Peru case study volume

COMPARATIVE STUDY OF LA-ND REFORX IN LATIN AMERICA BACKGROUND PAPER PERU CASE STUDY 'VOLUME by Douglas E. Horton Series Studies in Employment and Rural Development No,22 Division Employment and Rural Development Department: Development Economics Development Policy Staff International Bark for Reconstruction and Development The author prepared this background paper in his capacity as researcher for the Land Tenure Center (University of Wisconsin at Madison), in partial fulfillment of a contract between the Bank and the Land Tenure Center. The views expressed represent those of the author and not necessarily those of the Land Tenure Center or the Bank. This report may not be published nor may it be quoted as representing the views of the Land Tenure Center or of the Bank and its affiliated organizations. Washington, D.C., June 1975 A.1 APPETTDIX A AGRARIAN ZONAL REPORTS Twenty-seven cooperatives and SAIS were visited in six of Peru's twelve Agrarian Zones. Appendix A presents basic data on the Agrarian Zones, sum- marizes the findings of the case studies, and discusses a number of social, economic, and political issues related to the reform process and Peru's new reform enterprises. Table of Contents Page Ma-o: Peru's Agrarian Zones A.2 Outline: Agrarian Zonal Reports A.3 Reports: Zone IIT Lambayeque-Cajamarca 11.1-12 Zone III: La Libertad-Ancash (includes "Issues" section for Zones II and III} 111.1-19 Zone IV: Lima V1.1-18 Zone X: Jun n-Pasco X.1-18 Zone XI: Cuzco (includes "Issues" section for Zones XI and XII) XI.1-19 Zone XII: Puno XII.1-13 -11…。，[ A-3 OUTLINE: AGRARIAN ZONAL RE PORTS 1. HISTORICAL AND NATURAL SETTING A. Natural Setting 1. Location (political jurisdiction) . Ecology B. )Socio-cu-Itural Setting 1. Total, rural, and urban population, ana major towns 2. Migration trends Cultural features (language, race, literacy, peasan, communitie 4. Income characteristics and levels of living 5. Pre-reform political situation (including unionization ana peasant movements) C. \/ e-reform Agrarian Structure 1 Major crops and livestock 2. Lana distribution and major types of tenure 3. Labor sources and employment 4. Technology II. THE IAND REFOR14 PROCESS A. Impact of the 1964 Land Reform Law 1. Direct impact (expropriation and redistribution) 2. Indirect impact (investment, tenure, employment, and output trends, B. Land Reform Under the 1969 Law 1. Pace and direction (relative to national Land Reform program, and within the zone) 2. Social and political forces initiating and guiding the process (peasantry, local politics, national politics) 3. Socio-economic dislocations 4. New institutions (interim management institutions, coops, SAIS, peasant communities, central coops, firestructured" communities) 5. Public agencies dealing urith agriculture (Ministry of -Agriculture, SINW-110S, SAFCAP, Ag. Dev't Bank) III. PRINCIPAL PROBLEMS FACING THE LAND REFORM PROCESS 1. 'Resource base and variance of natural conditions 2. Population density and employment 3. Technology 4. Investment 5. Production 6. Public sector shortcomings 7. Reform enterprise problems (leadership, peasant support, administration) 8. Politics IV. ISSUES A. Land Tenure and Labor Systems 1. Pre-reform tenure and labor systems (role of group action) 2. Post-reform tenure and labor systems (implementation and adjud-'cation model) 3. Flexibility of policies and the new tenure structure B. Fconomic Issues 1. Economics of scale 2. Productivity (efficiency vs. equity) 3. Technological change 4. Employment 5. Income 6. Vulnerability C. ,Management and Administration 1. Separation of functions between peasant leaders and professionals 2. Balance between excessive paternalism and negligence 3. The decision-making process--technical efficiency vs. democracy 4. Control and supervision of enterprise officials and enterprise performance 5. Special role of public agencies 6. Accounting problems D. Social Problems 1, Leadership 2. Selection of members and social harmony 3. Political, social, and economic homogeneity 4. Internal strife (causes, positive and negative effects) 5. Delinquency, corruption, and exploitation 6. Political aspects of the LR process E. Special Considerations 1. Linkages and interactions 2. Cooperative doctrine and ideology NOTE 1. This report was prepared as a background paper for a comparative study of land reform in Latin America conducted by the Development Economics Department of the TWorld Bank. The main report by Shlomo Eckstein, Thomas Carroll and Douglas Horton, summarized the lessons that can be learned from a comparison 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. ( . ....... BACKGROUND PAPERS PREPARED FOR THE LAND REFORM STUDY Land Reform in Chile, by Eduardo Cifuentes. Studies in Employment and Rural Development No. 15. Bolivia Country Report, by Jeff Dorsey. Studies in Employment and Rural Development No. 16. A Case Study of Ex-Hacienda Toralapa in the Tiraque Region of the Upper Cochabamba Valley, by Jeff Dorsey. Studies in Employment and Rural Development No. 17. A Case Study of the Lower Cochabamba Valley, Bolivia, by Jeff Dorsey. Studies in Employment and Rural Development No. 18. Lessons from the Mexican Experience in Land Reform, by Shlomo Eckstein. Studies in Employment and Rural Development No. 19. Maxico Case Study: Comnparative-Analysis of Economic Performance of Tenure Groups in the Laguna Basin, by Shlomo Eckstein. Studies in Employment and Rural Development No. 20. Peasant Cooperation in Land Reform Programs: Some Latin American Experiences, by Shlomo Eckstein and Thomas Carroll. Studies in Employment and Rural Development No. 21. Peru Case Study 'Volume, by Douglas E. Horton. Studies in Employment and Rural Development No. 22. Land Reform and Group Farming in Peru, by Douglas E. Horton. Studies in Employ- ment and Rural Development No. 23. Land Reform and Reform Enterprises in Peru, by Douglas E. Horton. Studies in Employment and Rural Development No. 24. The Impact of Agrarian Reform on Chile's Large Farm Sector, by David Stanfield, and Others. Studies in Employment and Rural Development No. 25. Asentamiento Management and Productivity Changes in Chile's Central Valley, by David Stanfield and Stephen Smith. Studies in Employment and Rural Development No. 26. AGRARIAN ZOLE II -- LAMAYEQUE I. HISTORICAL AND NATURAL SETTING The Second Agrarian Zone covers all of the Departments of Lambayeque, Cajamarca, and Amazonas, and parts of La Libertad. Coast, highland, and jungle lands are all included within it. The coastal valleys produce much of the na- tion's sugar and rice. Corn, cotton, and a variety of fruits and vegetables are also cultivated. Alfalfa is harvested and fed to milk cows; fresh milk is trucked to villages and t-wns and sold door to door. The highlands of Caiamarca have been a traditional source of supply of cattle and labor for the coast. As in most parts of the sierra, transportation has always been costly and uncertain in this region, discouraging agricultural commodity trade over great distances. Warm, humid sections of Cajamarca and the neighboring department of Amazonas ship high-value commodities such as cocoa and coffee to urban coastal markets, and coca to highland market towns. The two principal roads connecting the coast to the sierra lead eastrard from Chiclayo toward Chota, and from Pacasmayo to the departmental capital, via Chilete. A less traveled road connects the capital to Chota via Bambamarca. The first route is an especially important supply route for Chiclayo and the estates of the department of Lambayeque. Four estates were visited in this Zone, one in the Valley of Lambayeque, three in a relatively isolated region inland from Zdia. One of these three, Espinal, is on a public road connecting the highland town of Wiepos to the coast. The other two, Monteseco and Udima, are on a private road constructed by the previous owners. Although relatively isolated, these three estates underwent substantial social and economic transformation in the present century as their owners attempted to increase profits. The upper ZaHa Valley, where the estate Monteseco is located, is the last region west of the Andes where climatic conditions allow the cultivation of coffee. Much evidence indicates that the upper reaches of many coastal valleys were suitable for coffee cultivation until settlement and deforestation led to climatic changes and soil destruction (erosion and leaching) which made culti- vation unprofitable. The upper Zana Valley is the last of the major coastal valleys to go through this transformation, due to its relative inaccessibility. The highlands above Monteseco are going through a similar though less pro- nounced ecological transformation, which is reducing the productive capacity of the region for both cropping and livestock raising. 11.2 B. Socio-cultural Setting 1. Population Departments: Rural Urban Total Laffbayeque 138,700 376,700 515,400 Cajamarca 754,700 161,600 916,300 Amazonas 129,700 66,800 196,500 Capital Cities: Chiclayo 189,700 Cajamarca .37,600 Chachapoyas lo,4o0 2. Migration from the sierra to the coast has had a profound impact on the socio-cultural makeup of the entire region. Beginning around the turn of the century highland peasants were hired by contract agents for work on the sugar coastal estates, under a system of "wage-debt slavery." Money lent to the peasants could only be paid ^back through work on the coast. Later in the century the debt component diminished in importance as increasing population pressure, improvements in transport, and extension of cash markets to remote areas en- couraged rural highlanders to migrate spontaneously to the coast in search of work. 3. In contrast to the central and southern highlands, in the highlands of Cajamarca many rural people do not speak indigenous languages. On the coast, it is extremely rare to hear Quechua. Each highland town has its typical dress, including a poncho, but customs are not nearly as indigenous in appearance as they are in the central and southern highlands. Racially, rural highland-people are typically mextizo, not indigenous. Coastal people often say that the tall energetic Chotano is much more "suitable" for cane cutting than-is his coastal counterpart.' Short coastal peasants are "naturally" more suited to shovel culti- vation. (Coastal peoDle also note that the Chotano is more suited for cane cutting because he is less intelligent (menos despierto) and more willing to do this backbreaking work (se deja enganar m6s facil) than are the costenos). Several indigenous communities exist on the coast, including Monsefd, Reque, and Eten, but these have lost most of their communal traits. Landholding is almost exclusively individual and the communities are now not much more than political-administrative entities. 4. Until quite recently cash wages were extremely low in highland rural areas, most pay being in the form of real goods and/or personal services. In contrast, coastal workers earned far better cath pay, but often suffered the effects of miserable living conditions, malnutrition, malaria,and tuberculosis. On the sugar estates pay rates were highest and working and living conditions often worst. In recent years unionization has led to marked improvements in working and living conditions, and also has encouraged mechanization and massive reductions in rural employment. Apristas led the unionization drive and exploit- ed it for their own political ends. Nevertheless the sugar workers became and have remained the wealthiest rural workers in Peru and a political force of national import. At the time of the LR the sugar workers earned at least two times the cash wages of other coastal farm workers and five times the wages of highland peons. 11.3 5. Unionization began first and has been most successful on the sugar estates. However, labor movements have also occurred in many other haciendas of the coast and some .in the highlands (nearly simultaneously with the labor movements of the sugar estates and certainly encouraged by them). Union were politicized and their leaders affiliated with national parties -- first APRA, later Acci6n Popular. Thus the foituns of the unions were tied closely to poli- tical developments at the national level. Of the four sugar estates in Lambaye- que the only one not to be unionized was Tuman -- a bastion of paternalism cum expert business management. Since the initiation of the unionization movement in the 1930s the APRA-dominated unions have been strongly anti-military. C. Pre-reform Agrarian Structure 1. Major crops of the Lambayeque Valley are as fellows: Sugar Cane 25,200 has. Rice 13,900 Cotton 4,3oo Corn 3,800 Pasture 3,600 In the highlands crops are produced primarily for local consumption, and include wheat, corn, potatoes, and barley. The principal economic activity and source of commodity trade for the region is livestock raising -- cattle and sheep. 2. Sugar cane is grown exclusively on large eF-ates, rice is grown on both large and small farms, corn primarily on small farms. In the highlands, crops are grown almost exclusively on small plots; livestock is raised on farms of all sizes. Sharecropping and labor tenancy are found on most estates of the highlands and the upper river valleys of the coast, but on fewer coastal estates. As haciendas producing rice and corn were absorbed by sugar planters in the twentieth century, colonato was replaced by wage labor. The large and highly profitable sugar estates were owned and operated by corporations. In Lambayeque these were controlled by Peruvian families (in contrast to, e.g., the operations of Grace in La Libertad and Lima). Smaller estates were typically owned by Peruvians and rented or managed by hired administrators. 3. Coastal sugar production and employment expanded rapidly in the first half of the present century, accounting for the heavy migration of workers from the highlands. However, until recently these migrants maintained economic and social ties with their highland communities and worked only part of each year on the coast. Over the last two decades, and particularly since the legal recognition of sugar unions in the early 1960s, the flow of migration to and from the sugar estates has subsided and the estates' populations have stabil- ized. (The number of workers has fallen. but the number of dependents and the total estate population have increased). Before 1960 employment on non- sugar estates increased less markedly than on the sugar estatest since that time it has fallen lezs markedly as well. 4, in technological terms, the sugar estates are the most advanced in the country. Irrigation systems, growing conditions, and production methods are among the best in the world, and productivity `(in terms of both cane and sugar pro- duction per hectare) is close to the world record. On the coastal plains rice is also cultivated under modern methods. In the upper valley regions mechanization' gives way to animal traction and hand cultivation, but yeilds are still high. Production'methods in remote highland regions are much more traditional and empirical, especially in cropping. Several haciendas have hired expert advisers and/or administrators who introduced scien- tific methods in cattle and sheep production, but since large scale cropping was not profitable they ignored agricultural technology. ._ Highland peasants have typically not had access to technical assistance. A striking exception to this statement is the case of the provincial town Chota, where a Ministry pro- gram introduced new inputs and methods for both crops and livestock. II. THE LR PROCESS A. Impact of the 1964 Law 1. The direct impact of the law was marginal. Sugar estates were not affect- ed by the 1964 law. No highland estates in the Second Zone were affected. A few coastal estates occupied by colonos'did enter the LR process.- On these, colonos were promised titles to the lands they farmed individually, and in some cases provisional titles were granted. In few if any cases were definitive titlec granted. (In the special cases of Rafgn and Mamape the entire estates were expropriated and transferred to the workers). . 2. It is clear that the indirect effects of the LR were far more important than the direct. A review of business correspondence of the de la Piedra interests (owners of 19 rural properties) and interviews with the hacienda owners and workers indicate that decapitalization was a common result of the fear of expropriation. On the sugar estates, owners began recouping plots held by workers and other hacienda residents-(paying cash for crops and improvements) in order to prevent their expropriation under the law's Title XV. In other estates owners attempted to exnel colonos and put their lands under direct cultivation. Where colonos could not be removed and owners feared expropriation, decapitalization occurred, in the form of delayed maintenance and replacement of machinery and installations and reduction of the quality and/or size of - cattle herds. All of these indirect effects of the LR had negative effects .on production and employment. B. LR Under the 1969 Law 1-2. The sugar estates of Lambayeque were among the first to be affected under the'new law, in late June 1969. For several months the LB activities of the Ministry and ONDECOOP were concentrated almost entirely on the transformation of these haciendas into production coops. The sugar coops were recognized legally in June and October 1970. Other estates on the coast were not affected until 1970 or later, and their coops were not recognized as legal entities until much later. The haciendas of Cajamarca have been affected more recently, and given the pecularities of the department's agrarian structure -- colonato, many small and medium-sized properties, and widespread rental -- the LR process, 11.5 which makes rental illegal and promotes the collectivization of agriculture, is seen by large segments of the rural population of the department as a mixed blessing at best. The government's early emphasis on cooperativization of the sugar estates was based primarily on tolitical considerations. As one Ministry official noted to me, "We had very limited resources and wanted to make as big an impact as possible." In addition, the government saw cooperativization as a means of eliminating the power of both the "sugar barons" and the sugar unions. For several reasons the implementation of LR was simpler in the sugar estates than it was later in non-sugar areas: (1) The sugar operations were centrally managed, facilitating their takeover by government "interventores." (2) Workers were accustomed to wage labor and held no, or extremely small; individual plots, and thus diid not oppose collectivization. (3) Most estates were in good financial shape (the one glaring exception being Cayalti), and thus expropriation did not entail government subsidization. (4) The sugar businesses had not felt the threat of expropriation under the 1964 law, and thus had not decapitalized. (5) Being the first to be affected under the new law, their owners had not had time to dismantle their estates. (6) Most estates were unionized, and thus workers had experience with popular organizations (al- though little experience with cooperatives ter se). (T) The estates are all on the coast and can be easily reached by auto (end in some cases, by airplane). (8) Being very large operations, the sugar estates could more easily support the costs of LR activities (planners, cooperative courses, military overseers, visits from national and foreign experts and curiosity seekers). The experiences gained and lessons learned in the cooperativization of the sugar estates, however, were not often directly transferable to the smaller, more remote, less profitable, undercapitalized, non-unionized haciendas operated under variants of the colono system. A crucial point is that, given the gen- erally successful experiences in the sugar estates, LR personnel (especially ONDECOOP personnel) was convinced that collectivization was a generalizable solution, appropriate for all estates. This was later found not to be the case. The Case Reports for Espinal and Udima reflect unsuccessful Ministry and ONDECOOP attempts to force collectivization on an unwilling peasantry. The collectivization drive, coupled with expropriation of many properties smaller than 150 has, led to the political mobilization of small and medium sized farmers (certainly encouraged and in part financed by latifundists and other opponents of the military government). In mid-1973 the government felt it necessary to lerislate new measures promisin the inaffectability of small private farms operating within the (numerous and complex) stipulations of Peruvian agrari, legislation. Since that time a very substantiaL part of the Second Zonets manpower and resources has gone into the processing of "Certificados de In- afectablildad" for farmers not to be expropriated under the LR. Where land reform beneficiaries opposed the collectivization of estate operations (e.g., in Espinal and Udima) partial or interim solutions had to be w worked out. ii. 6- 3. Sugar production has not suffered from the reform process, although it does not seem to have been stimulated by it either. Production of other agricultural and livestock commodities appears to have fallen somewhat in certain cases during the period in which estate owners had no interest in maintaining production and the Ministry was unable to devote sufficient attention to technica2 and managerial assistance. Production has also suffered where LR beneficiaries opposed the collectivization plans : the government. In three of the four estates visited beneficiary support for the reform process was ambivalent or lacking and financial and managerial problems hampered productive activities. In the sugar estates, where beneficiaries were on the whole in agreement with the formation of production cools, social problems have stemmed from two major factors: (1) The government attempted to maintain control of the coops by appointing the majority of delegates to the Assemblies. (2) The majority of members are suspicious and jealous of the power of technical and administrative personnel ,within the coops (some are members, others are not; the majority worked in the sugar industry prior to the expropriation of the estates). These and other related problems led to a number of strikes and a high rate of turnover of technical-administrative personnel until early 1972 when one estate, Tumin, was "intervened" by government officials. Soon thereafter the government amended the coops' election procedures in ways-which guaranteed democratic election of worker representatives to coop bodies and reduced formal government intervention in coop decisionmaking. Since these measures were taken, social conflict within the coops has declined markedly. It has by no means disappeared entirely, however. T the case of Cayalt, for example, low pay and abysmal living conditions motivate the workforce to strike and expell managerial personnel, pushing the coop nearer yet to the brink of financial disaster. 4. Under the 1964 law LR beneficiaries were organized into precooperative institutions which functioned z.s intermediaries between the Bank and individual cultivators. In the past three years these credit pre-coops have been disbanded and the workers have been encouraged to join preduction coops. At first the Ministry and ONDECOOP insisted that they cease individual cultivation and allow their plots to be fused with the "demesne" lands of expropriated estates into large scale centrally directed cooperative enterprises. Later, faced with strong peasant opposition, the Ministry has had to leave the peasantsin possession of their lands. (Those with less than 5 has. become individual freeholders). No SAIS have been formed in this Zone and in no cases have landlords been allowed to retain ownership of.iparts of their estates; entire estates have been expropriated and transformed into production coops. To date. no Central Coopera- tives have been formed, although the Ministry plans to establish three -- one for each of three PIAR -- within the Lambayeque Valley: 11.7 PIAR Ferrenafe 12,000 has. irrigated 1 Central 6 CAPs 2 CASs 1 CC PIAR Lambayeque- 18,000 has. 'irrigated 1.Central Chiclayo 7 CAPs I CAS 1 CC PIAR Chongoyape 6,800 has. irrigated 3 CAPs In addition to the three Centrals, 16 CAPs, and three CASBto be formed in the valley, two existing CCs are to be restructured and four existing CASs are to become members of the Central. Within each PIAR a Service Cooperative is to be established to provide employment for the Valley's temporary or non-full-time farm workers who do not own land or belong to production coops. (To my know- ledge no progress has been made on this project to date.) The valley's three sugar coops are outside these PIARs and are members of the CECOAAP, which functions in Lima, 5. ONDECOOP played a more imDortant role in the process of cooperativization in the sugar complexes than it did in other estates. Soon after the intervention of these complexes in June 1969 cooperative-training courses for administrative candidates were initiated in Lima, and groups of "promoters" were sent to the estates to prepare estate residents for participation in their production coops (the technical aspects of estate management were handled largely by the Special Committee). In Limbayeque, two sugar complexes (Tuman and Cayalt') cooperativ- ezed within a year and adjudicated to worker-managed cooperatives on June 24, 1970; the other two complexes (Pomalca and Pucalg-) were adjudicated on October 3, 1970 (the second anniversary of the establishment of the present government). ONDECOOP's problems in the sugar complexes were many and eventually led to the expulsion of most ONDECOOP peo-le from the sugar estates, and to a drastic reduction in the institution's cooperativization program for non-sugar estates. Several of the factors responsible for ONDECOOP's problems in the sugar complexes are the following: (1) the urgency of the program (cooperativization within a year) meant that ONDECOOP employees had to be hastily selected and trained for their jobs. (2) ONDECOOP employed young, college-agedurban people with little or no Drevious contact with rural people. (3) the training material available at the time was based on 19th century principals of cooperation (e.g., equality of membership in ownership, management, and income) often inappropriate for the cooperativization process under way. (4) In its courses ONDECOOP treated these principals of cooperation as sacred rules, whereas other public sectors were more conservative and pragmatic in their approach. For these reasons, ONDECOOP people often dictated courses which were ill- prepared and couched in university jargon not understood by the sugar workers. Moreover, the cooperative principals espoused by ONDECOOP -- e.g., member equality -- were often practically unattainable in the context of the existing LR and cooperativization program. 'Workers were led to believe that they would not only determine the course of their cooperative's future, but that a new era of worker eauality was being ushered in. ODECOOP's capacitaci6n program was cut back sharply and its approach be- came less radical after a crisis wnich occurred in the sugar estate Tuman in June 1970. The ONDECOOP group in Tuman was among the most aggressive and radical in the country; its members had oromised the estate's workers that democratic electic would be held and pay rate equalization would occur. However, just before elections were held, the government announced a set of election rules which allowed workers to elect representatives to coop bodies only in inverse propor- tion to the coon's agrarian debt to the government. This meant that the vast majority of delegates' in the coops' Assemblies would be named by the govern- ment. (Only in Cayalti were the majority of delegates elected by workers). On the first anniversary of the pronouncement of the LR law, June 24, 1970, the estate Tum6n was formally adjudicated.to'the cooperative,.with a special ceremony attended by the Minister of Agriculture. The occasion-was less than festive, however, and-worker dissatisfaction became blatantly manifest during a dance in the evening when the lights were cut and rock throwing erupted. ONDECOOP "agitation" was denounced as a cause of the melee, and the ONDECOOP teams were-hastily bussed out of all the estates of Lambayeque. (I do not know whether or not they were removed from estates outside the department). In Pomalca, Pucalg and Tumin there were no such eruptioneof worker Lissatis- faction, and the social aspects of cooperativization proceeded rather smoothly. However, the government's electoral laws and the strong reaction to worker un- rest in Tumin were viewed as ominous threatSof direct state control. Union leaders, who had by and large supported the cooperativization process, became alienated from it by an electoral rule which prohibited union and political leade2 from holding coop offices. (This was not an issuein Tumin since no union existed in that estate.) After the crisis of June 1970, ONDECOOP lost prestige and power within the LR bureaucracy- which it was never able to recover. As a result, the Ministry was forced to take on greater responsibility for "social aspects of the reform process" -- preparing hacienda residents for participation in their cooperatives. ONDECOOP never played a significant role in the LR process in non-sugar estates. (Later, with the creation of SINAMOS, which absorbed what remained of ONDECOOP, part, but by no means all, of the burden for cooperative promotion and capaci- taci'n was removed from the Ministry). Another institution which has played an important role in the sugar complexes but not elsewhere, is the SAFCAP. The original "interventores" in the sugar complexes were military officers, and since that time military officials have been stationed in the complexes. Each complex has a local "military coordinator" under the jurisdiction of SAFCAP's regional and national offices. Formally, the SAFCAP system is a dependency of SINAMOSbut in practical terms its operations arl quite independent of the national SINAMOS bureaucracy. Local coordinators are Majors or Colonels, the regional director is a Colonel, the national head is a General. The national head of SAFCAP, whose office is in Chiclayo, is both the regional head of SINAMOS and General of the Military Division located in Lambayeque. Chiclayo's regional SAFCAP office has a large staff, including. specialists in capacitaci6n, social work, agronomy, factory operations, agrarian and social legislation-, auditing, accounting, and general administration. In addition to the Military Coordinator, SAFCAP maintains a group of civilians (generally young social scientists) in each sugar coops. The civilians give II.9 courses in cooperative princiPals and technical operational aspects -- e.g., accounting a:i the role of .ssei-bl- Delerates. '1he re rional coordi.ator stated that his office was still growing, and that he needed two new types of specialists; an "inspector" who could investigateand analyze any type of problems which arose in the complexes, and a political advisor who could analyze the political factors involved in these problems. Recently the SAFCAP's sphere of activities has expanded to include the CECOAAP. In the words of the regional coordinator, it was simply "too independ- ent" prior to this time. Another public office which carries out important functions for many of the Second Agrarian Zone's cooperatives is the Central Accounting Office, es- tablished in November 1971. After expropriation, many of the Zone's estates were left with insufficient personnel to carry out necessary accounting opera- tions adeouately, and their accounts soon became disorganized and behind schedule. In order to solve these problems and avoid the contracting of costly, profes- sional personnel in all the coops, the Ministry decided to create one central facility to manage the accounts of all small coops in the region (not the sugar coops). Of the three non-sugar estates visited in this Zone, two had their accounts done in the Central Accounting Office, and a third planned to contract. the services of this office in the near future. The accountants of most enterprises handled by the Office seem to be up to date and in good order. All participating coops use 3tandardized account schedules prepared by the .Ministry. The office personnel of coops visited were in general satisfied with the service, but noted that the accounts kept in these estates prior to the LR were more detailed than those now kept. In addition, the office fails to keep important production and cost statistics that were kept prior to the reform in many enterprises. II. PRINCIPAL PROBLEMS FACING THE LR PROCESS 1. In the coastal valleys of this Zone natural conditions are excellent, and while commodity prices remain high it seems clear that coop members will benefit significantly from profit redistribution under the LR. However, in less well endowed arees, where the haciendas were barely making profits prior to LR, beneficiaries derive fewer benefits from the land redistribution, and may in fact oppose the reform to the extent that it pressures them to give up individual cultivation and become laborers on large scale enterprises. In the upper ZaEa Valley, where settlement and cropping are tied up with progressive destruction of the region's productive capadity, LR offers little hope for estate residents. 2. Unemployment is problematical in most of this Zone, and is especially conspicuous in and around Chiclayo. To date, LR has produced no substantial effect on rural employment rates. If anything, cooperativization has led to a drop in employment of outside laborers. 3. Sugar estate owners and managers did not expect the LT to affect them, and they continued to invest and improve their productive facilities and methods right up to the declaration of the June 1969 law. Since cooperativization, no Ii.10 striking technological changes have occurred. In many non-sugar estates maintenance and investment were lacking for several years prior to expropriation, and production methods were often outdated; owners simply did not see the rationalefor spending money on enterprises which were likely to be expropriated. Thus in these estates there was much room for technical improvement. In the estates visite; however, there were no substantial improvements in production methods for a number of reasons:' In Espinal peasants opposed Ministry, ONDECOOP, and SNUAMOS pressure to collectivize production, and refused to hire a professional manager. In Udima the first manager left after making several enemies in both the estate and.ig the Ministry; the second manager was a liar and a drunk and never showed signs of technical or managerial com- petence; a third has just been hired. In Monteseco climatic and natural condi- tions have depressed production for several years; the Bank refuses to lend money for renovation of the coffee plantation, and short term credit is insuffic- ient to meet even the most essential operating costs. In all these cases, the LR process has encountered difficulties in maintaining .x-estates as viable production units, and has not yet been able to attack successfully the technical problems of diversifying production and increasing productivity levels. Lengthy and optimistic development plans have been drawn up for each of these coops, but implementation is lacking and no results are visible. 4. Financial problems are less visible in the sugar coops than in other coop& in the Zone. The main restraint on investment in these agro-industrial complexes seems to be indecision and the lack of "cooperative spirit" at the "second level.' (That is, the sugar coops do not cooperate effectively in investment projects). Two examples illustrate this point. (1) For a year representatives of the valley' sugar coops discussed the construction and operation of a Central Feedlot, and plans were drawn up (with the assistance of a German technician from the Tinajone Mission). The project was finally dropped, however, since the coops could not agree where to locate the feedlot, how it was to be operated, or how costs and earnings were to be distributed. (2) For several years coop officials have discussed the operation of a paper and cardboard factory in the valley, but again, the project has not come to fruition. (The ex-owners of the sugar estates claim that this project was initially theirs, that it was funded, and than construc-ion was about to begin at the time of the LR). Individual sugar coops are more able to innovate and invest than are the coops as a group. (Individual coops have established their own,feedlots, for example.) But indecision remains a problem, for two reasons: (1) No single person or very small group of persons can make decisions of great moment. These must be studied by Committees, and approved by the Administrative Council, the Delegates' Assemblyand/or the CECOAAP. (2) Coop members have-been hasty and severe in sanctioning technical-managerial personnel for inadequate performance; thus tecnicos hesitate to "define themselves" and take a leadership role in coop decisionmaking. As one observer noted, "Por anos el obrero vivia en un sistema en que el tecnico nunca tenia la culp. y todo castigo fue de frente abajo; siempre era el trabajador que sufria. Ahora el obrero sigue resentido y Quiere echar la culpa siempre al personal tecnico. No se Dermiten errores. No entienden o quieren entender que siempre, con cualesquier cambio hay errores." II. 11 On several occasions coop technicians have been summarily reprimanded or removed from their positions for alleged poor management. Consequently, they are now very cautious and hesitate to make important decisions. In the non-sugar coops visited, most new investment has taken the form of replacing equipment and refurbishing installations. Little attention has been paid-to new types of investments or diversification. In two cases cattle were purchased but pastures were not prepared, resulting in high rates of morbidity and mortality, 6., The Ministry and most -other public institutions participate only marginal- ly in the affairs of the sugar estates) since the sugar coops have their own tech- nicians and the special services of the CECOAAP they do not need technical assistance from the Ministry. ONDECOOP and SINAMOS have carried out important programs promoting cooperativism in the complexes, but with little member support. The sugar coops finance their operations through the CECOAAP. SAFCAP, on the other hand, plays a major role in the coops. SAFCAPs national office is in Chiclayo. A staff is also maintained in each sugar coop which both promotes member participation in coop affairs and keeps a close watch on coop performance and political developments. The regional head of SAFCAP noted in an interview that his office was in the process of increasing its staff in order to cope with the day-to-day problems of the sugar coops. In particular, he needed two new specialists: a professional investigator who could be sent to the coops to study a parti6ular problem as it arose, and a political expert who could analyze the political aspects of social developments within the coops. Recently SAFCAP's jurisdiction has been expanded to cover the activities of the CECOAAP, which was seen as "too powerful and independent." non-sugar coops deal primarily with the Ministry and the Bank. Lambayeque is predominantly coastal, and the Ministry's technicians are most qualified for providing technical advice to coastal farmers. They are not in a position to provide very useful assistance to coffee producers in the upper Zaia Valley or to cattle raisers in the highlands. Discussions with Bank officials indicate that they are clearly aware that certain coops are viable economic units, worthy of credit "on Bankers' terms," but others are not money-making enterprises, and need subsidization, not credit per se. Two of the four cases visited fall into this latter category. This, of course, puts the Bank in the uncomfortable position of determining, to a large extent, the future of these near-bankrupt coops and the wellbeing of their members. As one official noted, "As bankers we cannot give money to a coop if we feel that there is no way the coop will be able to pay it back after the harvest. But on the other hand Lima pressures us to attend these people. So we have to use our imaginations,. stall the coop leaders, fudge our figures, and try to find some way -- any way -- to give them credit, and then hope for a good year. This year in the case of Monteseco we were lucky; the price of coffee doubled." 7. The principal internal problems of the sugar coops result from their large size and the deep social cleavages inherited from The pre-reform period. In other coops, the existence of colonos is a crucial factor. Colonos universally oppose collectivization, and a long battle, whether won by the Ministry and SINAMOS (unusual) or by the colonos, gets the coop off on bad 11.12 footing. In these cases coop leadership finds itself in the nearly impossible position of representing (or being denounced for representing) the state in an unholy campaign against the peasantry. Demoralization, reduced work discipline-, and corruption are likely consequences. 8. Workers with union leadership experience Ere natural candidates for both coop leadership positions and opposition leadership. In Lambayeque ex-union leaders have played both types of roles. However, little evidence indicates that these men play partisan roles intheir leadership positions. Moreover, while politics certainly enters into disputes which shake the coops. it does not appear to be a central issue or source of dispute. The. important issues usually involve pay rates and corruption in cbop leadership or management. III.1 AGRARIAN ZONE TI- AzCASH--LA LIBERTAD I. HISTORICAL AD NATURAL SETTING A. Natural Setting 1. The Third Agrarian Zone is one of Peru's largest and most important. Under its jurisdiction fall the intensively cultivated coastal valley lands of La Libertad and Ancash, and the highlands of these 2 departments. 2. Ecologically this Agrarian Zone is probably more complex than any other. However, since the 2 cases studied both fall within the coastal Santa Valley, just north of the city of Chimbote, I will restrict my remarks primarily to that reRion. Santa is a small coastal valley irri-ated by an unpredictable river of the same name. Until recently the bulk of its lands Tere not cultivated, and its area could still be greatly increased through irrigation works. Growing conditions are excellent for sugar, cotton, and a wide variety of fruits and vegetables. Cultivation patterns are determined more by economic than eco- logical factors. B. Socio-cultural Setting 1. The total population of Ancash Department is 727,000. The, population of La Libertad is 306,000. The major urban centers of this Zone include Trujillo (242,000), Huaraz (30,000) and Chimbote (159,000). Trujillo is Peru's third largest city; Huaraz is the principal population center in the highlands of Ancash; Chimbote is the fishing and steel capital of the country, and the fastest-growing major population center in recent decades. M2. Mirgtion from the highlands' to the coast has been massive. In the early 20th century migrants streamed to the sugar estates of the Chicama Valley (north of Trujillo) and Nepena (south of Chimbote). Later in the century, spurred by Peru's fishing boom, migrants paths shifted increasingly ,toward Chimbote., The growth of .Chimbote is central to the recent agrarian history of the, S.anta.Valley, for it provided 'the valley's agriculturalists with,an entirely new and rapidly growing market for foodstuffs. 3. The highlands of La Libertad and Acash are,predominantLy indigenous, and by comparison with the rest of Peru, relatively backward. Haciendas and peasant.communities dominate the agrarian structure, and both cling stubbornly to seemliP!ly ,apachronistic ways of- life And production (particularly in Ancash), The coastal valleys are more typically mestizo in character, but in the case of valleys such as Santa, the agrarian structure reflects a way of life (family farming) which many policy makers either fail to understand, would like to ignore,.or hope to.liquidate through agrarian reform. The only peasant com- munity in the Santa Valley was the fishing village, Chimbote, which is now a 111.2 sprawling urban center. 