Fair Trade and a Global Commodity

Coffee in Costa Rica

Peter Luetchford

• Publisher: Pluto Press
• Year: 2007
• Edition: 1
• eBook ISBN:
  9781783713684
• Topic: Social Sciences
• Subtopic: Global Development Studies
• Index: Social Sciences

Fair trade is widely regarded as a universal good. This fascinating anthropological study takes a closer look at a coffee-growing community and cooperatives in Costa Rica - and subjects the fair trade movement to critical scrutiny. As with conventional coffee, Western demand for organic fair trade produce is largely met by more affluent individuals with larger landholdings. As a result, it is caught up in the conflicts of interest and resentments that are part of the coffee industry as a whole. Ultimately fair trade fails to escape divisions that characterise other forms of production and consumption. All growers are united in their criticism of the high margins accumulated by regional and transnational processors and exporters. Sustainability, just rewards and social cohesion have formed part of the world view of these agricultural communities for decades. This book shows how there is much common ground between the worlds of the commodity grower and the priorities of the fair trade movement - if not necessarily always in the ways we might suppose.

1	CREATING COOPERATIVES: THE WELFARE STATE, COFFEE AND FAIR TRADE IN COSTA RICA

To situate fair trade in Costa Rica requires knowledge of the social and historical background. This chapter begins that task. It examines regional and national context, the political and social traditions of the country, and provides a short history of the Costa Rican coffee industry. We learn how a group of self-styled marginal cooperatives composed of small farmers emerged to engage with Northern alternative-trade organisations. The political orientations, motivations and experiences of the coffee cooperatives are central to locating fair trade in Costa Rica.

A useful starting point for the study of cooperatives, their politics and trade, which is the subject of this and the following chapter, is the commodity form. I define commodity as an item that has both a use value and an exchange value. For those on the left, influenced by Marx, value derives from the labour that goes into creating an object. In the case of coffee, therefore, value is created by the physical work of growing and processing it. Capitalists can make profits only because they own industrial machinery for processing and because they control the supply from producer to consumer through ownership of exporting companies. Commodity exchange then becomes exploitative; surplus is extracted from the value produced in labour by paying workers less than the value they create.

Although Marx was concerned primarily with industrial labour in factories, his approach informs much of the political agitation for ‘trade justice’. It has also been adopted and adapted by value-chain analyses of the coffee industry in discussions about the power of companies, often multinationals, to extract profit by exploiting the productive power of independent family farmers working their own land. Significant value is now generated in the coffee chain by advertising qualities, such as place of origin (a specific country, a certain altitude or a single estate) or the conditions of production (small farms, sustainable practices, organic or wildlife-friendly) and turning them into a quantity, measured in money. For Daviron and Ponte (2005) the trick is then for farmers to ‘upgrade’ in the chain by appropriating the value generated by the qualities imbued in their product.

Analysing the coffee industry in terms of the capacity to convert ‘qualities’ into ‘quantities’ in commercial exchanges tells us much about how transnational markets operate, and the next two chapters explore similar processes at the national level that Daviron and Ponte, among others, discuss in a global context. However, in this book this approach forms part of a larger cultural argument about the way value is realised through certain creative activities and forms of livelihood, which gives a frame of reference outside and in opposition to the market. Clearly evoked and drawn upon by rural Costa Ricans, this politics of value is also part of a Western cultural repertoire that provides a basis for judgments about trade and ethics.

Costa Rican coffee cooperatives are part of the conversation about value appropriation because they are inspired by the need to help farmers impoverished by the capitalist system. It is important to note that the cooperatives are reformist rather than radical. Their ambit is to improve the negotiating power of small landowners in the market, a pressing issue in a country in which small coffee farmers play a key role in the national historical imagination. From this perspective, farmers may control the means of production up to the farm gate, but from then on industrialists corner the commodity market by governing processing and export facilities. The solution offered by cooperatives is for farmers to share ownership of the industrial and commercial sides of the business, and so circumvent private control.

