Land reform and group farming in Peru

CONFIDENTIAL COMPARATIVE STUDY OF LAND REFORM IN LATIN AMERICA BACKGROUND PAPER LAND REFORM AND GROUP FARMING IN PERU by Douglas E. Horton Series : Studies in Employment and Rural Development No. 23 Division Employment and Rural Development Department: Development Economics Development Policy Staff International Bank for Reconstruction and Development The author prepared this background paper in his capacity as consultant to the Bank. The views expressed represent those of the author and not necessarily those of the Bank. This report may not be published nor may it be quoted as representing the views of the Bank and its affiliated organizations. Washington, D.C., June 1975 .. . .. . . .. . TABLE OF CONTENTS Page I. THE SETTING .................... ....... o. . . .. 1 II. PERU'S LAND REFORM PROGRAMS ............................... 6 Early Land Reform Measures ............... ............... 6 The Velasco Government's Land Reform Program 7........... 7 Land Reform by Region -- the PIAR ...... .... .. 9 Elements of a New Cooperative Agrarian Structure .......... 10 Land Redistribution Goals and Achievements ........ ...... 11 Complementary Programs ..... ................ ..... 14 Extent of Collectivization .......................... 14 III. CHARACTERISTICS AND PERFORTANCE OF NEW REFORM ENTERPRISES .... 18 Organizational Features .......,................... 18 The Agrarian Production Cooperative (CAP) ...... 18 The SAIS ........... ................................... 21 Communal Cooperatives and Restructuring of Peasant Communities ........................ 2 Agrarian Service Cooperatives and Parcel Integration ... 26 Central Cooperatives 0.0.0...0 .......... ............. 27 Performance of New Reform Enterprises .................. 32 LIST OF MAPS, TABLES AND CHARTS Map 1: PERU ..................*...... . ......... Map 2: PERU - Natural Regions .......................... ii Table 1. Land Area and Population in Peru's Principal Regions . 2 Table 2. Adjudication Goals of the Land Reform Program, 1976 12 Table 3. Pre- and Post-reform Land Tenure Structure .............. 12 Table 4. Land Acquisition & Adjudication, and Number of Beneficiaries, as of August 31, 1973 .........*........ 13 Table 5. Characteristics of Post-reform Agrarian.Structure ....... 16 Table 6. Characteristics of Governing Bodies of Agrarian Production Cooperatives ...............0.. ......... 20 Table 7. Sumnary Data on 23 Reform Enterprises .......*.......o.. 33 Table 8. Average Performance Scores, by Type of Reform Enterprise ........oo.... .....................oo..... 34 Table 9. Economic Performance Scores for 21 CAPs and SAIS ...o.o.. 35 Chart 1. Organizational Diagram of the SAIS "CAHUIDE" ........ ... 23 Chart 2. Organizational Diagram of the CECOAP ................... 29 FOOTNOTES ............S............go......... *...... oooo-... 42 C0 L 0 M B I A E C U A D 0 R 4>- 23 TUM6ES* No r PMT . 24g 0, DEPARTMENT ENTO) CAPITAL P(UA EPATA . Schur E v N I Tumbes Tumnbes B.q.. 2 Piura Piura A VReNI Gus 3 Lambaycque ChLlayo omYO 4. -o "" 4 Cajamrca Cjamnarcz 3s, 5 La Libertad Tuil CHAC 6 Ancash duaris L.oy.q TAAPT 7 Limna Limaz CHIC AYo... 8 lca lca l". 9, Argup Ar equipa cJAMARCA 13 1 ouga Mqeu > 11 Tacna Tacna + PACASMAYO 12 Amazona Chachapoy" -ac3San, Mart Myobamba k\ c14 Huanuco Huanuco R5) 15 Pasco Cerro de Psco TRS L r6 Junn H-jarrctalo sovry17 HtuaneILecx Huanca eleca PUCALLP - 18 Ayacucho AYCUI.,o Ch 19 Apurma Abanca.y Chl ,ZI.20 Cusco Cusco ch n e .... TurnosaC 2 1 Puno Pn 6i,g 22 Madre de Dios Po.M-dno n23 Loreto Iquitos ParornongoCER 30 d. PASCOopr HUACKO po 76 CAtL.AO HuAAY 7 nomr I * AYACUCHo cu ci ....... Marcorc-at * u04> 2 PronAbpncey Roads~~ C un8e Cartea en uANi .......K.. ......on 引 NOTE 1. This report was prepared as a background paper for a comparative study of landreform in Latin America conducted by the-Development Economics Department of the World Bank. The main report by Shlomo Eckstein, Thomas Carroll and Douglas Horton, summarized the lessons that can be learned from a comvarison of the land reform experiences of Bolivia, Chile, Mexico, Peru, and Venezuela. 2. The background papers vary substantially in terms of their subject matter and methodology. In most cases published and official documentation have been supplemented by field investigations. 3. Since most of the data were collected by other agencies, the IBRD can not attest to the accuracy of the statistical'information which appears in this report, The views expressed are those of the author(s) and do not necessarily represent those of the Bank. k BAC12GROQUND PAPERS: P 'D FlR THE LAND Ixnd Rcjform in Chile, by rauardo C fuentes. Studies in Employnt and Rural Tevelopznt 2>. 15 >ollv.ia Cour,.ry Report, by Jeff DormeY. Studies in Employment and Rural Lvelop,ent No. lo. A' Case t o Ex-HrUcienla1 Tor%J lap in thIe Ti.raqueI Regi on of the Ut>c- Cchozbada aley, by Jeff Dorsey. ur-,ies in r loyment and Rural D, lopment No. 17. A. Cse Study of the Lcor Cochaama Valley, Bolivia, by Jeff Dorey. Sudies i y n, c n :r.e t and. Rual De veopont No1 1 3. 6. Les,us fron the Mexian Jyäriee in Land Reform, by Shomo Eckstein. Stud! i. &,lrln and Rural eopuea No. 19. . cxico Casa Study: Coparative Anafvysis of Economic ].rfocrmne of Tenure Group's in th)-, Lun gin, by Shli.:n Esteitn. Studies in L a Isrl Dve or-.ncNo , 21). Paas:mnt: Copercuion in-Lr.nd Reform Programs: S m Latin American periences, by Shls:.o E(:stain aid 'Thovas Carr:oll. Studies in Employrant and Lural D)evelopaut No. 21. Peru Ca.se volurm, by Dougl.as E. Ilorton. Studias in Employment and Rural Land Reform and Group Parming in Peru, by Douglas E. lorton. Studics in Employ- ment and Rura Development No. 23. Land Reform and Reform Enterprises in Peru, by Douglas E. Horton. Studies in Er,ployrnut and Rural DeveIlopmlent No. 24. The Impact of Agrarian Reform on Chile's Large Farm Sector, by David Stanfield, and Others. Studies in Euployment and Rural Development No. 25. Asentamiento Management and Productivity Changes in Chile's Cntral Valley, by David Stanfiel'd and Stephen Smith. Studies in Employment and Rural Development No. 26. I. THE SETTING Peru is the fourth largest country in Latin America and the third largest on the South American Continent. Of the total population of roughly 14 million, three fifths is urban and two fifths rural. The country is sharply divided into three geographical regions. Forty-three percent of the total population, and well over half of the urban population, are located on the Coast--a narrow, arid plain which skirts the Pacific Ocean; forty- seven percent of the population resides in the Andean Highlands; and the remaining 10 percent resides east of the Andes, in the Peruvian jungle or "Selva" (Table 1). Until recently Peru has been a predominantly rural country and mining, agriculture and livestock raising in the Highands dominated the economy. In recent decades, however, most demographic and economic growth has taken place in and around the country's major coastal towns. The highly urbanizeu Coast is now Peru's most dynamic and modern region; the Highlands remain largely rural and traditional; the Selva is the country's immense and largely unpopulated frontier area. Land use, land holding patterns, and th-- internal organization of large estates (haciendas) differ markedly between the Coast, the Highlands and the Selva, and the problems and prospects of Peru's land reform and collectiviza- tion programs are intimately related to the characteristics of these regions. All coastal agriculture is located in fertile, irrigated valleys which are favorably located with respect to domestic markets and shipping terminals on the Pacific Ocean. The country's principal export crops--cotton and sugar-- -2- and most of the produce consumed in Peru's major cities are grown on the Coast. Irrigation water is the most limiting factor of production in most coastal valleys. Prior to the land reform, large estates controlled the best- watered lands. Areas of coastal minifundia were generally located on the poorest and least adequately watered lands along the margins of the river valleys. Prior to the reform the largest and most profitable coastal estates produced sugar and cotton. These estates were operated as centrally managed wage-labor production units. Rice and potatoes were grown on both large and small farms. Table 1: LAND AREA AND POPULATION IN PERU'S PRINCIPAL REGIONS, 1972 Total Land Cropland Population Region Million Million Hectares % Hectares % Million % Coast 14.0 10.9 0.8 27.6 5.8 42.6 Highlands 34.0 26.6 1.7 58.6 6.4 47.1 Selva 80.0 62.5 0.4 13.8 1.4 10.3 Total 128.0 100.0 2.9 100.0 13.6 100.0 Sources: (1) CIDA, Tenencia de la tierra y desarrollo socio-econ'mico del sector agricola--Peri (Washington, D.C., 1966), Chapt. 