4-5. A cataclysmic event which affected the lives of the entire population of this area was the earthquake of 1970, which destroyed much of the cities of Chimbote and Huaraz and disrupted agriculture, especially on the coast, by ruining irrigation systems, mills)and other productive instalations, and housing. The self-reliant peasant farmers of the sierra recovered rapidly from the devastating blow, but the estates of the coast (now cooperatives) have yet to rebuild completely and recover from their losses. Aside from its direct impact on lives and property, the earthquake has had farreaching social, political, and even psychological consequences. Many of these are the result of the ways in which disaster relief and reconstruction have been organized. A special government agency, known as CRYRZA was created to plan and co- ordinate these activities and all development-related activities in the affected zone. A private, Lima based institution known as DESCO, funded by charitable institutions, was contracted by the government to collaborate with CRYRZA in the elaboration of a comprehensive reconstruction and development plan for the Santa Valley. The massive CRYRZA-DESCO plan -- Peru's first PID -- includes the following 6 programs: 1. Agrarian reform (delineation and implementation of the PIAR) 2. Cooperative develoDment 3. Agricultural and livestock development 4. Infrastructure 5. Water resources.development 6. Education and "capacitacion" .In mid-1972 DESCO was charged with the implementation of the plan's (rural) coop development program. This involved 2 main activities: (1) establishing and consolidating a Central Coop (Peru's first); (2) providing technical as- sistance and cooperative education for the Santa Valley's 8 production coops (then in process of formation), all of which were to become members of the Central Cooperative. Since that time, DESCO has maintained a staff of over 20 technicians in the Valley. The majority of these employees work with the Central; one full time employee.is stationed.-in each-production,coop. (The..valley' production coops .must, by law, be members of the Central. DESCO does not work with service coops, and no service coops are affiliated with the Central). C. Pre-reform.Agrarian. Structure - 2. Highland estates are typically organized around some variant of the qolono system, with resident laborers working part-time under the hacienda ad- ministration and part-time on their own plots and grazing their own animals. Fewer ,coastal- haciendas employ colonos; most are operated directly by a central administration employing wage laborers... But in the Santa Valley and other coastal valleys settled recently or pqorly endowed with natural resources (particularly lacking a steady supply of irrigation water) many haciendas were operated by colonos and/or medium-sized rentors (5-50 has.) 111.3 In Santa the majority of estates were at least partially occupied by colonos. In areas settled recently or near Chimbote the portion of estate land occupied by colonos was greatest. 1. The principal crops gorwn in the Santa Valley are as follows: Corn 5,585 has. Cotton 1,916 " Rice 922 Wheat 614 Alfalfa 450 Beans 366 Sugar cane 238 Industrial crops such as cotton and sugar cane are grown almost exclusively on large estates operated by central administrations. Foodcrops and livestock are produced primarily by smallholders. Cotton is now being grown in the valley for the first time in several years. A small farmer noted to me that many small producers fail to seed cotton because of disease and pest problems. He also noted that small producers specialize in truckcrops because of their absolute advantage in such labor intensive and "management-intensive" crops, and the difficulty encountered by large estates in marketing large volumes of perishable fruits and vegetables. 4. A conversation with an unusually perceptive and analytical small farmer brought out the following point of view: "It is not that small farms employ much moe labor than large ones, per unit of production, but that small farmers use the labor they employ (either family or hired labor) much better than do large enterprises." That is, small farms are "management intensive." II. THE LR PROCESS A. Impact of the 1964 Law In this Zone,as in most, the direct impact of the law (expropriation) was marginal. A few peasants received land under the Title XV provisions of the law; no estates were expropriated in toto. The indirect effects of the law are especially important for understanding the current land reform process in the Santa Valley. The 1964 LR law defined "agrarian reform" as simply land redistribution in favor of the peasantry.. Thus, peasants expected LR to parcel hacienda lands among individual recipients. When Ministry, ONDECOOP, DESCO, and finally SINAMDS officials pressed for the col- lectivization of the valley's agriculture under the new law, the bulk of the rural population felt defrauded, and many refused to join production coops. B. LR Under the 1969 Law 1. The sugar estates of the Chicama and Nepe.a valleys were among the first estates to be expropriated under the new law, in June 1969. The remaining coastal and highland latifundia came under reform much later. Actions in much of the area were tied to plans for the reconstruction and development of the area devastated by the earthquake of 1970; this was particularly true in the Santa Valley. 111.4 2. Government and DESCO planners hoped to collectivize the bulk of the Santa Valley's agriculture. A senior member of the DESCO team cited the fol- lowing 6 points as basic to their development policy: 1. Organize agriculture in production cooperatives 2. Achieve full employment 3. Increase "indirect incomes" (e.g., housing, health care, education) relative to cash wages and salaries 4. Redistribute income via a Central Cooperative at the PIAR level 5. Create new enterprises and opportunities, via the PID 6. Close the "economic cycle" by processing and industrializing agricultural commodities and raw materials produced in the zone, via the PID Points 1-4. all depend upon the collectivization of agriculture,and collec- tivization is one of the most important goals stated in early rural plans (i.e., 1970-71). But in fact, it has been impossible to collectivize all of the valley's agriculture, or even the bulk of it. Independent small farmers have as yet been untouched by the LR process, and they occupy a substantial part of the arable land area. Moreover, hacienda"colonos have opposed the fusion of their small plots into'larger production coops. In at least one case, where nearly the entire estate was occupied by colonos (the hacienda "Santa Clemencia"), the colonos presented such staunch opposition to collectivization that early plans to form a production coop had to be abandoned entirely. 3. The principal social and economic dislocations produced by the LR in the Santa Valley involve colonos and their opposition to collectivization. In the partidular case of the hacienda Santa Clemencia (See Case Study Report on the CAS La Campina), which was occupied entirely by colonos and rentors, production declined and livestock numbers fell precipitously during 1971 and 1972, when the Ministry and SINAMOS were attempting to force workers to give up their- plots and form a production coop. 4. Once it became clear that collectivization would be impossible in the immediate future in: areas of peasant farming; the Ministry toyed with the idea of forming Service Cooperatives in which members would continue farming individ- ually, but would not be the owners of their lands. Instead,,a SAIS (comprising 3 such coops) would be the owner. Later in the LR process the SAIS concept was abandoned and it was decided to adjudicate the lands held by colonos (in, e.g., Santa Clemencia) to these individuals as private property, and form a CAS to pro- vide vital social and economic services to their members. To date 4 such CASs have been formed. The valley's estates which were not occupied in large part by colonos and where colonos did not staunchly oppose the formationd of production coops, have been transformed into CAPs. In most cases these do not function in strict accordance with agrarian legislation, which reauires.that all productive land and capital be held and utilized collectively. Instead, colonos continue to farm the plots they held' prior to the LR. It is rumored that in-some cases they have extended their grasp over former demesne lands of the estates. In Santa, Peru's first Central Coop at the level of the PIAR was formed. (In Puno a loosely-defined Regional Central which functions at the departmental, 111.5 not PIAR, level was established by ONDECOOP prior to the founding of the Santa Central). The Santa Central initiated its activities in October 1972 under the direct management of DESCO, providing accounting services to its 8 member CAPs. Since then the Central has broadened its activities into purchasing of inputs and commercialization of output. Plans for the operation of a machine repair- shop and livestock feedlot, and provision of credit to the coops are on the drawing board. 5. Due to the spe,cial circumstances created by the earthquake disaster of 1970, a number of public and semi-public institutions operate in this region which are not found in other parts of the country. CRYPA,the government' s spe- cial earthquake reconstruction and development agency, coordinates the activities of all public and private institutions involved in these sorts of activities in the area. DESCO, a non-governmental institution carrying out development research and projects, works with both the Santa Valley's coops and the Central. AID, Caritas, and several other institutions provide financing and in some cases technical assistance for development projects in the striken area. The Ministry of Housing, SINAMOS, and other public agencies have special programs in the area. According to Ministry and DESCO officials, the plethora of institutions operating in the Santa Valley has several negative consequences. First, there is no clear division of functions between them. This results in duplication of efforts and confusion. This problem seems especially critical in the area of peasant cooperative capacitacion, where not only the Ministry and SINPADS but DESCO intervene. A Ministry official stated that he had pulled his capacitacion personnel out of the field and given them other wrrk because (1) DESCO's resident "promotores" had seen the Ministry people as unwelcome tres- passers in DESCO's territory, and (2) coop members complained that DESCO and Ministry people presented conflicting information and interpretations of government policy. Second, the existence of many public and private agencies in the area,, each attempting to justify its presence and competing for a place in the lucra- tive limelight, strains inter-agency relations and makes coordination of their activities difficult. Third, the lack of a clear deliniation of responsibilities, has led to problems in.placing responsibility for actions taken or not taken. Fourth, in the special case of DESCO, which is the principal agency res- ponsible for rural cooperative develorment, lack of wholehearted government support severely hampers its onerations. This points up the degree to which LR activities are tied to public sector activities in related areas. A coop system simply cannot be established as an isolated "development project;" generalized support from the public sector is necessary. The following 2 examples reflect this: First, DESCO has been confronted with the sobering fact that the BFA cannot extend loans to Central Coops, since no such institutions are contemplated by its internal operating rules. The central cannot obtain funding from private bankers either, thus it has been forced to rely exclusively upon funds received from DESCO and from charitable institutions. For lack of credit funds have not 111.6 been available for the purchase of heavy equipment, the timely purchase of inputs, or the acquisition of heavy machinery -- 3 projects seen as crucial for the oper- ation of the Central. Also for obvious reasons, the Central has been unable to centralize its members' credit operations. A different sort of consequence of the lack of BFA financing is the fostering of a "charity mentality" on the part of the valley's coop members. Since the coops have received the Central's services free (small charges have been levied for accounting and commercializa- tion services, but these do not cover expenses) they now oppose the withdrawal of outside funding and management, which would place the burden for the Central's operation upon its members. (Important questions to ask at this juncture are: Why do members perceive the Central as a '"burden?" Could the Central be a profitable concern in the short run? Could it ever pay its way? Does some sort of "infant institution" argument apply which indicates the need for govern- ment control or subsidization for a period of time?") The second example of inadequate state support involves cooperative capacita- cion activities. The government operates 2 agencies involved in this work: CENCIRA and SINAMOS. (Peru's Ministry of Education does not participate in this area). However, interviews with DESCO employees working in their valley- wide capacitacion program indicate that they feel isolated in their efforts and lacking in support from these national institutions,which have a comparat've advantage (due to economies of scale) in the preparation of didactic materials. Moreover, they complain of poor coordination between their own efforts and those of public agencies, and institutional jealousies and ill will on the part of the latter. A fifth and final problem related to inter-institutional collaboration and coordination relates to the special role of CRYRZA. (this list could be extended, but for lack of time). All development-related projects must be reviewed and approved by this agency, which has its offices in the highland town of Huaraz. Consequently many projects which DESCO or the Central has plan- ned and even financed cannot be brought to fruition until they have received the bureaucratic go-ahead from Huaraz. According to DESCO officials, this is no simple matter -- drafting,numerous project proposals, bearing travel expenses, politicking, detail mongering, and the patience of a saint are all required. II. PRINCIPAL PROBLEMS FACING THE LR PROCESS 4. A severe problem facing the entire valley is the high cost of recovery from the earthquake of 1970, compounded by the floods of 1972. The most visible manifestation of the destruction is the sorry state of housing, but the valley's irriration system was also damaged extensively by the floods and resultant silting. Consequently crops were lost and high costs were incurred in channel cleaning and repair. The newly-formed coops are thus burdened heavily by disaster-related debts, and-less able than they otherwise would be to contribute to the financing of the Central. 7. In Santa, more than in other areas, the public sector is guilty of promising too much and delivering too little. Inter-institutional rivalries and profiteering hamper collaboration and coordination of development efforts and turn exDectant LR beneficiaries into synical critics of the government and charity ripQff artists in both public and private institutions. TII.7 8. For a number of reasons coop members are ambivalent in their support of the coops, and the coops are ambivalent in their support of the Central. The primary reason for lack of more wholehearted member support of the coops is the prevalence of individual plots and livestock within them. Thus, members derive substantial incomes from non-coop sources, have Cgood reason to slack on the cooperative job and spend more time and effort on their own production, and fear the fusion of their plots into larger production coops. As a Ministry employee noted, Landholding has always been the goal of these people--the source of income, employment, and security. While many workers have small, poor landholding-, and would most likely benefit from the pooling of land in cooperative farms, these smallholders are greatly influenced by larger farmers who celebrate the virtues of independent farming and damn collectivization. The coops withold unconditional support from their Central for several reasons. First, coop technicians tend to be jealous of powers delegated to or assumed by (either in fact or in theory) the managers of the Central. Second, they were forced to join the Central, under clauses written into the land trans- fer documents prepared by the government. Third, coop members are skeptical of new coop institutions in general, and particularly of those far removed from their control and vigilance. Fourth, coop members see the Central as an alien institution managed and financed by outsiders. Fifth, they are skeptical of the Central's ability to provide services to the coops at a saving. Sixth, they oppose the Central's attempt to channel funds from rich to poor coops (within the PIAR) and from the coops to other sectors of the economy (via PID). According to a high-ranking DESCO official, this latter point is the principal focus of discontent. 9. It is often said that the valley is highly politicised. My observations indicate that ideology played a decidedly secondary role after that of pover and the issues of income and wealth distribution. IV. ISSUES (For both the Second and. Third Agrarian Zones) A. Land Tenure and Labor Systems 1. The array of pre-reform land tenure and labor systems encountered in the Second and Third Agrarian Zones is the most diverse encountered anywhere in Peru. The sugar complexes employed the most highly sophisticated production methods and had the most complex planning and operational structures of any Peruvian estates. They operated large factories (the sugar mills) and cultivated thousands of hectares of sugar canG, producing sugar year around at yields unheard-of in most other countries. In contrast, some of the haciendas in the highlands of La Libertad, Ancash, and Cajamarca were among the poorest organized and least productive in the country. orkers on the sugar estates were exclusively wage laborers highland workers were sharecroppers or labor tenants. The nature of pre-reform labor-tenure institutions is an important determinant of the viabilit-r of alternative post-reform cooperative institutions. Prior to the in-plementation of the 1969 LE law rural cooperatives were of only marginal importance in the Second and Third Zones, as was the case elsewhere iIi.8 in Peru. The few service coops that existed had been formed by SIPA agents or Peace Corps volunteers in the 1960s. nany of these were comprised of benefici- aries of the 1964 LR law. In general these coops were not dynamic, independent units with strong member suvoort, but flimsy institutions performing marginal social and economic functions and having short life spans. In most cases formal governing bodies met infrequently and decisions were made by coop officials or outsiders (e.g., linistry officials) on an ad hoc basis. Few of these service coops survived or showed signs of life at the time of =y field work in this zone (1970-72). 2. Production cooperatives function best where estates were organized as wage-labor enterprises prior to the reform. Thus, the estates which the govern- ment expropriated first -- the sugar complexes -- were the most easily and success- fully cooperativized. Given their rapid success in the sugar complexes, many agrarian reform officials expected cooperativization to be feasible throughout the country. When the reform moved from the sugar complexes to other areas, however, these officials quickly became aware of the fact that very special conditions were responsible for the relative success of cooperativization in the sugar complexes. Cases in both the Second and the Third Zones indicate why it is unreasonable to expect hacienda colonos to give up their plots of land voluntarily in order to farm collectively. In many lines of production economies of scale are un- important. Moreover, cooperative institutions often function very poorly in the absence of adequate managerial personnel and-sufficient member support. Of course, the colonos who have most land and livestock oppose collectivization most staunchly and vociferously. In all cases where the government has attempted to impose collectivization on peasant tillers it has failed. In these cases production and investment fell and the peasants began to see the LR process as a threat to their incomes, wealth, and independence. In general they continued to support the national government, and particularly the president, General Velasco, but they damned local officials for inappropriate implementation of agrarian reform policies. Peasant opposition to collectivization has elicited diverse reactions from the reform agencies (in particular from the Ministry and SINAMOS). In most cases opposition has delayed the LR process while government officials reconsidered their positions and attempted to convince LR beneficiaries of the advisability of collectivization. In some cases the government has formed production coopera- tives even though many members continued to cultivate and raise livestock indi- vidually. In these cases land was adjudicated to the peasant group under the condition that "if, at some time in the future, the cooperative needs land cur- rently occupied by coop members, the members must relinquish their plots to the cooperative." In a very few cases the government has given up trying to form production coops and has parceled estates among individual LR beneficiaries (see Case Report No. 5). The cases in these two Agrarian Zones and in others indicate that peasants generally oppose the fusion of estates into larger production cooperatives, but can be convinced where economies of scale are present. Economic interests are again crucial here. Workers on relatively poor estates generally favor fusion with more profitable estates: workers on profitable estates generally oppose III.9 fusion with poorer estates. Colonos on all estates are generally suspicious of any form of cooperative production, and they onpose the fusion of estates where this may threaten, their individual tenure rights. The case of Monteseco and Tau- lis (Case No. 2) is classic -- The workers of the near-bankrupt coffee coopera- tive Monteseco agree with the coop's managers and Ministry officials that fusion with Taul s is the most appropriate way to increase the coop's land base and to forestall bankruptcy. The residents of Taulis, who farm individually and have higher incomes than their neighbors in Montesecoyoprose fusion adamantly. Where fusion brings benefits to all groups concerned, as in Labayeque's rice coop J.C. Mariateguue (no Case Report) LF beneficiaries are likely to be wary at first but easily convinced that fusion is the best course. Since very few service coops (CAS) have been formed under the current LR law we can say very little about their performance and viability. The only CAs visited, La Campiaa (Case 1,o. 5), appears..to be a dynamic enterprise capable of fomenting both intensification and diversification of its members' production. It is clear that La Campifa's leaders "want to prove something," namely that their CAB is "better" than the neighboring CAPs. To date Ministry and Bank officials seem to agree that the CAs can play a positive role in smallholder areas. It is very unfortunate that Peru's first Central Coop at the PIAR level is the Central Santa. The physical destruction produced by the 1970 earthquake left the CAPs of the Santa Valley in very poor financial shape. The flood of charity to the zone has led coop members to expect the help of outsiders. The Central Coop was created by "benevolent outsiders" -- a research and training institution from Lima (DESCO), funded by charitable institutions. The CAPs are, of course, grateful for this help, but they have participated only marginally in the establishment,funding, and management of the Central, and are now both hesitant and unprepared to take on the responsibility for operating the Central. The CAPs hesitancy to take on full responsibility for operation of the Central is based primarily on economic considerations. DESCO has carried out some very expensive programs, such as capacitaci6n, which the coops see no way of continuing. DESCO also pays the entire staff of the Central, and the coops dread the process of hiring new technicians and paying their salaries. To date the services of the Central have been provided free to the cooperatives. These coops are not wealthy, and they fear the high costs of operating the Central. Why should they ,want to take on the responsibility for managing and supporting the Central eco- nomically? According to government plans Central Cooperatives will fulfill important functions in Peru's new agrarian structure, But the experience of the Central Santa indicatesthat potential economies of scale in delivery, marketing, and service,activities can be more than offset by poor management;inadequate support from public institutions, lack of member support, and sabotage from the private sector. The concept of the Central Cooperative is a new one which must be "sold" to the members and staff of individual coops. To be convinced of the value of "higher-level integration" cooperatives must see concrete benefits. And for benefits to be forthcoming, the state must provide dynamic, flexible support to the new Centrals. Many of the problems of th Central Santa derive from the fact that it was established by a non-governmental institution which cannot demand (and does not have) the full support of the Ministry, the Bank, and other public agencies. In making a non-governmental institution responsible for the creation of the Central, the state made a serious error. III.10 3. Initially the government attempted to create "pure" production coops (i.e. with no individual production) where they were not entirely appropriate. In the sugar complexes the pure model was consistent with pre-reform labor and land tenure institutions; but as the cases of Espinal, udima, and La Campina show, production coops are opposed by labor tenants and sharecroppers, and insistence upon collectivization has negative social and economic effects. Over time the government has shown considerable flexibility in yielding to peasant pressure for the protection of individual cultivation and grazing rights. But reform agencies continue to press for colledtivization and the forma- tion of production units which are larger than those which the peasants would form themselves. Two fundamental reasons for this fact are the following: (1) The government is ideologically committed to collectivization, and any drift in the direction of small-scale or individual production makes officials vulnerable to claims that they are moving rightward. in their policies. (2) Large-scale units are more nearly self-sufficient in terms of technical and service personnel than are small units and thus help reduce the burden of technical assistance now shouldered by the Ministry. B. Economic Issues 1. Section IV.B.l. of the Zonal Report for Cuzco presents a more detailed discussion of economies of scale (ES) than will be presented here. In this section two special aspects will be discussed: (1) the special characteristics of the Peruvian coast and their impact on the ES arguemnt; (2) dynamic aspects of ES. Natural conditions on the coast are far less variable than they are in the highlands, both in spatial and temporal terms. Within the irrigated oases of the principal river valleys soil conditions and ecology vary far less between points than they do between points in the highlands. Seasonality and the risks of natural disaster (drought, frost, flood) are also far less important on the coast than in the highlands. Moreover, irrigation allows managers to control cultiva- tion cycles to a much greater extent on the coast than in the highlands -- they can decide not only when to olant, but also when to mature the crop. Cultivation in any one field must follow a biologically determined sequence of operations, but the cycle need not be initiated in all fields at the same time. Seedbed pre- paration in one field can coincide with seeding in another, maturation in a third field and harvesting in a fourth. (Certain crops, such as cotton must be seeded at particular times of the year but no estates produce only cotton -- by law, only 60 percent of any estate can be under cotton). The unimportance of variability in natural conditions and the potential for managerial control over production processes favor large-scale production. How- ever not all crops are grown on a large scale. Sugar cane is the most important large plantation crop; cotton is the next most important. Some cane is, and always has been, grown on a small scale. In the Lambayeque Valley small cane cultivators in the peasant community Monseff border on the immense agro-industrial complex Pomalca. However production of cane destined for the production of granula½id sugar has been carried out on an increasingly large scale since the latter part of the nineteenth century. Two principal reasons account for this fact: (1) ES in the manufacturing of granulated sugar; (2) ES in financial and marketing operations. In order to compete on the world market, Peruvian sugar III.11 producers imported large-scale modern equipment and kept their factories operating at near full capacity. in order to guarantee an adequate, steady supply of raw cane they needed control over land.. Small producers were both less efficient and less aole to get credit during periods of crisis (e.g., the 1930s), and sold out to the few remaining large producers. The small producers of Monsefd sell to small millers with low overhead costs, who in turn market unrefined juice ("miel") to small-scale local producers of alcoholic beverages ("chicha"). Rice and coffee are both produced by smallholders as well .as large estates largely because these commodities can be easily trans- ported and stored prior to processing. Sugar cane .s extremely bulky and must be processed immediately after cutting. Cotton is generally not produced on small holdings because of the problems of disease and pest control. Truck crops are grown primarily by smallholders who stagger their planting dates and market their crops on a small scale, Large holders avoid truck crops because of their labor intensity and problems incurred in marketing them on a large scale. Many (not all) of the advantages of large and small producers outlined in the preceeding two paragraphs are relative, not absolute. Small producers may be able tc produce more cotton per hectare than large producers (according to a Ministry official) but have a greater advantage in truck crop production. On the other hand large producers have an absolute advantage in granulated sugar produc- tion. As to the dynamic aspects of ES, there seem to be few inherent advantages in favor of any size group. Advantages for specific crops often depend upon the nature of non-agricultural institutional arrangements -- e.g., the adequacy of delivery, marketing, and technical services for different size groups -- and these change over time. Where smallholders are isolated and ignorant of techni- cal improvements originating outside their region, they cannot be expected to innovate or adopt modern methods agressively. Under these conditions an estate managed by a professional who keepsabreast of technical and market devel- opments elsewhere is likely to out produce and out-market small farmers in his area. One of the reasons why Ministry officials press for the formation of large cooperative production units is that these enterprises, staffed by competent technicians, facilitate the spread of new production methods. Dealing with thousands of unorganized small producers is a formidable job for the Ministry. Technical change could be brought about more quickly if these smallholders were organized into service coops, but minifundists are hesitant to hire adequate managers for the CAS. Thus much of the burden for technical assistance remains with the Ministry. Where large production coops are formed)the Ministry can convince (often at great pains) the CAPs to hire professionals and thus trans- fer much of the burden for technical assistance to the enterprises themselves. My field work in several parts of the country indicate that small farmers are often rapid adopters of improved methods where these do not require large scale operations (usually the case). However, cultural barriers are important imPedi- ments -o progress -- small farmers are not rapid adopters where they do not have acce. `- information, inputs, or marlIets. Thus, we can expect small producers to iLp- -e their performance relative to large producers (including production cooper tes) over time, as they become better educated and incorporated into the market eQc;nomy. 111.12 2. Since the reform,the more profitable production units (which were also the more profitable enterprises prior to the reform) have continued to have bet- ter access to information, inputs, and markets than the poorer units. A Bank official explained the distribution of credit to me in the following way: "We give credit to profitable enterprises with a minimum of red tape, but we must be very careful with poor enterprises. After all we are banking institutions, not a charity." Pomalca has few problems in acquiring credit, machinery, parts, fuel, etc. Monteseco, on the other hand, has to literally beg the Bank for credit, and is continually stalled by bureaucratic tactics. Thus, in this important respect lending policies are non-developmental. The dis- tribution of technical assistance is roughly the same. The largest and most profitable reform enterprises (the sugar complexes) are self-sufficient in technical terms. The poorest enterprises were poor before the reform in large part because few technical improvements could improve their performacE markedly. In Monteseco and Udima (coffee and cattle) for example, the Ministry has little good technical advice to offer. In general, it appears that -the reform has done relatively little to alter the pre-reform tendency for "the rich to get richer and the poor to get poorer." 3. As argued above, given present conditions technical change seems to be scale-oriented. This is especially true of labor-saving mechanization. Prior to the reform haciendas ensured technical change by-requiring their colonos to use s-oecific inputs. The Ministry's supervised credit program performs the same function. In some respects, however, the lending policies of the Bank and the Ministry's assistance seem less suited to the needs of colonos than the old hacienda system! For example, the Bank lends money only for "directly productive purposes;" the hacienda provided emergency loans for, e.g., the illness or death of a family member. The Bank also restricts its loans for rice production to a single crop each year. The haciendas provided credit for two crops. (On these points see the Case Report fn- Espinal). 4. On most of the estates visited the trend in pre-reform employment was downward. The reform has greatly diminished this trend, but there is little evidence of a marked increase in employment. A principal new source of employ- ment has been the initiation of social investment projects (community halls, schools, etc.) in many cooperatives. These projects, however, cannot last for ever, in large part because of the strain they place on the financial capacities of the reform enterprises. In no cases visited in these two Zones had coops devised means of employing member labor without paying cash wages. 5. The reform has increased workers' incomes under two very different sets of circumstances: (1) on wage labor estates which earned high rates of profit prior to the reform (e.g., Pomalca); (2) on traditional haciendas where the reform has eliminated rental payments by the colonos to the hacendado (e.g., Udima). Where estates were unprofitable prior to the reform income increases in the short run are small. (In the cases of Monteseco real income is falling over time). In such cases improvements in management an- technology are nec- essary for marked improvements in incomes. To date little progress has been made this front. Cropping is not intensified as a result of the division of :. extensively farmed estates into labor-intensive minifundia (as was the a in Mexico and Bolivia) since the Peruvian reform does not parcel he.elan-,lands. 111.13 6. Of the various cases visited, the one nost vulnerable to external forces seems to be Monteseco. In the last wear this coffee olantation has been favored by the sharp rise in coffee prices, but the long-run productivity of the enter-crise (and, indeed, of all coffee producers in this region) is threa- tened by the long-term degeneration of the ecology. Real wages have fallen in recent years, workers are demoralized, and individual production is increas- ing relative to cooperative production. The conflict with Taulis over fusion of the tvo estates into a single -roduction coop -ay deal a death blow to the cocoerative in Monteseco. Some workers state that if Taulls' workers are not forced to join the cooperativei,Monteseco's workers will demand parcelization of their own estate. In Esoinal the production cooperative does no- have the support of a large share of its members, but it seems likely that at least a core of the ex- hacienda's lands will continue to be farmed collectively -- especially if the Ministry convinces the coop to expand the area seeded to sugar cane. Even if the cooo fails the members will not suffer notably, since the economies of scale in rice production in this part of the ZaEa River Valley are _elatively unim- cortant. The Central Cooperative of the Santa Valley is far from being an economically sound enterprise. The Central is staffed by DESCO employees and operates largely on funds from charitable institutions. Its members are reluctant to take on either financial or managerial responsibility for the Central, feeling that some of its functions are not entirely necessary and that others could be better performed by the individual cooperatives, by the state, or by private enterprises. The Central's charter calls for each member cooperative to turn over its non-distributable funds (i.e., the reserve, investment, education, social -revension, and cooperative development funds) to the Central, which would, in turn, redistribute these between the member coo-os according to need and development criteria. The members, however, have not complied with this rule, threatening one cf the principal functions of the Central. It is clear that for the Central to be a viable cooperative institution, with active member support and control, the government must collaborate with the production coops of the Santa Valley in determining what functions the Central will have and how these are to be Derformed. The state must then proiide sufficient technical, managerial, and financial assistance to ensure the consolidation of the Central as a locally controlled enterprise unit. C. Management and Administration 1 All but two of the reform enterorises visited in the Second and Third Agrarian Zones employed professional managers -- the CAS La CampiFa and the troubled CAP El Espinal did not. In Pomalca and the Central Santa several technicians were employed on a full-time basis, in each of the other enterprises only one or two tecnicos vera emplloyed. ?,e menbers of the CAS La Campifa seemed actively interested in the manage- ment their cooperative. In production coops member interest was slight :onos continued in possession of small carcels of land (Espinal and U,d En the sugar coop Pomalca members dap,nd upon the cooperative for ne*. --1 their cash income, but the large size of the enterprise (over 3,000 memibers) discourages active member narticipaion in decision making. III.14 Until the time of =r visit member participation in the management of the Central Santa was slight. Both hinistry officials and outside observers re- marked that "the Central is managed by DESCO." 2. If the government has exercised excessive control over any aspect of the reform Drocess it is in the design of adjudication models. Officials invariably confront potential LR beneficiaries with an aleady-prepared adjudication model. They explain the model to the workers, emphasizing its strong points and avoiding discussion of its weak points, and then exhort the workers to vote in favor of its adoption. If the workers reject the proposed adjudication model the government official has failed at his job. Most Ministry officials are convinced that "they know what is best for the peasnatry, and they consider rejection of their ideas as the result of ignorance on the part of the peasantry or political agitation on the part of anti-government (leftist or rightist) groups. My case studies indicate, however, that quite often rural workers have good economic reasons for opposing collectivization. In traditional haciendas rejection of collective adjudication models is both spontaneous and widespread. Often the paternalistic attitude of the Ministry and other government agencies is combined with neglect. The government makes promises to the peasantry which it does not keep. In Espinal, for esample, a military officer promised that if the residents made adobes SINAMOS would provide the plan and technical advice for buidling a school. The adobes were made but no plan arrived, and they were finally ruined by the winter rains; the next year adobes were made again, but again the plan did not arrive, and for the second time the adobes were ruined by the winter rains. More than one coop member noted to me that they would have been better off without the "help" of the government. 4. In the sugar complexes formal institutions exist for controlling and supervising the performance of coop bodies and individual officials. The Vigilance Councils meet regularly and generally contract an auditor periodically to check the accounts of the coop. In addition, SINAMOS and SAFCAP pay close attention to the performance of the sugar CAPS. Outside the sugar complexes the operation of formal supervisory and control bodies (both those internal and external to the coops) is far less adequate. Vigilance Councils meet irregularly, and government offices intervene rarely. Where member support is strong informal mechani-s can take the place of formal institutions. But where member support is weE.:, lack of formal control and supervisory institutions jeopardizes the viab>... of cooperative institutions. 5. After adjudication public agencies intervene most actively in the larger, most visible, most politically important, and least stable coaperatives. In Pomalca SAFCAP maintains a full-time staff of trouble shooters. Non- sugar cooperatives receive occasional visits from Ministry agents, but SINANOS visits the coops primarily in times of cirses. 6. In both the Lambayeaue region and the Santa Valley accounting problems of non-sugar coops have been largely eliminated by the formation of Central Accounting Facilities. In Chiclayo a Central Accouting Office was established specifically for this purpose; in Santa accounting ras merely the first of 111.15 several functions to be initiated by the Central.. The Chiclayo facility pro- vides a -easure of accounting training, since members of each coop's office staff work with the Central Accounting Office's staff in drawing up accounts. In the Santa Central capacitaci6n is one of the principal objectives of the accounting service, and seems to be one of the services which member coops most value. D. Social Problems 1. Daniel Moynihan's remark, "there's little success in politics," seems equally appropriate for cooperative leadership. The majority of leaders in the coops visited have been subject to crises of confidence at one time or another during their tenure in office, and few have held widespread support until the end of their term. There seemed to be no truly "natural" leaders in the enterprises visited. For example, in Pomalca the first president was a mild mannered office employee; the second was the labor union's General Secretary's brother; the third was a dynamic techncian who had once been ex- pelled from the cooperative, but readmitted'. In Espinal the most politically important men oppose the cooperative, and thus do not participate in ary posi- tive sense in cooperative leadership. in Udima the men who promoted the forma- tion of a peasant association and demanded land redistribution prior to the announcement of the 1969 law were later driven out of leadership positions, under charges of nepotism. The ex-employees of the ex-hacienda do not have sufficient popularity to win elections in the cooperative; most other members of the coop have insufficient experience with administrative and technical matters to serve as adequate coop leaders. Technical assistance to Udima (which is several hours from the Chiclayo Ministry Office by auto) is-sporadic and incapable of compensating for the lack of aggressive, competent, internal leadership. 2'. The only cooperatives visited in the Second and Third Agrarian Zones in which selection of members is a burning issue were Pomalca (sugar) and the Central Santa. In the case of Pomalca several hundred non-members are employed by the cooperative to Derform numerous tasks, including cane cutting. These outsiters are paid far less than members in terms of cash) and receive no housing or any of the other perquisites enjoyed by coop members. (See Section I.E.5. of the Case Repc-, for Pomalca.) 