In discussing their efforts to secure a better deal for the cooperative membership, the managers tell a twin tale. They speak of the need for efficiency and modernisation, ideas that are now somewhat out of fashion in development circles (Escobar 1995; Ferguson 1990; Apffel-Marglin and Marglin 1990), but are intrinsic to industrial models of agriculture (Pratt 1994). Coupled to tales of growth and success are expressions of moral commitment to social values; cooperation, participation, sustainability and struggle by the disadvantaged in the face of unfavourable conditions and an unforgiving market. The roots of these dual concerns are to be found in a political conjuncture that can be traced back to the middle of the twentieth century, a time when a rising Costa Rican middle class seized power and put into operation a model of development based upon state intervention and aimed at fostering improvements and efficiency, but with an eye to social reform and welfare. The producer cooperatives of small farmers carry with them the legacy of this approach.

These messages – one moral and social, the other rational and instrumental – at times contradict one another. There are points of conflict in the cooperatives’ activities between their collective identity as representatives of small, marginal coffee farmers and their strategic success in negotiating markets. The managers of the cooperatives must speak to and convince those national and transnational, governmental and non-governmental organisations that are in search of suitable beneficiaries. They also need to place a quality product on the market and operate efficiently as a business. Negotiating these two requirements can be fraught with difficulty and requires astute and tactically aware management.

The data come from interviews with managers of coffee cooperatives, NGO staff and other administrators in Costa Rica, with supplementary material from written sources, principally cooperative documents. The cooperative managers are generally young professional men who live with their families in rural areas, close to the cooperatives in which they work. As brokers between coffee farmers and Northern organisations, they hold strategic positions in economic, political, cultural and developmental processes (Lewis and Mosse 2006a). By listening to them, and by taking seriously their experience of representing farmers in the coffee commodity markets, we gain insight into an alternative set of commitments, experiences and ideas attached to fair trade.

COFFEE AND LAND SETTLEMENT: EXTENDING THE FRONTIER

Coffee holds a central place in the history of many nineteenth and twentieth-century Latin American countries; responding to increased world demand for such primary agricultural products drew them into the global economy. Nevertheless, this common experience should not obscure their distinct historical trajectories. In the case of Costa Rica the history comprises a democratic tradition, an equal division of lands, reformist political policies and social harmony. This contrasts with countries such as Brazil, El Salvador and Guatemala, where an elite were able to establish extensive coffee plantations, exploit a substantial workforce, and where conflict and political suppression were rife.¹²

Upon independence in 1821, the newly liberated nation of Costa Rica had a largely unexplored territory, a population of some 50,000, and few resources capable of generating export wealth. In contemporary accounts of the colonial period the country is associated with rural poverty, isolated farmsteads and a meagre subsistence lifestyle.¹³ This began to change after independence. The arrival of coffee provided a much-needed source of revenue and, in conjunction with finance from the banana barons, the means and the incentive to create infrastructure.¹⁴ The country’s subtropical highland environment and volcanic soils are well suited to coffee cultivation, and Costa Rica soon became renowned as a source of the high-quality arabica beans in demand in British and European markets. Between 1850 and 1900 coffee provided approximately 90 per cent of the value of total exports (Hall 1991:15).

New wealth did not, however, lead to the development of large coffee estates; instead the government took a mediating role and controlled land distribution. The original European colonists gained land ownership through rights of possession, granted after a proven ten-year period of residence, a tradition continued into the post-independence period. In 1831, to encourage the newly established export crop, the National Assembly decreed that anyone planting coffee in uncultivated areas could claim title (Hall 1991:35). Such policies meant that the ‘expansion of coffee production tended to reinforce and extend the fragmented smallholding structure inherited from the colonial period’ (Cardoso 1977:170). On the other hand, a few powerful families exercised overall control of the coffee industry through ownership of processing facilities, the manipulation of access to credit and by acting as gatekeepers to international markets (Paige 1997; Samper Kutschbach 1995; Winson 1989).