1. (2) General de Divisi6n, E.P., Enrique Valdez A., Ministro de Agricultura, "El sector agrario, exposici6n en el CAEM, 24 de mayo de 1973" (CENCIRA: Lima, 1973), p.2. On flat lands rice estates were operated as wage-labor operations, but in the upper valleys, where terrain was rugged, land was often parceled among sharecroppers and labor-tenants, known as colonos. Most of the corn, beans and truck crops grown on the Coast were cultivated by small private farmers. In recent decades large coastal estates mechanized heavily and cut their employment drastically, and on most estates sharecropping and labor tenancy arrangements were eliminated. In the Highlands, agriculture is less technologically sophisticated, less productive, and more subsistence-oriented than on the Coast. In much of the region natural conditions do not permit cropping, and nearly everywhere the absence of all-weather roads limits the viability of commercial crop production. Most crops are grown for home consumption, and livestock products (primarily wool and meat) are the main exports of the region. In the Puna (high tableland) regions of the Central and Southern Highlands, no crops can be grown and sheep ranching predominates. On both the Coast and in the Highlands most land was held by large estates prior to the reform. However, estates were organized quite differently in these two regions. Most coastal estates functioned as large-scale, cen- trally managed production units employing wage laborers, but the majority of Peru's highland estates were organized around some variant of the colono system, with residents farming small plots of land and/or grazing livestock on the estates' pastures and paying rent in commodities, and/or labor. , A significant part of the highland population resides in traditional peasant communities which derive from the pre-Columbian ayllu (extended family). Previously, all land within the jurisdiction of these communities was considered communal property. Local government was strong and autonomous, and various forms of labor pooling and sharing were employed 4n agriculture and in the provision of public services. Pastureland was generally grazed in common, but cropland was parceled among comuneros (community members) for individual farming. Integration of rural highland areas into the national economy and society has resulted in the gradual loss of community lands and the erosion of communal organizations and traditions. Since the Spanish - conquest in the 16th Century, peasant communities fought a loosing battle against the land encroachment of haciendas. Consolidation of the nation state has reduced the autonomy and authority of communal governments. Within the communities, many comuneros have acquired private title to individual plots of cropland, and positions of leadership have been taken over by enterprising comuneros who advocate the private enterprise system. Despite the gradual breakdown of communal structures, most peasant communities continue to own some farmland and each community retains a hierarchy of public officials fo: the management of communal affairs. Labor pooling and exchanges are still common, although the wage-labor system is gaining in importance. Since the conquest haciendas have grown at the expense of small farmers and peasant communities, but during the last century expansion of commercial estates was exceptionally rapid on both the Coast and in the Highlands. The most extreme cases of land concentration on the Coast were in sugar-producing areas. In the well-documented case of the Chicama Valley, some 60 estates and numerous peasant communities lost their lands to two foreign-owned - corporations.1 On all these lands traditional crops, technologies and land- holding patterns were replaced by large-scale, highly mechanized sugar production, and the social structure of the entire region was drastically modified. The expansion of foreign-owned plantations and the resultant social and economic dislocations prompted the formation of Peru's APRA Party in the 1920's, and help explain its traditional, pro-land reform posture. Within the Highlands, the most pronounced land concentration processes have taken place in the High Puna, where land is unsuitable for cropping but offers great possibilities for extensive sheep grazing. As in the case of sugar on the Coast, expansion and modernization of sheep ranching in the Highlands produced serious socio-economic dislocations. Acquisition of com- munal lands by large corporations, elimination of small-scale peasant produc- tion and specialization in extensive grazing pushed the rural population increasingly onto tfhe diminishing resource base of the remaining peasant communities, and stimulated migratic. -.'the Coast. Over time, boundary conflicts between livestock estates --,ighboring peasant communities pro- liferated, and in the early 1960's, orgahized peasant groups with an estimated 300,000 members invaded the lands of several livestock ranches, initiating a process of de facto land reform. II. PERU'S LAND REFORM PROGRAMS Early Land Reform Measures Peru's APRA Party advocated land reform as long ago as the 1920's, but no substantial reform measures were implemented by the government until four decades later. In 1956 a high level commission was set up to study the land reform issue and in 1959 an Agrarian Reform Settlement Institute was estab- lished. However, no hacienda lands were redistributed until 1963, when organized peasants occupied estate lands in several parts of the country. Special land reform decrees legalized the peasant occupations of hacienda lands in two regions. In 1964 President Belainde signed the country's first comprehensive land reform bill (N' 15037). The law's provisions were so complex, its exciu- sions and exceptions were so numerous, and the (ompensation authorized for landowners was so generous, however, that land reform was extremely difficult 2 and costly to implement. Land reform was not actively supported by either the Executive or by Congress, the Reform Agency was inadequately financed and staffed, and the land reform bureaucracy was controlled by officials who were sympathetic to estate owners. Consequently, very little land redistribu- tion took place under the 1964 law. Instead, the government attempted to diffuse the peasant movement by promising land redistribution and by threaten- ing not to give titles to land invaders. Despite the fact that very little land was redistributed during Belainde's administration, the reform had a significant impact on the expectations and actions of both landlords and the peasantry. Non-enforcement of the 1964 law had a detrimental effect on agricultural production and investment, and increased rural tensions and .... ....7 -7- peasant pressures for real land reform. Fearing expropriation, landowners "mined agriculture," extracting surplus for investment elsewhere in the economy and failing to conserve or improve their estates' land, equipment and instal- lations. Landlords also attempted to expel their colonos in order to avoid future conflicts and possible expropriation under the 1964 law. The political campaigns of the 1950's and early 1960's led Peruvian peasants to believe that once in Office, Beladnde would carry out a massive land reform. When this did not materialize their hopes gradually turned to frustrations and cynicism. By 1968 government officials realizing this fact feared that if a substantive reform program was not implemen-ted peasant move- .3 ments and land invasions would spring up again. The Velasco Government's Land Reform Program By the time the military, headed by retired army general Juan Velasco Alvarado, deposed Pre ident Belainde in October of 1968, it was clear that neither land reform nor any of the other ambitious reforms promised by Bela'nde could in fact be implemented by his administration. APRA, Peru's largest mass-based political party, had become allied with conservative groups in opposing the President, and corruption, poor administration, and internal dissension had brought the government's major programs to a near halt. The first indication that the new government intended to implement land reform on a broad scale came in its "Outline of the Socio-Economic Policy