| PALENCIA, Guatemala,
December 28, 2004, NY Times via CropChoice. com:
Mario Chinchilla, his face shaded by a battered straw hat,
worriedly surveyed his field of sickly tomatoes. His hands
and jeans were caked with dirt, but no amount of labor would
ever turn his puny crop into the plump, unblemished produce
the country's main supermarket chain displays in its big stores.
For a time, the farmer's cooperative he heads managed to
sell vegetables to the chain, part owned by the giant Dutch
multinational, Ahold, which counts Stop & Shop among its
assets. But the co-op's members lacked the expertise, as well
as the money to invest in the modern greenhouses, drip irrigation
and pest control that would have helped them meet supermarket
specifications.
Squatting next to his field, Mr. Chinchilla's rugged face
was a portrait of defeat. "They wanted consistent supply
without ups and downs," he said, scratching the soil
with a stick. "We didn't have the capacity to do it."
Across Latin America, supermarket chains partly or wholly
owned by global corporate goliaths like Ahold, Wal-Mart and
Carrefour have revolutionized food distribution in the short
span of a decade and have now begun to transform food growing,
too.
The megastores are popular with customers for their lower
prices, choice and convenience. But their sudden appearance
has brought unanticipated and daunting challenges to millions
of struggling, small farmers.
The stark danger is that increasing numbers of them will
go bust and join streams of desperate migrants to America
and the urban slums of their own countries. Their declining
fortunes, economists and agronomists fear, could worsen inequality
in a region where the gap between rich and poor already yawns
cavernously and the concentration of land in the hands of
an elite has historically fueled cycles of rebellion and violent
repression.
"It's like being on a train with a glass on a table
and it's about to fall off and break," said Prof. Thomas
Reardon, an agricultural economist at Michigan State University.
"Everyone sees the glass on the table - but do they see
it shaking? Do they see the edge? The edge is the structural
changes in the market."
In the 1990's supermarkets went from controlling 10 to 20
percent of the market in the region to dominating it, a transition
that took 50 years in the United States, according to researchers
at Michigan State and the Latin American Center for Rural
Development in Santiago, Chile.
Brazil, Argentina, Chile, Costa Rica and Mexico are furthest
along. While the changes have happened more slowly in poorer,
more rural Central American countries, they have begun to
quicken here, too. In Guatemala, the number of supermarkets
has more than doubled in the past decade, as the share of
food they retail has reached 35 percent.
The hope that small farmers would benefit by banding together
in business-minded associations has not been borne out. Some
like Aj Ticonel, in the city of Chimaltenango, have succeeded.
But the evidence suggests that the failure of Mr. Chinchilla's
co-op is the more common fate.
Its feeble attempts to sell to major supermarkets illustrate
how the odds are stacked against small farmers, as well as
the uneven effects of globalization itself. Many small farmers
in the region are getting left behind, while medium-sized
and larger growers, with more money and marketing savvy, are
far more likely to benefit.
Most fruits and vegetables in the region are still sold in
small shops and open-air markets, but the value of supermarket
purchases from farmers has soared and now surpasses that of
produce exports by two and half times, researchers say.
The bottom line: supermarkets and their privately set standards
already loom larger for many farmers than the rules of the
World Trade Organization.
Still, stiff competition from foreign growers is also quite
real. To enter the supermarkets of Guatemala's dominant supermarket
chain, La Fragua - part of a holding company one-third owned
by Ahold - is to understand why Professor Reardon likens them
to a Trojan horse for foreign goods.
At La Fragua's immense distribution center in Guatemala City,
trucks back into loading docks, where electric forklifts unload
apples from Washington State, pineapples from Chile, potatoes
from Idaho and avocados from Mexico.
The produce is trucked from here to the chain's supermarkets,
which now span the country. Scenes at a mall in Guatemala
City anchored by Maxi Bodega, one of the company's stores,
suggest the evolving nature of grocery shopping for Latin
America's 512 million people.
On the ground floor was a sprawling, old-fashioned produce
market. At the entry, there was a shrine to its patron saint,
the Virgin of Rosario, who had plastic flowers sprinkled at
her queenly feet.
The sound of women patting out tortillas and the sweet smells
of ripe tropical fruits drifted through the market as people
stopped to squeeze the avocados, sniff the pineapples and
haggle for cheaper oranges.
To go upstairs was to leave Guatemala behind and enter a
mall that could be in Bangkok or New York, with its synthetic
Christmas wreaths, cheap clothing stores and oversized discount
packages of napkins and symmetrical tomatoes in plastic trays
at the Maxi Bodega.
The Baldetti family exemplified the generational change unfolding
here.
Delia Baldetti, an 81-year-old housewife, will only shop
for produce amid the heaps of tomatoes, chilies and papayas
where she can bargain to her heart's content. Her daughter
Elsa, a 56-year-old painter, shops both here and at Maxi Bodega,
while Elsa's daughter, a 36-year-old business administrator,
only has time for the supermarket.
Elsa wistfully predicted that while the country's fragrant,
raucous markets will never disappear, they will diminish.