'Coop members oppose their entrance into the cooperative because of the negative impact this would have on the present members' incomes. In the case of the Central Santa, membership is an important issue since not all the valleyts production coops wish to participate in the Central. By law all production coops within the jurisdiction of a PIAR must become affili- ated with the Central once it is formed. Thus, the opposition of one or more cooperatives becomes an issue of great importance, threatening the very concept of the Central, which emphasizes the union of cooperatives not only for delivery and other services, but for redistribution of resources between coops and channeling savings from agriculture to other sectors of the economy. 3. Group homogeneity is relatively unimportant where all workers are also coop members and where income differences are not striking. These two conditions are violated most sharply in.the sugar coops, and it is here that internal tensions have been greatest, Since the reform income levels for III.16 workers in these enterprises have become public for the first time. There has been a tendency fDr the income distribution to flatten in the sugar coops, but still differences between the incomes of field and factory workers and technicians are great; thus, tensions persist. A few technicians have been expelled from the coops, and many others have left by their own decision. Salaries of technical personnel have not kept pace with the wages of laborers, and the prestige and authority of the t'cnicos have diminished. 4. In the cases visited the principal causes of internal conflict and strife are the following: (1) dissatisfaction with the adjudication model (Espinal and La Campifa); (2) government attempts to curb member participation (Pomalca); (3) severe economic problems (Monteseco); (4) dissatisfaction with services provided by the cooperative (the Central Santa); (5) frustrated ex- pectations (Pomalca), and (6) distrust and suspicion of high-level employees (Pomalca). In both Espinal and La CampiKa the government attempted to force collecti- vization to the great displeasure of the LR beneficiaries of these estates. In Espinal a production cooperative was finally created, but members were al- loved to keep their individual plots of land. Since the adjudication1members have not become active supporters of the coop and internal problems are severe. In La Campifa the government abandoned its plan to collectivize production and the members of the newly formed CAS seem to be satisfied with this adjudi- cation model. In the sugar coops (including Pomalca) the government's attempt to curb member participation in management by hand picking the majority of Assembly Delegates and by preventing union and political leaders from participating in elections)resulted in widespread labor discontent and suspicion. Members of these coops were also resentful and distrustful of their coops' technicians (who had worked in the ex-hacienda). When it was announced in Pomalca that profit pay ents in December 1971 would be significantly lower than they had been the previous year, this combination of factors sparked a general strike and the expulsion of four top-ranking technicians. In Monteseco, internal conflicts and general member dissatisfaction with cooperative affairs are, as members put it, "el pan de cada dia." Due to the severe economic problems of the coop, there seems to be little chance of relief. The currently high price of coffee provides a welcome breather, but the ecolo- gical degeneration of the zone is likely to force coffee out of production ultimately. In the case of the Central Santa, managerial and financial problems and the lack of adequate public support for the institution have led to numerous problems in the provision of services to member coops, and consequently to member dissatisfaction with the Central. One coop had withdrawn from the Central at the time of my visit. 5. Early in the reform process (1969-1970) ONDECOOP employees seemed to operate under the assumption that liquidation of the latifundia system and its replacement with the cooperative system would be accompanied by a radical transformation of the behavior patterns of rural people. Personal egoism was expected (-eally assumed) to disappear, being replaced by a solidary 111.17 cooperative spirit. In fact, little character change has been witnessed to date. Two interviewees in Pomalca stated that individualism seems to have been accentuated by the reform, rather than reduced. The reform process has closed traditional channels for social mobility and opened new-ones. Personal loyalties and compadrazgo are less important in the new system than in the old; job performance and skills are more important. The old pay rates are being questioned and new criteria for pay are yet generally accepted. Thus, everyone is motivated to compete with his fellow cooperativists for a larger share of the total income produced. Delinquency and corruption should be expected in the new reform enter- prises, especially since they were the order of the day in the hacienda system. Established behavior oatterns cannot be eliminated overnight. Many persons sanctioned for misdeeds shortly after the reform were, in fact, being punished for actions taken prior to the reform or during the period of disorganization immediately following the announcement of the 1969 law--and often for acts which would have gone unnoticed or unsanctioned prior to the reform. Standards of performance have risen since the reform, and performance seems to have im- -Droved. But since there is'still a gap between the standards of behavior and actual performance, corruption and delinquency continue to be problems in the cooperatives. Several instances from the cases in this appendix and from others visited indicate that elected cooperative officials--especially the first ones--should be expected to abuse their power. The fundamental reasons are, I think, the following: (1) In the hacienda system individuals were expected to exploit any power at their disposal for personal purposes. In more traditional ha- ciendas the right of employees to "use" the peons and other resources of the estate was a conventional form of payment. Only as the traditional paternal hacienda system broke down did such personal use of hacienda resources become viewed as "corrupt." Moreover, corruption was an accepted fact of life in Peruvian politics and union activity. Leaders were expected to take advantage of their positions. Thus, the conventional behavior model for new coop offi- cials includes the exploitation of power for personal gain. (2) Group sanc- tions and "sanctions from below" in general were important innovations of the reform. Previously no employees feared reprisals from the workers for appropriation of hacienda resources for personal use. Thus, new cooperative leaders have had to learn and accept the new "rules of the game" through experi- ence. (3) In the new cooperative system "ordinary workers" have begun to occupy positions of power and prestige which they had never before dreamed possible, and many have certainly felt an urge to exploit this once-in-a- lifetime opportunity in ways which they feel might perpetuate their newly ac- quired status. (4) Coop leaders have come into contact with numerous outsiders (notably government officials) whose incomes and living standards are far above their own. This demonstration effect, and envy, may encourage corruption. It seems highly inappropriate to expect new coop leaders to behave like saints. On the contrary one should expect abuses of power and to design mechan- isms to control and supervise the actions of leaders and to cope with misbe- havior in as effective a manner as possible. In small cooperatives informal supervison and sanctions can perform important functions. In large reform enterprises formal vigilance is necessary. The Vigilance Council and Special Committees must be operative, and coop officials should be required to make all their decisions public and subject to the scrutiny of cooperative bodies and public officials. In this respect the SAFCAP and SINAMOS can fulfill important functions. 6. It is often said that an agrarian reform is essentially a political process. In Peru the decision to reform or not to reform and the determination of the reform's main objectives and methods were influenced greatly by political considerations. Once under way the reform's course has also been altered on numerous occasions in response to pressures brought to bear by specific in- terest groups. Small- and medium-sized farmers in Cajamarca and Arequipa organized and. coerced the government into stating more clearly what position private farmers are to occupy in the new agrarian system. The colonos of ex-haciendas have also forced the government to moderate its initial drive-to collectivize all production on estates affected under the reform. Sugar workers called numerous general strikes and expelled several technicians before the government liberal- ized its cooperative election laws in ways allowing more democratic worker control of the sugar coops. But in none of these cases did conventional party politics play a very important role. Of course certain individuals with clearly defined interests--large landowners, union leaders, Apristas, radical leftists, etc.--came to the fore)voicing the demands of peasants and workers and stirring up trouble wherever possible; but the fact remains that there was generally strong, spontaneous grassroots support for these causes. In nearly all my interviews with coop officials and members they insisted that politics per se. has been unimportant in motivating or guiding local reaction to national poli- cies. E. Special Considerations 1. Linkages and interactions are discussed more carefully in the Eleventh Agrarian Zone's Report. Here only a few special aspects of the Central Santa's poor performance will be discussed. The general point is that the creation of totally new cooperative institutions, such as Central Cooperatives, is an extremely difficult and delicate task requiring-the full and coordinated support of various branches of government. Placing the responsibility for the establishment of the Central Santa in the hands of a non-governmental agency--DESCO--was a serious error, which should not be made elsewhere. Were the establishment of the Central under the responsibility of a governmental agency it is highly unlikely that the government would have allowed the Bank to tarry so long in providing the Central with operating capital. Had the Central been provided with adequate operating capital it is unlikely that its operations would have remained so.restricted. Had the Central's operations been less restricted it is unlikely that its members would be so dissatisfied with its operations. If member support were more positive the Central would be more viable as a cooperative enterprise. The poor performance of the Central has forced the individual coops of the Santa Valley to take on numerous functions which could be better performed by a Central Coop, but which the member coops are not likely to willingly turn over to the Central in the future. Thus, poor performance of the Central has resulted in actions on the part of base-level units which jeopardize the future performance of the Central. III.19 If the government had waited until the Bank and other public agencies were prepared to provide adequate support for the new Central, the members of individual coops would not be as suspicious,.of second-level institutions as they now are (as a result of the poor performance of the existing Central). 2. In 1970 and 1971 ONDECOOP's capacitaci6n courses were strong on con- ventional cooperative doctrine and ideology and weak on practical aspects of cooperative operation. This was perhaps inevitable, sihce Peru had extremely little experience with production cooperatives at this time, and few ONDECOOP employees had practical knowledge in this area. The Ministry and higher govern- ment authorities were less concerned with doctrinaire aspects of cooperation than with practical economic and political matters. Consequently, the election laws legislated for Peru's sugar coops differed radically from the principles taught in ONDECCOP's cooperative courses. This discrepancy and the confusion and frustration it produced among the sugar workers contributed to labor unrest in several coops (notably Tmlu6n) and the ultimate wing-clipping and reorgani- zation of ONDECOOP. In general, cooperative ideology and doctrine have yielded in the face of practical matters. However, as mentioned abovelthe government is hesitant to give way to peasant pressure for the protection of individual cultivation rights because this is interpreted. both as "giving way to reactionary forces" and as a step in the direction of maintaining an inefficient and inequitable private landholding system. IV.1I AGRARI2% Z0NE IV--LI.A Peru's fourth Agrarian Zone comprises the entire deDartment of Lima and in- cludes several imDortant coastal valleys from Pativilca in the north to Ca7ete in the south. Until early in the century these valleys were famed for their suqar production, but with the expansion of cane cultivation in the more pro- ductive valleys of La Libertad and Lambayeque in the north suFar gave way to cotton and foodstuffs in most valleys of the Central Coasu. Three valleys were, visited in Lima: Canete, Huaura, and Barranca. The historical and natural setting and characteristics of the LR process in these 3 areas will be discussed in 2 separate sections. CAMETE I. HISTORICAL A:D NATIURAL SETTING A. Natural Setting 1. The four CAPs visited pertain to the PIAR Canete, which encompases the coastal lands of the Canete River Valley, south of Lima along the Panamerican Highway. 2. Irrigation water is relatively abundant in this valley, however drain- age is poor in sections of the lower valley, notably along the north margin (lands of the CAP Casa Blanca). The best soils in the valley are found inland from the towns Canete and El Imperial, on the CAP Cerro Alegre. Climate and soils are appropriate for the cultivation of a large variety of annual and permanent crops. In recent years cotton, corn, and potatoes have been the most important crops grown. B. Socio-cultural Setting 1. In 1972 the total population of the Canete province was 89,000. The two largest population centers, Canete and El Imnerial, had populations of about 10,000 each. 2. The nopulation of the valley is overwhelmingly mestizo. however, it is important to note that most rural workers speak quechua as a second language,and maintain ties with relatives in the highlands. During the "sugar boom' of the late nineteenth and early twentieth centuries large numbers of rural workers from the hinterlands of Huancayo and Ayacucho were brought to the coast by the enganche (wage-debt) labor contracting system. In recent years the haciendas of the valley did not have to resort to contracting laborers in their highland communities. Many rural people were forced to the coast in search of work and took up residence in the slums of El Imnerial. This greatly facilitated the contracting of day laborers for the haciendas' (and now the cooperatives') cot- ton harvests. 3. Literacy data from the 1972 census is not yet available. A very rough estimate, given by a perceptive union leader in the CAP Cerro Blanco, is that on IV.2 his coop about one third of the members are illiterate, with a higher percentage applying to non-member day laborers. 4. The cash incomes of rural workers on the Central Coast are much hi-her than those of their highland counterparts, but lower than those of the sugar workers of the :orth Coast. Living conditions on such coops as Santa Barbara and Casa Llanca are abysmal. Hbusing dates from the .sugar period; no light, water, or sanitary facilities are provided; education and medical care are of the most rudimentary nature. 5. Unionization began on a large scale in the valley in the early 1960s. Landowners resDonded to labor organization, and, later to threats of LR, by mechanizing, eliminating labor intensive activities (such as truck farming and hand selection of produce), and massive dismissal of workers. W'Tell organized labor unions functioned on all four of the estates visited; on two they played crucial roles in first disrupting and later maintaining estate production in the early post-reform period. In all four, traditional union leaders exercise considerable power in the new cooperatives. Historically unions in the valley have been allied with APRA. It seems that at present no strict political affiliations are maintained (in contrast, e.g., to the situation observed in the Huaura Valley north of Lima). C. Pre-reform Agrarian Structure 1. Agricultural land use in the valley is reflected by the following data: -Annual crops:- cotton 10,123 has. corn 4,824 potatoes 2,317 sweet potatoes 1,982 forages 1,470 truck crops 1,149 others 2,027 -Sub Total 24,392 -Permanent crops 3,323 -Pastures 749 -Forests 95 -Total 28,559 has, Livestock numbers are as follows: Poultry 299,500 Cattle 8,665 Hogs 7,490 Sheep 5,380 Goats 3,010 Cotton is grown almost exclusively on haciendas. The bulk of*corn and potatoes is also grown on large estates. Truck crops are cultivated primarily by smallholders. Livestock are tended as barnyard animals or in stables or modern Doultry facilities. Animals are seldom grazed in natural or cultivated pastureland. The bulk of forrages are harvested for feeding in stables. IV.3 2. The bulk of the valley's land is held by large estates worked by wage laborers. Smallholders occupy marginal lands and sections of estates parceled and sold in recent years. Colonato and rental are found more frequently on small farms than on large estates. Owners of large estates found it profitable,to mechanize production and work their lands directly. The owners -of small plots are often absentee owners, residing in Canete or Lima, and employed in non- agricultural activities. Their plots are often rented to small independent farmers. In the latter part of the 19th century and until the 1930s Canete was a major sugar-producing valley. In this period land fell increasingly under the control of a few very large sugar companies. In the 1930s, however, the sugar economy collapsed and a process of estate fragmentation began. In several cases estates were divided between family members; in some cases estates were parcel- ed and sold (often to sons of Japanese or Chinese immigrants). Some of the most intensive truck-crop agriculture in the valley is found on these plots, sold by large landowners who found operation of their haciendas barely profitable. On each of the four estates visited a few colonos were found. However, these colonos were not imnortant to the haciendas' profits. For example, Cerro Alegre gave plots of rocky, uncultivable land to 32 workers in 1962. The workers brought these lands under production over a period of several years. In Casa Blanca poor lands.along the margin of the valley's irrigation network were.given to workers. At the time of the LR rent was not being collected from the holders of parcels in any of the cases visited. 3. Most estates in the valley maintain resident laborers, but rely upon seasonal workers for especially labor intensive tasks such as cotton harvesting. Historically these seasonally-employed laborers have come from the highlands for the harvest season and stayed in hacienda barracks-or in the houses of friends and relatives residing in the estate. More recently unemployed highlanders have migrated to the slums of El Imperial and travel each-day to the haciendas for work. Both men and women work in the fields. Income levels for field workers ranged from S/.42 per day in Santa Barbara to S/.58 per day in Cerro Azul. These figures do not include the value of housing or other non-monetary perquisites, nor do they include the value of household production. 4. Estates in this valley are highly mechanized and farmed intensively. However, it is clear that in recent years machinery repair and repDlacement has been lax (See II.A.2. below). All estates utilize chemical fertilizers, improved seeds and pesticides. II. THE LAND REFOP1I PROCESS A. Impact of the 1964 LR Law 1. The principal direct effect of the 1964 law was the application of Title XV in a few estates. Since the lands occupied by residents in these estates were marginal (never cultivated by the estates directly) the law produced little or no direct effect on estate profits. .~ ~ ... ..... .. . .. IV.4 2. The indirect effects of the laU were much more farreaching. In some cases estates were subdivided. According to the resent administrator of the CAP Santa Barbara, the principal reason for the legal division of this estate in the early 1960s was the -fear of land reform. LR was also a factor in the sale of small plots later in the decade. Nore important, the threat of LR resulted in decapitalization throughout the valley. As one estate administrator noted, "Ya sabian, desde 1964 por lo men- os, lo que les iba a pasar." Machinery was neither replaced nor repaired ade- quately. Very few estates have machinery-with less-than 10 years' service, and both Ministry and coop officials agree that most of what remains is hardly worth repairing. B. LP Under the 1969 Law 1. The LR program initiated'by the 1964 law began on the national level in June of that year with the intervention of sugar estates. However, the reform did not begin its formal exproDriatiou Drocedure in Ca5ete until 1970, and the Special Committee created to manage expropriated estates was not set up until early 1971. 2. Even before the Committee was established, however, owners had abandoned- two of the 4 estates visited, and workers went several months-without'pay. In both cases, serious and frequent labor-management disputes had plagued hacienda operations in recent years; administration was inadequate in both social and economic spheres; and the estates were near bankruptcy. Strikes in 1970 and 1971 motivated the owners of these estates to close their offices and cease oper- ations. In both cases the hacienda unions organized workers and maintained vital field operations, although on a reduced scale. In Santa Barbara work proceeded 5 months in this fashion, without Day; in Casa Blanca 7 months. At the end of the crop year the oi,ners of Santa Barbara attempted to carry off the harvest, but failed. The Ministry ordered-that it be embargoed, but to date the workers have not received any compensation for their 5 months' work. 3. The reform-related breakdowns in' estate management and operation cited in the previous paragraph motivated the Ministry to: (1) set up a Special Ad- ministrative Committee,and (2) establish procedures for rapid intervention of estates in case of abandonment or other actions constituting a threat to the LR process or to the maintenance of Droduction and adequate social con- ditions on estates. According to the head-of the Ministry office in Canete, private owners are now maintaining or increasing their production levels under threat of immediate exproriation. Growing conditions during recent years have been quite good, and the targets set by the Ministry's production plan have been met. 4. While several estates were managed by their workers for several months after the withdrawl of the owners, formal Provisional Administrative Commissions were in no cases formed. A single Special Committee provided formal interim management for all the estates of the valley. In the valley, 2 new types of enterprise units have been established under the LR: CAPs and a Central Coop (2 CAS vere set up prior to the reform and con- tinue to function). At the time of my visit (early October) 6 CAPs had been IV.5 created (out of a total of 13 planned for the PIAR Canete) and the Central was in Process of organization, (not yet a legal entity, but with an administrative council elected by the 6 member CAPs). The Central's council had regular meet- ings, where such matters as crop prices and marketing strategy were discussed, in addition to Droblems of the formal organization and functions of the Central. Few of the CAPs in the PIAR comprise one single ex-estatE; most are formed by the fusion of 2 or more. Fusion has often been opposed by estate residents whose productivity and income levels are markedly higher than those of neighbor- ing estates. However, in most cases the fusions are found to be workable and seem to be accepted ex-post facto by coop members. The administrator of Santa Barbara, an intermediate level employee in the ex-hacienda, stated to me that it would be advisable to make some sort of arrangement with one or more other estates (possibly formal fusion) in order to afford the services of a first rate administrator. 5. The principal public institutions dealing with the CAPs are the Minis- try and the BFA. Coop officials tend to be critical of both these institutions; in the first case for lack of personnel and practical experience, in the second for excessive delays in loan processing caused by inadequate bureaucratic pro- cedures. A third public agency, SENAFER, is faulted for inadequate provision of fertilizer supplies. The SINAMOS office in Canete was established,only in August 1973, and all coop members questioned indicated that greater effort was needed in the areas of cooperative and technical education for which SINAMOS is responsible. III. Principal Problems Facing the LR Process 1. Natural resources in the valley appear to pose no serious problems for the LR, except where salination has rendered coop lands unproductive. LR appears to be an important element in the solution of such problems. The previous own- ers did not make heavy investments in drainage and land reclamation for two reasons: (1) their limited time horizon (See II.A.2. above); and (2) they 'had less leverage with public agencies than do the new coops. Support from the public sector is necessary for the acquisition of irrigation water, credit, technical assistance, and the use of heavy equipment necessary for eliminating the buildup of salts. 2. LR alone will not eliminate the specter of unemployment from the region, although coop officials seem willing and able to increase employment on the coops. Crucial factors in determining the extent to which employment will be increased are: (1) the degree to which technical assistance, aims at crop diversifica- tion and the promotion of labor-intensive truck crops; (2) the adequacy of new marketing systems and the government's price policy; (3) the prices and availability of alternative types of field equipment. 3. Coops which inherited little servicable equipment from the hacienda have invested heavily in new machinery and office equipment, often paying cash or using short term credit. In other valleys such rapid capitalization has led to liquidity problems in the future, esvecially when coupled with substantial pay increases, Kowever no such cases were noted in Canete. IV.6 4. The effect of ranid capitalization on employment is uncertain. In most cases new capital fills a vital gap in the estates' facilities; previously the estates were undercapitalized, and their productivity suffered as a result. But, given the surplus of manpower in the region and the high cost of machinery, over- capitalization would be likewise counterproductive. Both inistry officials and coop members feel that the buildup of machinery supplies is entirely justified and only marginally relevant to the employment issue. Double or triple cropping, for examTle, which,increases both output and employment, is only feasible where good field equipment-is available. 6. It anpears that fdespite the interim.problems of the initially hesitant LR program, the coops have been able to maintain, and in:most cases increase, production. The coops are also seeking ways of diversifying field and livestock onerations in ways which increase both productivity and labor use. 7. The LR has placed severe strains on public agencies in the region. Of the various agencies, the Ministry has responded most adequately, but after an unfortunate initial delay. The BEFA continues to frustrate coops with what appear to be excessively legalistic procedures, more appropriate for privately operated estates than for coops. (A reform of BFA procedures is now under way). SENAFER's provision of fertilizers and EPSA's provision of seed potatoes appears highly inadequate in this,valley, as elsewhere, and must be improved if productivity levels are to be maintained and improved. SINAMOS' staff must be increased and its quality upgraded in order to meet the coops' needs for training and motivation. 8. Peasant participation in these coops is 'active and apparently well in- formed. Leaders come largely from the ranks of union leadership. Hired managers appear to be competent and identified with the success of their cooper- atives. Their major complaint is uncertainty of job tenure. As one. manager stated: Es muy difIcil trabajar en las CAPs. Uno tiene que ser tecnico, soci6logo, y noli tico a la vez... Es muy fascinante--como correr a 200 km./hra. Es fascinante, pero no hay seguridad.. .Nunca hay un acuerdo total en la asemblea, y en cualquier momento le Dueden botar a uno. No hay seguridad...No es trabajo para personas t1midas, ni violentas, ni con problemas cardiacos. An apparent shortcoming of the LR in Canete is that it has produced few visible changes. Living and working conditions continue much as they were prior to the reform. As one technician put it: Nosotros entendemos el proceso, pero en la masa obera hay falta de comprension. El trabajo sigue igual,. la vida es igual. No ve un cambio real. Nuevas viviendas y un programa de drenaje ser an muy importantes para levantar a esta CAP. (The widespread purchase of new machinery may, in part, be a response to this same felt need). However, as the head of Camete's Ministry office noted, heavy investment in facilities which are showy but of low marginal productivity may threaten the IV. 7 coons' finances. It would appear, for example, that means must be devised so that housing can be improved through the use of cooperative labor and cheap materials (possibly manufactured on the place) rather than by contracting outside technici- ans and laborers for massive and lavish construction programs (as in the sugar coops). HUAURA AND BARRANCA I. HISTORICAL AND NATURAL SETTING A. Natural Setting 1-2. These 2 coastal valleys lie a few hours north of Lima along the Panamerican Hiahwav. Ecologically, they are quite similar to the Valley of CanetE and historically the same sorts of croDs have been grown in all 3 valleys. An important difference is that sugar is still cultivated in both Huaura and Barranca, but went out of production in Canete during the Great Depression of the 1930s. B. Socio-cultural Setting 1-2. The principal urban centers of these valleys are Huacho, Pativilca, and Barranca with poDulations of 37,000, 28,000 and 23,000 respectively. Data on rural population are unavailable. In the past century the population of these areas has been swollen by the migration of rural laborers and their families from neighboring highland areas. Temporary workers for the cotton harvest come from as far away as Piura in the north. 3. On a simple "Indio-lestizo-Blanco" continuum the bulk of the valley's population is estizo, but as the manager of one coop noted, hacienda workers and coop members feel culturally distinct from the Mestizo administrators and public officials; they consider themselves "Cholos," and are generally suspicious and resentful of their Mestizo bosses. 5. As in Cahete, Tbst hacienda workers in Barranca and Huaura were union- ized prior to the LR. An exception to this rule is Andahuasi (a sugar estate). As we will see below, unions ofter played important roles (both positive and negative) in the LR process. Coop leaders often come from the ranks of traditional union leadership. In Huaura)an active, leftwing Peasant Federation (affiliated with Peru's Confederacion de Campesinos Peruanos) is a thorn in the side of LR officials (See II.B.2. below). C. Pre-reform Agrarian Structure 1. The principal crops grown in these valleys are sugar, cotton, corn, potatoes, and truck crops. As elsewhere, the first four are grown primarily on large estates, the last on smallholdings. According to Ministry officials, a principal reason for this is that marketing of perishable truck crops cannot be easily handled on a large scale. iV.8 2. Colonato was not common on large estates in this valley. Where small- holders are found within hacienda boudnaries, they are typically not share- croppers or labor tenants but retired workers who several years ago were granted small plots of unimproved land by the hacienda, owner as a token of his esteem. Rental charges were never levied. Whether estates were rented or managed directly, their owners were seldom full time or expert agriculturalists. 3. Each estate maintained a corps of resident laborers and contracted outside laborers for brief periods. In 2 of the estates visited -- San Nicolas and Andahuasi -- sugar was the principal crop, and here temporary laborers were hired not so much for peak labor demands as for the performance of onerous tasks (such as cane cutting and loading) that full-time workers resisted. In the other 2 estates visited migrant laborers were hired primarily for the cotton harvest. 4. The estates visited were highly mechanized and-employed chemical fertil- izers, pesticides, herbicides etc. II. THE LR PROCESS A. Impact of the 1964 Law 1-2. In no cases studied was mention made of Title XV or other direct actions under the 1964 law; however, mary interviewees. noted that in the non- sugar estates maintenance and replacement of equipment and land improvements were discouraged by the threat of LR. B. LR Under the 1969 Law 1. The sugar estates Paramonga, El Ingenio, and Andahuasi were among the first estates to be affected in the nation by the 1969 law.. After they were affected, however, no other estates were affected in the-dept. of Lima for over a year. During this "perfodo de esperanza" uncertainty on the part of both estate owners and workers resulted in a series of socio-economic dislocations which the LR process later had to cope with. In one of the.4 estates visited, the owners attempted to prevent expropriation by initiating a private parcelization scheme. In another estate (not visited, but the subject of several interviews) a parcelization scheme led to a workers' movement which later became politicized and degenerated into the worst case of anarchy and mismanagement encountered in the 6 Agrarian Zones visited. By late October, 1973, Ministry officials could report that nearly all estates in these 2 valleys had been directly affected by th6 reform; most were under Special Committee management or already adjudicated to workers' coops, 2. Formally, the LR process was to follow a plan carefully laid out by national-level LR officials. However, social forces in the region required that this -lan be amended somewhat. This occurred most clearly in the cases of private parcelization schemes. Title 9 of the 1969 law allowed private owners to "do their own LR." through private land sales and grants. However, when the workers of such estates as Huando, Vilca Huaura, and San Nicolas organized to oppose these estate subdivisions, the government was forced to IV. 9 reconsider the Title 9 -,rovisions, to legislate new nrocedures (especially D.S. 18003) practically prohibiting private parcelizations, and to declare northern Lima an Agrarian Reform Zone (that is, to initiate formally the LR process in that part of the country). Later in the process official plans had to be revised again when unionized workers (many then in coops or pre-coops) called a general strike in the valley, demanding the expropriation of remaining haciendas. According to Ministry officials, politicization looms large among the several reform-related problems of the region. The principal political organ- ization seeking peasant support in Huaura is the local chapter of the Peruvian Peasant Confederation (CCP). In Barranca the CCP is less active, but coop members noted that they kept close watch on CCP activities and listened careful- ly to their arguments. CCP literature damns the government's cooperative move- ment for being bureaucratized and dominated by non-peasant (and non-worker) elements. The LR is characterized as a bourgeois scheme intended to enslave the peasantry in state-controlled production coops. Another group working with the rural population of the Huaura Valley is the Catholic Rural Education Institute (IER). inistry officials see the work of this organization as basically antagonistic to the LR, since IER personnel tell peasants that they must participate actively and directly in development pro- grams (including LR) and protect themselves from the naturally selfish machina- tions of middle-class reformers (including LR officials) if they are to benefit from such programs. IER people are not by any means antagonistic to the notion of LR or the formation of coops, Der se. They do, however, side with peasants who often oppose being forced into production coops (i.e., collectivization of peasant production) under the LR. 3. The principal dislocations observed were caused by the stymied attempts of landowners to sell off their hacienda lands prior to their expropriation. In one case (San Nicolas) the effect seems to be essentially temporary, and does not appear to threaten the long run viability of the coop established in that estate; in another (Vilca,Huaura) the chaos brought about by .the worker- management dispute and later developments has had an extremely detrimental impact on worker discipline and morale in the coop, with disasterous conse- quences for cooperative production and finances. 4. In Huaura Special Committees were employed in all but one estate, Vilca Huaura, and here early worker participation degenerated into chaos and financial disaster. In Barranca, San Nicolks operated with a Provisional Administration Commission with very different results: both interim and coop management have been adequate, and farreaching worker participation has not come at a sacrifice in productivity. 5. Interviews with Ministry personnel in Huaura and Barranca indicate that: (1) Ministry officials feel unduely burdened with tasks associated with provis- ion of credit to new LR beneficiaries;, (2) the Ministry's technical assistance programs for small farmers, which received particular attention under Belaunde, have been largely abandoned, in favor of programs aimed at the creation and consolidation of production coops; (3) SIJAOS' activities have adversely affected the interests of many small and medium-sized farmers in vays which IV. 1.0 1inistry officials consider unnecessary and counterproductive. In all parts of the country "agricultural development credit" is supervised by Ministry, not Bank, officials. Iinistry officials note that they simply do not have the time and manpower to attend all coops and all private farmeis. Coops have top priority and individual LR beneficiaries come next; small private farmers who have not benefited from the LR program often must be denied loans for the lack of administrative capacity. Ministry officials often feel that they are sDending too much time (at critical periods nearly all their time) attending loan requests, and disregarding their technical assistance and other responsibilities. Due to the severe manpower shortage, and the-highq priority placed in the government on LR, for several years a very high proportion of Ministry personnel and resources has been occupied with tasks of estate expropriation-and the formation and consolidation of production coops. Consequently, technical assistance and other programs serving small private farmers have been severely curtailed. SINAMOS comes under fire from.both Ministry and coop personnel. One Ministry official in the zone stated: SINAMOS ha hecho barbaridades con los pequenos y medianos agricul- tores; los muchachos no saben nada del agro, y dicen que todos son gamonales aunque tengan solo 4 o 5 hectares y han hecho su chacra con-sus propios esfuerzos. A coop member faults SINAMOS for telling stories and failing to contribute con- structively to the consolidation of his coop: SINAMOS ha venido varias veces, pero siempre dice la misma cosa: "La tierra es tuya." Al fin nos aburrimos, y decimos, "Bienvedidos, pero que digan otra cosa."...Entonces nos contaron del cambio social; nos dijeron de que el pira'ide social ya se habia vuelto y que ahora los de abajo estaban arriba. Nosotros decimos, "Xodavfa hay 3 puntos en el piramide y con cualquier de los 3 se puede comenzar a joder." III. PRINCIPAL PROBLEMS FACING THE LR PROCESS 7. In reviewing the specific case of Vilca Huaura, it appears that timely intervention of the Ministry and SINAMOS could have halted the process of coop disintegration. The reversal of such a process -- the reestablishment of work norms and principals of,authority and cooperation -- seems much more difficult than the halting of such a process in the first place. 8. In the 4 cases visited, it seems that member rejection of technical and administrative personnel is a less important issue than the scarcity of qualified personnel for technical and administrative positions. In Caldera and Potao, tecnicos occupied leadership positions and coop members seemed to be in agree- ment with both their exercise of power and their relatively high salaries. In Andahuasi there were technical and administration positions to be filled, and others which were occuDied by men who did not enjoy the full support of the membership. In San Nicolas, there was a great deal of member dissatisfaction IV.11 with the performance of the hired manager. However, in neither of these latter ' cases were members demanding that coop. management be left up to them alone; in both cases member sentiment seemed to be: We need technical expertise, of course; and we are willing to pay a good salary to a good man; but we want a qualified person, and a man who will work with us, not simply sit in his office pushing papers and giving orders. As we will note again and again, this sort of management-technical personnel is very scarce. 9. In the Valley of Huaura the importance of political issues is clearer than in any other region visited. As a coop manager noted, En este mundo todo es politica, y nosotros los politiqueros entendemos que el poder depende del control economico. Estamos luchando aca por la revolucion. Si estas cooperativas fracasan, la revolucion fracasa. The CCP (a leftist, union-based organization) wants the LR to fail. Con- servative landowners' organizations are also actively antagonistic to the LR process. Both types of roups attack the government by attacking the coops. A principal function of SINAMOS is to counter these attacks; to date its actions have had little success. Coop members are often skeptical of the competence and even the sincerity of SINAMOS functionaries. Small farmers are fearful of their leftist, collectivistic ideology; the CCP deiounces SINANOS as a counterevolutionary agency bent on modernizing the mechanisms by which the peasantry is exploited by the bourgeoisie. In both Canete and Huaura union leaders are concerned with political control over the Central's to be formed. In CaEete union activity seems to strengthen the coop sector, in Huaura it may.weaken it. IV. ISSUES, AGRARIAN ZONE IV A. Land Tenure and Labor Systems 1. All the estates visited in the Fourth Agrarian Zone operated in the pre- reform period as centrally managed wage labor operations. In most cases a few peasants had come into the possession of small plots of hacienda land, but their lands were generally marginal, and the rent (if any) paid to the estate owners was definitely insignificant as a share of total hacienda revenue. The 1964 LR law affected several of these landholding peasants, but adjudica- tion was in the form of individual plots; nc group activities were fostered. In Canete 2 service coops (CA1S) were formed prior to 1969, and in Huaura 2 CAS were functioning at the time of my visit. These institutions grouped inde- pendent small farmers who had not benefited from the LR. According to Ministry officials, 3 of these 4 CAS functioned more-or-less well ("en forma regular") IV.12 and had improved the technical levels of cultivation and the levels of living of their members. However, since 1969 11inistry attention has been diverted away from these units to the CAPs; the CASs are now much more "on their own" than previously. It is clear that promotion of group action has been greatly accentuated by the LR process initiated in 1969. This promotion is, however, selective -- predominantly in favor of CAPs formed on large estates, not benefiting small and medium sized farmers. It is interesting to note that in these coastal valleys absentee landlordism and colonato were more predominant on small properties than on large estates. Since the 1969 LR law makes all forms of land rental illegal, many of these minifundia are subject to expropriation and adjudication to their present operators (often relatives or close friends of the owners -- who are, by the way, often widows and other low income urban residents such as domestics and laborers). 