of the Revolutionary Government" (December 1968) in which land reform figured as the first of five structural reforms to be implemented. In this document -8- the government promised to accelerate la,id redistribution and to grant prefer- ential treatment to land reform beneficiaries in the government's agricul- tural promotion, credit and technical assistance programs. In January 1969 arrangements for expropriation of the landholdings of the Cerro de Pasco Corporation were finalized, and in the following months a new land reform law was drafted. The announcement of the military government's new land reform law (No. 17716) in June 1969 signified the beginning of a radical land redistribu- tion process in Peru. In many respects the law is more radical than the 1964 bill and its provisions are much clearer and much easier to implement. More important, execution of the reform has been given high priority by the gov- ernment and is ccisidered the strategic first step in creating a new agrarian structure which will both promote agricultural growth and spread its benefits more widely among the rural population. Three fundanental innovations introduced by the 1969 law are the follow- ing: first, the law called for the creation of a specialized branch of the judiciary ("El Fuero Agrario") to deal with all legal questions related to land reform; second, the new law prohibited all forms of land rental and required that all landowners reside on and work their properties directly; third, the law required that all agricultural workers participate in the management and profits of the farms on which they work. In addition, a long list of specific "causes for expropriation" was added. The valuation procedure was streamlined and ceilings were placed on cash compensations made to affected landowners. The 1969 land reform law has been complemented with a new water -9 law, a new set of by-laws for agricultural cooperatives, and numerous other pieces of agrarian legislation. After announcement of the law, rapid and efficient implementation of the land reform became the main responsibility of the Ministry of Agriculture. The financing and control of all public agencies dealing with agriculture became centralized within this Ministry, and a comprehensive agricultural planning 7. procedure was instituted. Land Reform by Region -- the PIAR While in the past no comprehensive plans for land redistribution were prepared and expropriations were made on an ad hoc basis, since 1969 the National Land Reform Office has drawn up global plans and priorities which have been elaborated and implemented by Zonal Offices through regional planning units known as PI.R's ("Integral Rural Settlemznt Projects"). Implementing land reform by regions (rather than on an estate-by-estate basis) allows the Reform Agency to erase old estate boundary lines and create more rationally dimensioned enterprises. Within each PIAR, not only estate lands but all agricultural lands are subject to land reform measures, which include parcel concentration and integration as well as subdivision of estates. To date, actions have concentrated on the redistribution of large estate lands, but in the futire the minifundia problem is to be attacked at the PIAR level. - 10 - Elements of a New Cooperative Agrarian Structure As reflected in the following statement by Peru's Minister of Agriculture, the ideology of the land reform program is decidedly collectivistic: The central element in Peru's New Agrarian Structure will be the "associative enterprises" ["empresas asociativas"I characterized by joint ownership and self-management. These enterprises are of two forms: Agrarian Production Cooperatives [Cooperativas Agra- rias de Producci6n--CAPs] and Agrarian Social Interest Societies [Sociedades Agricolas de Inter6s Social--SAIS].5 As detailed in Section III below, the CAP is a conventional type of production cooperative which is owned and managed by its workers. The SAIS is a novel quasi-cooperative which operates much like a production cooperative, except that its ounership, management and profits are shared both by its workers and by menbers of neighboring peasant communities. CAPs have been s-et up throughout the country. SAIS have been set up only in the High Puna, where impoverished peasant communities surround livestock ranches which have been expropriated under the land reform. In addition to the CAPs and SAIS, which receive top priority under the reform, land has also been adjudicated to peasant communities and, in excep- tional cases, to i.rdividuals. Peasant communi*ties receiving land under the reform program are required to organize Communal Cooperatives for the manage- ment of these assets. Smallholders are encouraged to organize Agrarian Service Cooperatives, or preferably, to pool their lands in Parcel Integration Cooperatives for joint production. Two types of Central Cooperatives are being established to provide mar- keting, credit, processing, accounting, technical and managerial assistance, - 11 - and other services to the new CAPs and SAIS: Regional Central Cooperatives at the PIAR level, and Specialized Central Cooperatives for producers of export commodities, such as sugar, coffee, tea and wool. Each Central Coop- erative is owned and managed by its affiliated base-level cooperatives and SAIS. Land Redistribution Goals and Achievements By the end of 1975 the government plans to redistribute approximately nine million hectares of land among 340,000 beneficiaries. Eighty percent of this land is to be adjudicated to Production Cooperatives and SAIS, 16 percent to Communal Cooperatives, and only 4 percent to individuais (Table 2). Al- though the redistribution program will reduce the total area held in private farms by 8.6 million hectares, private farms will continue to hold 43 percent of the country's farmland. After the reform pea.ant communities will hold another 32 percent and CAPs and SAIS will hold 13 percent and 12 percent, respectively (Table 3), In total, about half the country's cropland and pastures are to be redistributed. Between June 1969 and August 1973 over half the estates to be expropri- ated under the reform program had been affected. By this same date six times as much land had been expropriated and eleven times as much had been adjudi- cated under the 1969 land reform law as under all previous agrarian legisla- tion. In addition, over 90 percent of all land reform beneficiaries had received land under the military government's reform program (Table 4). - 12- Table 2: ADJUDICATION GOALS OF THE LAND REFORM PROGRAM, 1976 Area Beneficiaries Type of Thousand Thousand Adjudication Number Hectares % Families % Individual Production 61,376 348 3.9 61.4 18.1 Cooperatives 818 .3,777 42.0 174.5 51.3 Communal Cooperatives 372 1,400 15.5 59.2 17.4 SAIS 68 3,475 38.6 44.9 13.2 62,634 9,000 100.0 340.0 100.0 Source: Convenio, Ministerio de Agricultura, Agencia Internacional para el Desarrollo, Fundaci6n para el Desarrollo Nacional, Estudio de Evaluaci6n del Problema de Carnes en el Peri (Lima, 1973), Tomo 6. (Based on official data of Peru's Land Reform Agency, the Direccior. General de Reforma Agraria y Asentamiento Rural -- DGRA y AR). Table 3: PRE-AND POST-REFORM LAND TENURE STRUCTURE Pre-Reform Post-Reform Type of Situation (1961) Goals (1976) Land Tenure Thousand Ha. % Thousand Ha. % Private Farms 21.3 73 12.6 43 Peasant Communities 7.8 27 9.2 32 Production Cooperatives - - 3.8 13 SAIS .