"We'll lose some of our identity," she said. "We're
copying the foreigners."
Farmers who do not or cannot afford to change fast enough
to meet the standards set by supermarkets are threatened.
The tiny farming community of Lo de Silva clings to a steep,
verdant hillside. Slanting cornstalks look as if they would
slide into the valley if they were not rooted to the earth.
Some of the more than 300 farmers who originally belonged
to Mr. Chinchilla's co-op, the Association of Small Irrigation
Users of Palencia - known by its Spanish acronym, Asumpal
- were from this village. Only eight remain. The only product
they still sell is salad tomatoes - and they sell to middlemen,
not supermarkets.
Josè Luis Pèrez Escobar, 44, a member of the
co-op, scratched out a living for 20 years from his small
field, perched in the clouds here.
But after his potato crop failed last year, he migrated to
the United States to save his land from foreclosure by the
bank, leaving his wife, MarÌa Graciela Lorenzana, and
their five children behind. He now works the graveyard shift
at a golf course in Texas for $6 an hour so he can pay his
debts.
He had dreamed his cooperative would help him escape poverty
by selling directly to the supermarkets. "It would be
magnificent," Mrs. Lorenzana recalled of that more hopeful
time. "The small farmer would not need a middleman. But
he was never able to achieve it."
A transformation begins
The transformation of Latin America's food retailing system
began in the 1980's and accelerated in the 1990's as countries
opened their economies, often to satisfy conditions for loans
from the International Monetary Fund and the World Bank. As
foreign investment flooded in, multinational retailers bought
up domestic chains or entered joint ventures with them.
Most concern about the perils of globalization for local
farmers has focused on unfair trade competition from heavily
subsidized American and European producers.
But increasingly, supermarkets also leave small farmers exposed
as the stores spread from big cities to small towns, from
well-to-do enclaves to working-class neighborhoods, from richer
countries to poorer ones.
The chains now dominate sales of processed foods and their
share of produce sales is growing. In Guatemala, supermarkets
still control only 10 to 15 percent of fruit and vegetable
sales. But in Argentina, their slice has grown to as much
as 30 percent, while in Brazil they control half the market,
according to Professor Reardon.
As the chains' market share expands, farmers who are shut
out find themselves forced to retreat to shrinking rural markets.
The changes would not be so troubling if the region's economies
were growing robustly and generating decent jobs for globalization's
losers. After all, supermarkets are providing consumers with
cheaper, cleaner places to buy food, economists say.
"It would be an appealing transformation of the sector
if alternative jobs could be made available," said Samuel
Morley, an economist at the International Food Policy Research
Institute in Washington.
But economic growth has not kept pace with rising populations.
The number of people living below poverty lines in Latin America
has risen from 200 million in 1990 to 224 million this year.
More than 6 in 10 people living in rural areas are still poor.
Given the difficulties small farmers face in doing business
with multinational corporations, traditional strategies, like
providing peasants with fertilizer and improved seeds, now
seem quaint here.
Professor Reardon and Julio A. Berdeguè, an agronomist
who heads the Latin American Center for Rural Development,
are collaborating with supermarket researchers across Asia
and Africa, as well as Latin America, to document the trends.
In addition, a team at Michigan State has financing from
the United States Agency for International Development to
help small farmers in Central America, India and Kenya sell
to supermarkets. They and other development experts are brainstorming
about what to do.
Among the ideas: Regulations requiring that farmers be paid
promptly. Enforcement of laws meant to curtail monopolies
and oligopolies, including mergers of supermarket chains.
Improved security and cleanliness at open-air markets. Infusions
of credit and technical expertise for co-ops.
But while such cooperatives are almost certainly necessary
if small growers are to amass the clout and scale to sell
to multinational chains, they have been a disappointment so
far.
Even in economically vibrant Chile, which has invested $1.5
billion in small-scale farming since 1990, a study of 750
farmer organizations found that 8 of 10 had failed or survived
only with continuous infusions of government aid.
Mr. Berdeguè, author of the Chile study, had sought
to make the associations work in the 1990's when he was a
senior government official there. The pressure from the I.M.F.
and the World Bank to allow greater foreign investment was
intended to make Latin American economies more competitive.
"But the model did not have a social dimension at the
real center," he said. "It was trickle-down economics."
An experiment disappoints
Mr. Chinchilla, 46, drove his battered, 20-year-old pickup,
laden with crates of tomatoes, into his cooperative's spacious
packing shed. The building and the business are in decay.
The water had been cut off. Toilets no longer flushed. The
roof was missing over the bathroom, its floor covered with
bird droppings. The live-in caretakers who sort the co-op's
tomatoes had only an open pail of rainwater to wash their
hands. They wore no gloves while handling the fruit.
Typically, each farmer is growing less than an acre of salad
tomatoes in rustic greenhouses that are fast deteriorating.
Their production has plummeted because of the blight that
dries out the plants, which then yield very small tomatoes.
"We haven't found a solution," Marìa Antonietta
Muralles, a co-op member, said with a shrug. "Maybe it's
the water."