Although discussions of land and labour in Costa Rica focus on an exploitable frontier and land availability for all, the most fertile areas in the Central Plateau (Meseta Central) were claimed early on. There has long been a rural proletariat in the country. In the 1868 census half the agricultural population were listed as wage labourers; 20 years later this figure had risen to 71 per cent (Seligson 1980:23). The rise in the numbers of landless workers saw growing concentrations of wealth in the hands of larger landowners, accompanied by dispossession of smaller farmers, and increasing differentiation among the peasantry.¹⁵ Gudmundson, in a study of an area of the Central Plateau, identifies a wealthy class of growers who were able to maintain their position, and a declining group of smallholders who found it increasingly difficult to gain access to sufficient land (1995). As cultivable areas became scarce in the Central Plateau, so migrants moved to progressively more marginal areas in search of agricultural opportunities. This had the effect of opening up hitherto unexplored or underexploited parts of the country (Seligson 1980:122–152; de Vries 1995).

Cardoso identifies key phases in the development of the country’s coffee industry. Until the 1840s cultivation was restricted to the central part of the Meseta Central, from where it expanded, firstly to the western edge of the plateau, and then to the east, towards Turrialba and Tarrazú (1977:169). To these stages I add another. From the end of the nineteenth century and into the twentieth century, dispossessed or land-poor peasants (campesinos)¹⁶ moved into upland regions outside the Central Plateau: highland parts of the Nicoya peninsular; the area in the far south around present-day San Vito; and the volcanic mountain chains extending to the northwest.¹⁷ The settlers in these marginal areas began to grow coffee and raise cattle. They are important here as they later founded cooperatives that today supply fair trade markets. For this to come to pass required a series of national events that pushed aside the old coffee order, and saw the rise of a development model that combined state intervention, social welfare, with measures to support cooperatives.

SOCIAL UNREST AND REFORM

The first half of the twentieth century was a period of turmoil and change in Costa Rican political and social life.¹⁸ It was marked by a steady decline in the power of the cafetaleros, that small group of wealthy and politically influential families who had controlled the processing and export sides of the coffee industry throughout the nineteenth century. As a challenge to this group, an urban, modernising and rising intellectual bourgeoisie, with their own agroindustrial agendas, began to inject progressive and democratic ideas into the political process. With the introduction of suffrage in 1913, and secret ballots in the late 1920s, the stage was set for a new political order in Costa Rica.

Change was precipitated by economic depression and the rise of the Communist party. The Costa Rican branch of the party was founded in 1931; they quickly gained support amongst the rural and urban poor, particularly in the banana enclave, where conditions were dire and labourers were left without rights.¹⁹ The party attracted followers and gained influence throughout the 1930s. Communist deputies were elected to congress, and in 1934 a strike by 10,000 banana workers rocked the establishment (Winson 1989:42). More pertinent, and documented in the next chapter, was increasing tension between coffee producers and processors, demands for reform and trade justice by growers, and state intervention in the coffee industry.

In 1940 the conservative Calderón Guardia came to power with the support of the Republican party. Calderón had a Catholic background, and had come under the influence of the Catholic sociologist Cardinal Mercier during time spent in Belgium; he declared that his government would adhere to Christian social ideas (Calderón 1942, cited in Palmer and Molina 2004:136; Williams 1989:109). A series of papal letters, or encyclicals, had previously laid the foundations for Catholic social doctrine, and these ideas had then been pursued and developed by Mercier and the National Union of Social Studies.²⁰ Proposing a ‘third way’ between unbridled capitalism and radical left-wing politics, they advocated state reforms to help the poor, emphasised social harmony over class conflict, and stressed the sanctity of the family, individual freedom and the necessity for social justice. This had a profound influence on both the Costa Rican church and on political life; in 1943 the ‘Rerum Novarum Labour Organisation’ was formed (Miller 1996; Williams 1989). To implement the Catholic model Calderón and the reform-minded head of the church, Monsignor Sanabria, entered into an unlikely pact with the leader of the Communist party, Manuel Mora. They ironed out their differences and together proposed reforms. These encompassed specific guarantees, including a bill of rights, a social security system and a labour code, as well as the principles of the protection of family life, work as a social imperative and support for cooperatives (Paige 1997:143; Williams 1989:109). Social Christian doctrine, by permitting a rapprochement with the Communist party, had laid the foundations for the much-lauded Costa Rican welfare state, and for a development model based upon state intervention and cooperatives.