- - 3.5 12 Total 29.1 100 29.1 100 Source: Convenio, op.cit. -13- Table 4: LAND ACQUISITION AND ADJUDICATION, AND NUMBER OF BENEFICIARIES AS OF 31 AUGUST 1973 Previous Period Velasco Reform (as of 6/24/69) (6/24/69-8/31/73 Total Number % Number % Number % A. Land Acquisition (000 has.) 1. State Lands 95.5 44.0, 121.3 56.0 216.8 100.0 2. Private Lands 738.9 14.0 4,552.7 86.0 5,291.6 100.,0 3. Total/Average 834.4 15.1 4,674.0 84.9 5,508.4 100.0 B. Land Adjudication Area (000 has.) 320.9 .8.4 3,510.8 91.6 3,831.8 100.0 Percentage of A.3 38.5 75.1 69.6 C. Number of Beneficiaries (thousands) 13.6 8.2 152.3 91.8 166.0 100.0 D. Area per Beneficiary (has.) 23 23 23 Source: Data supplied by the DGRA y AR. =14- Complementary Progras Several new programs of the military government complement land redis- tribution by expanding the land base; by establishing, consolidating, and supervising new reform enterprises; by implementing the water law and other facets of Peru's agrarian legislation; and by providing credit, technical assistance, and other services to farmers. Responsibility for implementing the government's agricultural programs focuses on the Ministry of Agriculture. Within this Ministry, responsibility for specific programs is delegated to specialized branches, the most directly involved in the reform process being the Land Reform and Settlement Agency and the Land Reform Investigation and Training Center. The Agricultural Development Banc is the principal source of credit for farmers, and the onl, source of credit for the new cooperatives and SAIS. A ministry-level agency known as SINAMOS collaborates with the Ministry of Agriculture in setting uT 6 cooperatives and SAIS and supervising their activities. Since 1969 all public agricultural programs have given preferential treatment to Production Cooperatives and SAIS. Despite expansion and restruc- turing of the Ministry of Agriculture, it has not been possible to carry out the land reform without cutting back other programs. One of the most substan- tial cutbacks has occurred in the area of technical assistance to smallholders. Extent of Collectivization Despite aggressive implementation of the government's land reform and cooperative programs, the extent of collectivization has been limited. 15 - Prior to the land reform about half of Peru's cropland and pastures was held by peasant communities and by small and medium-sized private farms which were not subject to expropriation. The government has encouraged comuneros and small farmers to organize groups for joint production, but as a result of peasant opposition practically no group farms have been set up outside the land reform sector. Within the reform sector the only fully collectivized production units are the CAPs set up on the Coast, where estates were centrally managed prior to the reform. These enterprises farm 12 percent of the country's cropland and employ 8 percent of the rural population (Table 5). In the Highlands and the High Puna regions, where nearly all haciendas employed sharecroppers or labor tenants prior to the reform, land reform beneficiaries have refused to pool their usufruct plots or turn over their livestock for joiit management. Consequently, it has been necessary to "bend the law" an-1 organize CAPs, SAIS and Communal Cooperatives in which only part of the land is managed by the group and part remains under the control of individual workers. Where peasant opposition to group farming has been very strong, individual titles have been distributed among land refoi-m beneficiaries. The partially collectivized cooperatives and SAIS farm roughly 30 percent of the country's farmland and empl6y one eighth of the rural population. Land reform beneficiaries who have received individual titles constitute 5 percent of the rural population and control 8 percent of the cropland. Table 5: CHARACTERISTICS OF POST-REFORM AGRARIAN STRUCTURE Families Total Land Cropland No of Thousand Thousand Farms Thousands Hectares % Hectares % A. Land Reform Sector Fully Collectivized CAPs 550 90 7.5 550 1.9 450 12.2 Partially Collectivized CAPs, SAIS, and Communal Cooperatives 700 190 a/ 15.8 a/ 8,100 27.8 1,050 28.4 Recipients of Individual Titles 61,400 61 5.1 350 1.2 300 8.1 Sub-total 62,650 341 28.4 9,000 30.9 1,800 48.6 B. Non-reform Sector Private Farmers 500,000 500 41.6 12,300 42.3 1,200 32.4 Comuneros 350,000 350 29.1 7,800 26.8 700 18.9 Full-time Workers - 10 0.8 - - - - Sub-total 850,000 860 71.6 20,100 69.1 1,900 51.4 TOTAL 912,650 1,201 100.0 29,100 100.0 3,700 100.0 a/ Of the 190,000 members of partially collectivized reform enterprises, 150,000 (12.5% of all rural families) are member-workers and 40,000 are comuneros in SAIS who do not work in the Production Units. See Section III for a detailed discussion of the SAIS. Source: Estimates based on the CIDA-Peru Study, official data provided by the DGRA y AR and preliminary results of the 1972 censuses of population and agriculture. . - 17- Within the partially collectivized reform enterprises about one-half of the cropland and two-thirds of the pastures are managed collectively, and the remainder is under the control of individual workers. Hence, a total of about one-fourth of Peru's cropland and one-third of the pastures are managed jointly by new peasant groups set up under the land reform program. The membership of these reform enterprises constitutes roughly one quarter of the rural population. III. CHARACTERISTICS AND PERFORMANCE OF 7 NEW REFORM ENTERPRISES Organizational Features Most land redistributed under the Peruvian reform.has been adjudicated to groups of peasants organized in Agrarian Production Cooperatives and SAIS. Communal Cooperatives and Agrarian Service Cooperatives are also being promoted by the government, and a few Central Cooperatives have been estab- lished to provide specialized services for the new base-level cooperatives and SAIS. The following paragraphs describe the principal organizational features of these new reform enterprises. The Agrarian Production Cooperative (CAP) As defined in Peru's cooperative by-laws a CAP is an indivisible produc- tion unit in which the ownership and usufruct oi all productive assets--land, livestock, crops, equipment and installations--is collective; no individual production is permissible. Management is democratic and profits are distrib- uted equally among the members or in proportion to the number of days worked by each. The membership is the supreme authority and the management of cooperative affairs. In CAPs with less than 500 members all members meet periodically in General Assembly; in larger cooperatives an Assembly of Delegates is elected to repr,esent the general membership. In both cases democratic elections are held to select an Administrative Council, a Vigilance or Supervisory Council, an Education Committee, and one or more Special Committees. One member of the Administrative Council is selected as the -19- Cooperative's President. Table 6 outlines the composition and principal functions of these bodies. In most cases a professional manager is hired, and in a few cases (most notably in the large coastal sugar cooperatives) several technicians are employed. In smaller cooperatives managerial functions'are performed by the cooperatives' President and other member-workers. Where a CAP's members are not adequately prepared to manage the group's affairs, and where they cannot afford the full time services of a professional manager, officials of the Ministry of Agriculture and/or the Central Cooperative may provide necessary managerial assistance. Although profits are distributed equally among the membership, or in proportion to days worked, most CAPs pay their members a daily wage or monthly salary, the level of which depends upon each member's functions and pre-rpform 8 pay rates. With;n small cooperatives pay differentials of two or three to one are common. in larger enterprises the salaries of administrative per- sonnel may be frog five to ten times as high as those of field workers. In practice most CAPs function as mixed cooperatives rather than as fully collectivized production units, and in all cases there has been a high degree of continuity between pre-reform land tenure patterns and the extent of collectivization in new reform enterprises. On the Coast, where estates were centrally managed prior'to the reform, cooperative operations are fully collectivized. But in the Highlands, where the colono system predominated, land reform beneficiaries have refused to give up their usufruct plots and individual herds of livestock. In these cases, although Land Reform Table 6: CHARACTERISTICS OF GOVERNING BODIES OF AGRARIAN PRODUCTION COOPERATIVES Governing Body Comp:7ition Principal Functions 1. General Assembly All members of the cooperative. 1. Elect members of Administrative and Supervisory Coicils (Asamblea General) A 2. Elect members of Special Committees 3. Consider and approve Annual Reports and Accounts. 4. Allocate surpluses (within legal limits). 5. Approve annual Development Plans and Budgets. 6. Set financial limits on powers delegated to Administrative Council. 2. Assembly of Delegates 100-200 members elected by General Functions 3-6 of General Assembly Assembly when cooperative member- (Asamblea General de Delegados) ship exceeds 500. I M3 3. Administrative Council Not less than 5 members elected by 1. Responsible for day-to-day operations. 0 General Assembly 2. Appoint managers and grant them the (Consejo de Administracion) powers necessary to carry out their work. 3. Submit an Annual Report and Accounts to the Assembly. 