2. In some instances "reform turmoil" and peasant occupation of estates has led to the consolidation of a cooperative spirit, in others it has been exploited by peasant and political leaders who oppose the formation of production coops or the LR process. In three of the four known cases of peasant take- overs (Santa Barbara, Casa Blanca, and San Nicolas) the principal dislocations seem to be temporary, and principally the result of insufficient or tardy Ministry support and supervision, not of peasant intervention per se. In the fourth (Vilca Huaura) the negative social and economic effects have been more lasting, and appear to threaten the coop's success. In this particular case the local Peasant Federation has played an active role in promoting anti-cooperative sentiment. In all cases where estate workers intervened directly in the LR process they have tended to be skeptical of the need for professional manage- ment in the coops formed. Thisi- certainly due partly to the government's own political statements on LR, emphasizing peasant participation and self-management. Coop members generally do not seem to reject management personnel out of hand. In Santa Barbara, San Nicolas and Casa Blanca workers now agree that professional management is necessary for the success of the coop. Only in Vilca Huaura is member sentiment strongly anti-management. In none of the cases studied have members willingly relinquished their plots of land to the coop. (In most cases they do not have plots. In some instances workers have chosen to withdraw from the coop in order to maintain their plots.) In one case (Caldera) members have agreed to sell their livestock to the coop (this has not yet taken place however). In the other cases the issue has not arisen. B. Economic Issues 1. Of the various types of economies of scale (see relevant section of this report's body) administrative and LR economies are certainly more important than economies in cultivation Der se. Ameng the various crops cultivated on the coast, economies are greatest in sugar cane and cotton, and much less important in foodstuffs, especially truck crops, However, given the fact that the LR is affecting large wage-labor estates, and given the scarcity of qualitied managerial personnel (in both the Ministry and in the coops sector) administrative and LR IV. 13 economies are of great importance. This provides a rational for the fusion of small and mediu--- estates into larger production coons. In the specific case of SantaBarbara members had found it im-oossible to offer an expert management candidate the salary he demanded; they are now consIdering-17arious forms of integration with other coops in order to create an economic base capable of supporting the cost of a first-rate administrator. LR economies are, of course, relevant only during the LR process itself. Administrative economies may also be subject to alteration over tine,, As the shortage of management personnel becomes less critical, smaller coops may be able to get along with competent, but less-well7-paid technicians ( possibly coop members or their sons). .1arketing of truck crops presents problems which are inversely related to the scale of operations. A principal reason why large estates and coops prefer cotton and sugar cane over more labor-inatensive truck crops is the difficulty Of timely marketing. With improvements in marketing and in production planning techniques (e.g., prograThming) large units could plant, harvest, and market a variety of truck crops year around, and reduce their comparative disadvantage relative to minifundists. 2. It appears that the LR has maintained, and probably increased several of the pre-refrorm advantages of large estates (now production coops) over small farms, in the acquisition of resources and 'the improvement of production methods. Nearly all governmental assistance to-agriculture is now concentrated on the production coops. Less credit and technical assistance is available to small farmers than was true prior to the LR?,,and it appears that large coops are disproportionately favored by government priorities in the acquisition of machinery, fertilizers, seed, and irrigation-water. 'While -this allocation of resources may increase food and fiber maritetings in Lima (not the same thing as total marketing, including marketing in provincial towns) it may well lower the total value of agricultural and livestock production and the wuelfare of rural and urban provincial people. This is not to say, of course, that the pattern of resource encouraged by present governmental priorities is not justified on political and loagrun social grounds as a necessary element in the government's program to consolidate a rural cooperative sector. Government policies are clearly raising the technical standards of estates affected un-der the LR, and benefitting their y-orkers. In all cases visited modernization of field equipment was observed. The professional level of estate managers also seems to be improving; new managers are often less experienced. than old ones, but the,r Cenerally have more ecucation. In 2 of the 6 cases visited the total cultivated area wqas being expanded markedly through land reclamation (in Casa Blanca due to drainage Imiprovements, in Caldera due to channeling of the river). In this Agrarian Zone (or more correctly in the coastal part of the zone) government and coop programs are tending to reduce pre-reform differences in productivity and income levels between, estates. (This does not seem to be the case betu~een coast and sierra, due primarily to the radically different resource bases of these 2 rez~ions), IV.14 3. Production coop members have benefitted from the LR in some cases without major technological changes, simply because the profits'which used to be received by the landlord are now distributed among the workers. However,- it is unlikely that this one-for-all increase in worker income will be sufficient to maintain active member support for the coop. .Potao's manager warned that technical change must be rapid for workers to be paid well and "subversive' movements controlled; without technical advance the coop will fail. .On the other hand, both coop members and managers are aware.of the potentially negative impact of technical change on employment, both for present members and for their children. The implementation of technical change is clearly.scale-oriented. However, an alternative to the production coop would be a public technical assistance pro- gram for small farmers complemented by a system of service coops. While the production coops are investing heavily i field machinery, they are also preoccupied with employment-for themselves, their children, and potential new members (not because they are anxious to-increase*coop membership, but be- cause they feel Government pressure to do so). The coops' approach to the . employment issue has not been to reduce machine use but to diversify cropping, establish livestock operations, and (less often) install processing facilities for their produce. As mentioned earlier, small farmers have improved-their cultivation methods markedly in recent years, largely as a result.:0f the Ministry's technical assis- tance programs in the 1960s, which have been all but liquidated since the initiation of the 1969 LR process. 4. (See point 3. immediately above). Under the LR all full-time workers have been granted membership in the production-coops,formed on their estates. In addition, the Ministry has usually granted membership to part-time workers with over 6 months work in the estate in the previous year. Moreover, the Ministry calculates a.theoretical full employment capacity ("cabida") for each coop and requires the coop to admit additional members to fill this quota. in all of the coops visited in this Agrarian Zone full-time work was provided for all members. In a few, it was reported that make-work projects were needed to keep all members employed. In a.few others members' labor failed to zeet requirements throughout the year and outside workers had to be hired on a continual basis. In most cases seasonal demands (particularly cotton harvest- ing) had to be met with outside laborers, but normal demands could usually be covered (or very nearly so) by members' labor. In nearly all cases coop officials and members mentioned the need to diversify production and to innovate in order to provide employment for "the next generation." In a few, diversification of crop and livestock activities had been initiated, resulting in modest increases in employment. In no case did coop members or managers consider it rational to cut back or delay mechan- ization in order to employ more field hands. Nor were,cases found where members cut the number of days each worked in order to take on more outside laborers. In most cases the majority of coop members work only half days. However, this custom dates from the pre-LR period, and.is not the "fault" of the cooperative. To the extent that cooperativists cut hours off their work day in the future, they will be likely to rely more heavily upon mechanization and non-member labor. IV.15 5. The incomes of coon members have increased primarily as a result of the distribution of the ex-owners' profit among them. Profits are high largely due to good growing conditions and high commodity prices. However, in several cases there are strong indications that productivity under the coop system will exceed that of the ex-hacienda as a result of technical improvements, invest- ment, and reduced labor-management frictions. It is too early to make a care- ful evaluation of these phenomena. 6. To date, the coops under study have not had to face "lean years." The degree to which price declines and crop failures will threaten coop viability is unknown. C. Management and Administration 1. To date, professional training of coop members has been lacking. In all the cases studied the coops employed professional technicians as managers, or were looking for professionals. 2. In none of the coops visited was the manager able to run the coop as an "ordinary" private enterprise, disregarding member opinions and demands. However, various approaches to the `-management problem" were encountered. In Cerro Alegre, the manager saw himself as a rather frustrated, dynamic person- ality, performing much the same functions as in any other business, but now having 165 bosses instead of one. This meant that he had to involve himself in bothersome social-and political problems, in order to succeed in his position as manager. In Potao, the manager played a much less dynamic, more paternalistic role, considering himself a technical advisor and "catalyst" in a decision process controlled primarily by the coop membership and formal management bodies. In San Nicolas the manager felt that he sould be allowed to concentrate on administrative matters, and resented becoming embroiled in technical issues related to field production and social issues unrelated to the technical aspects of coop administration. In Caldera the manager saw his role as pri- marily that of a leader -- a catalyst of group action, but with a mission! In no coop visited did the Ministry or any other public institution play a substantial role in coop management. 3. In the coops visited a great deal of control over day to day technical aspects of coop management was left in the hands of the manager. In all cases his actionswere closely watched by the coop president, and in general there was close collaboration between these two figures. More weighty issues were discussed by the Administrative Council (which the manager attended). Major production, investment, employment, and pay decisions were deliberated in the General Assembly. In practice, there are no rigid criteria for deter- mining which issues are to be settled by specific coop officials, Councils, Committees, or the Assembly. The more'important" or controversial the issue, the more likely that it will be dealt with in the Assembly. In general the coops' Sepcial Committees (e.g., the credit committee, marketing committee, administration committee) do not function to the satisfaction of either coop members or public officials. 4. FormaLly, the Vigilance Council of each coop must eamine all decisions made by the coop's Administrative Council, and place responsibility for illegal IV.16 or inappropriate actions. In addition, SILAMOS should make periodic checks of coop records and accounts in order to ensure the functioning of coop institutions the legality of their decisions, and the-consistency of coop activities with public policies (e.g., Special Committees should be formed, periodic.meetings held, and detailed minutes recorded). A specialized office within the Ministry should also make periodic visits to the coops to evaluate coop management and review the books. (SINAMOS is responsible primarily-'for sOcial aspects of coop performance, the Ministry for technical and economic aspects). In practice, the Vigilance Councils -generally lack motivation and expertise. SINAMOS lacks personnel, and reviews coop performance primarily in times of internal crisis. The Ministry visits only a few coops, again due to a severe lack of personnel. Thus, formal control and supervision of coop activities seems to be lacking. Within the co6ps visited, however,, informal control and supervision partly offsets the poor performance of formal mechansism. In most of the cases studied, the labor union continued to function, and paid careful attention to the activities of coop managers and the Council. Often coop members expressed more confidence in their unions than in new cooperative-in8titutions, and traditional union leaders channeled information'to, and/or put pressure on, coop management and leadership. In Caldera the unibn seemed io play an integral part in.both decision making and su veilance of'coop activities. Informal mechanisms also exist within the state which perform important control and supervisory functions. Employees of the Bank and the Ministry are in close contact with coop officials and perceive maihy problems of coop opera- tion as they develop. A formal system for channeling ihformation from Bank and Ministry officials to coop bodies-and public agencies charged with the formal supervision and control of coop activities'does not exist, however. 5. The cases studied have folloiw7ed several different paths in their conversion from haciendas to coops. The "normal course" involved a pacific inter. vention on the part of the state, the formation of a Special Administrative 'Committee or, less ofte-n, a ProVisional Administration Commission, preparation of the workforce for membership in their cooperative, and finally adjudication of the enterprise to a production coop. Where this course has been followed economic and social dislocations have generally been minor and the coops seem to be performing well. Where landlord abandonment or parcelizatib schemes motivated worker strikes.and occupation of the estate prior to the formation of formal pre-cooperative management bodies, interim dislocations were inevitable and consolidation of coop institutions has been somewhat more difficult. As might be expected, the performance of public agencies has been most adequate where the process of cooperativization has been most tranquil and bureaucratically controlled. Peasant participation in the *transitional period results in uncertainties which public agencies are hard pressed to cope with. However, peasant intervention has usually resulted in adjudication models which are more adequate to peasants' needs (and with which they are more strongly identified) than has been the case under the normal bureaucratic course while peasant participation in the cooperativization process seems important for ensur- ing active membership suoport for new cooDerative institutions, the Ministry IV. 17 and SINAOS should by no means let peasants "work things out" entirely on their own. Close and amicable ties should be maintained with pre-coop unit-5 and tech- nical and managerial assistance should be provided even where not directly requested. In the one case where the government virtually abandoned the enterprise -- Vilca Huaura -the cooD has not proven to be a viable social or economic unit, despite the fact that the estate's workers would certainly be better off in a production coop than in any alternative institutional arrangement (including individual smallholdin-s). D. Social Problems 1. In most coops visited, leadership seemed honest, competent, and accepted by the membership. Where leaders had fallen into disrepute, it was generally for acting secretively and attempting to benefit personally from leadership positions. Union experience seems to be beneficial both for coop leaders and for the membership as a whole. In several cases union leaders now occupy conspicuous positions in the coop bodies, including the presidency. In others, where coop leaders were not union activists, union organization seems to have provided valuable experience for the membership. Unions generally continue to function and provide coop leaders with a sounding board for member sentiment. 2. Fusion of several estates into larger coops poses problems where pro- ductivity and income levels differ radically. However, it appears that in wage-labor estates such problems can be overcome with time and adequate motivation by the Ministry and SINAMOS. (This seems not to be the case where colonos are involved or where cultural differences are of great significance'.) Social differences between field laborers and office, technical, and administra- tive personnel are potential sources of conflict. The principal antidotes are (1) demonstration to members of the importance of relatively well paid technical personneliand (2) levelinR of incones within the coops (This latter course is essential and involves training new technicians for the coops who will be willing (and forced -- as the supply of technicians increases) to work for lower salar- ies'.) Managing a coop is no easy matter, especially in the early post-reform period. As the manager of Cerro Alegre stated, it is likely the first admin- istrators will"get burned; later,things will be easier. The principal causes of internal strife noted in this zone relate to cor- ruption and incompetence of coop leaders or highly paid employees, and the low wage rates of most members. As noted earlier, cases of severe discontent and censuring of coop leadership or staff are few. As more than one coop official stated, where there is no discontent or conflict, there is no interest in the coop, A certain level (how much?) of conflict, then, seems to be beneficial for the clarification of important issues and for arriving at solutions which are neceptable to the coop member- ship. 5. To date,livay member interest in coop activities seems to be an adequate antidote to internal corruption. IV.18 6. In the Peruvian context, politics seems to play a negative role in the coop movement, since most existing political parties are opposed to the present military regime. In this Agrarian Zone the coop sector has.become an important political battleground, and Ministry and.SINAMO.S officials. are quick to blame ultraleft political groups for major coop- failures, such as Vilca Huaura. X.1 AGRARIAN ZONE X -- JUNIN-PASCO I. HISTORICAL AID NATURAL SETTING A. Natural Setting 1. The Tenth Agrarian Zone comprises all of the Departments of Junrn and Pasco and parts of Huanuco, Huancavelica, and Ayacucho. Most of this Zone is within the highlands, and its most important estates specialize in sheep production. Prior to the reform the estates of the Cerro de Pasco Corporation, Ganaderla del Centro S.A., and Algolan were the largest, best organized, and most technologically advanced estates in the Peruvian highlands. (Algolan was affected in 1963 under Belaunde. The estates of Cerro de Pasco and Ganader1a del Centro were expro-priated under the Velasco government). 2. The Zone is characterized by ecological diversity. The Mantaro valley is one of the most productive cropping areas in the highlands; the high planes of Junin and, Pasco are among the most barren zones in the highlands; the eastern fringe of the Zone included high jungle lands ("ceja de.montaia") which produce coffee and fruits. The two reform enterprises visited in the Tenth Agrarian Zone are both located in the highlands, and both specialize in sheep production. most of this Zonal Report will discuss conditions observed in these two spots -- the SAIS Cahuide in the mountains around Huancayo, and the Central Cooperative in Cerro de Pasco. These two zones are high, cold, and dry much of the year. Sheep production predominates, although alpacas and llamas are raised in the highest areas. B. Socio-cultural Setting 1. Junln has 691,000 inhabitants, Pasco 177,000. Rural population in these departments is 40 percent in both cases. The largest town in junIn is Huancayo. with a population of 116,000; Cerro de Pasco has 47,000 inhabitants. 2. The Huancayo region has traditionally been an area of out-migration to the coast -- particularly to Lima. All along the Mantaro Valley population densities are high and land fragmentation is intense, forcing rural people to search for work elsewhere. (See Section I.S.B.2. of the Zonal Report for Lima). Throughout the department of Pasco population densities are low and relative- ly little out-migration has occurred. For years the mines of Cerro de Pasco have attracted laborers from other parts of the highlands (including many from around Huancayo) and even from the coast. The area's high altitude and harsh climate and lack of employment opportunities other than the mines have discour- aged permanent in-migration. Both technicians and laborers leave the place as soon as they can. X.2 3. Traditional peasant communities are found throughout th departments of Junin and Pasco. These are often more highly organized and more politicized than those in Puno. In the 1960s comuneros invaded the lands-of many haciendas in the region, and their actions were partially responsible for the legislation of Peru's first LR bill in 1964. 4. The mines and the large, efficiently run sheep-estates paid higher wages than most other employers in the area. The mines paid some of the highest wages in the country. The estates paid the highest wages of any highland haciendas. Working conditions, however, left much to be desired, primarily due to the hgh altitude and harsh climate. 5. In the early and mid-1960s the peasant movements of Peru's Central Highlands were the most massive in the-country. Several thousand peasants were involved,and numerous haciendas were invaded. The reaction of the and- owners, the police, and the military was prompt and violent, leading to the death and injury of hundreds of rural people. As a direct result of the movements the immense estate Algoln (300,000 has.) was expropriated and divided among 23 cooperatives. This measure was taken on'an ad hoc basis, prior to the legislation of Peru's 1964 LR bill. The promise of land redistribution under the 1964 law and the liquidation of Peru's guerrilla movement in 1965 effectively "pacified" the peasantry. How- ever land redistribution did not become a general phenomenon until the implemen- tation of the 1969 law. C. Pre-reform Agrarian Structure 1. Along the Mantaro River cropping is intense and commercially oriented. However, away from the river, in the bulk of the Zone, high altitude _tevents crop production, and cattle and sheep raising predominate. In the zones control- led by the large, highly productive sheep ranches practically no crops were grown. The estates' management cultivated small areas of fodder and irrigated pasture for the livestock; what foodstuffs were-produced came from individual plots on the haciendas and in neighboring peasant communities. In addition to sheep, most estates raised cattle. Milk was commonly used in cheese and butter production, for sale in highland towns and in Lima. Meat was also sold both in highland towns and on the coast. Most wool was exported. 2-4. Along the Mantaro River and in lands cultivated by peasant communities minifundia prevailed. The majority of the Zone's land was held by large estates. Minifundia were often owned by town people who rented them to rural friends or relatives. The large estates were generally managed directly by large corpor- ations. Peru's most productive highland haciendas were located in the Central Highlands. These estates were extremely large and well-organized. Over the years traditional forms of land tenure and labor use had been progressively eliminated in favor of wage labor. 2mloyment had been cut and the number of huaccha sheep had been reduced. Valuable purebred animals had been imported, and an entirely new, highly productive breed -- the "Junln" -- had been developed. X.3 High wages were paid to the estates' workers. Sheep producers throughout Peru considered these estates -- particularly those of the Cerro Corporation as models of estate organization and management. II. THE LR PROCESS A. Impact of the 1964 LE Law 1. One of the most important production units in the Central Highlands - Algol'n -- vas affected in 1963 in an ad hoc measure prior to the 1964 legisla- tion. (See Case Report -To. 15.). Fev estates were affected under the 1964 law. 2. In contrast to the situations observed in the coast and in Puno, de--- capitalization resulting from the threat of LR under the 1964 law does not appear to have been very significant in the estates of the Central Highlands. Interviews in the er-estates of the Ganader'a del Centro indicate, however that meat sales increased somewhat in the late 1960s. The estates also tried to clear up their boundary disputes vith neighboring peasant communities, and launched public relations campaigns emphasizing the "social function of expert management." B. ,L' Under the 1969 Law 1. The few large enterprises in the Central Highlands which have been transformed into SAIS -- Cahuide, Tpac Amaru, Ram6n Castilla, and Pachacutec - were aaong the first highland estates affected by the 1969 LR law, and they have received considerable attention from the public sector. The SAIS T4pac Amaru and Cahuide are considered the reform's model hihland enterprises. Other estates in the Zone have been expropriated later and have received much less public sector support. As a Ministry official in the Huancayo office stated En la sierra, fuera de las SAIS, no hay inter6s del nivel nacional en las empresas. 2stamos en la calle en los aspectos sociales, administrativos, ... en todo! 2. In the special case of Algolan (Case 1o. 15) peasant action was directly responsible for exr-ropriation. Long-standing boudnary disputes be- tween Algolan and,neighboring communities seemed unresolvable, and finally a larqe-scale peasant invasion of estate lands forced the government to exprorriate the conplex outright and adjudicate it to a number of peasant communities and production coops. In the cases of estates expropriated under the 1969 law, the reasons for early expropriation were not directly associated with peasant unrest but with national Political and economic considerations. The government affected these large and highly productive estates ir order to make the greatest possible publicity for its new LR program and in order to prevent their decapitaliza- tion and the disorganization of their administrative systems. Less important estates have been expropriated later, with less fanfare, and with less ex- Penditure of nublic resources. 3. The reform process has caused social and economic dislocations both in the large estates and i. areas of minifundia. Since the 1969 law prohibits absentee land ownership (no matter the property size) and since many small properties are rented, many minifundists have been adversely affected by the LR process. When Algolan was taken over in 1963, the Ministry decided to split up the complex (some 300,000 has.) and adjudicate its lands and livestock to the workers and neighboring peasant communities in 23 independent cooperatives. This form of adjudication resulted in two principal types of dislocations: (1) By breaking up an efficient administrative structure and creating legal boundaries between ecologically complementary zones the reform has reduced productivity. Prior to the reform management could shift livestock between ecological zones in order to exploit natural resources to their utmost - pastures in different zones have differing comparative advantages at different times of the year; pregnant and lactating animals need better pastures than do others. By breaking up the large unit the reform has also created management problems. No small coop can afford the services of technical personnel who are as competent and highly paid as those employed by Algolgn prior to the reform. (2) By creating 23 new enterprises, each with a distinct membership and natural endowment, the reform has helped to maintain and possibly increase income disparities within the regioh-- coops with many members and poor natural resources are poorer than those with few members and better resources. The production and distributional problems resulting from the reform in Algol6n motivated LR officials to design an entirely new adjudication model for highland areas where haciendas and peasant communities compete for land -- the SAIS. It was clear to officials that the peasant comunities must be incorporated somehow into the reform process. But the experience of Algol'n indicated that it was highly inadvisable to split up efficient pro- duction units intD smaller independent enterprises. The new Peruvian solution is to form complex legal and operational units -- SAIS -- owned and managed by ex-estate workers and by the estate's neighboring peasant communities. Typically, the government affects one or more estates which were owned by a single landowner prior to the reform and transforms these into a Service Cooperative (which differs from a Production Cooperative in that its members are not the owners of the .land and capital their cooperative uses). The Service Coop and several bordering peasant communities become members of a SAIS. The integrity of the pre-reform production units is repsected and both the workers of the ex-estates and the members of neighboring peasant communities participate in the ownership, management, and profits of the ex-estates. Of the SAIS' principal goals -- to avoid a drop in production, help equalize incomes, and eliminate the traditional land conflicts between estates and peasant communities -- the first has been most nearly achieved. Decapital- ization and the disorganization of production during and shortly after the reform have not been nearly as significant in the new SAIS as they were in Algolin. Since the adjudication of the SAIS they have generally been able to maintain or increase livestock numbers and production. The principal development which may threaten production in the future is the high rate of turnover of high-level personnel. These large estates of. the Central Highlands differed radically from those of Puno and. especially X.5 Cuzco in that they were managed by large technical staffs -- not by a single technician or "-ractico." WiTh the reform the majority of these technicians have left the estates and have been reolaced by intermediate level employees or younger, less-experienced technicians. The robolems associated with income disoarities and land conflicts have been less successfully attacked by the SAIS. The peasant communities participate in the income of the SAIS, but only marginally. Each SAIS has a Development Division which provides technical assistance and implements development projects in the communities, but in many cases the budget of the Development Division is inadequate to produce major changes in the incomes of community members. in most cases officials of the Division visit each community only a few times each year. At the end of each accounting year the communities each receive a share in the SAIS' profits, not in cash, but in the form of social or productive capital -- e.g., expenditures on a bridge or irrigation canals. The amount of expenditures on such projects is small in terms of the needs of the communities. The communities of the Central Highlands participate more significantly in the economic returns of the SAIS than do the communities of Puno, but still the disparities between income levels of laborers on the ex-estates and community members are great, and in general community members feel are antagonistic to the workers of the ex-estates. What the communities expected from the reform, and still want, is land. 4. Several types of new reform institutions have been created in the Central Highlands. Where conflicts between peasant communities and estates are not present CAPs are generally established. Where estates are surrounded by communities, these are generally fused to form SAIS. The communities themselves are Trestructured" by STIAMOS prior to their integration into SAIS, Restructuring of peasant communities is discussed in the Zonal Beport for Puno (Section II.B.h.) and will not be discussed at great length here. The principal fact of restructuring is that the communities resist many -f the measures which the government attempts to impose upon them, since the.se threaten the existing power structures of the communities and the economic in- terests of many community members. To date the principal de facto changes brought about by restructuring are in the sphere of internal administrative organization -- the traditional governing bodies have been replaced by new bodies with names analogous to those of cooperatives -- Administrative and Vigilance Council, Special Committees, and the Assembly. in spirit, the restructuring process tends toward the "cooperativization" of the communities,and their integration into the SAIS as collectively operated annexes of the pre-reform estates. However to date there is no sign that the communities will soon begin to oeprate as collective production units. Com- munity members everywhere fear the confiscation or expropriation of their livestoc- and land. In Cerro de Pasco a new reform institution which provides important services to the 23 coops which received land from the Algolin complex in the 1960s is the recently established Central Cooperative. The Central began its o-erations in 1970 as a Central ".ccounting Office set up by ONDECOOP. Initially there was great mefber opposition -- the coops refused to turn their account books over to the Central. Police power had to be used to force all coops to collaborate with the Central, but soon the affiliated coops x.6 became convinced of the benefits of centralized accounting. Recently the Cen- tral has expanded its activities into marketing, delivery services, and technical assistnace. According to 11inistry andCentral Officials, the ultimate goal is the formation of a SAIS. However, officials are quick to note that the in- tegration of the now-independent coop will be a long and difficult process. An institution which was in the process of'organization at the time of my visit and which promises to take on great importance in the future is the Central-SAIS. The members of this Central will be the SAIS of the Central Highlands and the Central Coop of Cerro de Pasco. This "Third-Level Institution" will coordinate input delivery and marketing for its members as well as organize new processing facilities in the region -- e.g., spinning and 'weaving, and-possibly clothes manufacturing. 5. SIITAMOS has not played a very significant role in the reform process in the Central Highalnds. The Ministry was instrumental in setting up the new SAIS, but now provides little technical assistance to them. As one Ministry official noted, No tenemos aue asesorar a las SAIS. Estan bien equipados. Tienen personal competente, y no necesitan ayuda exterior...Pagan S/.30,ooo-S/.4o,o00 para sus t6cnicos en las SAIS, y la Oficina Agraria paga S/.10,000. No tenemos gente de la misma categoria. The smaller CAPs of the region need assistance from the Ministry, but the government has placed a relatively low priority on servicing them. More- over, within the CAPs there is generally an absence of strong member support for cooperative institutions.. An official in the Huancayo Ministry Office concluded dismally: El problema numero uno aue tenemos en toda la sierra es la falta de inter6s de parte del campesinado en las cooperativas. La gente m9s auiere vivir de su parcela y ganado. The livestock SAIS of the Central Highlands are on relatively solid financial footing and have relatively few dealings with the Bank. Short-term credit is not needed, and they generally have savings accounts in commerical banks. They resort ot Bank financing primarily for long-term investments. The Bank's bylaws do not allow lending to "Second or Higher-Level Cooperative Institutions," and thus the Central Coop of Cerro de Pasco has not been able to borrow from the Bank. In late 1973 the Bank's bylaws were being modified in order to permit it to lend to such institutions. (See Section I.E.3. of the Case Report for the Central-Santa). At the time of Algolan's expropriation many of the employees of the ex- estate were hired by the Ministry and employed in an experimental station and technical center created to provide services to the 23 new coops which received land from the Algolan complex. At the time of my visit, this center, known as "La Quinua", was being transformed into a Service Cooperative -- the twenty fourth member of the Central. . ...........] X.7 III. PRINCIPAL PRCBLEMS FACTIG THE LP PROCESS 1. In the case of the Central Pasco the topic of natural resources often entered into my interviews, since the division of the ex-estate into several independent coops has left some Tith much poorer resources than others. In addition, the high altitude and inclimency of the region discourages many good technicians from working in the region -- a recent publication of nine rather well-paid job openings attracted only three candidates.' Lana use and produc- tivity can of course be greatly affected by investments in, e.g., irrigation, pasture improvements, and fencing, but to date natural factors continue to exercise a great influence over production patterns and productivity. 2. Eployment is a pressing problem in much of the highlands, and particularly in the areas visited in Jun'n and Pasco. In both Cahuide and the Central Pasco, enterprise and .inistry officials emphasized the inability of the reform to increase employment markedly. In both areas industrializa- tion was mentioned as the necessary antidote to the employment problem. 3. In terms of technologr the large estates of Junin and Pasco were the most advanced in all of the Peruvian highlands, and the reform is unlikely to bring about significant improvements in this area. 'Ievertheless, it appears that even in such "model enterprises" as the SAIS Cahuide and TUpac Amaru production has been intensified since the reform, and the process of livestock improvement moves foreward. Where the Development Divisions of the new SAIS function well, it is likely that the production methods usedinpeasant communities will be improved. 4, Since the estates affected by the 1969 law were highly capitalized prior to the reform and suffered few major economic dislocations under the reform, post-reform capitalization has been neither inadequate nor rapid. In contrast, Algol'n suffered massive decapitalization during the reform process, and while livestock numbers have increased significantly since that time, the number of sheep own ed by the coops still falls short of the number owned by Algolin prior to the reform. (It seems unlikely that the decline in cooperatively owned livestock has been offset by an increase in privately owned animals.) 5. In Algol6n production declined significantly as a result of the land invasions and subseouent reform turmoil. Since the reform,production has risen, but has not yet reached the pre-reform level of estate productivity. In the estates expropriated under the present law and transformed into SAIS production has not fallen. 6. When Algolan was expropriated, the pblic sector was not prepared to cope with the myriad of reform-related problems that develoned. The new law has been implemented with much greater expertise and success. As in most other areas visited, the principal shortcoming in the Central Highlands is in the area of peasant participation. In the immense SATS the refor:m has not introduced mec1anisms which allow active ParticiTation of coop ad community members in management. 7. In the coops formed on the lands of the Algolgn complex accounting nroblem.s -ere severe prior to the formation of the 'entral. Since the formation X.8 of the Central accounting has ceased to be problematic, but another problem has arisen -- member participation in the Central's management. At the time of my visit -the Administrative Council was threatening resignation on the grounds that their frequent trips from their coops and communities to the Central's offices for council meetings were excessively time consuming and inconvenient. Member support is generally positively related to the benefits derived from participation in the reform enterprise, and negatively related to the importance of members' individual economic activities. Thus, in production coops full-time laborers and employees are the principal supporters; part- time workers who own livestock remain disinterested. In the SAIS, the workers of the ex-estates are generally the most active supporters of the SAIS, comuneros are less interested. A Ministry official noted that in some cases comuneros wished to sit on the SAIS' Councils only so as to receive the daily expense allowances received by Council members. (This contra- dicts the situation encountered in Cerro de Pasco, but may be due to differences in allowances and inconveniences.) IV. ISSUES A. Land Tenure and Labor Systems 1. Over the course of the present century in the Central Highlands a few corporations bought up and lisurped the lands of both traditional heciendas and indigenous communities, causing not only a concentration of landholding but a radical transformation of land tenure and labor systems as well. It is often stated that the large estates gained control of the region's best land. This is unlikely since the livestock companies wanted pastureland, not cropland. Livestock grazing can be efficiently and profitably organized on a large scale; highland cropping cannot. At the time of the reform much of the best pastureland is Junin and Pasco was owned by large corporations, but much of the best cropland was owned by smallholders and peasant communities. The large livestock corporations (notably Cerro de Pasco, Algola'n, and the Sociedad Ganadera del Centro) sought to maximize profits by improving production methods. The principal improvements introduced were the following: (1) improving the quality of livestock through the importation of breeding stock and careful crossbreeding and selection programs; (2) increasing feed production and improving feeding through fencing and pasture rotation; (3) improving the exploitation of natural resources and pastures by planning the use of micro-regions in accordance with their special ecological charac- teristics--e.g., certain zones were set aside for pastqring pregnant ewes, other were reserved for sick and weak animals; (4) reducing rates of mortality and morbidity by introducing systematic, professional veterinary care; (5) maximizing meat and wool production by grazing fewer, more productive animals. The rapid introduction of these technological changes on a massive scale required not only the acquisition of large tracts of land but fundamental changes in traditional land tenure and labor systems. Production decisions had to be taken out of the hands of peasants and entrusted to professionals; poor quality huaccha and michipa sheep had to be eliminated; fewer, more highly skilled workers were needed. Thus, the corporations attempted to X.9 reduce the number of residents on their lands and to liquidate the colono system. At the same time that the livestock corporations expanded and modernized their production methods the region's population growth rate was on the in- crease. Modernization on the estates implied a reduction in their employment, and an increasing number of rural people became crowded onto the shrinking land base of the peasant communities. Increasing demographic pressure in the communities, compounded by increased contact with the outside world and rising and frustrated expectations, precipitated widespread land invasions in the early 1960s. Outside of the Algoln Project few estates were expropriated prior to 1969 and very few production coops were formed. The few consumer and credit coops that existed had a very minor impact on rural incomes and levels of living. 