Mr. Chinchilla treated his plants with pesticides to no effect.
"You can't fight it with chemicals," he said. Maybe
the soil itself is infected, they speculated.
"Everything costs money," he explained - money
he does not have and cannot afford to borrow at the going
rate of 21 percent. "When you don't have access to credit,
you can't expand," he said. "We don't want anything
given to us, but we need a hand."
As the farmers talked, two workers separated tomatoes by
size, with the shrunken ones far too numerous. But their co-op's
hopes of selling to big supermarket chains withered well before
the plants. The co-op got started in the late 1990's, with
a small grant from the government to upgrade the packing shed.
An agronomist, Candelario Lûpez, was given a two-year
contract, also at government expense, to advise them.
Over the next couple of years, Mr. Lûpez helped the
co-op get its foot in the door with La Fragua and C.S.U.,
another major supermarket chain. The chains have since united
to become the Central American Retail Holding Company, with
332 stores and almost $2 billion in sales in 2003. It is one-third
owned by Ahold, which had more than $68 billion in sales last
year.
But the co-op did not manage to supply the big chains for
long. The farmers themselves were uncomfortable with the rules
of the supermarket game. They found it difficult to wait weeks
to get paid. They did not want to sell their vegetables on
the books and pay taxes that sharply cut profits. And some
of what they supplied was rejected as too bruised or too limp
or too ripe.
The co-op's leaders said they quit selling to C.S.U. through
its dedicated wholesaler in 2000 after two container loads
of vegetables got held up for days at the Nicaraguan border,
severely damaging the produce. "We weren't prepared to
absorb that kind of loss," said Marco Tulio Alvizures,
who then headed the co-op.
Perhaps more fundamental, co-op members had trouble consistently
delivering the quantity and quality of produce the supermarkets
demanded, a problem Mr. Chinchilla readily acknowledged.
In the case of La Fragua, Mr. Alvizures contended that the
chain never gave the co-op a chance to sell the amount it
was capable of. But Jorge Gonzlez, the chain's manager for
vegetables, said the small orders likely reflected La Fragua's
judgment, based on weekly evaluations, that the co-op was
not up to the task. The co-op was such a small supplier that
Mr. Gonzlez could not recall all the details of their dealings.
The corporate imperative is to reward suppliers who consistently
provide what the chain requires. If the vegetables do not
arrive, shelves stand empty. "We punish farmers very
hard if they don't deliver what we order," said Bernardo
Roehrs, a spokesman for the chain.
As the co-op members sought to navigate the difficult new
world of supermarkets, they lost the critical guidance of
Mr. Lûpez, the agronomist, when his contract expired
in 2001. He is now a salesman for a company that makes high-tech
greenhouses the co-op's farmers could never afford.
A rare success story
Not too far from Palencia, in the city of Chimaltenango,
is Aj Ticonel, an association of small farmers that has thrived
because it has something Mr. Chinchilla's co-op lacked: a
shrewd and enterprising businessman to run it.
But even for a savvy company like Aj Ticonel, success came
not from supplying choosy supermarket chains but rather from
its ability to exploit a global market.
Aj Ticonel sells three million pounds of mini-vegetables
and snow peas for export to the United States, but only 80,000
pounds to supermarkets. Alberto Monterroso said he gave up
on growing broccoli for La Fragua. He found the chain bought
inconsistent amounts. "There are a lot of competitors
here," he said, "a lot of small farmers trying to
sell to them, so the prices are low."
The company's success has been built instead on sales of
pricey vegetables for export. It now sells the same to La
Fragua, and its membership has risen from 40 families in 1999
to 2,000 today.
Its plant sparkles. Its 53 packers wear gloves, face masks
and hairnets as they sort slender French beans on stainless
steel tables. Each box produce is marked with a bar code traceable
to the family that grew it.
Aj Ticonel sold $2.5 million worth of vegetables last year,
but Mr. Monterroso, a sociologist and deal maker with a passion
for justice, paid himself only $18,000. Most of the company's
profits are plowed back into the plant, marketing campaigns
and agricultural education for the farmers.
"I want a different country for my sons," Mr. Monterroso
said. "I'm trying to redistribute the wealth so people
will live in harmony."
One recent afternoon, a big Aj Ticonel truck took a meandering
path into the hilly countryside, stopping for peasants waiting
roadside with crates of vegetables to load.
Many of them grumbled that Aj Ticonel does not pay enough
and rejects too many of their vegetables, but most had been
selling to the company for years. The evidence of their profit
could be seen in new roofs, freshly painted homes and well-clothed
children.
Still, Mr. Monterroso acknowledged how hard it will be to
replicate Aj Ticonel. Three times, the company loaned money
to farmers to clone itself. Three times the farmers went out
of business.
For Latin America's millions of small farmers, he offered
this sobering fact of life: "The client buys from us
not because poor people produce it, but because it's a good
product."
http://www.nytimes.com/2004/12/28/international/americas/
28guatemala.html?ex=1105278541&ei=1&en=94f68f97f7417a07
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