4. Vigilance Council Not less than 3 members elected by 1. Supervise actions of Administrative Gen--a- Asjc.,tbly Council and Special Committees to ensure (Consejo de Vigilancia) that these are adequate and within the powers granted to these bodies. 2. Check the cooperatives' accounts. 3. Examine claims by members against actions by Administrative Council and Special Committees. 4. Submit a report on its activities to the Assembly. 5. Education Committee and Not less than 3 members elected by the 1. Plan the policy for the corresponding Special Committeess operational or geographical unit for functional or geographical unit. which the committee has been formed. 2. Advise on its execution. (Comites Especializados) 3. Such othor duties as may be delegated by the Administrative Council. a. Excepc for the Education Committee, their establishiment is optional. Source; Cooperative Bylaws: D.S. No. 240-69-AP, Nov. 4. 1969. - 21 - Officials often pressed for the collectivization of colono production, staunch opposition from the peasants has necessitated the organization of cooperatives in which the centrally managed lands of the ex-estates are worked collectively but members retain possession of their usufruct plots. As will be discussed below, in many of these mixed cooperatives sharp conflicts exist between the economic interests of members and the management. The SAIS Peru's cooperative by-laws define the SAIS as a pre-cooperative institu- tion, to be established when the government determines that a group of land reform beneficiaries does not fulfill one or more of the requirements demanded for legal recognition of a cooperative. According to the same document, when the special conditions which required the creation of the SAIS cease to exist, the SAIS should become a Production Cooperative. Most SAIS have been established in highland areas where livestock estates are surrounded by peasant communities threatening land invasion. In these cases the principal objectives of the SAIS are to preserve the administrative and physical unity of efficient livestock ranches expropriated under the reform, while, at the same time, spreading thr benefits of land redistribution as far as possible among the neighboring population. 9 Legally, each SAIS is owned and managed by a Service Cooperative, made up of the workers of expropriated estates, and by a number of neighboring peasant communities which have been designated by the Reform Agency as land reform beneficiaries. -22- Each SAIS has two -principal spheres of activity: (1) agricultural and livestock production on the lands adjudicated to the SAIS--termed Production Units; (2) technical and developmental assistance to affiliated peasant communities. The SAIS' operations in the former sphere fall under the juris- diction of Agricultural, Livestock and Administrative Divisions; activities in the communities fall under the jurisdiction of a Development Division (Chart 1). All work in the Production Units is carried out by the workers of estates adjudicated to the SAIS. Comuneros residing in affiliated peasant communities do not work in the Production Units. In determining which peasant communities should become members of a SAIS, the Ministry of Agriculture employs the following criteria: (1) Communities must border on lands of 'he expropriated estates. (2) Over 40 percent of the comuneros' incomes must come from agri- culture and livestock raising. (3) The productive capacity and per-capita family income of the communities must fall below the average for the area. (4) Communities with border conflicts with expropriated estates are favored over those with no such conflicts. Prior to land reform, the incomes of workers on highland livestock ranches were significantly higher than average income levels in neighboring peasant communities. The SAIS attempts to reduce the income gap between ex-estates and peasant communities through two principal mechanisms: (1) distribution of SAIS ownership and profits among the communities and the service cooperative in inverse proportion to their pre-reform income levels; (2) provision of technical assistance and credit to the communities via a "Development Division" which operates exclusively for the benefit of the -23- Chart 1. ORGANIZATIONAL DIAGRAM OF THE SAIS "CAHUIDE" jDe' ';1~Assemblyl Planning Office Educatior Administration . Vigilance Committee Council Council Special .. - -- ---.-J Committees jilanagementj jLegal Advisorj Development lA,ric!. ture Administrative Division - ock Division Agriculture i and Livestock Accountin- S 1Health Purchases Education Sales Infrastructure Persotal Organization of Peasant EnLerDrises eterinary IAServices 1Puntol T ýRunatullc Acopalcal Huari Laivej Antapon-o Production Units - 24 - affiliated communities. The poorer the community, the greater its share in profits and the more services it receives from the Development Division. The governing bodies of the SAIS correspond to those of the CAP. The Service Cooperative and each affiliated peasant community have equal repre- sentation in the Assembly of Delegates. Since each SAIS has several community members and only one Service Cooperative, the communities not only receive most of the SAIS' profits, but also control management of the enterprise. Thus, in this complex reform enterprise type the major shareholders (the communities) manage production and receive most of the profits but do not work on the SAIS, while the SAIS workers (ex-workers of the ex-estates) do not participate significantly in either management or profits. Since most SAIS are very large enterprises (average membership 1,100, and land area 54,000 hectares) each employs a professional manager and highly paid accou-ting and technical personnel. Within the Service Coopera- tives, pay rates approximate those on the estates prior to land reform. Most profits are distributed among the affiliated peasant communities, but for two reasons this profit distribution has little impact on the incomes of comuneros. First, the number of comuneros is very large and the average 10 value of profits per comunero is very low. Second, profits are not distrib- uted in cash, but in funds for infrastructure'investment, such as bridges, roads and storage facilities. As in the highland CAPs, most land reform beneficiaries organized in SAIS continue to farm small plots of land and/or graze their own livestock on the reform enterprises' land. Since most SAIS have been set up in areas of -25- High Puna, where livestock raising predominates, conflicts have arisen between management and membership over the use of pastureland. In many cases progres- sive charges are levied for member use of SAIS pastures in order to reduce the size of their herds. In the Central Highlands individual herds are small and are segregated from the SAIS' livestock. But in the South (Department of Puno), the number of livestock owned,by SAIS members often exceeds the number owned by the reform enterprise itself. Since the reform, on most SAIS the size of members' herds has remained roughly constant, but SAIS managers hope to reduce these herds in the future. Communal Cooperatives and Restructuring of Peasant Communities Traditional peasant communities receiving land under the reform program are required to exploit this land collectively via Communal Cooperatives. The internal organization of these cooperatives is the same as that of Agrarian Production Cooperatives. The only difference between the two is that the members of the latter must be comuneros, whereas in the former case anyone may join the cooperative. Title X of the 1969 land reform law calls for the formal restructuring and "cooperativization" of all peasant communities, and a 1970 Statute for Peasant Communities provides guidelines for restructuring. The new Statute requires three major reforms within the communities: (1) replacement of traditional communal authorities with administrative and supervisory councils; (2) purging community membership lists of individuals who do not reside full time in the community, who own farmland, and/or who derive most of their income from non-agricultural sources; and (3) collectivization of land ownership and land use. - 26 - As noted earlier, most cropland within the communities is held in usu- fruct plots by individual comuneros; many comuneros own farmland or run small shops; and most community leaders spend a great deal of time outside their community each year, employed as workers, driving trucks, or engaged in commerce. Hence, most comuneros view