2. In the highlands/ CAPs, SAIS, and Central Cooperatives have been esta- blished under the LR program, and an attempt has been made to restructure peasant communities. Case Reports Nos. 15 and 16 (Central Pasco and SAIS Cahuide) discuss the organization and operation of the SAIS and Central Coop- erative models. CAPs have been discussed amply in other Zonal and Case Re- ports. In this Section some implementational issues will be treated, especially as they relate to peasant communities. Cooperative structures are not indigenous to the highlands. Peasant communities often exhibit traits of self-government and labor pooling and exchange, but these do not constitute a strong base for the adoption of coop- erative institutions. The best base for cooperativization is a profitable wage-labor estate. Individual comuneros occupy and often own the bulk of land in peasant communities, and these individuals staunchly oppose collecti- vization. In general, peasant communities are highly stratified. Within each community there are relatively rich and relatively poor families. The rela- tively well-off peasants are the best-educated and most worldly. They are often "culture brokers" between the lower strata of the communities and the outside world--the truck drivers, merchants, community leaders. Since com- munity leaders are often socially superior and culturally distinct from the bulk of the community's members they are often the subject of distrust and envy. In one community within the SAIS Cahuide a rumor circulated that the leaders were selling communal lands to the SAIS. Since the wealthiest comuneros--the largest farmers, cattlemen, merchants-- are also likely to be the communities' leaders, the traditional leadership of the communities is likely to oppose community restructuring, which requires: (1) purging membership lists of all persons not residing in the communities or deriving the bulk of their income from agriculture or livestock raising; (2) equalization of individual landholdings; (3) abolishing private ownership within the jurisdiction of the community; (h) eventual collectivization of agricultural and livestock production. At the time of my field work, August-November 1973, community restruc- turing had not gone beyond point (1) in any of the communities of the Central X. 10 Highlands, and it was not clear to what extent the membership lists had been effectively purged. In both Pasco and Cahuide the need to eliminate "false comuneros" from the lists, and especially from leadership positions, was men- tioned. Despite the fact that peasant communities are not likely to-become con- verted into communal farms or production cooperatives in the foreseeable future, this does not mean that cooperatives can play"ho role in their de- velopment. Where new land has been acquired, as in Algol6n, production coop- eratives are acceptable to the communities, although it should not be expected that all comuneros will join the new coops. And where new activities are undertaken, such as poultry production, marketing, large-scale purchase of inputs and/or consumer goods, constitution of cooperatives is often the most appropriate solution (even though local merchants are bound to oppose coop- erative delivery and marketing schemes). Where production or marketing are to be cooperativized either the cooperative must be introduced from outside, or peasant leaders must receive cooperative capacitaci6n, encouragement, and technical, organizational, and financial assistance in establishing and operating their cooperative. It seems that in general the most socially viable (although not necessarily the most productive) -cooperatives have been established by peasants, with encouragement and support, but a minimum of outside control. A Ministry official in Huancayo stated to me that one of the principal problems facing the LR process in the highlands was the lack of peasant in- terest in and support for production cooperatives. According to him, "they would rather live from their individual cultivation and grazing." It seems that peasants fear and oppose collectivization for four basic reasons: (1) They fear outside,control of production cooperatives and the extraction of surplus. (2) They fear that the internal distribution of income will be un- favorable to them. (3) They fear that the cooperative will fail and that they will lose both their life-' savings and their source of current income. (4) They fear "peonization"--loss of the right to manage their own affairs and conversion into simply wage laborers. What the peasant seems to want most is independence from outsiders, since dependence has always led to ex- ploitation. He fears that without outside help (technical, managerial, finan- cial) the coop is likely to fail. But with outside help the peasants are likely to lose control over their enterprise and the cooperative is likely to become an instrument of oppression, not of progress. In some cases the peasant is probably justified in opposing collecti- vization; in other cases he is not. For example, in highland crop production technical economies of scale are relatively unimportant and managerial problems are formidable; thus, collectivization is in most cases'not advisable. But in livestock production there are strong arguments in favor of large-scale production. In many service functions, too, large-scale facilitates efficient operation; accounting is certainly one of these. Since peasants fear exploita- tion, it is difficult to convince them of the advantages of any form of coop- eration which implies dependence on outsiders. For example, in Algolan the coops hesitated to turn over their account books to the Central Accounting Office, even though the Ministry promised that the new accounting facility would greatly improve accounting services and cut costs to the individual cooperatives. X. 11 A general conclusion is that the government must be very astute if it wants to promote cooperativization in rural areas. Projects should be selected which will elicit peasant support or a minimum of peasant opposition. Moderate initial opposition can be tolerated if positive results will be forthcoming in the short run. The government should be careful not to impose cooperative models where they are not likely to furcition well. In short, the government should be pragmatic, realistic, and selective. Cooperatives work best where production was collectivized prior to the reform, and where LR beneficiaries support the cooperative performance of new activities. Peasants oppose collectivization per se. It:.is probably an error to attempt to force them to farm collectively unless striking tech- nological improvements can only be introduced in this way. They must see short-run benefits or the cooperative will never be actively supported by its members. 3, In the Tenth Agrarian Zone, as in others, the government has taken a relatively pragmatic and flexible approach to the reform process. This is perhaps seen most clearly in the Ministry's response to peasant opposition to collectivization in traditional haciendas and in peasant communities. The Ministry has not been able to convince peasants that they should give up individual cultivation and grazing. Generally the charter of production coops established in these estates states that "if in the future the coop needs lands occupied by members, they must turn them over to the coop." Cooperative and SAIS managers and officials generally attempt to reduce the number of huacchas, but often with limited success. In peasant communities restructuring has not gone far beyond formal organizational restructuring (elimination of traditional leadership positions and crection of Councils and Special Committees); in no cases have comuneros given up individual culti- vation and grazing. B. Economic Issues 1. The topic of economies of scale (ES) is discussed in great detail in the other Zonal Reports and in numerous Case Reports. In this Section the discussion is restricted to special aspects of livestock production in the Central Highlands. When peasant invasions precipitated LR in Algola'n in the early 1960s the government took what appeared to be the only possible action at that time: The enterprise was divided into a number of parcels; each peasant community bordering on Algola'n received lands from the enterprise and esta- blished independent production cooperatives; the remaining estate lands were divided into several more production units which were adjudicated to the workers of the ex-estate as cooperatives. This adjudication arrangement is now criti- cized on two main grounds: (1) By fragmenting the enterprise the reform destroyed the pre-reform administrative structure and separated ecologically complementary micro-regions; both of these factors caused a decline in producti- vity. (2) The division of Algol6n's assets between co=unities and cooperatives was hastily and inadeauately planned. Since the several production units are now independent, members of some cooperatives earn far greater incomes than do the members of others. The first point will be dealt with in this Section, the second in Section IV.B.5. below. X.12 According to the manager of the Central Pasco, livestock numbers and -production are now about 15% below their pre-reform levels. -He attributes this reduction primarily to the -adjudication of ecologically complementary zones to different-cooperatives. The provision of technical services has also become more difficult as a result of the reform. Algol6n employed a number of 'well-trained and experienced technicians who handled the firm's accounting, planning, marketing, financing, land management, and veterinarial and other services. After the reform the Ministry had to take on many of these functions which the independe'nt cooperatives could not perform themselves. The Ministry could not charge'the coops for these -services, and. thus technical assistance became a financial burden for the government. Moreover, peasant groups were often hesitant to take the.advice-of Ministry officials, and thus technological progress was restricted. Administrative reorganization and improvements in the provision of tech- nical and other services (e.g., cooperative capacitaci6n) are principal goals of 'the Central Pasco. Central officials encounter two major problems in these areas: (1) lega lboundaries between cooperatives-still prevent optimal utili- zation of the region's resources; (2) the cooperatives complain of the Cen- tral's high-operating costs, and some wish to withdraw or curtail the.scope of the Central's activities. Officials of both the Central and the Ministry feel that the ideal solution to these problems is the formation of a SAIS. Naturally there is opposition to the formation of a SAIS, particularly on the part of the more prosperous cooperatives--the CAPS made -up of Algola'n's ex-workers--and it seems unlikely:that total reintegration will be achieved. in the near future. 2. In the case of highland sheep.production, it seems clear that in- dividual ownership and uncontrolled grazing jeopardize productivity. On the other hand, prior to the reform, the benefits of large-scale production accrued to a tiny minority of landowners, and to a far lesser extent to their workers. The SAIS attempts to maintain productivity by maintaining large- scale operations, and to spread the benefits more widely. In the SAIS the service cooperative (made up'of the ex-workers of ex-estates) and a number of peasant communities each-have equal representation-in the-S.AIS' governing bodies. Since there are several communities and only one cooperative the communities control these bodies. Profits are distributed in accordance with need, and thus the communities also receive the bulk of profits. This produces the strange result-that'the,SAIS is managed not by its workers but by its neighbors, Moreover, profits are -distributed not among the workers but among the needy, who are also the-majority owners. - 'The results are not totally acceptable to either group. The-workers coinplain that they.are- not the "partners" of their communal neighbors but their "servants." They denounce the unholy alliance of technicians and comun- eros which seeks to reduce huaccha numbers and'hold wages down. They demand greater participation in management and in profits. In one important case (Cahuide) the workers have formed a labor union. The communities, on the other hand, complain that what they always wanted and sorely need is not some sort of abstract 'participation"-in something called a SAIS--which many mis- pronounce as SEIS (the number 6 in Spanish)--but land! In the SAIS Cahuide y-,,ear-end profits received by the peasant communities in 1971-72 and 1972-73 X.13 amounted to only about 13 and 30 U.S. dollars per comunero, respectively. The budget of the SAISt Development Division amounts to less than 20 dollars per comunero each year. Moreover, the comuneros do not receive profits in- dividually, but in the form of communal development projects, many of which benefit only a part of the comuneros and/or produce tangible benefits only over a period of years. Thus, both workers and comuneros tend to see the SAIS as "a great deal more in theory than in practice." This section must be closed with a confession of ignorance. Despite the obvious technical advantages of large-scale sheep production, we do not have.data on levels of total productivity per unit of land. All sources stress that the large highland estates reported very high levels of wool and meat production per animal per year, but they also generally note that individual peasants "overgrazed"--they had more animals per hectare of pastures than did the large estates. A CIDA study of the Algolin project notes that comuneros had 3.5-4.5 sheep per hectare of pastures, whereas the enterprise had less than one per i.ectare.. Wool production per animal was about 3.5 times as high in AlgolAn as in the neighboring communities; carcass weight was about 3 times as high. Thus, we cannot be sure that total production per unit of land was significantly higher in the modern enterprise than in the backward neighboring communities. What is clear is that modernization of estate opera- tions allowed great savings in labor and increased profits. 3. One of the most salient features of the large sheep enterprises of the Central .Highlands was their high level of technical sophistication. Fewer, higher quality animals grazed in the estates than in neighboring peasant communities, pastures were utilized more rationally, and sanitary and veterinary care was better. Technology was poor in the peasant communities for several reasons: (1) the Ministry's technical assistance to highland peasant areas was greatly inadequate, and the peasants were largely ignorant of potential technological improvements; (2) peasants lacked technical service facilities, such as veterinary care; (3) some necessary improvements, such as dipping tanks, required large investments which individual peasants could not make; (4) peasant communities lacked credit and organizational support from the government, both of which would have been necessary for communal investments in productive installations; (5) communal grazing and lack of community organi- zation resulted,in poor utilization of pastures (often overgrazing) and made livestock improvement difficult. The typical solution of large estates to these inadequacies of individual grazing has been the reduction of huacchas. In the Central Highlands huaccha numbers amount to only a small fraction of the total number of livestock on estates. In Puno, in contrast, the number of huacchas often comes close to or exceeds the number of estate-owned animals. In a few estates, in addition to reducing the number of huacchas, estate owners separated these from the livestock of the estate, paid shepherds to pasture them, and upgraded the quality of huaccha animals by crossing them with estate animals and adminis- tering sanitary and veterinarial care. Tio government's solution to the technological lag of individual pro- ducers in the highlands is essentially the same as the ex-latifundists-- elimination of individual production. In both the Central Highlands and in Puno officials in the Ministry and in the reform enterprises stated that X.14 "the huacchas must be eliminated." The modernization process begun by the Cerro dL Pasco Corporation is being continued and probably accelerated by the SAIS, since now both technicians and comuneros demand the elimination of workers' huacchas. 4. The Peruvian.-government's attempt to maintain and in cases increase the size of highland production units limits the labor-absorptive capacity of new reform enterprises. Employment has not increasedAotably. One of the stated objectives of the government in promoting the integration of the SAIS and the Central Pasco in a higher-level institution is to generate em- ployment through the establishment of processing plants.. International finan- cial institutions are presently considering loans for the installation of a textile factory, buat consultants state that use of modern industrial techno- logy (necessary to guarantee profitable operation) will limit employment in the facility to less ,than a hundred persons. The principal employment effect of such a venture; they feel, will come from "backward linkages"--a greater demand for wool will-spur greater production and thus greater employment on the reform enterprises. It is clear- that both agricultural and industrial experts cannot be correct in assuming that the important employment effect will.come in the "other sector." The fact is that neither the.Ministry.'s nor the financial institutions' experts are willing to sacrifice profits- for employment. Everyone passes the buck; the.employment effect of the reform and its associated diversification projects seems destined to be marginal. 5. Income and wealth-redistribution are central goals of LR. A reform that redistributes only barren land can have-little impact on.the welfare of rural people unless the.new owners can somehow make it productive. A reform that redistributes already productive land has a greater short-run impact on income flows-; one, which redistributes capital (livestock,equipmenti installations) as well as land has the greatest immediate impact. In the Algolan Project both productive land and capital were redistributed among- LR beneficiaries.-*'In the case of. the new SAIS-no physical redistribution occurred; workers and peasant communities became co-owners of the ex-estates and their capital', but the unityeof the pre-reform enterprise was maintained. In both these cases the.pre-reform,enterprises were highly productive and profitable . An important-aspect of the reform is the degree to which the profits of the ex-enterprises have been redistributed among their workers and the members of neighboring peasant communities. In the case of Algola'n I do not,,have data on pre- and-immediately post-reform wages, and thus can say nothing about'the short-run -impact of the reform on the incomes of estate workers. In the period 1972-73,.the ex-workers of the ex-estates in the': Algolan Project--now members of production cooperatives--earned an average of S/.32,810 per year (S/.22,600 in wages and S/'.10,210 in profits). In comparisonfthe ex-workers o'f the Sociedad Ganadera del Centro-nbw members of the SAIS Cahuide's service coop--earned an average of.S/.28,5o40 (S./.28,354 in wages and S/.186 in profits). See table at end-of this section. The impact of the reform on neighboring peasant communities is more diffi- cult to evaluate. In the Algolan Project 14 communit;ies with 3,066 .families received land under the reform. In each community a "communalrenterprise," managed directly by community officials and inr which all 'comneros;participated, was set up to exploit the land and capital received under the reform. These X.15 enterprises were not viable because some comuneros (the most wealthy) did not wish to participate in them and others (the poorest) were not able to make the capital contributions necessary for membership. Consequently, the communal enterprises were abandoned in favor of "communal cooperatives," which are managed by their own governing bodies and in which only 1,600 (52%) of the comuneros participate in ownership, management, and profits. In the case of the SAIS Cahuide 29 peasant communities with 3,237 families were selected for membership. The reform did not grant the communities direct possession of land, but made them co-owners, along with the service cooperative formed by the ex-workers, of the ex-estates of the Sociedad Ganadera del Centro. The communal members derive material benefits from their affiliation with the SAIS from two sources: (1) year-end profit distributions; (2) techni- cal and social services provided by the SAIS' Development Division. The profits distributed among member communities are not received by individual comuneros in cash, but are invested by the communities in development-related projects. The activities of the Development Division are also aimed at pro- moting the social and economic development of the communities. In the period 1972-73 the 14 communities which received land in the Algol6n Project earned a total of S/.4,224,000 in wages and salaries and S/.6,622,000 in profits. Since only 1,600 of these communities' members belonged to the communal coops, each cooperative member received S/.6,780. In the SAIS Cahuide profits distributed among the affiliated communities totaled s/.4,287,000 and the budget of the Development Division amounted to S/.2,358,000. These amounts were not distributed in cash among the comun- eros; nevertheless, they should indicate the approximate value of benefits accruing to the member peasant communities from the SAIS. Assuming this, the reform has redistributed income in favor of the communities in the amount of S/.2,053 per family. The above figures reveal that in the Algol6n Project the benefits of LR accruing to peasant communities are concentrated among half their popula- tion, but are much more significant on a per-family basis than in the SAIS Cahuide. However, if these benefits are calculated on a per-family basis for all community residents, they amount to only S/.3,500, and if profits (excluding wages and salaries) are calculated on the same basis they amount to only S/.2,200--very close to the corresponding figure for the SAIS. Since the communal cooperatives of the Algol6n Project have become profit- making 'enterprises,other comuneros have sought membership, but the founding members have chosen to exclude them. Thus, the richest and poorest comuneros have not benefited from the reform. (Most labor employed by the coops is provided by members.) In the SAIS all members of the community benefit at least to a degree from the development projects financed by profit distribu- tions and the activities of the Development Division. Three principal results of the differing ways in which LR benefits are distributed among comuneros in the Algol6n Project and the SAIS Cahuide are the following: (1) in the SAIS the benefits are more widely distributed; (2) in the SAIS the use of profits is likely to have a greater development impact; (3) in the Algol6n Project the immediate, tangible benefits (cash) received by communal coop members are greater, and thus ensure greater member x.16 support for the reform enterprises. In the SAIS the benefits are so widely distributed and so "developmental" in nature that individual comuneros are likely to consider them insignificant. In the Algol'n Project there is. no mechanism to provide financing-for development projects. At:present the-Central Pasco is considering distribution of profits to communities for development projects only; members of the communal coops oppose this measure siie it would reduce their cash incomes. Thcome Accruing to Members- of Peasant Communities in the Algola'n Project and the SAIS Cahuide, 1972-73 Algolin SAIS Prolect Cahuide (1) Number of Families Residing in Affiliated Peasant Communities 3,066 3,237 (2) Members of Communal Coops 1,600 -- (3) Profits Distributed to Peasant Communities 6,622,000- 4,287,000 (4) Budget of Development Division -- 2,358,000 (5) Wages and Salaries Earned by' Members of Communal Coops 4,224,000 (6) Total (3) + (4):+ (5) 1o,846,ooo 6,645,000 (7) Income per Comunero (3) + (1) .2,160 1,324 (3) (2) 4,139 (6) (1) 3,538 2,053 (6) (2) 6,779 Note: In the Algolan Project, wages, salaries,, and profits are pa-id to members of communal cooperatives in cash. In the SAIS Cahuide profits are invested by member peasant communities in development-related projects. The SAIS' Development Division plans, coordinates, and executes.these and other development-related projects in the communities. Sources: -Algolin: accounting documents.and above-cited SINAMOS report. -SAIS Cahuide! "MemorialAnual" and "Situaci6n real de la. SAIS...." 6. The SAIS attempts to maintain productivity and improve the distribu- tion of income in the affected area. This it appears to do, but not to the general satisfaction of its members. Workers and comuneros compete for income generated by the SAIS, and thus in effect the tensions that existed between the estates and the peasant communities prior to the reform have now been in- ternalized by the SAIS. This reduces member support and threatens the X. 1T long-term viability of the SAIS. Member support for the production and communal cooperatives of the Algol&n Project is much greater, but technical and manageri- al assistance seems necessary for them. By turning these functions over to a Central Cooperative, the Ministry not only reduces its expenditure in this area, but may help to improve the quality of these services--technicians em- ployed by the Ministry provided services to the cooperatives and their members, but could not be sanctioned by them; technicians employed by the Central are indirectly employed by the coops and their members, and thus are likely to take their service functions more seriously than would be the case if they were public employees. On the other hand, the individual cooperatives may not place as high a priority as the government on social and technical programs which influence productivity and rural development. They might vote to reduce the scope of the Central's activities in order to reduce expenses and increase the profits accruing to individual coops and their members. Thus, in conclu- sion, the individual cooperatives seem viable, but the Central seems vulnerable. Its successful operation implies a significant flow of funds from the coops to the Central which the peasantry may not wish to allow. C. Management and Administration 1. In both the Central Pasco and the SAIS Cahuide one.of'the principal tasks of the professional staff is to convince peasant leaders of the advis- ability of specific plans and courses of action. In the SAIS, where the prin- cipal goals of both technicians and peasant leaders are to maximize profits, the technicians generally succeed in gaining support for their proposals from the Administrative Council. In the Central Pasco, where technicians wish to expand the range of the Central's activities, they receive less support from peasant leaders. Peasants fear increased dependence upon the Central and the trend toward integration of cooperatives into a SAIS; but just as important, they oppose expansion of the Central's budget, which must be funded by the cooperatives. 3. In the Algoln Project technical efficiency seems to have been sacri- ficed in favor of peasant control. At present the government is attempting to improve technical-administrative aspects of the cooperatives' operations by centralization of many functions, first in the Central, ultimately through the formation of a SAIS. The peasant members of the 23 cooperatives formed in the Project oppose this re-integration process, and thus, in the eyes of policy makers and technicians, they restrict productivity. In the SAIS Cahuide the introduction of participatory mechanisms does not seem to have significantly reduced the overall efficiency of the operation, since the pre-reform production unit has been maintained, and since the peasants who participate in decision- making are not the enterprises's workers (who would like to increase wages and huaccha numbers) but representatives of neighboring peasant communities On are as interested in maximizing the enterprise's profits as are the tech- nicians). 4. Within the Algol6n Project the performance of individual cooperatives is scrutinized by officials of the Central. The Central's Vigilance Council does not function, and other formal mechanisms for monitoring the Central's activities are not yet functioning adequately. The Ministry keeps a close watch on technical aspects of the SAIS' operations, but control and supervision of participatory aspects of the reform enterprises' operations seems inadequate. X. 18 5. One of the government's objectives in forming the SAIS and Central Cooperatives is to reduce the-deoendence of LR beneficiaries upon public in- stitutions, particularly the Ministry. In neither the Algola'n Project nor the SAIS Cahuide do public agencies play leading roles in management or tech- nical assistance. 6. Small cooperatives often encounter accounting problems. in the Algolan Project,Peru's first Central Accounting Office was established to provide accounting services for a number of independent cooperatives, and experience here and elsewhere indicates..that accounting is one area in which centralized facilities can provide valuable services to reform enterprises. D.- Social Problems 2.-5. Social harmony is especially problematic in the SAIS since the interests of Production Units' workers and members of affiliated peasant com- munities are quite distinct. Peasant leadership positions are monopolized by comuneros) and peasant communities receive the bulk of profits produced by the Production Units. Thus, the SAIS' workers feel exploited and react hostilely toward the comuneros. This problem seems inherent in the SAIS model and is likely to lead to continuing internal tensions and conflicts. In the SAIS Cahuide workers have recently formed a labor union to present their demands before the SAIS and public authorities. To date wages and huacchas have been the principal issues raised by the union. XI.19 failures are likely to overshadow the numerous less-conspicuous success stories in political terms, and discourage continued support for new reform enterprises. 2. In the early phase of reform activity OIDECOOP spread the gospel of traditional cooperative doctrine, but without great success. More recently implementation of the reform has been guided more by practical considerations than by ideological convictions. The policy of cooperativization at all cost has been abandoned. Coop and SAIS members have been allowed to keep their own livestock and small plots of land. More public resources have been spent on teaching practical .apsects of cooperative management than teaching formal principals of cooperation. This change in emphasis is, I think, an appropriate one, since most LR beneficiaries are more interested in practical issues con- fronting them on a daily basis than in theory and doctrine. Peasants were often hostile to abstract, unconvincing, lectures on the inherent benefits of cooperative life. If peasants are to be convinced of the advantages of cooperation, they must see concrete benefits. Thier coops and SAIS must function well, and this depends more upon adequate organization and technical assistance than upon an understanding or acceptance of traditional cooperative doctrine and ideology. XI. 1 AGBARAI ZO.L I -- CUZCO I. HISTORICAL AND NATURAL SETTING A. Natural Setting 1-2. Peru's Eleventh Agrarian Zone is comprised of the departments of Cuzco and Madre de Dios. All the cases visited were in Cuzco, near the towns of Cuzco and Sicuani, and this Zonal Report concerns itself primarily with aspects of the LR process in these areas. Cuzco, like Junin and Cerro de Pasco (Zone X) and Puno (Zone XII), is in the highlands, but unlike these other two Zones/;much of Cuzco's farmland is arable, and crop production is an important source of rural employment and income. In the highlands)cropping is more productive but more risky than livestock production. Crop production is less productive and subject to greater risks in the highlands than on the coast. But more important for our study of reform enterprises is the fact that highlad cropping is highly seasonal in comparison to livestock production and coastal crop production. The seasonality of rainfall and temoerature (frosts!.) imposes a rigid schedule upon cropping activities and makes timeliness a critical determinant of productivity. If credit, seed, fertilizer, equipment, and labor are not made available to agriculturalists at the correct time, their entire year's crop is jeopardized. In contrast, livestock production is less influenced by seasonal climatic factors and far less dependent upon the supply of labor and off-farm in-outs (See Section I.A.2. of the Zonal Report for Puno). On the coast most crops can be seeded throughout the year and thus can "wait" for in-uts to arrive. (The principal exceptions are cotton and rice, but even rice can be seeded much of the year in many places, and if the optimal time passes for either of these crops, others can be substituted.) The longer the wait (fields lying idle) the lower the value of output per ha. per year, but in most cases waiting does not seriously threaten the crop. In addition to making the timeliness of non-farm supplies of critical importance, the seasonality of highland crop production makes competition for labor severe during the seeding and harvesting seasons. As can be seen from the Case Reports for Cuzco and Puno, cooperative and SAIS members would rather work on their own plots of land than in their enterprises' fields during the seeding and harvest seasons. Labor shortages motivate the reform enterprises to mechanize. Another consequence of the seasonality of croppihg in the highlands is the seasonality of agricultural commodity supplies, and the resultant strains placed on commodity market channels and storage and processing facilities. Compounding these problems, the bulk of production is marketed during the rainy season, when commodities are most perishable and difficult to transport. B. Socio-cultural Setting 1-2. The total population of the department of Cuzco is 713,000. Rural and urban populatio.s are 456,000 and 257,000 respectively. The largest towns XI. 2 in the department are Cuzco, Sicuani, and Santa Ana, with populations of 121,000, 13,000, and 11,000 respectively. Cuzco, like all of the highlands, has been a traditional source of migration to the coast. 3. Culturally, the department is predominantly rural and indigenous. The capital city, Cuzco, is the principal city in the southern highlands, and has traditionally been inhabited by government officials, clerics, lawyers, merchants, artesans, landowners, and their rural-born servnts. Tourism is now big business. Rural people are overwhelmingly non-Spanish speakers or bilingual. Prior to the reform most land was owned by hacendados, the remainder being largely communal property. Traditional social cleavages are sharper in Cuzco than in any other part of Peru, and rural violence and politicization have deep historical roots ---all originating in the region's latifundist-dominated agrarian structure. 4. As in other parts of the highalnds (See Reports for the Tenth and Twelfth Agrarian-Zones) income and levels of living-are extremely difficult. to estimate in Cuzco, since much of the rural production does not enter . . urban markets, and much of the labor force is.not dependent upon cash wages and salaries. One point is clear: measuring income in terms of cash earnings* (particularly cash wages) is totally inappropriate. By dwelling on the point that the haciendas of the region paid very low (or no) wages, critics of the latifundia system have overstated their case -- hacienda residents, were generally labor-tenants, living in. large part from the crops and live- stock they produced on hacienda lands, and paying rent in cheap labor. 5. Cuzco Has traditionally been-one -of the most politicized.highland areas in the eduntry. In the 1960s guerilla activity concentrated in the recently settled La Convenci6n and Lares valleys. to the north-of Cuzco, but rebell: and 'Political activity have also been common in the areas of indigenous settlement. -The peasant communities have long fought to defend their lands against encroachment by neighboring haciendas-; they typically have no more confidence in public officials than in the hacendados themselves. ("El juez es peor que el hacendado.") The majority of estates in the region were unionized prior to the LR. Peasant communities were well-organized and often politicized. C. Pre-reform Agrarian Structure . 1. The principal crops grown in the highlands of Cuzco are potatoes, corn, and wheat. (Coffee and cacao are important in the Convenci6a Valley region). Cropping is much more important in Cuzco than in Puno, but most production is still carried out on a small-scale basis, for home use and local markets. A greater part of the cropland is irrigated, and mechaniza- tion is more prevalent in sections.of Cuzco than anywhere in Puno. Much of Cuzco-s pastureland is at a lower altitude and is better watered than the pastures of Puno, Junln, or Pasco. Consequently, cattle raising is more important in the Eleventh Agrarian Zone than in the Tenth or Tvelfth. In all of the four coo-ps visited in Cuzco cattle numbers exceeded the numbers of sheep. In the six coops and SAIS visited in Puno the number of sheep exceeded the number of cattle. XI-3 2-3. Prior to the L., the bulk of the department's land was in large haciendas. The remainder of the agricultural land was held rimarily by -easant communities. As in most of the highlands the latifundia of CuZco were organized around variants of the colono system. Labor tenancy was the -rincipal tenure system -- estate residents cultivated small plots of hacienda land and maintained their livestock on hacienda pastures; in return they were required to work a few days each week or month for the estate's administration receiving low (or no) wages. A few hacienda families were responsible for looking after the haciendas' livestock on a full-time basis, however, the majority of the estates' work was done by part-time workers. in some cases entire estates were rented to peasant communities. More frequently, peasants from neighboring communities worked part-time on haciendas on an individual basis. Co3-aunity residents who worked part time in the haciendas were often allowed to graze a limited number of livestock on hacienda lands. Wages were generally loryw, and in some cases no wages were paid to hacienda residents. Charges for pasturage were also generally low, and rent was usually not charged for cropland. However, most estates limited the area which each f=mily could cultivate. Peasant communities in Cuzco conserve vestiges of traditional self-govern- ment and labor sharing, and part of the lands under the jurisdiction of communities is communally owned. In some communities oastureland is communal ly owned, and all members graze their animals on it. In some cases pasture land has been subdivided for individual use, and at times individual ownership. Cropland is nearly always subdivided for use by individual community members, and in nearly all communities "islands" of privately owned cropland are found. In extreme cases islands of communally owned land are found amid a patchwork of small private parcels. (In Quehuar -- Case No. 17 -- all land use is individual,) Tator exchange for individual production (including cropping, house- raising, etc.) and labor pooling for community tasks (such as road repairs, canal construction, and school building) are common in most peasant communi- ties. Put it must be understood that such activities are not similar to work in production cooperatives on four counts: (1) Land is held in small individual Plots, not large collective units. (2) When labor is exchanged among individual producers the man who occupios the plot on which the work is being carried out is the boss. He directs work and is solely responsible for the outcome; at the close of the season he is owner of the product. Decisions are not made democratically, and profits are not shared. (3) When labor is pooled for community tasks, such tasks require community action for only brief -periods -- a day or two, or a week at most. Such wor1 is usually performed in a festive atmosphere, with food, drink, and often a full-fledged party afterward. (4) Labor exchange and pooling are community traditions accepted by community members in part because they arec ueful for getting work aone, but also because deviance is strongly sanctioned within the community. Feasant communities often oppose cooperative institutions, esopcially where they land redistribution or pooling. By attempting to 4mpose new rules and institutions iublic officials cftun disrupt and jeopardize the survival of communal traditic-ns and institutions. XI. 4 4. An appraisal of pro-reform technology is difficult, both because of the absence of good information on this subject, and because of th, high variabil- ity of conditions within the region. In general, however, technological levels on both latifundia and minifundia (the communities) in Cuzco seem to have lagged behind those of other parts of the country. This is certainly true for the cases observed. Technological backwardness seems to result in large part from the rigid traditional rural social structure which provided little motivation for either the latifundist or his colono to improve production methods, and kept peasants ignorant and isolated -- unaware of progress in either social con- ditions or technology in other parts of the country. (On this point see especially Case Report No. 19). It would be a gross exaggeration, however, to state that technology was strictly "traditional" and unchanging. Many haciendas owned, e.g., trucks, threshing machines, and even combine harvestors; fertilizers and improved seeds have come into widespread use. II. THE LR PROCESS A. Impact of the 1964 Law As in the rest of Peru, few estates in Cuzco were expropriated under the 1964 LR law. However, there was great pressure from the peasantry for reform and the 1964 law had im-ortant indirect effects on peasant movements and landlord responses. Essentially the law stalled real reform! giving landlords a few more years in possession of their estates and the opportunity to de- capitalize them before expropriation. It also encouraged peasant communities to purchase estates rather than invade them. (Under the reform all beneficiarie were to compensate the state, which was in turn to compensate the landowners). A few estates were sold by their owners to peasant communities (See Case Report Ko. 17). However, the majority of the department's peasants continued working on the estates, waiting for the reform to begin. B. LR Under the 1969 Law 1. To date few reform enterprises have been established in Cuzco. Of the 2.4 million has. subject to expropriation in the department, only 31 percent had been affected and 16 percent adjudicated by the end of August 1973. The first and biggest enterprise set up in Cuzco (and one of the biggest headaches for the Ministry, The Bank, and SINAMIOS) was the production coopera- tive T'pac Amaru II on the Pampa de Anta (not to be confused with the SAIS T6pac Amaru in Junin). Initially the Ministry planned to fuse the numerous haciendas and small and medium-sized properties on this fertile plain north of Cuzco,into three independent production coops. Later, for apparently political reasons -- wanting to make as big an impact as possible on both zhe local and national levels -- it was decided in Lima to fuse all the estates into one giant cooperative. Hundreds of public officials, including dele- gations of international experts converged on the area to draw up the adjudi cation model, motivcte and educate the residents, and plan all aspects of the rugion 's post-reform development. Newspaper reporters, high-ranking military officers, Peruvia and foreign students,, and loads of tourists dropped in to se e the new cooperative. The members soon got bored with the publicity and XT.5 especily w.~ith the speeches, romises, plans, studies, =roposals, evaluations, and meetings which -produced little improvement in their own living standard. Many concluded that the reform was a farse (See Case Reort No i8). Most of the other reform enterprises in the department have been establishcd only recently, and are generaIly smaller, less well-known, and also more successful than the CAP Túpac A-ru II. One exceptio-n is the immense SAIS arangen, just outside of Sicuani, which a Mjinistry official from the area worried might turn out to be "even a bigger mess than the CAP Tpac Amaru 2. As stated above, the politicized Cuzcan peasantry has clamnored for reform for years. Nievertheless , peasants have generally not played active roles in initiating or guiding the reform process. The adjudication models have generally come from the Zonal Ministry Office and from Lima. An exception to this generality is the community of Qúehuar (Caso No. 17) which purchased a small estate in early 1969, prior to the pronouncenent of the new reform law. Politics played a major role in the formation of the CAP Túpac, Amaru II, but it was policymakers in Lima not the politicized peasantry who were the principal actors. 