sufﬁcient in

meat products, having to import beef from Argentina.

The agricultural sector did not grow at the same rate as demand and, by

the 1940s, was no longer able to supply the domestic market so that Chile

had to rely on food imports. This situation was aggravated by the strife that

resulted from attempts at land reform during the governments of Eduardo

Frei and Salvador Allende (see the third section).

In the late 1970s, economic policy was directed at improving Chile’s per-

formance in agriculture by concentrating on high-value products, especially

fruits, vegetables, and wines for export. This effort was very successful and

Chile became an exporter of these products primarily to the United States,

the European Union, and countries of the Paciﬁc Rim. Export of agricul-

tural products between 1975 and 2001 grew at an annual rate of 18 percent.

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520 Otto T. Solbrig

Whereas in 1975 agricultural exports were only 3.8 percent of the total,

by 2001 they had grown to about 17 percent. A total of 1.613 U.S. billion

dollars were exported in 2001.Ofthese, fruits, especially table grapes, were

the most important products, representing a third of all agricultural exports

(U.S. $660 million).

Since 1961,vegetable production has increased two

and a half times, from 1 million to 2.6 million metric tons, while the sur-

face dedicated to this activity has increased only by 30 percent, from 73

thousand hectares to 105 thousand hectares.

Chile exempliﬁes the modern strategy of export-led growth based on

natural resources, both renewable (agriculture, forestry) and nonrenewable

(copper). There is a great deal of concern that this strategy is not sustain-

able economically or environmentally. As with all agricultural commodities,

markets become saturated, leading to reductions in price. From an envi-

ronmental viewpoint, the intensiﬁcation of agriculture has reduced crop

rotations and increased pest loads. This in turn has increased signiﬁcantly

the use of pesticides that are mostly imported. Given the limited amount

of agricultural land and the dependency on irrigation, land degradation

poses a serious threat to Chile.

the evolution of mexico’s agriculture

Geographically, Mexico is a very diverse country. Two mountain chains –

the Sierra Madre Occidental and the Sierra Madre Oriental – descend

from the north along both coasts and meet south of Mexico City. There,

a number of large and active volcanoes delimit a number of valleys and

interior basins, the so-called meseta that occupies the center of the country

up to the Isthmus of Tehuantepec. From there south along the southwest

coast, the mountains continue, whereas to the northeast there is a large,

relatively ﬂat area that extends (with some interruptions by low mountain

chains) to the Yucatan peninsula.

The north of the country is dry and agriculture without irrigation is

not possible. Most of the area is dedicated to cattle raising, except in areas

along the foothills of the mountains where rivers have been dammed to

provide irrigation. Farther south in the area of the Baj

ıo and the valleys

north of Mexico City, rainfall is adequate for growing temperate crops

E. Figueroa et al., “Sustentabilidad ambiental del sector exportador chileno,” in O. Sunkel, ed.,

Sustentabilidad ambiental del crecimiento econ

omico chileno (Santiago, 1996).

M. R. Quiroga and S. Van Hauwermeiren, The Tiger Without a Jungle (Santiago, 1996).

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Structure, Performance, and Policy in Agriculture 521

such as wheat. The southwest part of the country, where there is adequate

precipitation such as in the state of Morelos, is dedicated to tropical crops

such as sugar and coffee, as are the mountain slopes in the state of Veracruz.

The lowlands in the southern states of Veracruz, Chiapas, and Tabasco were

covered with the northern extension of the tropical rainforest until recently.

However, in the last thirty years, a great part of that forest has been felled

and converted into pastures. Finally, the state of Yucatan is underlined by a

limestone shelf that signiﬁcantly reduces the water-holding capacity of the

land. Consequently, in spite of adequate rainfall, agriculture is restricted to

low-lying basins.

Henequen, a cactus-like succulent native to Mexico, was grown in the

area around M

erida in the nineteenth and early twentieth centuries, but that

crop has almost disappeared today. In its heyday, Yucatan held a monopoly

in the production of this crop, the ﬁbers of which are used to make rope and

twine. At the time, mechanical reaper-binders used for harvesting wheat in

the United States used enormous quantities of twine, made mostly from

henequen. The privileged situation of Yucatan producers created enormous

fortunes that were invested in great part in conspicuous consumption of

palatial houses and other luxuries. Henequen requires a lot of labor, and

the landed elite enslaved in all but name the local Maya population. The

Mexican revolution after 1910 freed labor from bondage and took over

the commercialization of the crop. By then, the new combine harvesters

had replaced the reaper-binders and demand (and price) dropped signif-

icantly. Henequen continued to be grown protected by government sub-

sidies, but the introduction of synthetic ﬁbers dealt a mortal blow to this

crop. The last government-subsidized henequen factory in M

erida closed

in 1999.

During colonial times, Mexico’s agriculture and animal-raising activ-

ities helped to create a singular agricultural production institution that

was the large hacienda.

These were quasi-feudal establishments that con-

trolled large areas of land, grew a diversity of crops, and raised cattle, sheep,

and other domestic animals. Above all, they controlled the lives of the

rural population by a variety of means, including physical coercion, debt

peonage, and laws and customs that created personal work obligations.

Haciendas had their own police and jails to enforce their rule over those

who worked there. Yet the Spanish legislation also protected the rights of

indigenous communities to their land. Colonial authorities tried to protect

F. Chevalier, La formaci

on de los latifundios en M

exico (Mexico City, 1975).