restructuring as a threat to their economic interests and have opposed the,government's attempts to implement the new Statute. By the end of 1973, very few peasant communities had been formally restructured. Communities benefited by the land reform have set up Communal Cooperatives to manage the new lands received, but in all cases individual comuneros have retained possession of their traditional usufruct plots. Agrarian Se-vice Cooperatives and Parcel. Integration Smallholders may form two types of agricultural cooperatives: Agrarian Service Cooperatives and Parcel Integration Cooperatives. In the former type, peasants who opertte farms of less than three times the legally defined "family-sized unit" organize to provide themselves with input supplies, credit, marketing or other services cooperatively. Agricultural production per se remains organized on an individual basis. In the second type, smallholders cede land ownership or usufruct rights to a cooperative in order to farm these lands jointly. Neither of these types of smallholder cooperatives has been actively promoted by the government since 1969. Most of Peru's landholding peasants are opposed to the pooling of land for joint farming, and no parcel integra- tion cooperatives have been established to date. The previous administration - 27 - promoted service cooperatives, and many of those set up continue to function. A few others have been formed in recent years, largely as a result of peasant initiative. Central Cooperatives Specialized Central Cooperatives., Prior to the land reform, large estates producing export commodities maintained offices in Lima to handle their financial and commercial affairs. In addition, producers' associations provided them with specialized services. After expropriating these estates and abolishing the producers' associations the government has set up Special- ized Central Cooperatives to take over the functions of their Lima offices. The organization and operation of the largest and most complex of these-- the Central Sugar Cooperative (CECOAAP)--is outlined in the following paragraphs. The CECOAAP's principal functions are the following: (1) management of credit for both the Central Cooperative and its member cooperatives; (2) purchase of inputs; (3) marketing; (4) research and scientific investi- gation; (5) technical assistance; (6) centralization of accounting, auditing and control system.,; (7) professional, technical, and cooperative training for members of affiliated cooperatives. Each of the CECOAAP's .twelve meinber cooperatives elects four representa- tives to the Assembly of Delegates. The Assembly, in turn, elects one rep- resentative from each cooperative to the Administrative Council. This Council, which is the principal decision-making unit within the CECOAAP's governing structure, is assisted in its tasks by several Special Committees, and its operations are supervised by a fixe-man Vigilance Council. -28- The Administrative Council hires a general manager who is responsible for implementing its decisions. Implementation is carried out through a complex organizational structure which includes six specialized Divisions. The manager is assisted in his functions by the CECOAAP's Administrative Division, the Legal Department, and a Comptrollership Unit (Chart 2). The Technical Division's functions include scientific investigation, extension and technical assistance to affiliated sugar cooperatives. The Financial Division administers the CECOAAP's finances, negotiates loans for members, and manages their insurance policies. The Organization and Systems Division operates a computerized data processing center which processes accounting data for member cooperatives. The Social Promotion Divison provides advice, support, rnd coordination for member cooperatives in the areas of health, education, housing, and public relations. The CECOAAP occupies 10 floors of a modern skyscraper in Lima, and employs a staff of nearly 400. In 1973 its operational budget was 4.4 million dollars. Peru's twelve sugar cooperatives are the country's largest agri- cultural exporters; hence the impressive size and complex organization of the CECOAAP. The other Specialized Central Cooperatives have much smaller budgets and staffs and more limited functions. However, the CECOAAP has served as a model for their organization. 29- Chart 2.' ORGANIZATIONAL DIAGRAM OF THE CECOAAP !Delegates' Assemblyl Administrativel- Speci CommitteesI igilance_ Council Council -E-Edcaý, Committeel General Managemento Administrative Legal lComptrollership- IDivision epartment Technical Marketin Fir Purchasin Organization Social vision Division i ; o Division ,and Systems Promotion jDivision - IDivision † .. - 30 - Regional Central Cooperatives. Until 1973 the Ministry of Agriculture gave top priority to the establishment and consolidation of base-level reform enterprises and a few Specialized Central Cooperatives. Since 1973 more attention has been paid to e creation :.E Central Cooperatives at the PIAR level. According to government plan3 .se second-level units are to facili- tate the redistribution of income am-:, u;se-level enterprises, and play a strategic role in implementation of t .i% overnment's agricultural production plans and rural development policies. The internal organization of Regional Central Cooperatives is similar to that of the CECOAAP, outlined above. Central Cooperatives are to plan production in accordance with national and regional plans drawn up by the Ministry of Agriculture. In additi are to be responsible for the purchase of inputs utilized by th : anc the sale of commodities produced by them. Investments in p w&shg facilities and economic infra- structure are to be planned and executed by the Central Cooperatives, as are socially oriented projects, such as housing and school construction. By law, each base-level cooperative and SAIS is to pay a significant share of its profits to the Central Cooperative in its region. Part of these pooled funds is to be redistributed among the base-level units in accordance with social and economic needs in order to equalize incomes and productive capacities, and part is to be invested in non-agricultural activities in accordance with the government's regional development plans. In the future, third-level and possibly higher-level cooperatives are to integrate the base-level production units and PIAR-level central cooperatives into a broader cooperative sector. -31- At the time of my .field work in late 1973, very few Regional Central Cooperatives had been established, and none of these functioned in accordance with government plans. Various factors have delayed the formation of these units and impaired their functioning. First, many cooperative and SAIS leaders oppose the establishment of Regional Central Cooperatives on the grounds that services can be acquired more economically elsewhere. Second, many cooperative and SAIS leaders fear that the Regional Central Cooperatives may become instruments of government control. Third, base-level reform enterprises adamantly oppose the pooling of profits for income redistribution or investments outside of agriculture. To date no Central Cooperatives have been able to collect profit shares from their members. Consequently, no significant investments have been made and attempts to diversify production and redistribute income have been frustrated. it seems likely that if the government's redistributive and diversification goals are to be achieved, other mechanisms, such as taxation and direct public investment will have to be employed. -32- Performance of New Reform Enterprises This final section presents an analysis of new reform enterprise performance based on a survey carried out by the author in late 1973 (Table 7). Eighteen Production Cooper .ives, three SAIS and two Communal Cooperatives were visited. In each elterprise data were collected on 7 variables which can be employed as peformance criteria: (1) Intensity (mix) of crop -nd livestock production. (2) Total value of output. (3) Employment. (4) Directly productive investments. (5) Social investments (schools, housing, etc.). (6) Whether or not the 7 : : .1;7ofitable. (7) Degree of member ia on in maagement. On the "average" reform enterprise the mix of crop and livestock production had intensified somewhat since the zaform and the total value of production had increased slightly; employmenz had remained about the same and investments in social infrastructure and productive facilities had increased