3. Tmplementation of reform policies has been less satisfactory in Cuzco than in the other Agrarian Zones visited, for several reasons: (1) A low na- tional priority has been given to the Cuzco region, manifested in the inade- ouacy of personnel and resources at the disposal of the Zonal Office, the tardiness of expropriations , and the long periods of interim management prior to the formation of coops and SAIS. (2) The estates, were decapitalized, makin8 in 1t e r i m management difficult and costly (e.g.., tractors, ecuip- ment, and even hand tools had to be purchased). The ignorance and isolation of hacienda residents and absence of adequate control on the part of the Minis- try gave landowners the opportunity to remove capital assets from their estates prior to expropriation. (3) Little LR activity had occurredin the Zone prior to 1969 (in comparison to e.g., Puno, where plans for expropriation had at least been made). (4) Close ti2s between local Ministry personnel and landowners made aggressive early action unlikely. Later, personnel was rotated between the Agrarinn Zones to avoid this problem. During the interim between expropriation and adjudication crop production suffered notably in all of the ostates visited duc to inadequate management and the scarcity of tillage equipment. In Noveber 1973 Ministry officials in Cuzco told me that the scarcity of machinery was still thr principal probl-m facing the Special Cornittec which manages the majority of Cuzcan estates no- yet adjudicatced. Officials stated that by December 1 it would be too late to seed potatoes , and that , due to tho shortage of tractors , the com=mittee would have to plant cereals s-uch as wheat and barley or lands which would ideally be under potatoes. M,anagement problems were sever- -ntil very r7cently; estate workers were unpreoared to handle the technical aspects of uroduction planning and operationE and the Ministry was unable to provide necessary assistance. Expansion of th n4iýjstry's technical assistance service : the last two years has greatly helped to solve this management prob½em XI.6 Since adjudication, many reform enterprises have continued to experience serious economic dislocations, again especially in cropping, for the same two reasons -- scarcity of management and equipment. Production on estates not affected by the reform has also. declined as a result of uncertainties produced by-the reform process and the absence of a clear definition of the future roleit be played by the non-reform sector in Peruvian agriculture. In many areas peasants press for expropriation of such estateq, and their owners hcsitate to invest or even maintain normal production operations for fear of losing their lands. (On this point see especially Case Report No. 19). 4. Most of the reform enterprises created in this Zone are production cooperatives. The only SAIS is Marangeani, near Sicuani. In a few cases peasant communities have received lands (See Case Report No. 17). No Central Cooperative had been formed at the time of my visit. 5. SINAMOS has had an especially difficult time in this Zone, due to the suscicion and politicization of the peasantry. The Bank comes in for scathing criticism from many coop officials, as a result of the numerous "pica- yune requirements and unwarranted delays" involved in the lending process. Bank officials noted, however, that most of the delays in the lending process resulted from sins of commission and, more often, omision on the part of the prospective borrowers, not the Bank. The first year any enterprise seeks credit from the Bank it is considered a "new borrower" and must demonstrate its credit-worthiness; copperative officials are often dumbfounded by these procedures and slow in complying with them. Another significant problem, and one the Bank can do little to solve, stems from the fact that coop officials do not prepare their final production plans, and hesitate to sign binding loan documents, until the planting season is upon them and they have made their final appraisals of growing conditions. Once the planting season has arrived, they want credit immediately, but the Bank's procedures require 10-l days at mi.nimum for processing loan requests. When confronted with the fact that many coop officials complain bitterly of the lengthy delays in acquiring credit, Bank officials in Cuzco presented me with a list of credit operations over the last year which demonstrated that most "known borrowers" received credit within 10-15 days of application, and most "new borrowers" within 40-60 days. III. PRINCIPAL PROBLMS FACING THE LR PROCESS 1. As mentioned in the first section of this report, natural conditions allow crop production in many parts of this Zone, but impose a rigid seasonal schedule on cropping activities. As a result, the demand for labor, credit, tillage and harvest equipment, seed, fertilizer, and other inputs is highly seasonal, and scarcities and delays in input deliveries can jeopardize an entire year's crop. The seasonality of harvesting strains marketing channels and results in wide price fluctuations. Processing facilities cannot keep pace with the harvest for a few months and are under-utilized the rest of the year. XI.7 Qe=sonali5y is important for the LR process for four main reasons: (i) new reform enterprises and interi' =anagement institutions (Special Committees and rovisional Conmissions) often suffer from ad=inistretive problems which result in hesitancy and delays in both production planning and operations. Under any conditions jelays are bound to reduce productivity somewhat, but w^Gr seasonality is not pronounced delays are not likely to ruin a crop. In the highlands, where crops must be seeded and harvested on time, delays can spell econonic disaster for a nev enterprise. (2) Decapitalization of estates has reduced their capacity to seed and harvest rapidly and at the optimal times. (3) In the highlands, where natural conditions permit, members always grow crops of their own, and during times of peak labor demand (seeding and harvest) they prefer to work on their own plots rather than on the fiulds of their coop or SAIS. ( 4) The reform not only creates new agricultural enterprises, but new supply and marketing systems as well. For many enterprises credit has been especially problematie, delaying field preparation and seeding far beyond the optimal dates, and increasing the likeli- hood that rain and frost will destroy the crop. The harvesting and marketing of some crcps, such as potatoes, requires a permit from the Ministry, and Ministerisl delays have jeopardizcd the harvests of sone new enterprises. Supplies of seed potatoes and fertilizers are also regulated by the government, and here too delays and scarcities are very serious matters. In addition to seasonality, natural conditions in the highlands present serious risks for the reform enterprises. Prolongued droughts occur from time to time and can bankrupt a livestock operation. Agriculturalists are plagued by more freauent, and much less violent aberrations in climatic condi- tions. Even.slight alt erations in the periodicity and degree of annua! rains and temperature can produce marked fluctuations in crop yields. Thus highland cropping enterprises are subject- to far greater risks than are the highland livestock enterprises and coastal crcp producers. 2. To date the reform has increased employment on the affected estates only marginally. Intensification and diversification of productiye activitics are by no means automatie results of cooperativization or the formation of SAIS, but must be impimented through agressive policies of the new reform enterprises (especially through the actions of innovative managers) and of public agencies (especially the Ministry). Innovation and aggressivity in th:sL areas are scarce. A casual observer (especially one trained in conventional micro-economic theory) might think that decapitalization under thu reform process could produce a significant positive employ=ent effect -- substitution of machinery for labor. However, in the cases visited the result seens to have been a deeline in seeding rather than a substitution of inputs. Coop officials cited tro reasons for this: (1) The new reform enterprises can not seed profitably without tractors and heavy machinery sny more than ex-haciendas coulk behasue of the need to cultivate and seed rapidly, and becaase of the currently high level of wages. (2) The members do not want to York in the fields "como burritos," transporting heavy loads on their backs and cultivating with draft animals or by hand. They aspire to a bettur life. XI. 8 In many coops cropland now lies idle. E`hen questioned about how this land could be brought under cultivation, coop leaders and members indicated two possibilities: (1) mechanize, or (2) turn the land over to individual producers rho could seed it with family labor. They universally advocated the first solution, since the second implies increasing the number of families living on the estate, and a reduction in the share of coop profits received by each. Thus, for very rational reasons the coop members opposed policies which would increase production and employment and improve the distribution of income. 3. Technical levels have not improved in Cftzco as they have in many other parts of the country largely as a result of three factors: (1) poor financial position of the new reform enterprises; (2) administrative deficiencies in both the reform enterprises and in the Ministry;-(3) the absence of new types of technology which could-be profitably introduced in the area. (Highland crop- ping and cattle raising are,far less amenable to technological improvement than are sheep raising in the highlands and cropping on the coast). 4. In a few enterprises, such as the CAP T'pac Amaru II, capitaJization has been rapid, but in most cases investment has been curbed by the same three factors cited in the previous paragraph. 5. in Cuzco production particularly cropping -- seems to have suffered more greatly than in the other Zones visited. Several reasons accounting for this fact were cited in Section III.1. above. As agronomists note, "El medio es muy dificil" -- the terrain is very rugged, transport and communications are difficult and costly, field size is necessarily small, the climate is perverse, and the peasantry is in most cases ignorant and suspicious of outside "help." The high variability of natural conditions -- both climate and soils -- make micro-planning and the rapidity and flexibility of decisionmaking extremely important. The government's emphasis on consolidation of units and planning "al nivel de escritorio" are highly inappropriate in this respect. The poor performance of reform-related supply and marketing systems further threatens crop production. 6. The public sector has a very difficult time implementing reform policies in Cuzco. The iumber one problem on everyone's mind is the monsterous CA' TQ Amaru II. What was intended to be a showcase for the reform process has turned out to be a negative example -- how not to implement the reform. Miziistry officials in Ctzco now admit freely that this coop is a failure and should be split up. They claim that the Zonal Office never wanted to form such a giant unit, but was instructed to do so by the National Agrarian Reform Office in Lima. In their view the principal reasons for forming a single large enterprise were political, not economic, and that now political consid- erations delay the inevitable disintegration of the unit into a few (say three) sma.ller, managable enterprises. But the Ministry has serious problems in its other reform enterprises as well; production is down and financial c-onditions are not promising, administra- tive personnel is scarce and the memfoers of new reform enterprises are not capable of handling the technical aspects of enterprise management. As pointed out above and in the Cse Reports, these problems are due nore to the pre-reforr agrarian structure and natural conditions of the region than to glaring inadequacies in the Ministry itself. In Cuzco the test of 1inistry rerforma_ce XI .9 is greatest, and thus here its performance seems poorest. In this highland area the reform policies of the government -- emphasizing cooperativization and state control -- are less suited to prevailing social and natural condi- tions than they are in any other area visited, and thus here they are least likely to succeed. The 1inistry takes the rap. SINAMOS has an even more difficult time than the Ninistry, ,ue in part to the ooliticization of both urban and rural people in Cuzco. At the time of my field work (mid-November) violent university strikes dirccted at.SITAMOS, took place in Cuzco. In late November the Cuzco SINAMOS Office was burned by strikers. Fural people do not seem to be much more receptive or friendly to SINPOS. In one cooperative visited a leader stated proudly, "SINAMOS le hemos rechazado. Es una farsa lo que hace!" Many cooD officials fault the Bank for making credit difficult to acquire and thus late. One official stated "Siempre viene cuando ya se termin6 el sem- brio." As stated in Section II.B.5. above,Bank officials insist that their institution is less at fault than are the new coop officials who are slow to decide what to plant, and who come to the Bank unprepared to meet "standard" banking requirements. Over time credit problems should become less critical for three reasons: (1) The first loan an enterprise requests from the Bank requires considerably more paper work and delay than subsequent loans. (2) With time coop and SAIS officials will become familiar with banking procedures and will be more likely to present-timely loan requests to the Bank. (3).A Bank reform is now in progress which should simplify lending procedures and make them more appropriate for the new reform enterorises. 7. None of the four coops visited in Cuzco had a professional manager. In two (possibly three) of the four, competent, agressive leadership seemed to be absent. in one of the coops (Tupac Amaru II) corruption and apathy have surfaced time and again in the coop's leadership. In Ram6r Castilla and Tahuantinsuyo leadership appeared timid and hesitant. In all four cases (including the peasant community Qu6har) the Ministry played a very active role in technical assistance. In all but Qu4'huar it could be said that the Ministry manages the enterprises. Only in Tdpac Amaru II did it seem likely that the enterprise could support the salary of a competent professional manager. But is the enterprise manageable? In the others members and officials expressed the hope that "some day" sons of pres3nt members would become sufficiently trained and motivated to provide the enterprise with management services at low salaries. (In. Quehuar it was noted that a competent young person from a neighboring community had offered his services at S/.h,0 -- about $100 -- per month,but the coop felt that it could not afford even this). In all but T6pac Amaru II there seems to be adequate member support for the coop. In Tpac Amaxzu II members are apathetic or worse. A Ministry official noted thz.t if the coop fails most members would not even notice -- they derive practically all their personal income from non-cooperative activities. Very few members rely upon the coop for full-time employment. Many members would welcome the failure of the coop since this would allow them to grab land now cultivated by the enterprise. Officials in the Yinistry's special office for Reform Enterprise Promotion and Credit stated that the principal problem faced by the new enterprises was administration. Competent, experienced, honest, revolutionary technicians are XI.10 extremely scarce and demand high salaries which most of the new reform enterpris- es cannot pay. T Jaining local people is costly and time consuming. The Ministry lacks both personnel and resources td provide adequate managerial assistance for all the reform enterprises. Central Cooperative facilities have not yet been set up. Although the region is highly politicized, local politics per se does not seem to be a critical factor in enterprise performance to-date. In the peasant community Quehuar, coop officials feel that the Bank fails to provide them with adequate credit because reactionary Bank officials hope the- coop will fail. Bank officials deny this, noting that since their coop was formed in 1969 it has never'turned a profit. In Tahuantinsuyo and Ramn Castilla political variables seem unimportant. In the case of TGpac Amaru II political considerations at the national level have certainly influenced the adjudication model and subsequent cooperative performance, but political organization of the workforce does not seem to have been an important determinant of the coop's failures; at no time did public officials mention politicization as an important factor in this case. Where political variables are of great importance is at the national level. Will' the Bank provide credit for some reform enterprises which will be incapable of repaying loans? If not, they will fail. Will the Ministry get the resources necessary for consolida.tion of and continuing assistance to the new coops and SAIS? If not, many will fail. Will the role of the remaining private sector be clearly enough defined to remove the present disincentives to production? Will adequate technical assistance and services be provided to the non-reform sector? If not, production in this important sector will stagnate. IV. ISSUES (For'both Agrarian Zones XI .nd XII, Cuzco and Puno) A. Labd Tenure and Labor Systems 1. In Cuzco and Puno the cooperative movement had little impact on rural areas prior to the initiation of the 1969 LR process. In Puno, especially, credit and consumer coops were established in the principal towns and in some parcialidades, but these had no impact on hacienda residents. Very few service cooperatives were established in rural areas. The only production coops visited which were established prior to the initiation of the 1969 LR process were in two peasant communities -- Soratira and Qu'huar (see Case Reports Nos. 17 and 26). A few other small estates were transformed into production coops in Puno (see Section II.B.l. of Zonal Report for.Puno). The Ministry's SIPA program benefited primarily large and medium-sized producers, but small producers did learn new techniques from Ministry agents- and from their neighbors,and were beginning to use fertilizers and pesticides prior to the 1969 reform. A major deterrent to modernization of methods on the small farms was the inadequacy of delivery systems. Agricultural inputs WEre seldom sold in small villages,and producers who wished to use fettilizer or other purchased inputs had to travel to provincial or departmental capitals. Merchants often sold small quantities of these inputs at exorbitant prices and provided very little information to peasants on methods of application and dosages. Puno's Central Cooperative (which has several local outlets) set XI. 11 up in 1970 has benefited small farmers not directly affected by the reform process by providing them with a low cost source of farm inputs. Prior to the reform, the most important forms of group action in the highland areas of Cuzco and Puno (not La Convencion) originated in the peasant communities. Traditionally the communities had fought against the encroachment of neighboring haciendas; in the 1960s numerous land invasions and violent conflicts occurred. In most cases the communities were beaten back; in a few instances hacienda lands were sold to communities. Military repression and promises of land reform helped to prevent de facto land takeovers. 2. In Puno implementation of-the LR program has produced fever social and economic -dislocations than in Cuzco. Several factors are responsible for this fact: (1) Host estates in Cuzco were operated by their owners or owned by persons living in the area, so that no formal administrative staff was nec- essary; in Puno -the majority of estates were absentee-owned and each had its own small administrative staff and accounting personnel. Thus, after expropriation the estates of Puno were generally left with better qualified coop leadership candidates than were the estates of Cuzco. (2) the estates. of Puno are larger, more profitable, and more able to afford the services of full-time, professional managerial personnel. (3) Large livestock operations are more easily managed than are large crop-producing units, and thus the estates of Puno can be more easily fused to form units capable of supporting a professional manager than are the estates of Cuzco. (4) Prior to the reform. estate decapitalization was severe in both Cuzco and Puno, but capitalization of new reform enterprises has been far easier in Puno -- Puno's livestock enterprises capitalize "naturally" through the reproduction of cattle and sheep, while Cuzco's cropping units can be capitalized only through the purchase of tractors and equipment. (5) Cropping in the highalnds is much more demanding on delivery and market systems than is livestock production, and thus poor performance of the Ministry -- which coordinates input purchases. for many coops -- and the Bank -- which provides credit -- cause more serious dislocations in Cuzco than in Puno. (6) Highland cropping is subject to unpredictable climatic variables which make productivity highly dependent upon timely management decisions; livestock production is not nearly so dependent upon the agility of management. Thus management problems common to interim management bodies and new reform enterprises cause more serious dislocations in the Cuzco region than in Puno. (7) Livestock production requires a few full-time workers. Cropping demands labor primarily in the seeding and harvesting seasons, causing a conflict of interests between coop members who cultivate small plots and the coop's management, which is respon- sible for seeding and harvesting crops on the coop's fields. Prior to the reform the hacinedas could force their residents to work on their fields but the coops cannot do so without seriously jeopardizing member support. Both undercapitalization and the labor shortage have caused serious declines in crop production on estates subject to LR in the Cuzco region. (8) The stock of technical improvements which can be relatively easily introduced in cattle enterprises in the Puno region.is greater than the stock of known improvements which can be introduced in cropping in Cuzco. This is due in part to the greater influence of climatic and ecological factors over crop production than over livestock production in the highlands. It is also due to the inherent differences of scale in these two types of operations -- an improvement introduced in an immense livestock operation such as Santa Lucia XI.12 (58,000 sheep) can have a much greater effect on production than can an im- provement in, e.g., potato'production in Tahuantinsuyo (10 has.). In these highland areas, beneficiaries have not participated as actively in the reform process as they have on the coast (especially around Lima). The principal cases visited in which peasants have influenced the reform process are the peasant communities Quehuar and Soratira. In one-other small but highly productive estate, Posoconi, members have demanded to manage the estate themselves and have been quite successful to date. In most other cases LR beneficiaries have accepted'the reform passively. In the giant Tipac Amaru II a few members seem to feel that the adjudication model designed in Lima is workable. Most members participate in cooperative work and management only marginally and tend to view the coop as a.politically inspired white elephant. In no cases have LR beneficiaries pooled their private plots or capital to form a collective enterprise. Where the government has attempted to impose collectivization (e.g., Tahuantinsuyo) it has encountered strong peasant resistance, contributed to social and economic problems, and finally failed to collectivize the estate. 3. Peruvian agrarian legislation defines the production coop as a worker- owned enterprise in which all productive assets are used collectively by the membership -- individual production is strictly prohibited. However, in practice,all coops in the highlands tolerate individual crop and livestock production. The coop is also defined as a unit owned by natural persons -- no in- s4 itutions can participate in ownership, and by implication none should partici- pate in management. However, in Funo strange coops have been formed which have peasant communities as members. In Cuzco the majority of coops seem to be managed by the Ministry rather than by their m--ribers. Treatment of the private sector has also deviated from what many observers interpret as the spirit of the law. In 1969 it appeared that only large estatces would be subject to expropriation, and that many of these would be left with - a small part of their land. In practice, properties of all sizes have been affected -- including some of less than 10 has. In only one of the cases visited in all of Peru -- Tahuantinsuyo -- was the landlord left with part of his original estate.' One of the principal uncertainties produced by the new LR process is the uncertainty of continued private land ownership. The government is now providing private owners with "Nonexpropriation Certificates," but these stipualte so many conditions under which land can be expropriated that they provide little comfort for land owners. The three preceding paragraphs indicate that the government has been quite flexible in implementing its agrarian legislation. On the whole this flexibili- ty has come through "extralegal" and ad hoc procedures, which have increased uncertainties, particularly for the remaining private landholders. B. Economic Issues 1. Five distinct types of economies of scale (ES) arerelevant to the study of reform enterprises (1) ES in production planning and XI.13 administration; (2) ES in production operations; (3) ES in delivery, market, and processing systems; (4) ES in the LR process itself; (5) ES in public services (especially technological assistance ). In most of the highlands ES in cropping operations are of very little importance. ES in livestock operations are much more significant, especially where complementary ecological zones are contiguous. In both cases ES in planning and administration are more important than ES in direct production, but due to the importance of unpredictable climatic variability in cropping, planning and administrative ES are more significant in livestock operations than in cropping. The same holds true for delivery, market, and processing. The larger the individual enterprise and the larger the market, the greater the benefits to be derived from increasing the scale of delivery, marketing and processing systems. Thus Central Coops and special public agencies and programs are likely to be more beneficial in the livestock area of Puno than around Cuzco. Ministry personnel tend to believe strongly in economies to scale, in large part because their own LR and technical assistance programs are more easill implemented where a few large enterprises.are involved. For this reason the Ministry is likely to fuse estates into coops and SAIS which are larger than optimal from the standpoint of production planning and operations. In highland cropping areas ES in technical assistance are likely to be overestimated, due to the importance of local variations in -soils and weather. Government organizeL delivery and market systems are likely to be too bureaucratic and sluggish to provide adequate timely services to agriculturalists. In all cases observed, membership participation in the implementation of reform and in the management of reform enterprises is negatively related to enterprise size. In many cases there is a trade-off between productivity and participation. In Santa Lucia, for example, fusion of several ex-estates has seemed to help boost livestock production, but members participate only marginally in management. In extreme cases, such as the CAP Tpac Amaru II, large size reduces both productivity and participation. The large "model LR enterprise," designed by outsiders unfamiliar with practical aspects of crop and livestock production, is simply too large to manage. 2. In the case of Puno's huaccha sheep, it seems clear that the elimina- tion of traditional individual production could increase productivity -- the huacchas produce far less than do the sheep of the reform enterprises. However, the members of new reform enterprises oppose the elimination of the huacchas because they fear total economic dependence upon the enterprise and the leveling of incomes which this implies. The leveling of incomes would benefit the major- ity of the reform enterprises' members, but would not, of course, benefit the large producers -- the most vocal spokesmen for huaccha interests. Dependence upon the new reform enterprises is feared for several reasons: (1) If the enterprises fail the members would suffer. (2) Dependence upon the enterprises means dependence upon outsiders in most cases -- managers and the state -- and outsiders have been notoriously good at exploiting such dependency relations for their own advantage. (3) Dependency upon the enterprise implies dependency upon markets, and adverse price movements could wipe out whatever gains result for increases in productivity. Xi.14 In the case of highland agriculture there is no clear reason why the elimination of individual production should increase total production. The central needs of agriculture are improved methods and timely provision of in- puts. Planning and especially operations can best be carried out on a small scale. 3. Technological change requires the coordination of new input supplies, technical assistance, and credit. Such a task is more easy in livestock raising than in cropping activities, and success to date has been greater in Funo than in Cuzco. The implementation of the LR has eliminated the uncertainty of property ownership on the estates affected by the program, and spurred capitalization and modernization. The Ministry and the Bank feel political pressure exerted upon then to provide the best possible technical assistance and credit services for the new reform enterprises.. 4. One of the major dissappointments of the reform is its impact on em- ployment. Neither striking increases or declines have been reported, and it seel likely that the net effect is a small positive one. Both the coops and public agencies dealing with them, however, are searching actively for profitable ways to increase employment. Most coops and SAIS have been forced to grant membership to a few previously part-time .workers, and the enterprises are now searching for productive ways of employing them. The case of Tahuantinsuyo shows that coop members are by no means interested in increasing membership.. or non-member employment at the expense of profits. 5. in both Cuzco and Puno rural incomes have risen as a direct result of the LR. Cash wages paid to-coop and SAIS members have risen markedly, and in a few cases year-end profits have been distributed. In Puno social investments -- new schools, medical posts, coop stores -- have been made; in Cuzco they. have not. 6. Due to the-dependence of both crops and pastures in the highlands upon climatic conditions, agriculture and livestock production are subject to greater yearly fluctuations in-the highlands than on the coast. Crops are more suscep- tible to climatic variations and managerial and supply problems than is livesto Thus, in general, the enterprises of Cuzco are more vulnerable to economic problems than are those of Puno. As one coop official in Cuzco put it, "El Banco nos joda porque nos vino el hielo! Ahora los socios nos fregan porque no viene el credito! El credito no viene y los socios no trabajan; entonces seguramente la cosecha fracasara otra vez!" C. Management and Administration 1. In most of Puno's reform enterprises professional managers are employed None of the enterprises visited in Cuzco had professional managers; only one -- T-dpac Amaru II -- planned to hire a professional in the near future. The two enterprises visited in Puno which did not employ professionals were rela- tively small coops. In these cases it was apparent that member participation in coop planning and operations was greater and more fruitful than in the larger coops visited. XI.15 In Cuzco neither large nor small enterprises had managers, but worker participation did not seem to compensate for this absence of professional expertise. Instead, the Ministry played a central role in management. Four factors seem to be responsible for the absence of active member participation: (1) The enterprises are relatively new. (2) They lack qualified personnel for management tasks. (3) They are more dependent upon the Ministry than.are the livestock enterprises of Puno since it coordinates the supplies of credit, seed, and fertilizer necessary for cultivation. (4) These estates did not have strong union organizations or traditions of local government as did the cases cited above for Puno -- Posoconi and La Uni6n de Soratira. Where professional managers are present, they generally take on responsi- bility for most management tasks, leaving "social aspects" of coop administra- tion up to elected coot officials and formal coop bodies. 2. Where workers' organizations are strong and in favor of the coop, and where technical aspects of enterprise operation (especially financing) are not too complex -- e.g., La Uni6n de Soratira -- neglect on the part of the government may be a good thing. However, where workers are not organized and led by competent leaders, where workers are not wholeheartedly in favor of the coop, and where planning and oeprations require sophisitcated management analysis and negotiation with public agencies (e.g., the Bank),neglect on the part of the Ministry can spell disaster -- e.g., Tahuantinsuyo. In some cases the Ministry provides nearly full-time technical managerial assistance, but even in these cases it probably does not mean that the Ministry is being overly paternalistic. Without Ministerial support such coops as the Tpac Amaru II, Tahuantinsuyo, and Ram6n Castilla would soon disintegrate. 3. Democratic decision making is more time-consuming than is conventional management by a professional technician. This may be a problem in highland reform enterprises where timeliness is important for cropping. Coop and SAIS members often oppose measures which could increase their enterprise's productivity -- e.g., the elimination of huaccha sheep in Puno. Democratic control also hampers the work of professional managers, since coop and SAIS members -- ex-hacienda laborers and comuneros -- often act vindictively toward technical personnel. Both democratic decision making and technical management in large enterprises result in less-than maxinum productivity by seeking to maximize profits.. As was clear in Tahuantinsuyo, both members and technicians oppose bringing more members into the enterprise and parcelization of cropland because, while these measures could increase crop production, they would result in lower profits for the cooperative and lower incomes for the present members. In few cases in Puno and fewer yet in Cuzco did peasants seem capable of managing their own enterprises without the services of a professional manager or the Ministry. Each of the three coops which functioned well without professional management -- Posoconi, Qu6huar, and La Uni6n de Soratira -- were small enterprises. Two of the three were peasant communities; the third was a very well organized and profitable enterprise prior to the reform where worker were familiar with union organization and intermediate-level administrative personnel became members of the coop. Most of the enterprises in Puno seem too large for their members to manage efficiently without professional management, Many of the enterprises in Cuzco are small, but their members are very ill- prepared for management tasks -- they were generally not unionized prior to Xi.16 tha reform, office employees are not among them, and they have lack experience in dealing with bureaucratic institutions, such as the Bank. Furthermore, they often seem ambivalent toward their own coops. In Posoconi, Qu4huar, and La Uni6n de Soratira members support their coops wholeheartedly. In Tahuantin- suyo, Ram6n Castilla and T5pac Amaru II they do not. In the first three cases economies of scale are more important than in the latter three. In the first three members have also fought for control of their own coops and see clear benefits from cooperative action. In the latter thr!ee the pressure for cooperativization has come from the government and members themselves 3ee little reason for it. 4-5. Ministry and Bank officials maintain close ties with most of the enterprises visited. These men make note of the enterprises' performance and demand the correction of glaring problems. Within the coops and SAIS,members generally pay close attention to the performance of their coop officials and professional staff and are quick to censure them. Hoxever, formal mechanisms to control and supervise coop and SAIS performance -- both those internal to the enterprises (e.g., the Vigilance Council) and those external to the enterprises (e.g., SINAMOS and the Ministry's Direcci6n de Producci'n) -- function rather poorly. In most of the enterprises visited the Vigilance Council met rarely and was not thorough in its review of decisions made by coop officials and the Administrative Council. SINAMOS provides capacitaci6n prior to the formation of coops and SAIS,but once adjudicated, SINAMOS seems unable to supervise coop performance, and visits the enterprises only when crises appear. The Ministry concerns itself primarily with technical aspects of production, often condemning SINAMOS for "stirring up" members with participatory issues. Members of reform enterprises also tend to condemn SIPTAMOS for providing more questions than answers, and for bringing conflictive problems into the light without helping the enterprises to solve them. 6. In most of the enterprises visited in Puno the estates employed professional accountants prior to the reform, and the coops and SAIS continue to do so. In the case of Posoconi, no licensed accountant is employed. Thus while'the coop seeis able to handle its own bookwork, for legal reasons, it must have a Ministry official review its books. In Cuzco the typically family- run haciendas did not have accountants and the reform enterprises have difficulties in keeping their accounts. It would seem that a Central Accounting facility, such as those in Chiclayo and Santa, would greatly help to solve this problem. D. Social Problems 1. Leadership problems are particularly severe under the following circum- stances: (1) where pre-reform peasant organization was weak; (2) where the re- form enterprise experience severe economic problems; (3) where members don't strongly support their enterprise, and see enterprise officials as agents of the state. The most severe leadership problems have surfaced in the coop TiTpac Amaru II, but in other enterprises issues such as the elimination of huaccha sheep have caused the erosion of leadership. .17 2. Where members have radically different social and cultural backgrounds social divisions tend to appear. But more importantly, conflicting economic interests breed tensions. The principal example of this is the fusion of ex- eatates and peasant communities in the formation of coops and SAIS in Puno. In Buena Vista tetsions between the residents of ex-estates and community members were overt, but seemed to derive primarily from competition for pastures, crop- land, and enterprise profits rather than from cultural differences per se. SAIS officials condemned "ingresantes" for bringing livestock onto the enterprise's land and for demanding plots of cropland. 3. Only in the case of the coop T-dpac Amaru II did political differences seem to result in conflicts between leaders within the enterprise. 4. The principal causes of internal strife and conflict are: (1) the ab- sence of strong member support for the enterprise; (2) specific issues which jeopardize the economic interests of members -- such as the elimination of huacchasheep; (3) an inadequate adjudication model; (4) severe economic problems; (5) the corruption of leadership. In cases of severe internal conflicts, such as in the Tipac Amaru II,. the future of the enterprise is threatened and members become skeptical of the viability of cooperative ventures in general. In other cases, where internal conflict derives from less fundamental problems, it can help "clear the air" and produce reforms which help consolidate cooperative institutions. For ex- ample, the censuring-of a coop official can motivate coop officials to institute better control and supervisory systems which prevent misconduct in the future. In such cases SINAMOS and the Ministry can play important roles in helping reform enterprises introduce reforms which have functioned well in other enter- prises. 5. In general, delinquency and corruption have not been severe problems in the enterprises visited. The most glaring exceptions were found in the giant Tipac Amaru II, where the lack of control and supervision -- both internal and external -- provided a propitious environment for misconduct on the part of coOp officials. 6. Political factors seem to have played a very minor role in determining the performance of the reform enterprises visited in Cuzco and Puno. Again, the major exception is the coop Tirpac Amaru II, where the inadequate adjudication model seems to have been the result of political decision making at the national level. In no cases did the political affiliations or activities of peasants seem to affect coop performance. E. Special Considerations 1. The importance of linkages, interactions, and coordination of public sector activities cannot be overestimated. Several types of interactions can be listed: (1) member support and responsibility vs. state support and respon- sibility; (2) economic performance vs. member participation; (3) enterprise performance vs. public support. To the extent that members support and take responsibility for the management of their enterprise, the state can relax. But in n-rny cases XI.18 reform enterprises-cannot function on their own. and member support and responsi- bility must-be: cultivated. Here an important dilemma arises: If the state takes the-bulk of responsibility.for%the management of reform enterprises, and especially if it emphasizes technical-productivity considerations over the development.of viable participatory institutions, members are- likely to lose. interest in- management and through non-participation fail to acquire skills necessary for taking over responsibility themselves. Adequate economic performance of reform enterprises is necessary for member support -- where coops and'SAIS experience severe economic problems members tend to conclude that their leaders are- incompetent or corrupt and that cooperation is not viable-,per se. But, as pointed out in Section IV.C.3. above, member participation in some cases jeopardizes the economic performance of the enterprise -- especially where members utilize enterprise resources for individual production and seek to expand individual production at the expense of coop or- SAIS- production.. If members are not convinced that their own inter- ests are-served through the strengthening of cooperative activities democratic management is likely to wreck the enterprise. If members are forcedtAo collec- tivize against their will the government must take on the burden of management until member support is restored -- ig ever. - One of the most fundamental conclusions,of this research is that public support is necessary for the consolidation of most enterprises created under the reform. Production cooperatives and SAIS-.cannot be expected. to flourish on their own. Several; areas in. which the state- must, provide support are the 'following:. (1) training,of new management personnel; (2) -re-training of experienced. managers for service in- the coops; (3) training of peasants in practical aspects of coop management (including basic cooperative principals, but more importantly, accounting, credit operations, and the necessity of formal control and supervision of coop and SAIS officials' performance, and in practical aspects of agronomy and livestock management; (4) creation of adequate credit and.,technical assistance fac-ilities; (5) improving the function- ing of state-controlled- delivery and.market systems; (6) upgrading the quality of the rural school system. All of these programs are now being implemented, at least to a degree, by the- Peruvian government.. They are costly and some can be expected to yield benefits only in,the long run. They are most costly and least beneficial in the short run in isolated, backward areas where- peasants are poor. For practical political reasons the government is 1-ikely ,t spend.its funds where- it gets the greatest -short-run return. Since the returns are- likely to be calculated in terms of productivity, not participation, more is likely to be spent on, e.g., credit and technical assistance than on adequate capacitaci6n and training of peasants. Moreover, government funds are likely to be invested in the areas which are already most productive, wealthy, and best integrated into the market system. To the extent that this is ture, government policies are likely to improve the.technical performance of the best enterprises and disregard the poorest ones -- perhaps allowing them to disintegrate. - Just as public support is necessary for the success of new reform enter- prises, adequate performance is likely to be necessary for the continuance of public support. It seems very unfortunate that some of the. reform'8 "showcase" such as the coop T-6pac Amaru II have performed so poorly. Such notorious XII. 1 AGRARIAN ZONE XI: PUNO I. HISTORICAL AND NATURAL SETTING A. Natural Setting 1-2. The Twelfth Agrarian Zcne comprises the department of Puno, Peru's southernmost highland department bordering on Lake Titicaca and Bolivia. The Zonal Ministry Office is in the departmental capital, also named Puno, which is a port city on the lake. Crops -- corn:, wheat, oats, rape, barley, quinua, potatoes -- can be -ro-,n only in the lover sections df the Puno department. (Crops are generally grown at altitudes of less than-4,000 meters above sea' level). As one travels upward, away from the lake, crops give way entirely to livestock raising. In the highest zones cattle cannot be grazedj and only llamas and alpacas are found. (The non-domesticated vicufa is practically extinct.) Within the highlands higher and lower lands are complementary not only becau. crops can only be gr6wn at lower levels, but also because pastures at different altitudes have differing comparative and absolute relative productivities, at different times of the year. During periods of abundant rains the highest- lands provide good pasturage. But during the dry season these pastures are far less productive than are pasturelands at lower altitudes. Thus, livestock production can be maximized by moving cattle between lower and higher pastures in an annual cycle. In the highest reaches of the department, where no cropping is possible and pastures are sparse, estates are extremely large and the human and livestock populationis are continually on the move. Shepherds sleep in dingy huts (or in t e n t s in the "modernized" estate Picotani) and move with their herds each day. B. Socio-cultural Setting 1. The principal towns of the department are Puno and Juliaca with popula- tions of '41,000 and 38,000 respectively. No other town in the department has over 10,000 inhabitants. The total population of the depar tment is 780,000; the rural and urban populations are 593,000 and 187,000 respectively. 