By the end of the Calderón era politics had descended into intrigue and accusations of corruption, and by the 1948 elections the political process was in disarray. When the election results were nullified, an armed insurrection, led by José Figueres, broke out; Figueres was arguably the most influential figure in twentieth-century Costa Rican national life. After several weeks the government forces were defeated and Figueres set up an interim assembly or junta²¹ with the support of the Social Democrats. Figueres and his followers were reformists; they adhered to the social democratic principles of the centre and looked to the urban middle-class and small and medium-sized landowners as their natural constituency. Both these groups had an interest in eroding the grip of the coffee elite, but were also opposed to the more radical politics of the left. Despite paying lip service to the principle of democracy, the junta were ruthless in the execution of their plan; communists were persecuted and imprisoned and the Communist party banned.

Support for Figueres and his politics had never been unconditional amongst coffee growers; suspicious of state intervention, unhappy with excessive and wasteful bureaucracy and resentful of taxes, they had long espoused a spirit of independence and maintained a somewhat conservative outlook. Often anti-communist, some growers also organised opposition to the social reforms of the 1940s. Whereas small and medium-sized producers had once sworn common cause with agricultural workers (peones), some now campaigned against the imposition of a minimum wage for labourers in the coffee industry (Acuña Ortega 1987:145; Bowman 2004:179; National Association of Coffee Producers 2004 [1922]:125). For their part, the junta identified with many of the ideals of the small and medium-sized producers. Democracy, social harmony, welfare and the importance of economic independence were values leading politicians, farmers and the Catholic Church held in common.

Figueres and his followers had ambitious plans for a welfare state and a comprehensive cooperative movement, ideas that they started to implement as their party, the Partido Liberación Nacional (PLN), came to prominence in national political life.²² Under the guidance of leading intellectuals, Figueres moved Costa Rica towards policies of state intervention. This aimed to encourage development and generate wealth, but also maintain and extend the social reforms introduced in the Calderón era (Winson 1989:59). The most significant tools were a programme of nationalisation of key industries, and state-sponsored development projects. Of specific interest is the policy directed towards the coffee industry, which included provision of credit and technical assistance, and measures to support the establishment of cooperatives (Paige 1997:253–254). Given the importance of coffee to the national economy it is hardly surprising that the state tapped into the industry as a source of revenue. To fund the welfare state, a coffee export tax was introduced, exporters were forced to sell their foreign currency to the Central Bank, and an ad valorem tax on processing was levied (Winson 1989:78–85).²³ The raising of these revenues coincided with political struggles between producers and processors, in which the state played the role of interested mediator.

The junta quickly nationalised the banking system to direct funds and finance projects and created a state electricity company (ICE) to develop power output and a national grid. Putting the infrastructure and incentives to promote cooperatives in place was less swiftly accomplished. Nevertheless, the idea that economic life should be based upon beneficial cooperation between autonomous individuals accords with both the liberal democratic model and Catholic social doctrine. Commitment to equality, democracy, self-help and individual responsibility, underpinned by a concern with social welfare, are central to national identity, and are values that crystallise in the figure of the independent smallholding yeoman farmer.

COFFEE COOPERATIVES: THE PILLAR OF THE ECONOMY

Successive governments have provided support for cooperatives via the Institute for Promotion of Cooperatives (Infocoop) and the Department of Cooperatives within the National Ban...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Dedication
• Acknowledgements
• Acronyms and Proper Names
• Glossary of Spanish Terms
• Introduction: Approaching Fair Trade: Coffee in Costa Rica
• 1 Creating Cooperatives: the Welfare State, Coffee, and Fair Trade in Costa Rica
• 2 Sowing Progress and Contesting Development in the Tilarán Highlands
• 3 Farming for the Global Economy: ‘Playing’ and ‘Juggling’ in the Market
• 4 Landowners and Labourers: Uncertainties, Strategies and Tensions in the Labour Process
• 5 Working Nature, Working the Market: Sustainability and Organic agriculture
• 6 Envisioning Autarky: the Family and the Farm
• 7 Civil Society: Local Development and the Limits of Government
• 8 Creating and Contesting Value: the Earth, Labour and Exchange
• 9 Conclusion: Fair Trade and Moral Economies
• Tables
• Notes
• Bibliography
• Index