substantially. In most cases enterprise operations were profitable and the members participated in management, although not with great enthusiasm (Table 8). Thus, it seems that on the whole, in the short period since initiation of the land reform, cooperatives and SAIS have been able to maintain or modestly surpass pre-reform levels of production while investing heavily in both productive and social capital. However, the new reform enterprises have not increased employment significantly. The poor employment performance of the reform sector is presently a major concern of. both reform enterprise officials and agricultural policy makers. Table 7: SUMMARY DATA ON 23 REFORM ENTERPRISES Date of Enter- Principal Crops Govt. Date of Total Case prise and/or Inter- Adju- N' of Area No Type a/ Enterprise Name Location Livestock vention dication Members (has.) 1 CAP ESPINAL Highlands Rice Production 6/69 1/73 163 8,212 2 CAP MONTESECO Highlands Coffee 6/69 1/72 272 1,960 3 CAP UDIMA Highlands Cattle-Crops 6/69 12/71 512 39,500 4 CAP POMALCA Coast Sugar 6/69 10/70 3,300 16,662 7 CAP CERRO ALEGRE Coast Cottoa-Potatoes - 6/71 12/72 265 1,087 8 CAP SANTA BARBARA Coast Cotton-Potatoes N.D. 6/72 137 443 9 CAP CERRO BLANCO Coast Cotton-Potatoes 8/71 12/72 150 532 10 CAP CASA BLANCA Coast Cotton-Potatoes N.D. 6/72 72 668 11 CAP CALDERA Coast Cotton-Miscel. N.D. N.D. 150 900 12 CAP ANDAHUASI Coast Sugar 6/69 N.D 375 1,084 13 CAP EL POTAO Coast Cotton-Corn 9/71 1/73 98 717 14 CAP SAN NICOLAS Coast Sugar 11/o9 7/72 300 1,432 16 SAIS CAHUIDE Puna Sheep 10/69 4/71 30 b/ 268,182 17 CC QUEHUAR Highlands Potatoes N.A. 69/73 c/ 280 N.D. u: 18 CAP TUPAC-AkARU II -- ANTAPA4PA Highlands Cattle-Potatoes 1969 6/71 2,800 37,351 19 CAP TAHUANTINSUYO Highlands Cattle-Wheat 2/70 6/73 187 11,017 20 CAP MARISCAL R.CASTILLA Highlands Wheat-Potatoes 9/69 6/73 82 2,331 21 SAIS YOCARA Puna Sheep 1969 12/70 56 9,421 22 CAP SANTA LUCIA Pund Sheep N.D. 10/72 235 74,115 23 SAIS BUENA VISTA Puna Sheep N.D. 12/72 750 49,383 24 CAP MICAELA BASTIDES Puna Sheep N.D. 8/72 586 60,250 25 CAP POSOCONI Puna Sheep-Cattle 11/69 1971 75 1,769 26 CC LA UNION DE SORATIRA Puna Sheep N.A. 9/66 87 6,539 Source: Case Study Reports. a/ CAP: Agrarian Production Cooperative; CC: Communal Cooperative; SAIS: Agrarian Social Interest Society. b/ One service cooperative and 29 peasant communities. c/ A Communal Cooperative was set up in Quehuar in 1969, to which the Velasco Government adjudicated more lands in 1973. N.A.: Not applicable. N.D.: No data. Table 8: AVERAGE PERFORMANCE SCORES BY TYPE OF REFORM ENTERPRISE (1) (2) (3'; (4) (5) (6) (7) (8) (9) Changes from Pre -Reform Values Intensity Directly Prof ita- Total Member No of Crop- Total Productive Social bility Economic Participation Sur- Livestock Value of Employ- Invest- Invest- of Enter- Performance in veyed Mix Production ment ments ments prise Score a! Management A. Formal Classification of Reform Enterprises SAIS 3 33 100 (D7 167 200 200 128 0 CAPs 18 33 33 0 94 83 ill 59 44 Communal Cooperatives 2 0 -100 50 -100 50 200 17 200 Total/Average 23 30 30 13 87 96 130 64 52 B. Classification of Reform Enterprises based on Principal Activity and Natural Environment b/ Irrigated Crop Production (Coast) 9 67 122 44 ill 78 200 104 122 4-- Rainfed Crop Production cI (Highlands) 6 -50 -117 -117 -17 67 -67 -44 -100 Extensive Livestock Production (Puna) 6 67 83 83 183 167 200 130 50 Source: Case Study Reports. a/ The arithmetic average of scores for variables (2) -(7). b/ CAP?s and SAIS only. c/ In 3 of the 6 cases both crops and livestock were produced, but in all cases crops predominated. Key: Variables (2)-(7) and (9): ____________Variable Score Variable 100 to 0 to -100 to Number 200 100 0 -100 to 0 -200 (2)-(6) Large Moderate No Moderate Large Increase Increase Change Decrease Decrease (7) Profits Losses (9) Member Participationz Ambivalence Member Opposition to Adju- in ianagewierit dication Model Active Moderate Moderate Strong -35- Table 9: ECONOMIC PERFORMANCE SCORES FOR 21 CAPs AND SAIS Economic Case Number and Name Performance Score Agricultural CAPs on the Coast 8 CAP Santa B'arbara 150 10 CAP Casa Blanca 150 11 CAP Caldera 150 9 CAP Cerro Blanco 133 7 CAP Cerro Alegre 83 12 CAP Andahuasi 83 13 CAP El Potao 83 4 CAP Pomalca 67 14 CAP San Nicolas 33 Average 104 Livestock CAPs and SAIS in the High Puna 22 CAP Santa Lucia 167 21 SAIS Yocari 150 23 SAIS Buena Vista 133 24 CAP Micaela Bastidas 117 25 CAP Posocini 117 16 SAIS Cahuide 100 Average 130 Agricultural CAPs in the Highlands 1 CAP Espinal 50 3 CAP Udima 0 18 CAP Tapac Amaru II -33 20 CAP Ram6n Castilla -33 2 CAP Monteseco -83 19 CAP Tahuantinsuyo -167 Average -44 Source: Case Study Reports. -36- The overall or "average" performance of the 23 reform enterprises surveyed is of little significance due to the wide variance of performance scores. However, clear patterns of enterprise performance are discernible. The Communal Cooperatives surveyed have lower economic performance scores than most CAPs and SAIS. These enterprises were set up by indigenous groups without active support from the government, and neither has had ready access to credit. Consequently, their production and investments have been curtailed. Despite their rather weak economic performance, both these enterprises turn profits and member-participation in management is stronger than in any of the other reform enterprises surveyed. In both cases the membership's commitment to the group augurs well for the long-term viability of the Z Communal Cooperatives. The performance of SAIS is better than that of the CAPs surveyed on all six economic criteria. However, there is a conspicuous lack of member participation in SAIS management, and sharp conflicts among comuneros, ex- estate workers, end managerial personnel are frequent. Given the high level of internal conflict and rapid turnover of management personnel, it seems likely that over time the government will have to play an increasingly central role in SAIS management. In the field there has been a confusion of new property/management models, and many SAIS function essentially as production cooperatives, with little or no participation of the affiliated peasant communities in management and profits. This was the case in two of the three SAIS included in the survey, Thus, the superior performance of the SAIS derives not from their unique organizational features but from other variables. The survey results indicate that the two principal correlates of reform enterprise performance are "principal activity" and "natural environment." Most crop-producing enterprises on the Coast have increased production, employment and investments since the reform and operate profitably. The economic performance of livestock enterprises in the High Puna is similar to that of the coastal enterprises. However, in areas of highland crop production most reform enterprises have not been able to maintain pre- reform levels of production, employment or investments, and they are loosing money (Tables 8 and 9). This finding reflects the fact that in the land reform sector, as in the pre-reform agrarian structure, the most efficient farm size and internal organization (degree of managerial centralizat-on) depends largely upon natural and technological conditions. In rainied crop production, special- ization of personnel is limited by the consecutive,seasonal nature of tasks. Use of large-scale, specialized equipment is limited both by the need for it to be mobile and by the short period each year during which it can be employed. Unpredictable weather and subtle variations in soils make it impossible for managers to schedule operations in advance; important adjustments must be made on a daily basis. And the timeliness of decisions and operations at crucial seeding and harvesting times have a significant impact on the entire year's production. The biologically determined length of production cycles makes it diffult to evaluate the quality of labor inputs, and large land areas hamper the effective control and coordination of tasks. For all these reasons, managerial problems limit the size of labor force on crop-producing farms in rainfed areas. And for the same reasons many large farms decentralized their operations by employing tenants, and -38- concentrate their managerial resources on activities which the tenants cannot perform adequately on an individual basis (e.g. credit, purchasing, marketing or processing services). Prior to land reform, this was the case of crop-producing baciendas in the