2. Migration to and from this highland department is of little importance i comparison to that between, e.g., Junin and Cajamarca and the coast. In particular, the rural population has been quite stable. In recent years young people have abandoned the area in increasing numbers, often migrating to Arequip and later to the coast in search of work. The agrarian reform has spurred a modest reversal of this pattern; young people are now returning to the estates on which they were born in the hope of benefitting in some way from the reform. (On this point see Section I.E.6. of the Case Report for Santa Lucia). Another important result of the LR has been the migration of large numbers of public sector employees to the region. XII. 2 3. Culturally the region is largely indigenous. The bulk of the population is rural, and the bulk of rural people are non-Spanish speaking. Rural people live in, three principal types of settlements: haciendas, peasant communities, and parcilidades. Haciendas are found throughout the department. Peasant communities are the remnants of pre-Colombian villages, with communal pastures, strong local government, varying degrees of communal ownership of cropland (although cropping is always individually cultivated),-and. important traditional forms of labor exchange and pooling for both individual production and public works. These peasant communities are generally located in relatively isolated areas. Parcialidades, which are located primarily close to the lake, are not communal units, with traditional forms of government or labor use but merely Peru's smallest geographical-political subdivision (below the level of the.natiol come the departamentos, provinciasi distritos, and finally parcilidades or anexo. In the early period.of the LR process- in Puno Ministry officials not familiar with isolated areas ignored the existence of peasant communities in the department and formed SATS which did not integrate communities and haciendas (See, e.g., the Case Report for Yanarico).. Later the Ministry altered its policies drastically and attempted,to 'onvert.parcialidades into peasant communities. Since the parcialidades lack both communal property and.traditions of self government and mutual assistance this latter course of action is as dubi- ous as the first. As an expert on the communities in the region noted: No es como el,Moro,que al bautizarse convierte en Cristiano No se puede:fabricar comnidades.campesinas. Tienen su.raiz historica, pues. An important question is.whether important social and cultural differences separate residents of ex-haciendas-,from comuneros and parcieleros. The. social assistant of one estate visited stated flatly that a clear socio- cultural stratification existed, with parcieleros at the top,-comuneros below tht and estate laborers at the bottom. It must be kept ini mind,.howeyer,.that estatE and neighboring communities or parcialidades engaged in important social and economic interactions. Prior to the reform many hacienda laborers were resident, of parcialidades-and peasant communities. Others who were stable hacienda resi- dents were sons of parcieleros or comuneros and often "kept a foot in the community." The largest landholders in the peasant communities were often mayordomos from neighboring haciendas and maintained residences .(and often families) in both places. Nevertheless, it appears thatjin general,income and educational levels are higher in parcilalidades 'than in communities (often because of ecology and isolation as well as culture) and that hac.ienda workers are worse off than.their neighbors on both these scores. Another important mode of interaction revolves around border disputes betweea haciendas and neighboring communities and parcialidades. These disputes often placed hacienda workers and outsiders in direct confrontation, since it wa the workers who enforced orders given by the hacienda owners and their adminis- trators. As a comunero noted to me: Can you expect the comuneros to make peace with hacienda peones who for years have been at the service of a patr6n who stole our lands? What we wan is land not "integration" in the form of a SAIS (which is after all, merely symbolic). XII.3 14. It is very difficult to measure or estimate income levels for this region since a large part of the population is at the margin of the cash economy and a large part of rural production is produced by smallholders who earn little or no cash income fron wage labor. The peasants of the region, however, are generally considered among the poorest in the country. Living and- working con- ditions are certainly among the poorest to be found, due both to the.harsh austerity of the region's ecology and to the exploitative nature.of the hacienda system. 5. Several estates in the region, particularly those close to Puno and Juliaca, were unionized prior to the reform. In contrast to coastal unions, those of Punio were not formed by or affiliated with APRA. Union-and political activity was discouraged in the region by the presence of a large military unit in Puno. C. Pre-reform Agrarian Structure 1. The department is predominantly pasture, not cropland. The most im- portant products produced in the region are wool and meat. In addition to sheep cattle are raised in the lower parts of the department; alpacas and llamas in the higher sections. (Llamas are raised primarily as beasts of burden, alpacas for-their wool). Cultivation is restricted to lower altitudes, and even there it is small-scale. Low yields, high risks, and high transport costs discourage large-scale production for urban markets. Nevertheless cultivation is by no means on a "subsistence" level. Most producers sell a part of their produce, and many now use fertilizers and pesticides. Producers generally sell their own produce in local markets to local merchants and con- sumers,and to merchants from other towns. The bulk of agricultural products are consumed near the point of production. Livestock and their products (meat, wool, skins) are produced in large volume for coastal and foreign markets. 'In recent years small highland towns have suffered from an increasingly severe meat shortage)since local producers (including the coops and SAIS) have diverted their sales from local markets to more lucrative coastal markets. (On the issue of meat shortage see Sections II.A.2. and II.B.3. below). 2-3. Over half of all Peru's highland pastureland is owned by peasant communities (we do not have -brecise figures for Puno). The communities gen- erally exploit their pastures co2lectively -- that is, all community members graze their livestock on the community's pastures. Generally pastureland is not fenced, making sanitary control, genetic improvement of the livestock, and pasture rotation difficult. Prior to the reform)levels of productivity were lower in the communities than on most estates. On the department's haciendas land tenure and labor arrangements were highly complex. In all estates workers were allowed to raise livestock on an individual basis and to cultivate small plots of land (qhere natural conditions permitted). In some estates rent ("hierbaje" or "-pastaje") was charged for the right to pasutre, usually as a flat fee per animal per day. Hacienda residents typically owned cattlq llamas, and alpacas as well as sheep . For rental charges these were "reduced" to sheep-equivalents. Each head of cattle, for example, reduced to 10 sheep-equivalents' thus a man with 5 head of cattle and 200 sheep was charged for 250 sheep-equivalents. In other estates no rent. was charged for pasturage. I know of no. case where rent was charged for cropland' however, the maximum amount which each family could cult!vate' was often limited by the administration (as well as by labor supply, capital . shortages, and marketing difficulties). Iaall estates residents were expected to work for the administration "when needed.". In some estates wages were paid. In others workers received a daily ration but no cash wages. In yet others neither wages nor rations were given. In all cases work for the hacienda was seen as an obligation arising from the right to pasture animals on the estate's lands; workers did not necessarily feel exploited if cash,wages fell below the - legally defined minimum wage or below the level which a naive outsider might con- sider minimal for human existence., Wage payments below "market" or "just" levels often offset low rental.charges for pasture. (In most coops and SAIS both wage rates and rental charges have increased, but in some cases unpaid labor is still employed). The bulk of the haciendas' labor force came from residents; however, neigh- boring peasant communities and .parcialidades generally supplied a part of each haciendas' workers. In general;large estates were absentee-owned (managed by hired administrato: while smaller estates were managed directly by their owners. One-large cor- poration, the Sociedad Ganadera del Sur, owned a dozen large haciendas in Puno which produced record wool yields for the department. My interviews indicate, however, that most other large estates suffered from managerial deficiencies and were less productive thai smaller es,tates managed by their owners. 4. Technologically the estates of the Sociedad Ganadera del Sur set the trends for the region. Important factors in technological improvement were: (1) importation of purebred sheep; (2) genetic improvement,of estate stock by careful programs of crossbreeding; (3) fencing which allowed pasture rotation and improved sanitary control of livestock; (4) elimination or isolation of ganado huaccho" (peasant-owned.stock which generally produces less than half as much wool as improved stock); (5) introduction of regular veterinary and sanitary control. In the 1960s'SIPA promoted technological improvements in crop and livestock production. As a Ministry official noted, "SIPA worked primarily with medium and large-scale-producers, but small farmers saw what their larger neighbors were doing and improved.their own methods too." My interviews with Ministry officials and estate,residents indicates that the view of the peasant as backward, traditional, and non-innovating is quite inappropriate for the areas visited in Puno. Where new inputs, such as fer- tilizer and pesticide (Aldrin), are available and pay off, peasants seem to discover and begin using them quite-rapdily. As will be noted in Section II.B.4. below, the creation of supply sources for small farmers is an important task for the Ministry. II. THE LR PROCESS A. Impact of the 1964 Law XII. 5 1-2. Very few estates were expropriated under the 1964 law as a result of initiative on the part of the central government. However the LR had important indirect effects. A few estates were expropriated as the result of peasant initiative. One such case, La Uni6n de Soratira, was visited and a Case Report is included in this Appendix. In this case the members of a peasant community (many of whom were workers on the estate) hoped to receive land free under the Belaunde rform and negotiated with the government and with the Sociedad Ganadera for four years (1962-1966) before finally coming to a purchase agreement. In 1966 the government expropriated the estate from the'Sociedad, and in 1967 the peasant community paid the first of 20 annual.agrarian debt payments to the government, A much more important indirect effect of the 1964 LR legislation and its non-application was decapitalization in the majority of the department's estates. Peru's 1961 Agricultural and Livestock Census.reported just over six million head of sheep in the department of Puno. According to Ministry official. the number of sheep had fallen to less than four million by 1972, a significant part of these being sold prior to 1969. (We do not know precisely what part of this decline came prior to the 1969 legislation). In addition to the decline in sheep numbers)it is also apparent that owners hesitated to make improvements in their land and installations and to purchase or repair machinery. Well- informed Ministry officials state that this was by no means due to a lack of investible profits. Profits were invested elsewhere, due in part to the insecurity of tenure in Puno. Since livestock represents both capital (breeding stock) and produce (meat, not wool) on the estates of the region, the decline in livestock numbers restricted the production of wool but increased meat sales. Decapitalization, however, clearly reduced the productive capacity of the estates. Since the coops and SAIS are now in the process of capitalization, their sales of livestock, and thus the meat supply, has temporarily declined. B. LR Under the 1969 Law 1. The following table reflects the pace of LR activities in Puno: (see page XII.6). This table shows that prior to 1969 only'five estates had been expropriated. Under the new law the first new enterprises to be created were four SAIS. More recently CAPs have been formed, and there is a pronounced trend toward larger enterprises (both in terms of number of estates fused into each new unit and in total has.). The initial thrust of LR activity in Puno was concentrated in the area around Juliaca, which is most accessible and where the department's most important estates are located. Seven enterprises were programmed for that region, and they have all been formed (restructuring of some is now planned). More recently the Ministry's resources have been shifted to LR activities in more remote parts of the department, and to estates which are less important (in terms of marketed output). Of the total land area to be transferred under the reform in Puno (about 1,600,000 has.) approximately 80 percent had been affected and 45 percent adjudicated by the end of August 1973. SUMMARY DATA ON THE CAPs AND SAIS OF THE TWELFTH AGRARIAN ZONE (PUNO), 26 JUNE 1973 Date Number Number Value of.Assets of of Estates Total of at Time of Expropriation Expro-. Fused Area Members Livestock Land Other Total priation, C A P s ( 0 0 0 H a s . ) ( - - --- - - t h o u s a n d s o f s o l e s - - - - - - - Tupal 1 .17.2 31' 739. 1,039. n.a. n.a. 1967 Putina 1 3.0 30 n.a. 536 n.a. n.a. .1967 Combuco 2 4.0 28 n.a, 452' n.a. n.a. 1967 Ramon Castilla 1 2.7 29 n.a, 256 n.a. n.a. 1968 Huaycho 1 12.7 28 3,155 1,631 25 4,814 1971 SasapuJio 1 4.9 28 n.a. n.a. n.a. n.a. n.a. Posconi 1 1.8 75 --8,999 1,565 507 .11,071 -1971 7 San Jose 1 i3.6 68 4,171 3,023 351 7,545 1971 Alianza 1 9.8 -28 n.a . n.a. n.a. n.a. n.a. Carmus .2 23.7 75 .. n.a. n.a. n.a. n.a. n.a. Gigante 15(n.a.)* 203.7 .373(1,450)** 38,586 20,521 2,204 61,311 1972 Manco Capac 8(n.a.)* 37.0 267( 500)** 15,341 8,297 1,094 24,732 1972 Micaela Bastides 9(n.a.)* 60.2 586(1i586)** 27,296 15,362 1,624 44,282. 1972 Santa Lucia 14( )* 74.1 235( 936)** -22,221 10,856 2,539 35,616, 1972 SAIS Yanarico 4 30.0 150 '11,358 5,872 7,581 24,811 .1970 Yocara 1 , 9.4 . 56 4,245 2,322 2,823 9,390 1970 Picotani 3 39.9 81 ' 15,219 5,167 5,298 25,684 -,1970 Sollocota 2 20.'4 100 18,000 .2',503* 2,982 .23,485' 1970 Buena Vista 18(13)* 49.4 750(1,300)** 17,020 717,761 1,607 36,388 1972 COMMUNAL COOPERATIVE La Union de Soratira 1 6.5 87 . 0 1,200 0 1,200 1966 Source: Official data, Ministry ZonalOffices, Puno and'Juliaca *Numbers in parentheses refer to the number.of communities which are members of the CAPs or SAIS, **Numbers in parentheses refer to number of families i4 communities which are members of'the CAPor SAIS. n.a. Not available. H XII .7 2. In contrast to the cases studied on the coast, in Puno there is little evidence of active peasant participation-in the initial phases of reform. Peasant strikes, invasions, or other forms of overt conflict with owners or government officials have not played a significant role in initiating the reform. (In the early and mid-1960s peasants did press for reform in a few cases). LR priorities seem to have been determined primarily by economi6 con- siderations; the first estates to be expropriated were the most important ones in the department, in terms of capitalization and marketed output. These were affected first in order to minimize the economic dislocations resulting from the reform process. Another, closely related consideration was the ease of implementation; the best-run estates were the easiest to process and the most likely to succeed as coops and SAIS. 3. Economic dislocations resulting from the reform can be grouped under the following headings: (1) disruptions of investment and production in ex- propriable estates prior to government intervention; (2) disruptions during the interim between intervention and the formation of new reform enterprises; (3) disruptions in new reform units; (4) disruptions in the remaining non-reform sector. (1) In Puno, cattle sales were spu=red by the reform. A governmental decree made it illegal to sell or slaughter breeding stock without authoriza- tion from the Ministry. However, Ministry officials admit freely that this was virtually impossible to enforce, since animals can be moved out of the region (on the hoof or in trucks) on so many roads that it is simply impossible to catch all offenders. Animals can also be slaughtered within the estates, and dried meat can be stored for weeks prior to consumption or shipment out of the region. As noted above, decapitalization of livestock herds increases production temporarily. The reform reduced crop production, however. Landowners were not certain when their lands would be affected by the reform and often sold their equipment and reduced the cultivated area long before expropriation. When the Ministry expropriated each estate, government officials appraised its assets and in most cases notified the owners that a part of their live- stock would not be expropriated -- and transferred to the new reform enterprise due to its low quality. This livestock could be sold freely. At the moment of government notification of expropriation most owners began dismanteling their estates, by carrying off whatever capital (e.g., machinery, office equipment, furniture) was not tied down. (2) During interim administration (by Special Committee or Provisional Commission) livestock numbers began to increase, and production of meat de- clined correspondingly. Usually the interim administration also began pur- chasing machinery and equipment and repairing the estates' constructions and installations. Crop production began to rise, although interim credit problems (hampering the purchase of inputs and equipment) often caused increase in crop production to lag somewhat behind the turnaround in livestock numbers. XII. 8 (3) Once the, coops an& SAIS were formed and interim credit problems solved (as they were) both livestock and:crop proauqti.on (again not necessarily meat sales)' began to increase. Most casesT studi'e.d show,impressive rates of. live- stock capitalization since the dateiof-expropriation., However, in most . cases we- do not'have data 'which allows us to determine whether or not they have more livestock now than in 1960 or 1965. (4) Economic dislocations ir the remaining private secto, ---small and medium sized farms not affected by.the reform, and a. few-large. estates reduced in size- by the reform -- remain serious, and will probably continue to be so for years to come. -This is primarily due to theiruncertain position in Peru's new agrarian system. At both the ideological-propagandistic level and in day-to-day implementation)the government's behavior with respect to private farmers has been schizophrenic. On one.hand government spokesmen guarantee the rights of small private farmers; on the other they denounce private farmers as reactionaries who-obstruct the advancement-of the LR process.. The-Ministry has presented..private farmers with "Certificados de Inafectaci6n," but these are so.encumbered with clauses and-restrictions. that most farmers (and independent observers) consider,them. practically worthless. , . . 4. As elsewhere in Peru, the principal new LR institutions are CAPs and SAIS. Many of Puno's CAPs and SAIS.are-very strange creations,unlike any found elsewhere in Peru.' In blatant contradiction of,agrarian.,legislation some CAPs have communities as members! In part- this is, due to. the fact that four-of Puno's five SAIS were-set up.in 1970,-when the.meaning of the SAIS concept was far less clear than it is today (and it still remains rather hazy). A second-factor; referred to. in Section L.B.3. above, has, to do with the important distinction between.bonifide peasant communities - relatively isolated indigenous villages which maintain group landownership and tradition- al forms of labor exchange and self government -- and parcialidades -- administrative units located primarily close to Lake Titicaca.which have no communal traditions or landholding. According to an anthropologist (himself born in a peasant community)., Ministry officials misunderstood the-.importance of peasant communities in the,-department, since they were. familiar only with the readily accessible area around the lake. Ignoring the existence of such communities, they formed-SAIS with no communal members. This, however, does.not-explain why these units were called SAIS.and not CAPs. A likely explanation is the following: In 1970 the literal interpre- tation of the SAIS (derived from the coop byla.v, D.S. No. 240-69-AP) as an essentially pre-cooperative unit (in which members could continue grazing livestock and cultivating individually, but were expected to cease doing so prior to the constitution of a CAP) was still widely accepted. The general, interpretation of the SAIS as a complex unit formed by the fusion of one or more 'estates and a number of neighboring peasant communities is a "common law" development arisin5 from the well-publicized constitution of such units (e.g., the SAIS Tupac Amaru and Cahuide) in the Central Highlands. Why CAPs such as Santa Lucia, formed as late as 1972, shouldhave peasant communities as members is not clear, and contradicts both Peruvian agrarian legislation and practice elsewhere in the country. XII .9 Both Provisional Commissions and Special Committees were employed as inter- im administration units, but the tendency has been toward the latter. In June 1973 the depar-ument's four existing Provisional Commissions managed nine es- tates; four Special Committees managed a total of 67 estates. A Central Cooperative set up by ONDECOOP shortly after the initiation of the LR program in 1969 markets inputs and consumers' goods through'branch outlets in several towns in the department. All reform enterprises in Puno are members, but non-members can also purchase goods from the Central. One of the Central's principal achievements to date has been to make fertilizer and pesticides available to smallholders in remote areas at reasonable prices. Some coop officials interviewed were dissatisfied with the performance of the Central, stating that its prices for some products were.above.those charged by independent merchants. Others complained that credit was unavailable, forcing them to purchase consumers' goods from private merchants. Shortages of some commodities in the Central's outlets force other potential customers to -urchase from private merchants. The Central's principal activity is to provide inputs to farmers. The Central offers no credit and has no advisory-personnel. Thus collaboration. with the Ministry and the Bank has been necessary -- the Central provides inputs, the Ministry provides technical assistance, and the Bank provides credit. Since the Bank will not loan for non-productive expenditures, many rural people (including some in reform enterprises) must purchase consumer goods from private merchants who do extend short-term credit. The Central was set up prior to the drafting of PIARs for the department, and Ministry officials noted that it will have to.be reorganized when a Central is set up for each PIAR. According to Ministry plans,the existing Central will be resturctured to function as a third-level coop institution.-- a Central for the department's Central Coops. Each of the new Centrals will provide credit and technical assistance as well as supplies of inputs and consumers' goods. Peasant communities are to be restructured by SINAMOS so as to become more like production cooperatives. Several steps are involved in the restructuring process, including the elimination of non-residents, accurate determination of community boundaries, equalization of individual holdings, and finally collectivization of all production within the community. The first two steps are less difficult than the last two, but even the first has caused opposition to restructuring in many communities. The princiapl reason is that community leaders are typically, "cholos" -- intermediaries betwe full-time community residents and the outside world -- who spend a great deal of time outside of the community (e.g., driving trucks , narketinr: commodities worlinp elsewhere). In a few cases new membership lists have been drawn up and surveys have been taken to determine the extent of community lands and individual holdings, but in no cases have individual plots been equalized in size or has produc- tion been collectivized. In Puno (in contrast to the cases studied on the coast) no stores existed on the haciendas. Hacienda residents traveled to market towns to make their purchases and sell their products, since the reform cooperative stores have been established in most reform enterprises. XII.10 5. The- principal agency dealing with estates affected by the LR is the Ministry. The Ministry has arranged for'the importation of purebred sheep for all reform enterprises in Puno. Delegations of coop, SAIS and Ministry officials have traveled to Argentina, AustraldiiLnd other foreign countries to- select the breeding stock. All'the estatera-visited had.received- animals under Ministry-sponsored import program. The-Ministry now also arranges for- the sale of meat and wool produced on the-eform*enterprisesi. A uniform price .is paid to all enterprises,,helping to level' incomes, but reducing- the incentive to improve product quality. ONDECOOP set up the Central and SINAMOS vrks with estates during the process of their cooperativization, but after adjudication: SINAMOS visits estates in the' area only sporadically. Coop and SAIS members -interviewed did not seem to think the work of SINAMOS was very effective, although most em- phasized the need for capacitaci6n and training courses. The principal problems seem to be that: (1) SINAMOS lacks.personnel, and (2). SINAMOS employees are young and inexperienced, unable to communicate effectively with coop and SAIS members, or to provide them with competent advice on technical problems . A cynic's interpretation of, SINAMOS'role in. the reform process -is-reflected by the.following epigram, painted neatly on the wall of a coop's dining hall: El hombre propone, la mujor dispone.- - Viene SINAMOS, lo descompone. The Bank's-performance was seldom mentionedby coop officials, pri- marily'because'timely short-term financing is not nearly as critical in livestock enterprises as in enterprises which depend upon crop production. One production coop visited had not borrowed short,term-.capital since its formation (1966), and had received long term credit for the first time in 1973, for the importation of breeding stock. III. PRINCIPAL PROBLEMS FACING THE LR PROCESS 1-3. In contrast to the natural conditions of the coastal valleys, Puno's resource base is strikingly meager'.. Altitude limits crop production to a very small portion- of the department's land-area. -Where crops are grown, frost, un- seasotably heavy rains,-and draught threaten-production. Floods often hamper marketing. The very low carrying capacity of the land means:that population density is-low, costs for-providing social services -- education, health care, transport, and communications -- are high. Technological improvements, such as pasture improvements, new breeding stock, and better seed, fertilizer, .etc., can raise the productivity and profitability of agriculture and livestock raising, and striking improvements have occurred in recent years, but a great deal of basic research and heavy investments in service infrastructure are needed. The LR process seems to have spurred t dhnological improvements (certainly on large estates, and probably on small farms too) but it will be important for the Ministry to link its cooperativization programs more closely XII. 11 to technical assistance programs in the future.. Cooperatives by themselves do not auarantee that the incomes of peasants Till increase continuously over time. As one coop meteber stated to me: What can the coop and its manager do for us? Will they make the rain come? Will they protect us from the frost? No. Our lives will remain difficult with the cooperative or without it. Employment is a particularly pressing problem in The region. Livestock raising'is notoriously labor-extensive and few other,job opportunities exist. One coop member remarked that whereas in the past the hacienda did not offer employment to the children.of estate residents and they sought work elsewhere, now everyone hopes to get.his children a job in the coop. If the coop cannot employ them, everyone becomes discontented. In several cases the employment problem has been attacked in very. innova- tive ways. Construction programs often absorb labor as well.as provide , facilities for education.land-medical care and other necessary social programs. However such socially-beneficial programs cannot be carried out indefinitely, both because the needs of the enterprises .are finite, and,because no .enterprise is wealthy enough to finance such construction programs indefinitely. Most reform enterprises need new housing, but hesitate to launch any massive program of housing construction or improvement because of the inability to finance such programs. Few cases visited had devised methods of employing member labor in a "cooperative" fashion -- without the payment of cash wages. Many enterprises employ workers in excess of the number actually needed, in order to spread work and provide as many man-days of employment as possible for the membership. In all cases visited members and officials were pre- occupied with future employment problems -- how to employ the growing popula- tion. Diversification into non-agricultural pursuits was the most often cited means-of providing increased employment. In a few casesAincreased employment has been provided through diversifi- cation schemes. In Santa Lucia the manager (ex-functionary of the.Ministry) had promoted the creation of three small shops within the coop which provided employment for about 30 people. One produced sweaters, another rugs, and the third bed frames and springs. The manager stated that the shops were not making great profits, but were breaking even and providing much needed employment. In most of the, *cases visited, lack of managerial expertise or dynamism and a skilled labor force limit such diversification schemes. 4. Prior to the reform the estates of the Sociedad Genaderadel Sur were the most advanced in terms of productive technology, but even these fell far behind the estates of Cerro de Pasco and Fernandini in the Central High- lands. Ministry officials state that the reform has facilitated technological advance in the department for three reasons: (1) Prior to the reform invest- ment and technological improvement had been discouraged by the threat of reform. Profits were extracted from the region for iuvestment in non-agricul- tural enterprises in other parts of the country. (2) Administrative personnel employed in the reform enterprises is more highly-trained than were the managers of the haciendas prior to LR. (3) The state provides more assistance to the reform enterprises than was provided to the estates prior to the reform -- e.g., the massive importation of sheep. XII.12 If coop managers and Ministry officials get their way, the coops' pro- duction should increase for yet another reason: the elimination of "ganado huaccho" (livestock owned by workers and.grazed. within the estate). The owners of the ex-haciendas would have liked to eliminate the huacchas, but were stymied by worker opposition. Nov, coop,.SAIS, and Ministry officials all pursue the same end, and with apparently greater chances of success. The Ministry organized a meeting in which the departments' coop and SAIS officials agreed to reduce their enterprises' huacchas. Members are continually bombar- ded with arguments in favor:of-the elimination of the huacchas -- they are of low quality, consuming as*much pasture as coop sheep but.producing less than half; that they carry disease and. prevent adeqate sanitary control in the enterprise; : they spoil:livestock improvement:programs by inter- breeding with cooperative sheep. Most-:of the ex-haciendas charged flat rates for huacchas, while most coops and SAIS charge progressive rates -- e.g., 50 per head per day for owners of less than 100 animals; 10 per head per day for owners of 100-200; and steeper rates for owners of over 200 head. Where management is determined and pasture 'rental is -chargedj the number of huacchas has shown a downward trend.; where management...is weak ,the number of huacchas seems to-have remained constant or increased slightly.. It should be kept in mind that in all cases.coop and SAIS members oppose the elimination of their huacch s. Residents of this area have always owned livestock, and.it is difficult to change such an ingrown part of the, culture.. But equally as important, the huacch -s provide their owners with-a source-of cash income and. products, and with a capital.reserve which can be drawn upon in times of crisis. . 5. As stated at several points above, meat production was inflated some- what' during the late 1960s as.a result of the fear of LR and subsequent re- duction of livestock herds. After 1969. this tendency was greatly accentuated. At the time each estate was expropriated. a part of its livestock was generally rejected by the Ministry, and its sale further inflated the supply of meat. Since the formation of coops and. SAIS livestock sales have fallen markedly, aggravating what has come to be known in Peru as "El Problema de la Carne." (For more information on the production effects of.LR in Puno see Section II.B.3. above). 6. See Section II..B.5.' T. In general, the coops visited in Puno seem to-be in "good health." Coop and Ministry officials cite the "huaccha problem" as the most critical one facing the coops. Managers generally feel overburdened and lacking in support personnel; this problem is particularly acute in large coops,, such as Micaela Bastides. A manager felt that heneeded two more technicians to assist him, but could not get member support for contracting new employees. Members seem to support their coops, but passively. Great cultural barrie exist between the membership of most coops and their managers. Ministry officials note that rural people have always been exploitedand tricked by the "misti" (white man, patr6n "todos nosotros") and are predictably suspicious of the motives of reform personnel. One perceptive official stated that for the rural people to support their coops actively it would be necessary XII .13 for government officials and managerial personnel to convince workers that the reform was, in fact, intended to benefit them. This, he went on to say, would require: avery special, very scarce type of technical personnel capable of speaking to rural people in their own language and in terms they understand, ... telling them the truth and not offer things neither the government nor the coop will be able to deliver. The very special, very scarce type of technical personnel which this man speaks of, and which the coops seem anxious to hire, must have a particular combination of qualifications: technical training, bilingualism, identificatio: with the agrarian goals of the government, and experience in estate management in the region. Very few technicians possess these characteristics, and those who do demand high salaries. This is one of the reasons cited by Ministry officials for the fusion of several ex-haciendas into larger production coops -- only a large unit can support the services of a competent technician. (Low population density and poor transportation would make the provision of management services to several coops, by a Central or by the Ministry, very difficult). But interviews with management personnel in large coops indicates that this reasoning may be faulty, since: (1) no single person possesses the technical and other skills, and the time and energy necessary for the efficient management of very large units, and (2) members often oppose hiring more technical-administrative personnel. Moreover, the larger the unit the , less members are likely to participate in management. In smaller units par- ticipation is greater and the socio-cultural disparities between members and the manager are smaller. 8. Politics seems less important for the success of the reform enter- prise in Puno than in any of the other zones visited. B.1 APPENDIX B CASE STUDY REPORTS Case Number Page Map: Reform Enterprises Visited B.2 Outline: Case Study Report B.3 Reports: Agrarian Zone II CAP Espinal 1 1.1-9 CAP Monteseco 2 2.1-11 CAP Udima 3 3.1-13 CAP Pomalca 4 4.1-18 Agrarian Zone III CAS La Campina 5 5.1-5 Central Cooperative Santa-Lacranarca 6 6.17 Agrarian Zone IV CAP Cerro Alegre 7 7.1-8 CAP Santa Barbara 8 8.1-5 CAP Cerro Blanco 9 9.1-4 CAP Casa Blanca 10 10.1-2 CAP Caldera 11 11.1-5 CAP Andahuasi 12 12.1-5 CAP El Potao 13 13.1-4 CAP San Nicola's 14 14.1-5 Agrarian Zone X Central Cooperative Pasco 15 15.1-12 SAIS Cahuide 16 16.1-20 Agrarian Zone XI Communal Cooperative Quehuar 17 17.1-7 CAP T6pac Amaru II--Antapampa 18 18.1-11 CAP Tahuantinsuyo 19 19.1-7 CAP Mariscal Ram6n Castilla 20 20.1-5 Agrarian Zone XII SAIS Yocara 21 21.1-5 CAP Santa Lucia 22 22.1-6 SAIS Buena Vista 23 23.1-7 CAP Micaela Bastides 24 24.1-6 CAP Posoconi 25 25.1-5 Communal Cooperative La Uni6n de Soratira 26 26.1-5 Central Sugar Cooperative (CECOAAP) 27 27.1-19 引 B-3 OUTLINE- CASE STUDY-REPORTS,(adapted from the-Case Study outline prepared by Shlomo Eckstein and modified-by the staff of Mexico's Centro de.Investigaciones Agrarias) Name of institution Location: Dept. (coast or sierra) Date of intervention Date of adjudication Number of m hbers Area 1. HISTORICAL AND NATURAL SETTING-AND ECONOMIC, ASPECTS'OF THE LAND REFORM PROCESS A. Natural Setting B'. Socio-cultural Setting 1. Demographic aspects 2. Cultural aspects 3. Housing C. Pre-reform Estate Organization and Administration 1 Land--use and labor-tenure institutions 2. Administration, finance, marketing 3. Labor source, employmenti*and income 4. Technology 5. Political conditions (including unions and peasant movements) 6. Impact of the 1964 law 7. Previous cooperative experience D. The LR Process Initiated by the 1969 Law 1. Initiation of the process (peasant participation) 2. Interim management (Special Administrative Committee or Provisional Administrative Commission) 3. Principal socio-economic dislocations 4. New-LRinstitutions 5. Appraisal,of estete resources for LR purposes E. Present Economic Situation 1. Area, cropping, and livestock (services for CAS and Central Coops) 2. Administration, technology,* investment, marketing, and processing 3. Financing 4. Labor availabilit--y and use. 5. Income levels and distribution (including profits and perquisites) F. Public Agencies, Higher-level Coops, and Other Institutions Dealing with the Group II. OPERATION OF NEW REFORM ENTERPRISES. A. Production:'Planning and Peasant Participation. - 1. Participation.of members- leaders, -technicians, councils, and public officials in the planning process 2. Division of labor in planning and management functions (e.g., credit, purchases, sales, production) 3. Reporting on the planning and administration processes in the assembly 4. The administrative chain of command_ B. Operations and Peasant Participation . 1. Daily administration--management of personnel,. operations, assignment of jobs, technical supervision 2. Division of work (specialized work teams, job rotation, work brigsaes with. multiple functions) 3. Control of work time and quality (are group sanctions used?) 4. Determination of piece rates . for different jobs 5. Are deferred payments used? 6. Incentives and sanctions (salary, profit sharing, suspension) 7. Work sharing or rotation in cases where full-time employment is not available for all members - . . .- 8. Selection of local leaders and hired-technicians 9. Honesty, competence, and corruption of leadership and technicians 10. Individual parcels (size, crops, problems for management) 11. Individually owned. livestock (numbers, typ4i; production, problems) 12. Subjects discussed'in the Assembly (administration, work organization, discipline, responsibilities,,perfc,rmance of management) and their impact 13. Capacitacion courses (for the general membership, delegates, council members, and technical-administraitve personnel) C. Accounting and Information.Systems 1. Internal accounting 2. Revision and auditing.of accounts 3. Providing accounting information-to members (in the assembly, bulletins,,-etc*.-)- D. Income Distribution. 