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Trading Melons for Maize Doesn’t Work Some Central American farmers thrived on policies that encouraged them to switch from growing food crops to raising export crops. Many more were driven deeper into poverty. Is it too late to help the poorest farmers who remain on the land? |
During the 1980s, faced with an increasingly competitive environment as a result of globalization and trade liberalization, Central American governments began transforming their agricultural sectors to increase export earnings and improve food security. They implemented a policy to move from producing basic grains to cash or commercial export crops such as palm oil, coffee, and melons. Basic grains would be purchased from international markets.
“This policy hinged on arguments that the production of basic grains like white maize was not competitive and that increasing productivity in this area would not ease poverty,” says Gustavo Sain, CIMMYT regional economist for Central America. “While this policy has made some sectors competitive, it benefited only a few people. As a result, rural poverty has remained unchanged or, in some countries, has increased.”
Sain coordinates a regional project that is evaluating whether white maize production in Central America can be more competitive than policy makers assumed. He works with a network of scientists from national agricultural research systems in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama, who identify and characterize competitive maize areas in each country. Current and future technologies that can strengthen competitiveness are also documented. The project is funded by CIMMYT, the Regional Fund for Agricultural Technologies (FONTAGRO), and the Swiss Agency for Development and Cooperation (SDC).
Where Have All the Farmers Gone?
In many countries in Central America, agricultural policy has had a particularly adverse impact on grain production and smallholder farmers. Talk of the “disappearance” of maize production areas and smallholder farmers is common. In Costa Rica, for example, maize production has decreased from 64,000 hectares to18,000 hectares. “Maize is grown in areas with poor soil. The rich soil areas belong to more competitive products like coffee and palm oil,” explains Rocio Oviedo Navas, national maize coordinator for Costa Rica’s Ministry of Agriculture. “Many farmers prefer to grow maize, but they lost their subsidies and had to switch to the new crops. We are slowly seeing the disappearance of the smallholder maize farmer.”
A recent study conducted by Hermel López, director of Planning and Socioeconomics at the Instituto de Investigación Agropecuaria de Panamá (IDIAP), indicated that production of basic grains—rice, maize, and beans—fell by 30–40% among smallholder farmers, who make up the majority of agricultural producers in Panama.
“In rice we had around 15,000 farmers, now we have 1,000. Only the big farms have survived. The scenario is very much the same for maize—a lot of farmers have disappeared in a very short period,” he says. “Agriculture is one of the sectors hardest hit by this adjustment policy. If you look at the figures, agriculture used to be 11% of GNP; now it is only 5.8%. This has had a social impact that has not been looked into in its full dimension. We are still dealing with it in terms of migration of the rural population and extreme poverty.”
Increasing poverty and high rates of malnutrition in rural areas are some of the consequences. A recent census indicated that 60% of farmers are poor, 40% cannot meet their basic needs, and malnutrition rates reach 40% in rural areas. To address the problem of malnutrition, IDIAP recently began a poverty relief program for poor farmers.
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Agriculture in Transition In Panama, farmers receive an incentive of US$ 150 for each hectare they convert to export crops. The government also subsidizes 60% of the cost of irrigation to produce the crop. Despite these incentives, problems remain, even for larger commercial maize producers like Hugo Agurto, president of the Maize and Sorghum Association in Los Santos, Panama. Maize production is the primary activity in Los Santos, where farm sizes range from 20 to 200 hectares. “In 1996, we had 17,000 hectares of maize and 95 producers, and 3,500 hectares of sorghum with 80 producers. Now sorghum has disappeared and we have 10,000 hectares under maize with 53 producers,” Agurto says. He explains that farmers were edged out by the lack of investment capital and were hesitant to face the risks associated with the new crops. “We need irrigation to grow these crops, and even though the government subsidizes the cost of irrigation, they pay the 60% only after the farmer has invested. In March I sent a five-ton container of melons to the US and Europe, and we still haven’t received payment. We farmers don’t have cash, we buy many things on credit, and not having this payment makes life difficult for us.” Agurto converted a portion of his land to the new crops, but he prefers to keep growing maize. “I know the technology , I have a credit obligation on my land, all the equipment I have bought over the years is for maize, and I have greater food security during the dry season—I have the maize and the cattle. Also, with these new products, the farmers in Honduras, Costa Rica, Nicaragua, and Panama are all growing the same thing and competing for the same market.” Although the government in Nicaragua encourages farmers to diversify into commercial export crops, the production of white maize, a staple, remains a national priority. Maize is produced mainly by small- and medium-scale farmers using local varieties and traditional technology. “The farmers here still grow maize, but they also grow a greater variety of products, “says Lesbia Rizzo, a socioeconomist at the Instituto Nicaragüense de Tecnología Agropecuaria (INTA). “What we’ve done is to identify maize areas and look at factors that can make production more competitive. We’ll analyze the information we collect and bring it to the policy level so they can take the right decision to help these farmers.”
What’s the Right Decision for Farmers? The information gathered by Sain and his colleagues will be used to investigate whether white maize production can be socially beneficial and competitive, both nationally and internationally, and to promote policies that support maize competitiveness. Sain believes that white maize production can be competitive. He cites the example of DEMASA, one of the main producers of corn flour and tortilla in Central America, which opened its offices in Costa Rica several years ago. “When DEMASA came into Costa Rica, they started buying maize and giving seed and technology to farmers, and the maize area started growing again. If there is demand for the product—even in Costa Rica, which is not traditionally a maize-producing country—then white maize production will go up,” he says. Among the ideas that Sain hopes to promote is the production of maize-derived products for consumers. “We want to show the need to be competitive not only in producing maize but in consumer products. We also want to promote policies that support maize competitiveness and allow farmers to capture a share of the value of the final product,” Sain says. “This could be a win-win situation. You are building up your competitive advantage with a crop produced by the poorest group in the rural sector, you are increasing your competitiveness, and you are avoiding poverty. This modernization program has not reduced poverty. Our hope is based on the importance that governments are giving now to helping the poor .”
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CIMMYT
October 2001