Structural Adjustment and the Agricultural Sector in Latin America and the Caribbean

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3 Structural Adjustment and the Agricultural Sector in Latin America and the Caribbean Edited by John Weeks Professor of Developm ent Economics and Director, Centre fo r Development Studies, School of Oriental and African Studies and Associate Fel/ow ofthe Institute of Latin American Studi es, University oflondon M St. Martin's Press in association with Palgrave Macmillan

4 Institute of Latin American Studies 1995 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WI P 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published in Great Britain 1995 by MACMILLAN PRESS L TO Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN ISBN (ebook) DOI / I First published in the United States of America 1995 by Scholarly and Reference Division, ST. MARTIN'S PRESS, INC., 175 Fifth Avenue, New York, N.Y ISBN Library of Congress Cataloging-in-Publication Data Structural adjustment and the agricultural sector in Latin America and the Caribbean I edited by John Weeks. p. em. -(Institute of Latin American Studies series) Includes bibliographical references and index. ISBN I. Structural adjustment (Economic policy)-latin America. 2. Agriculture-Economic aspects-latin America. I. Weeks, John, II.Series. HCI25.S '88--dc CIP

5 CONTENTS Acknowledgements List of Contributors List oftables List offigures vii ix xi xv Introduction John Weeks Chapter 1 Rural Development and Agrarian Issues in Contemporary Latin America Cristobal Kay 9 Chapter 2 Disentangling the Performance of Latin American Agriculture, Raul Hopkins 45 Chapter 3 Chapter 4 Macroeconomic Adjustment and Latin American Agriculture since 1980 John Weeks 61 The Environment and Structural Adjustment: Lessons for Policy Intervention in the 1990s Michael Reddift 93 Chapter 5 Argentine Agriculture and Economic Reform in the 1990s Hector Maletta III v

6 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Structural Adjustment and Agricultural Policies: The Brazilian Experience since the 1980s Antonio Marcio Buainain and Gervasio de Castro Rezende 149 Structural Adjustment and Agricultural Performance: The Chilean Case Cristhin Palma Arancibia 177 Adjusting to Reality: The Impact of Structural Adjustment on Honduran Agriculture Andy Thorpe 205 The Impactof Structural Adjustment Policies on the Performance of Agriculture: The Case of Jamaica Ranjit H. Singh 229 Conclusions John Weeks 259 Bibliography 265 Index 289 vi

7 ACKNOWLEDGEMENTS Acknowledgement is due to the United Nations Food and Agriculture Organisation (FAO) for funding the conference, held at the Institute of Latin American Studies, University of London, on which this book is based. The editor would also like to thank Tim Girven for his work on the index, Tony Bell for his help with the editing of the book, and Alison Loader de Rojo for preparing the text. vii

8 LIST OF CONTRIBUTORS Antonio Marcio Buainain is Assistant Professor of Economics at the University of Campinas (UNICAMP), in Sao Paulo, Brazil, and an economist at the Latin American and the Caribbean Group, Policy Analysis Division, United Nations Food and Agriculture Organisation. Gervasio de Castro Rezende is Professor at the Universidad Federal Fluminense (UFF), Rio de Janeiro, Brazil, and Economist at the Instituto de Pesquisa Economica Aplicada (IPEA), Rio de Janeiro. He is the author of several books and articles on Brazilian agriculture. Raul Hopkins, Department of Economics of Queen Mary and Westfield College, University of London, has been a consultant to various international organisations on the problems of agricultural development in Latin American countries. Cristobal Kay is at the Institute of Social Studies, The Hague and was formerly a lecturer at the Institute oflatin American Studies, University of Glasgow. Hector Maletta was previously Lecturer in Economics at the University of Buenos Aires and at the University of Lima, Peru. He is an active consultant to a number of international organisations on problems of agricultural development in several Latin American countries. Cristian Palma Arancibia is an agricultural engineer currently working as Advisor to the Minister of Finance, Chile. Michael Redclift is Professor of Rural Sociology at Wye College, University of London and the author of numerous books on agriculture and the environment in Latin America. Ranjit Singh is Professor of Agricultural Economics at the University of the West Indies, St Augustine, Trinidad. Andy Thorpe is a Lecturer in the Department of Economics at the University of Portsmouth and was formerly visiting Professor of ix

9 LIST OF TABLES Growth Rates of Gross Domestic Product by Economic Sector in Latin America, Agricultural Output Growth, Agricultural Output Growth by Decade, Exchange Rates and Agricultural Output Growth 56 Characterisation of Trade Regimes in Latin American Countries 70 Unweighted Average Tariffs by Country 75 Rate of Growth of Total Agricultural Output, and Rate of Growth of Current Agricultural Exports, and Trend in Terms of Trade, and Rates of Growth of Total Agricultural Output, Rates of Growth of Constant Price Exports, T.rend in Agricultural Exports as a Share of Agricultural Output, Constant Prices, Trend in Agricultural Net Exports, Current Prices Rates of Change of the Real Exchange Rate, and Countries Grouped by Real Exchange Rate Performance and Agricultural Indicators, xi

10 Argentina: Export Tax for Farm Commodities at Selected Dates Argentine Monetary Units, Argentina: The Effect of Exchange Rate and Export Taxes on Agricultural Export Revenue, Argentina: Annual Consumer Price Index Inflation, Argentina: Annual Percentage Rate of Growth of GDP by Sector, Argentina: Consumer and Wholesale Prices, Monthly and Annual Rates, Argentine Exports, Argentina: Results of Non-Financial Public Sector as % of GDP, Argentina: Cereal and Oilseeds Export Taxes/Tax Reimbursements, Brazil: Indices of Apparent Consumption of Selected Agricultural Inputs, Brazil: Indices of Real Product (per capita and by Main Sectors) and Annual Rates of Change, Brazil: Indices of Real Producer Prices, Brazil: Value of Rural Credit Loans Contracted by Use Brazil: Stocks of Agricultural Commodities Acquired/ Financed through AGF/EFG Programmes, Brazil: Indices of Minimum Prices for Major Crops, Brazil: Indices of Parity and Effective Rates of Exchange xii

11 Chile : Tariff Liberalisation, Chile: Evolution of Nominal and Real Exchange Rates 183 Chile: Evolution of External Trade 184 Chile : Agricultural, Livestock and Forestry Production, Chile : Agricultural, Livestock and Forestry Exports, Honduras: Average Agricultural Cost and Price Changes in Domestic Currency for Honduran Coffee Producers, Honduras: Daily Labour Costs, Salary Increases and Price Changes for Various Crops, Real Growth in the Jamaican Economy, Jamaica: Major Policy Initiatives, Jamaica: Volume of Agricultural Exports and Production, Jamaica: Trends in Real GDP Growth: Regression Slopes xiii

12 LIST OF FIGURES Scatter Diagram between Agricultural Output for the Domestic Market and Agricultural Exports 48 Import and Export Incentives in a Three-Good Model 64 Argentina: Effects of Exchange Rate and Export Tax on Agricultural Export Revenue 116 Argentine Terms of Foreign Trade, Argentina: Fertiliser Used per Cropped Area, Use of Fertiliser in Argentina, Jamaica: Relative Share of Various Commodities in Traditional Export Earnings, IMF and World Bank Programmes of Support to Jamaica, Jamaica: Movements in Exchange Rate and Inflation, Jamaica: Real Growth of Agricultural GOP, Jamaica: Volume of Agricultural Production and Exports, xv