Andes which employed colonos. Strong economies of scale are encountered in two types of agriculture: (1) crop production in irrigated areas where neither weather nor soils are highly variable, and especially where the commodity produced is perishable, but can be profitably marketed or processed on a large scale; (2) livestock production on natural pastures. Sugar production on the Peruvian Coast is a classic example of the first case. Cultivation takes place in irrigated valleys where soils are quite uniform and the climate is hot and dry throughout the year. The absence of seasonality allows specialization o1 the labor force and performance of different tasks simultaneously in different fields. For optimal results the cane must be milled within a few hours after harvesting. Processing takes place in large, modern factories which operate year-round, 24 hours a day. The sugar mill and processing plant can be operated at a uniform rate near full capacity only if cane cultivation, harvesting, and transport are carefully scheduled in accordancc with the mill's capacity. Thus, it is logical that on the Peruvian Coast sugar cultivation and proces- sing take place in large, vertically integrated centrally managed units. Economies of scale in sugar processing are greater than those in field cultivation. It is the need to coordinate fieldwork with processing which has led to the growth of sugar plantations to over 10,000 hectares. -39- Most other coastal estates are centrally managed, but have less than 1,000 hectares of land. Sheep ranching in Peru's High Puna exemplifies the second case. Here, fencing and centralized management of pasturelands, introduced in recent decades, haveincreased the carrying capacity of pasturelands markedly, while importation of new stock and initiation of crossbreeding programs have increased the productivity of herds. The rationalization of pasture use and stock improvements were both hampered by peasant production on estate lands. Thus, since the outset of the ranch modernization in the High Puna managers have pressed hard for the reduction of colonos'.herds. The attitudes of Peruvian land reform beneficiaries vis-a-vis collectivization appear to be determined prinarily by economic considerations. The strongest supporters of collectivization are coastal wage earners who realize that mai-tenance of existing large-scale production units offers strong advantages over subdivision of coastal estates into individual parcels. In the Puna most beneficiaries opt for partial collectivization with group management of pastures and group ownership of part of the livestock, but continuing individual ownership of small herds, primarily as a security measure against failure of the new group enterprises. In highland crop- producing areas, where there are strong managerial diseconomies in large- scale crop production, most land reform beneficiaries are skeptical of the advantages of group farming, and would rather farm independently on an individual basis. In several cases land reform beneficiaries have subverted group activities in the h6pe that failure of the cooperative would prompt individual parcelization of the land. The most vocal opponents of collecti- vization have been ex-employees of highland haciendas, who have larger-than- -40- average usufruct plots and herds of livestock, and thus, whose economic interests are most threatened by the pooling of resources for group farming. Nevertheless, in the Highlands anti-cooperative sentiments seem to be nearly universal. Lack of peasant support for group farming has been accompanied by severe managerial problems in highland reform enterprises. Most enterprises on the Coast and in the Puna are large enough to afford the full-time services of a professional manager, insuring reasonably adequate management. The smaller highland cooperatives must rely upon self-management, with occasional assist- ance from the Ministry of Agriculture. As noted above, the members of high- land cooperatives possess neither the skills nor the motivation to manage their enterprises well. Fusion of several ex-e.3tates has been attempted as a means of creating reform enterprises which are large enough to bear the fixed cost of a professional manager. But in these cases the managers have found problems of planning, controlling and coordinating field work to be intractable. Sporadic assistance from the Minirtry of Agriculture has not been an adequate substitute for full-time enterprise managers. And it does not appear that Central Cooperatives can meet the reform sector's manage- ment requirements. The operations of large crop-producing units have been so poor that the Ministry of Agriculture is now considering subdivision of the largest ones. Conflicts between members' economic interests and those of the group threaten the viability of all reform units, but have been most serious in the Highlands,where labor is scarce at crucial seeding and harvesting times, Wages are extremely low in highland reform enterprises, and to date - 41 - no year-end profits have been paid. Thus, members are strongly motivated to increase their incomes by expanding production on their individual usu- fruct plots. Prior to the reform, landlords demanded that colonos work first in the haciendas' fields, leaving their usufruct plots for later. Reform enterprise managers cannot enforce such rules, and now at seeding and harvesting times members tend their own plots first, leaving the cooperative's fields for later. Since growing seasons are short and time- liness is an important determinant of yields, labor shortages have resulted in a contraction of both the seeded area and yields on the centrally managed lands of highland production cooperatives. Low productivity and resultant financial difficulties, in turn, help convince land reform beneficiaries of the futility of group farming. In conclusion, for numerous reasons (rela+ed ultimately to natural conditions, production patterns, technology and pre-reform estate organiza- tion, and more directly to peasant attitudes and managerial problems) fully and partially collectivized reform enterprises have the greatest potential for success in areas of irrigated crop production and in areas of extensive livestock production, respectively. The prospects for group farming in rainfed agricultu:al areas are not bright. .42- FOOTNOTES 1. CIDA, Tenencia de la Tierra y Desarrollo Socio-econ6mico del Sector Agricola -- Perd (Washington, D.C., 1966); and Peter Klaren, Modernization, Dislocation and Aprismo: Origins of the Peruvian Aprista Party, 1870-1932 (Austin, 1973). 2. An excellent discussion of land reform implementation under Peru's 1964 law is presented in James Petras and Robert La Porte, Cultivating Revolution, The United States and Agrarian Reform in Latin America (New York, 1971). 3. Ibid, p. 97. 4. "Lineamientos de la Politica Econ6mico-social del Gobierno Revolucio- nario" (Lima, 1969). The other four major structural reforms were a new mining policy, a new industrialization policy, reorganization of the public administration and fiscal reform. 5. Enrique Valdez A., "La Reforma Agraria Peruana, conferencia del Ministro de Agricultura en la primera reuni6n plenaria de Jefes de Misiones Diplomaticas Peruanas en el Exterior" (CENCIRA, 1973), p. 18. 6. In 1974 the Ministry of Agriculture was divided into two ministries; one was chaTged with land reform implementation, the other with production-:elated programs. In April 1975 SINAMOS was declared "in reorganization" for having failed to "carry the revolution to the people." Latin America, May 9, 1975. 7. The term "reform enterprise" refers to all cooperative and quasi- cooperative enterprises set up under the Peruvian land reform program. 8. A provision of the reform legislation aimed at protecting managerial personnel, does not allow the reduction of beneficiaries' salaries below pre-reform levels. 9. The Service Cooperative differs from a Production Cooperative (CAP) in that its members share both ownership and management with the affiliated peasant communities. The Service Cooperative also differs from an Agrarian Service Cooperative (CAS) in that in the former case members are workers who exploit the resources of a SAIS collectively, whereas in the latter the members are independent smallholders who organize for the provision of services (e.g. delivery, marketing, and credit). 10. In the SAIS "CAHUIDE," which is a relatively profitable enterprise, profit shares were roughly 30 dollars (US) per family in 1972-73.