1. Wages, salaries, and advances (members, leaders, professionals) 2. Profit-distribution (social:and investment funds, cash and products distributed) 3. Non-monetary income of members (perquisites: rations, housing, medical-care, education)' 4. Outside income (from parcels,.livestock, small businesses, etc.) E. Employment and Membership 1. Selection of members 2. Distribution of work between members and non-members 3. Pay and perquisites of members and non-members F. Continuing Role of the Union 1.1 CAP Espinal Dept. of Lambayeque (coast) Intervention: June 1969 Adjudication: Jan. 1973 163 members 8,212 has. (621 cultivated) I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Espinal is located in the upper Zana River Valley, in the foothills of the Andes, in the eastern fringe of the dept. of Lambayeque (bordering on Cajamarca). Much of the estate's 8,200 has. is unirrigated and rocky, steep- ly sloping land useful only for grazing in the early months of each year follow- ing the seasonal rains. A narrow strip of land along the river is irrigated and seeded to rice, sugar cane, and a few hectares of fruits and vegetables. The climate is hot and the soil structure of the land along the river is adequate for cultivating many types of crops, but heavy investments were necessary to bring the land under cultivation. Principal among these were deforestation, land leveling and,construction of irrigation canals. Irriga- tion water is available all year and especially abundant from November to March, but costly irrigation infrastructure would be necessary to bring more land into cultivation. Water legislation and complaints of agricultural- ists down river halted the exapnsion of the canal system in the 1960s. B. Socio-cultural Setting Most of the lands now cultivated were "opened up" in the twentieth century; the resident population is first and second generation. Migrants came primaril, from the upper Lambayeque River Valley in search of land to work (not wage labor). Most came in the 1950s, when malaria was erradicated from the region and the hacienda administration encouraged "colonization" of marginal, previously uncultivated lands. Three primitive rancherias were constructed for hacienda residents, but many workers preferred to construct their own houses on or near their plots of land. Hacienda houses have dirt floors and no windows; two of the three rancherlas had electric lights until the generators were removed by the admin- istration in reprisal*for union activities in the 1960s. C. Pre-reform Estate Organization and Administration 1. Until the 1940s rice was the principal crop grown on the estate, and production was centrally administered. In the 1940s rice was displaced by alfalfa, which was harvested and fed to dairy cattle maintained in two stables. In the 1950s,alfalfa gave way to Hice again, but this time only part of the cultivated area was managed centrally; colonos were settled on marginal lands, and as these came into production their share in the estate's area and production increased. 1.2 In addition to land and water, the administration provided each colono with seed, fertilizer, and cash advances on an account to be settled at har- vest time. A fixed rent was charged per unit of land tilled. All the above obligations were settled by the delivery of rice to the hacienda warehouse at harvest time. In addition, the colono had to sell all but a subsistence allotment of rice to the hacienda at less-than-market prices and provide labor to the hacienda when demanded, at less-than-market wages. In addition to rice, colonos cultivated foodstuffs for their own con- sumption and'fruits and vegetables for sale. They also raised barnyard , animals and livestock for consumption and sale. But these activities were carried out on a very small scale; most of the hacienda's land, water, and labor were employed in rice production. 2. Espinal's owners operated a rice mill.in Chiclayo and owned several estates in the area (including Pomalcal<Monteseco, and Udima). Espinal was a relatively small part of their total operations, and they managed this estate indirectly via a-hired administrator.'"All-major decisions were made by the. owners in Chiclayo or Lima, and the local administration was .not responsible for financial or marketing decisions. Its main functions were: day-to-day management of "demesne" activities, and allocation of inputs to and collection of rent from colonos. 3.' The hacienda administration planted once each year, the colonos planted twice. In this way demands for water and labor were staggered and the hacienda minimized its own production risks (early rains often make harvesting of the second crop difficult, but individual small producers get -this second crop out with less difficulty than the hacienda). 'Colonos were expected to work for the hacienda when it needed labor, but the resident labor force was incapable of meeting total peak labor demands for seeding and harvesting. Migrant laborers from the upper Lambayeque River Valley (around Santa Cruz) were contracted for this work. It is difficuit to make pre- and post-reform comparisons of employment and income in the'case of Espinal since the reform process began in the early 1960s, under the 1964 law. In 1969'the cash wage paid to colonos was S/.17 per day plus a'ration of 2 lbs. meat, 8 lbs. rice, 6 lbs. sugar, and 1/2 lb. -lard per week. (The market value of this ration was approximately S/.94 workers were charged S/.5.) i. The hacienda administration was aggressive in introducing new inputs and production methods, but given the rough terrain of the area and the small field size, mechanization was less complete than in rice haciendas on the coas- tal plain. The administration provided seed and other inputs to their colonos, and thus technological advance was guaranteed on both the demesne and colono sections of the estate. 5. In the 1960s, in the wake of unionization in the coastal sugar haciendas, a union was established in Espinal which demanded improvements in working conditions and pay of the colono-laborers (migrant laborers did not ' participate in the unionization effort). 1.3 6. Espinal was among the coastal haciendas affected by Title XV of the 1964 law. Prior to agrarian-reform colonos operated strictly "bajo la protecci6n de la hacienda" ("under the protection of the hacienda"), receiving land, irri- gation water, seed, fertilizer, and short-term credit from the administration, and settling their debts with rice deliveries and obligatory day labor at less- than-market wages. In 1965 Peru's Agricultural Research and Promotion Service (SIPA) initiated its "Plan Costa," under which supervised credit was provided to smallholders and hacienda colonos at rates far lower than those charged by the hacienda administration. At this same time officials from the National Office of Agrarian Reform (ONRA) interviewed colonos in Espinal in preparation for the expropriation of their plots. Fearing expropriation, the owners attempted to force the colonos from the hacienda. Wage labor was denied them, as were credit, seed, and fertilizer for cultivation. Severance pay, bonuses for improvements made on colonized land, and employment outside the hacienda were offered colonos willing to leave the hacienda. A number of colonos yielded to the owner's pressures and offers and left the hacienda. A few had the courage to accept the owner's money and stay on the hacienda. The majority, however, refused to negotiate with the administration, remaining stubbornly on "their" land. Lacking both remunera- tive employment and credit, the majority of the colonos wtuld have been eventual- ly forced from the hacienda if it had not been for the SIPA credit program. As in all of Peru, expropriation and adjudication processes moved very slowly in Espinal. To speed the reform, the colonos of these haciendas, led by ex-union leaders, formed an Asociaci6n de Campesinos which pressured ONRA offices in Lambayeque and Lima. In 1968 the members of the association raised. 50,000 soles which were delivered to the Agrarian Reform Financial Corporation in advance payment for their lands. Late in the year provisional titles were granted the ex-colonos, and definitive titles were promised for early 1969. 7. In Espinal, SIPA,and the Bank set up one pre-cooperative committee (Comite de Pequefios Agricultores) in each of the estate's three principal zones, and channeled supervised credit through them to individual farmers. Major goals were to establish cooperative or group responsibility for all produc- tion credit extended to the peasants, and to simplify Bank and SIPA lending procedures by negotiating a single contract with the peasants' organization and making the group responsible for internal distribution and recovery of funds. The pre-cooperative committees suffered fr6m two problems which many of Espinal's residents see as inherent in cooperative ventures: First, the leadership was poor. One committee was controlled by a local merchant who used his position to increase sales of inputs and to lend Bank funds for personal profit. He insisted that members spray their fields late in the grow-- ing season, resulting a drop in production. Second, "cooperative credit" worked against the interests of successful farmers, since the Bank attempted to "balance out" the debts of some group members with the profits of others. This balancing act was especially detrimental to the interests of profit-making producers because the Bank added all past debts to those of the current produc- tion year. At harvest time all rice produced by individual producers was confis- 1.41 cated by the Bank! (This is not an unsubstantiated rumor; a Bank report states: "El Integro de la cosecha entregado al Banco.y controlado bajo intervencion de control y vigilancia.") Never had the hacienda administra- tion confiscated produce in this fashion. The following, statements reflect the peasants' reaction: Antes los grandes hacendados nos explotaron; ahora los medianos nos vienen a explotar! Eso del credito-cooperativo es una lisura! El que pierde, pierde; lgico.. Pero el que gana, pierde tambien. Todos perdemos! Siempre hay unos que trabajan y rinden, y otros que toman y viven mal. Pero con esto de la cooperati-va nadie va a trabajar y todos vamos a vivir i.al.. In addition to this very negative experience with cooperative institutions (and with government officials) most estate residents can cite cases of poor cooperative performance (usually related to corruption, incapacity of leaders,. or disincentives to members) in neighboring estates. D. The LR Process Initiated by the 1969 Law 1-2. In Espinal the 1969 law not only initiated a new process but attemp-. ted to stop the process initiated,by the 1964 law. Espinal's peasants had been granted provisional titles by the.Velasco.government (while still im- -plementing. the 1964 law) and had,paid a considerable sum of money in advance payment for their property titles. Now the government wanted.to collectivize the estate. Espinal posed an extremely critical dilemna for the establishment of a production cooperative. In 1971 a Provisional Commission was established to administer production on the lands of the ex-hacienda. Elections to fill positions on the co=mittee were free, and apparently the will of the voters was accurately expressed; the majority of Espinal.'s residents were opposed to the constitution of a production cooperative, and so were the-men elected to administer the pre-cooperative. Rather than attempting to carry out their jobs responsibly and foster the development of a cooperative spirit, the Committee made flagrant personal use of cooperative resources and frustrated the work of cooperative promoters sent to Espinal by ONDECOOP and the Ministry. Espinal's Asociaci6n de Campesinos, which petitioned the government for agrarian reform in the period 1965-1969, actively opposed the constitution of a production cooperative. The association demanded the formation of a. cooperativa mixta (mixed cooperative) in which members could continue to farm their plots individually, and work the lands of the ex-hacienda collectively. Finally, in January 1973 a production coop was legally recognized in which peasants with less than 3.5 has. of land could continue to farm their plots individually and work the lands of the ex-hacienda collectively. Peasants with more than 3.5 has. could not join the coop, but were promised individual titles to their plots. 1.5 3.- It appears that LR has not reduced production on the demesne lands of the ex-hacienda. Production in 1971 and 1972 far exceeded the record of the previous 5 years. We do not have data which allows us to compare pre- and post-reform peasant production, but it is doubtful that LR has resulted in a decline in production on the individual parcels. The LR process has, however, resulted in serious social dislocations which jeopardize future cooperative programs in the estate. Government insistence upon collectivization has turned peasants against public officials. They ask, "Why collectivization?" and answer the question themselves, "In order to provide employment-for government bureaucrats and their friends, and to collect the surplus the patr6n used to take... or collect even more!" Their dismal experience with cooperative credit adds credibility to the claim that cooperativism will not work in.Espinal. As the wife of one peasant reminded me: Nosotros le dijimos hace rato que la cooperativa no iba a tener grin 5xito... . El campesino, aunque ignorante, sab'a desde un principio que la cooperativa no podria resultar aca. Since the legal recognition of the cooperative, internal conflicts have intensified. A few 'members, particularly those with small plots or none at all, support the coop but many others remain dissatisfied. The presence of a few estate residents who were not' granted-coop membership (those with over 3.5 has.) and were promised individual titles complicates the matter. The peasant association which opposed the formation of the coop still functions, and has recently sent a delegation to Lima demanding that all residents be granted individual titles to the plots they till. In September 1973 the General Assembly voted to cut the work day from six hours to four. In early October, after refusing to hire a manager for the coop, the Assembly voted to throw out the coop's leadership and to call new elections. According to the coop's president, members were encouraged on both occasions to vote in such "irresponsible" ways by a SINAMOS agent working the the area. The SINAMOS man stated before the Assembly that members had-every right to reject a manager, cut working hours, and change the coop's leadership if they so chose. Discipline is a major problem in the coop. A field employee stated to me: Antes habla respeto en el trabajo; ahora no. Ahora el obrero dice, 'si fregas te botamos,' Que vamos a Hacer? Nada, pu6s. Es la masa . que decide aca. 4. The only new legal entity created in the estate is the production coop. The government has promised individual titles for residents who have not been granted coop membership, but no titles have been issued to date (other than the provisional titles issued in early 1969, prior to the pronouncement of the new LR law). As noted., the production coop functions as a "mixed coop"; much of the estate's crop land is held by individuals. The contract signed by coop officials at the time of the coop's legal recognition states that land held by individuals must be turned over to the coop "if requested by the coop." This clause is a source of great discontent for members, especially those holding larger-than-average plots. Since the coop has already become 1.6 the legal owner of both the demesne and the.peasant-occupied lands of the ex- estate (with the.exception of a feV.plots'over 3.5 has. to be adjudicated to non-members) no more individuals can hope to.acquire individual titles unless the government requests or permits the coop to sell these lands to the ex-colonos. E. Present, Economic Situation 1. Accordingto'the Ministry, the coop cultivates a total of 334 has., of.which 140 are in rice and 36.in sugar cane. Residents cultivate 287 has., bringing the total cultivated area to 621 has. The coop's president stated to me that the coop cultivated approximately 200 has. and the workers 500 has. (I have requested information from the Ministry on this discrepancy). .Prior tolthe LE cattle from:Udima descended to Espinal after'the rice harvest to graze on the stubble. This has stopped with the legal separation of these two estates. In 1973 Espinal's coop purchased 420 head of cattle, and is now in the process of preparing cultivated, irrigated pastureland. Lack of,adequate.feed had resulted in 20 deaths by early October..- Most coop members cultivate individual plots'(only 15 do not have plots) and nearly all raise barnyard animals and a few head of livestock. 2. Technical assistance is provided to the coop primarily by the resident "sectorista" employed by the Ministry...However, as noted above, relations between the Ministry and coop members are far from.cordial and it is'not clear to what extent the Ministry's assistance is put to good use by the coop or by individual cultivators. Since the reform both the coop and individual producers have'been required to market their rice through a government agency, EPSA. EPSA provides each producer with a certificate which he must, in turn, present to the miller. The miller sends payments to the Bank, where loan obligations are subtracted and the Bank finally sends a payment order to the Banco.de la Naci6n, which finally, pays the producer the amount due him (if any). Coop members note that rice prices are now higher than in the days of the patron; but that the bureau- cracy is a headac.he. EPSA discounts for excess dirt and moisture and low rice quality. During the last harvest season the agency had to stop rice purchases temporarily and delay payments for months for lack of funds! 3. The coop suffers the "usual" financial problems of a new coop -- loan applications, (especially the first) require a great deal of time and paperwork, and funds are late in arrival. Much more severe financial problems, however, are encountered by the estate's individual producers. Since the formation of the coop they have not been eligible for Bank financing, and other sources are scarce and costly. One producer noted to me that without the help of his family and compadres he would not have been able to plant this year. 4. Rice cultivation demands a highly seasonal labor input. The coop cannot employ all its members year around, and must contract outside workers for peak periods. Since nearly all members seed rice of their own, there is great potential for conflicting labor demands. During the optimal planting period, members prefer to work in their own plots ratherthan'in the coop's fields. Prior to the reform, the hacienda solved this problem by insisting that the colonos seed rice two times each year, staggering their planting and harvesting dates around the hacienda's. This system has broken down in large part for two reasons: -(1) battles with water users downstream have resulted in a curtailment of irrigation water to the hacienda, making planting outside the early months of each year (the "avenida") risky. (2) The Bank offered credit to the peasants for only one rice crop each year. Since all Bank credit has been cut off, many of the estate's smallholders have returned to the two-crop system, easing the conflicts between the coop and the smallholders for labor and water. There are still problems, however, including instances when smallholders have dammed irrigation canals to coop fields and vice versa. A few outside workers must be contracted for the peak rice transplanting period, and members complained in September 1973 when there was insufficient work to employ them all during the slack season. 5. Since the LR, the basic cash wage has been increased from S/.17 (1969) to s/.4o (1973), but the weekly ration has been eliminated (value, approximately S/.94 per day). At the time of my visit in October 1973 twelve employees were on the payroll, earning from S/.1,200 to S/.2,450 per month. .A new primary school has been constructed in the coop. Members complain that they lost the adobes for this project two years in a row during the annual rains, while waiting for a construction blueprint promised by SINAMOS. 6. Aside from rice, thn coop has expanded two lines of activity, both initiated by the ex-hacienda. It is increasing the acreage under sugar cane (now milled in Cayalti, not in Pomalca), and it has purchased 240 head of cattle. Both enterprises have met with less-than-total success. The cane sold to Cayalt! did not reach the minimum sucrose percent specified in the milling contract, and Cayaltl has refused to make payment for the cane. Of the 240 beef animals purchased by the coop, 20 have died. According to a veterinary who has seen the cattle, this is primarily the result of inadequate feed. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group For the Mnistry, the Bank, and ONDECOOP (later SINAMOS) Espinal has been a tremendous thorn in the side (coincidentally, the name "El Espinal" means the "thorny place"). The Bank's problems began in 1965, when supervised credit was first extended to the hacienda's colonos on an individual basis. By the time "Cooperative Credit" was instituted the smallholders of the estate had accumulated some S/.80,000 debts. In 1971 when the Chiclayo branch of the Bank attempted to recoup its losses by confiscating the entire rice crop, the pea- sants denounced its actions in Lima, and forced the Bank to settle accounts on an individual basis. The Ministry's problems began in 1970 when the estate's residents came out in direct opposition to collectivization. The whole collectivization issue posed a serious dilemna for the Ministry, since many Ministry employees regarded the collectivization of small londholding peasants of marginal importance, but for ideological reasons -- to combat ONDECOOP claims 'that the Ministry was reactionary -- Ministry officials felt it necessary to collec- tivize "at all cost." The result was that Ministry employees were sent to Espinal and other colonized estates to "sell" collectivization in a half-hearted 1.8 manner to an unwilling and suspicious peasantry. On several occasions Mn- istry personnel were harrased.. (In.one instance a well placed bur.sent a horse and rider galloping into the thorny forest and an injury resulted). Seldom could Ministry officials talk the colonos into serious consideration of collectivization. on some occasions-people refused to enter the meeting -hall. More than once Ministry people were shouted down and requested to leave the estate. As one,angry peasant summed up his views of Ministry personnel, "Antes los grandes [hacendados] nos explotaron,.ahora los medianos [burocratasl nos vienen a explotar." . ONDECOOP was in political trouble, understaffed, and underfinanced by the time capacitacion and.cooperative.motivation *courses were necessary in Espinal; consequently this. institution played a relatively minor role in the LR process there. However, the little contact which ONDECOOP had with the estate's residents seeded confusion and skepticism as to'the sincerity and professional competence of'its staff. This resulted in large part from the schizophrenia of ONDECOOP (and later SINAMOS) policy in dealing with.the estate's peasants.. On one hand ONDECOOP and SINA40S employees denounced the Ministry for its heavy-handed-, reactionary tactics in imposing a production cooperative, and told the peasants that the Revolutionary Government guaran- teed them the right to participate actively in all matters which affected their lives, including the decision to form a.production cooperative. On the other hand, ONDECOOP and' SINAMOS attempted. to convince the peasants that the production cooperative was, in fact, the ideal enterprise form for their estate. When the peasants presented ONDECOOP with concrete reasons why they did, not want a cooperative (e.g., because they feared that poor discipline and management,might cause production b fall, that coop.leaders might squander or steal earnings,, and that cooperative social funds might not be able to replace privately-owned animals as a source of ready cash in times of crisis) one or more of three results occurred: ONDECOOP officials either (1) misunder- stood. the peasants' reasoning; (2) evaded the issue; or (3) presented unconvincing replies -- often ones which were phrased in abstract,university jargon or official platitudes. A significant recent development is that a SINAMOS employee has encouraged the estate's residents to defend their interests in the cooperative and throw out the cooperative's leadership if they wish -- this of course traumatizes the leadership but delights a large segment of the membership. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation The coop's life has been so plagued by uncertainty and member dissatisfaction that formal questions of production planning are hardly relevant. Coop leaders are apparently losing the battle with the peasant association which sabotages coop activities and demands parcelization. B. Operations and Peasant Participation 10. When the colonos' parcels were measured for purposes of the 1964 LR law, 133 colonos were found to be in the possession of 187 hectares of land. By 1971 the number of colonos had increased to 148 and the area held 1.9 by these people had increased to 317 has. Of the 148 colonos, 22 held less than one ha., 66 held between one and two has., 43 held from two to three has., and 17 held three or more has. The largest individual holding in the estate was 6.35 has. 11. The majority of the estate's residents own livestock, but we do not have data on numbers or value. C. Accounting and Information Systems 1. Only the most rudimentary accounting is done in the estate. The coop's formal accounts are drawn up by the Accounting Center located in Chiclayo. 3. The extent to which accounting information is relayed to coop members is unknown. D. Income Distribution: See Section I.E.5. above. Profits for the period Feb. 20 - Dec. 31, 1971 were S/.1,737,787. Losses for 1972 were S/.1,101,168. The profit figure for 1971 overestimates profits for the whole year since costly field and seed preparations carried out in the first 7 weeks of the year are not reflected in this figure. 2.1 CAP MONTESECO Dept. of Lambayeque (ceja de sierra) Intervention: June 1969 Adjudication: Jan. 1972 272 members 1960 has. I. HISTORICAL AND NATURAL'SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Monteseco lies in the upper Zana River Valley, above Espinal on the north bank of the river, in the steeply sloping land between the river and the highland cattle hacienda Udima. Monteseco is one of Peru's largest coffee estates and is the only coffee' estate west of the Andes. Until the 1930s the region on both sides of,the Zana River at the altitude of Monteseco was nearly entirely uninhabited. The steep slopes were covered by dense forest; the only families living within the zone had cleared a few parcels of relatively flat land on which they cultivated sugar cane and distilled cane liquor. In the late 1920s a man who had pioneered hacienda settlement in the Peruvian jungle began the establishment of a coffee plan- tation in Monteseco ( which was until that time an unexploited region within the larger hacienda Udima -- see Case Report for Udima). Parcels were offered to mejoreros who agreed to clear land, plant coffee, and till it for four years. When the plants were ready to bear fruit, the mejoreros settled accounts .with the hacienda administration and moved on to new plots of virgin forest. Day laborers were also brought from.a number of highland communities by enganchadores. The owners began the exportation of high quality coffee to the United States in the 1930s. From that date, Monteseco has remained the only large- scale producer of coffee on the western slopes of the Peruvian Andes. The growth and prosperity of Monteseco attracted many settlers to the south bank of the Zaea River. Many came*as laborers for the hacienda, learned to cultivate coffee, carried seed to the south bank, and established themselves as smallholders. Settlement and deforestation had important ecological and economic effects on the region. According to both residents of the zone and students of coastal ecology, the climate has changed markedly over the last four deca-les as a consequence of deforestation. Rainfall has declined as has the average relative humidity. To combat declining rainfall a complex network of irrigation canals has been constructed. In Monteseco's hilly terrain, irrigation is both costly and imperfect, and spillage contributes to eiosion. Irrigation by aspersion was attempted, but proved uneconomical. 2.2 Erosion has exposed the subsoil in many areas, making hand cultivation difficult and costly. This and the implementation of minimum-wage and social legislation has led to the gradual shift from shcyel-weeding (digging weeds out) to machete-weeding (cutting weeds off). The cost of.planting new seedlings has risen and the probability of their survival has dropped. Fertilization has become essential for the maintenance of productivity. According to students of coastal ecology, the processes of settlement,. deforestation, and ecological change observed in the upper Zana River Valley are typical of processes which occurred-ir other coastal valleys at ear.ier dates. Moreover, the ecological changes related to deforestati6n and settle- ment are by no means complete. In the future the zone will become progressive- ly less suited to coffee cultivation. B.- Socio-cultural Setting In 1973 the population of Monteseco was 1398 (732 men and 666 women), of these people 272 were members of the cooperative. The estate's population is of relatively recent settlement. Until the 1930s.the entire region was nearly uninhabited. Since then.the estate's administration has actively encouraged in-migration and settlement, but without great success. Labor contractors had to be relied upon-to provide a. sufficient number of day laborers for both cultivation and harvest_. The hot,,.rainy climate makes the area especially unhealthy; the climate,,the.technology of coffee production and"the estate's isolation make working and living conditions particuiarly undesirable. Con- sequently, few permanent settlers have been attracted to. the estate. An ex-administrator remarked to me: "Only the worst class of people stayed in Monteseco. Thieves, highwaymen,.men running from.the police'wre the types who stayed here - to hide. from the law." In recent years a process of net outmigration has. occurred. Outmigration has been a selective process with some of the most capable workers leaving Monteseco for Chiclayo or for colonization in the Peruvian selva. 3. Housing is worse in Monteseco than.in' most of the other cases studied. The annual rains take a very heavy toll on the estate's constructions, and in recent years the hacienda administration spent very little on maintenance and repair. Residents have also failed to keep up their houses for two reasons: (1) in most cases they were provided housing.by the administration, and expected the administration to make necessary repairs; '(2) even when residents built their own houses they typically did not expect to remain in the estate for the rest of their lives, and thus did not choose to invest heavily in ' hous.e repairs..' Most houses in the main population center (about 30) are of adobe and have wooden floors. Most other houses in the estate are of cane and mud and have dirt floors. C. Pre-reform Estate Organization and Administration 1. Since the 1930s coffee has been the estate's principal crop, but other crops and livestock activities played.important roles in the estate's develop- ment at particular times. In the 1930s and 1940s the extraction of lumber was a major activity, as the forests were cleared for coffee cultivation. Later, sections of the estate provided seasonal pasture for cattle from Udima. 2.3 Throughout the years hacienda residents cultivated corn and other foodstuffs for domestic consumption, and raised barnyard animals and a few head of, livestock for consumption and sale on the coast. Native fruits of the region (e.g., bananas, passion fruit, chirimoya) are gathered for consumption and sale. Coffee is a perrenial plant., and thus the area under production does not fluctuate widely from year to year. In recent years, however, the cultivated area has shrunk. Even without adequate tree trimming, fertilization, and weeding much of this area can be,harvested for a few years, but in time it will go out of production.altogether. In the early years of estate deyelopment mejoreros seeded a significant part of Monteseco's coffee, but once their plants came into production cultivation was assumed by the hacienda employing wage laborers. The estate has never employed sharecroppers or labor tenants as coffee producers. The estate's laborers were allowed to cultivate small plots of land and to raise a few animals without paying rent. In the last decade the size of individual land- holdings and the number of individually-owned cattle has increased markedly. 2. Prior to the LR Monteseco was owned by the same corporation which owned Pomalca, Espinal, and Udima, and financially and administratively the operations of these four production units were highly integrated. Most important decisions were made in Lima or in Pomalca, and it was,common for Monteseco's administratoa to consult with these offices on a regular basis. A private telephone system- .and a short wave radio linked the estate with the onwer's business offices in Pomalca, Chiclayo, and Lima. Monteseco was the administrative center for the firm's other two haciendas in the region (Espinal and Udima). Monteseco's manager was the general "superintendent" for Espinal and Udima. Below him in the organization chart came the field and factory bosses in Monteseco, and the manager in charge of operations in Espinal and Udima. Pomalca -OLima Chiclayo Office ce Office Superintendent Monteseco Manager EsDinal-Udima Field Boss Field BosF Field Boss lFactory Boss Montese Monteseco The principal accounting office for the three estates was located in Monteseco, however detailed records were also kept in Udima. In recent years Espinal's books were kept in Pomalca. Until the 1960s coffee was hauled from Monteseco to Pomalca for hand sorting into some -26 categories, most of which were exported. In the early sixties unionization in Pomalca led to the closing ofthe sorting facility; after this, all processing prior to exportation was handled in Monteseco. 2.14 3. Until the 1960s labor shortage was one of the estate's most pressing problems." Outside laborers were contracted by the hundreds for both .the harvest season and routine cultural tasks, such as pruning, fertilization and weeding. In 1969 the daily cash wage paid to workers was S/.22.50. In addition a weekly ration,'worth approximately S/.15 per day, was-given workers. 4. According to reports'of the Ministry, the processing plant o Monteseco is one of the largest and most sophisticated in Peru. The estate also.has an ingenious system of hoppers and underground tubing which allows harvested beans to be carried by flowing water from the fields to the factory. The irrigation system is complex, although the rough terrain of the-.estate makes irrigation by gravity'difficult aind prone to cause erosion. Irrigation by aspersion was attempted but abandoned. In recent years fertilization has increased in importance in.the estate. There are few highly qualified Peruvian specialists-in coffee production, and the owners felt it was worthwhile on several occasions to spend.considerable sums of moeny to bring foreign specialists to the estate. Over the last decade a gradual process. of estate decapitalization and degeneration has resulted from four principal factors: (1) weakness in the international coffee market; *(2) union organization and rising labor costs; (3) changing ecological conditions; (4)'the threat of LR. Replacement.of worn-out coffee plants, repair and maintenance of equipment.and constructions, and routine cultivation tasks were all subject to "economization measures." . 5. Since the early 1960s Monteseco has been the scene of numerous violent labor-management conflicts. Faced with severe economic difficulties the management of the estate fought bitterly against union organizors. As a result many organizors were forced out of the estate or were "bought off" by the haci- enda. The union was never completely broken, however account data from the hacienda indicate that.the union did not succeed in pushing real wages up in the 1960s. Instead, the numerous strikes and confrontations led primarily to enmity between workers and employees, demoralization of the hacienda population, a reduction in working hours and intensity, and an expansion in the size of private plots and livestock holding. Workers claim that the estate' adminstrator actively provoked union unrest in order to justify his frequent trips to the departmental capital. 6. In 1964 Monteseco was legally separated from Espinal and Udima in order to prevent its possible affectation under the LR. A new corporation, "Negociaci6n Monteseco S.A.," was formed, but the same family (the de la Piedra faily) continued to own the estate. 7. In the mid-1960s a consumption coop was formed in Monteseco, under the encouragement of the estate's administrator. This coop never had widespreal worker support or even a large membership. It was controlled by the estate's office employees, and as their hobby'it limped along for several years, pro- viding marginal services to the estate's residents. The coop finally folded in 1972. 2.5 D. The LR Process Initiated by the 1969 Law 1. Monteseco was expropriated in 1970, but this legal action had little meaning to the estate's workers, since work continued "as usual" and neither the Ministry or ONDECOOP organized coop courses for a considerable period after the initial intervention. Worst of all, the administrator (who had held his position since 1954 and was distrusted by most hacienda residents), remained in charge until December 1970. (At this time Ministry officials requ- ested that he leave, "for his own protection.") 2- . In December 1970 a Provisional Administrative Commission was elected, which managed the pre-coop's operations until the final adjudication, January 1972. Several problems of this Commission are related to the socio- economic c.-nditions described above: (1) ecological degeneration of the region; (2) weak market conditions; (3) demoralization of the estate's workforce; (4) expansion of private economic interests; (5) decapitalization of the estate. These were compounded by other problems introduced by the reform: (1) finan- cial and other ties with Pomalca and the larger de la Piedra financial- economic empire were severed; (2) the administrator confused and divided workers by promising parcelization of the hacienda; (3) collapse of the estate administration's authority worsened worker morale and.discipline problems; (4) stagnant pay rates, poor working conditions, and fear of imminent coop bankruptcy motivated many estate employees and workers.to abandon the place. The severing of financial ties with the larger Piedra empire.had a devas- tating effect on estate operations; for the first time ever cash became unavailable for the by-weekly pay days, and police had to be brought to the estate to guard the accounting office. On numerous occasions (once for three months) workers went unpaid or-recieved only partial pay. (Later they xere reimbursed). Not only did workers go without pay; necessary cultural opera- tions went undone. Since coffee is a prennial plant the effects of this negligence will be felt over several years. The Bank, responsible for financing Monteseco's operations, might at first glance appear to be grossly negligent in its handling of the situation -- perhaps to the point of sabotaging the LR. But in fact.the Bank faces a very real dilemna. On one hand, Bank employees hesitate to loan money to people or institutions which are incapable of meeting contractual repayment schedules. To do so would simply violate banking rules. On the other hand these same employees are pressured by non-Bank interests in Lima to attend needy LR beneficiaries. Under Peru's National Cropping Plan coffee production is not to be encourag- ed, and Bank funds cannot be loaned for expansion or renovation of plantations in the Lambayeque region. Thus Monteseco was qualified for short-term operat- ing credit only. It was estimated that the estate's annual operating expenses (assuming "normal, adequate" cultivation) were about S/.6,000,000, but expected gross revenue was less than S/.4,000,000. The bank official in charge of cooperative loans told me that he virtually tore his hair out searching for a way to provide Monteseco with adequate operating &apital, but had no legiti- mate way of doing so. An "integrated credit package" was being prepared for Monteseco, but for reasons outlined in the paragraphs below was not yet ready 2.6 for disbursement. . * Faced with an intransigent local.Bank administration, Monteseco sent a delegation of workers to Lima, to complain to.the national Bank-and-Ministry offices. As a direct result, the National Bank Office instructjed.the Chiclayo Branch that, for essentially political reasons., some way must be.found to extend credit to the new coop.. Oddly enough, the disasterous rains of 1972 were the coop:s salvation! Faced with widespread destruction on the north coast the government issued D.L. No. 19396, which offered "rehabilitation credit" to-estates suffering from the-rains. On the grounds that Monteseco had been affected by the rains, the Chiclayo Bank Branch prepared a reconstruction-development loan for the coop with an eight year amortization period. In the words of a Bank official, "This would provide immediate employment for coop workers and result in- productive capital formation." Roads- and-irrigation canals were to be improved and, perhaps-most importantly, cultivated pastures were to be prepared.for cattle purchased with funds from the same loan. The loan was misused.. Instead of investing all the money, the coop spent much of it on current operating expenses. ' Consequently, pastures were not prepared and of the 325 head of cattle purchased-vith loan funds 54 have died. At the time of my visit', practically no pastureland had been .improved, and. feed was being trucked in from the coast. In addition to-the-severe problems discussed above-, one- other is of glaring importance . The Ministry has decided to fuse Monteseco and another estate on the opposite bank of the Zana River, known as Taul's, into, one prod,uction coop. Monteseco has some 1,358 residents and 1,960 has.; Taul's has approximately 500 residents and 8,576 has. Monteseco is near bankruptcy; Taulls has no financial problems. The estates. have a common border along the.Zana River. Thus it might seem that fusion of these two estates could provide economies in administration, improve resource use, and level incomes. On these grounds in an official ceremony held in a town several hours from either estate, and against the will of the residents of .Taulls, the Ministry legally. fused the two estates into one production cooperative. (None of the residents of.either estate attended the ceremony). -This legal fusion is adamantly opposed by the residents of Taulis for two principal reasons: (1) the estate was abandoned by its owners (the Gilde- meister family) years ago, and now residents occupy individual plots of , land and graze their animals without paying rent; they are independent farmers who oppose the formation of a production coop.. (2) Income levels are much higher in Taulis than in Monteseco, and therefore residents of Taulis opp9se fusion, which implies income leveling. By Ministry estimates residents of Monteseco may earn as little as one quarter as much as residents of Taul's. (That is, wage levels in Monteseco may be-less than one quarter the net value of individual cattle sales in Taul's). - Another interesting fact is that while.both estates border on the river there is no bridge at this point, and'the only way to reach Taulls from Montesec by auto involves a lengthy trip down the north bank of the river to a bridge 2.7 and back up the south bank. (taking four hours in total). Even though the estates-are fused legally, they continue to operate complete ly independently, and no one interviewed outside the Chiclayo Ministry Office believed that an administrative and operational fusion could be brought about. 5. Appraisal of Monteseco for LR Purposes: Land S/." 707-,207 Coffee Plantation .1,092,117 Constructions, Installations, Machinery-, Tools, etc. .396 748 Sub-Total .2,196,072. Interest .1,565,4o8. Contract costs .250. Total S/ .3,761,730 Appraisal of Taulis for LR Purposes: S/.2,708,526 including interest; no breakdown is available. E. Present Economic Situation 1. Since the formation of the coop, Monteseco has cut back the area under coffee 'cultivation to about 500 has. Plans indicate that pastures will be cultivated on an increasingly large scale, and coffee will be-confined to the zones where productivity is highest. (See I.E.3. below). As mentioned above, over 300 head of cattle have been purchased by the coop, but mortality has been high due to inadequate feeding. Individual cultivation and livestock raising has increased in importance since the initiation of the LR process. 2. It is somewhat difficult to appraise the technicaL level of coffee production in Monteseco since this estate is the only large coffee producing enterprise in the region. Coffee is grown by numerous smallholders on the south bank of the Zaia River and it is clear that cultural practices are more primitive there than in Monteseco. However, there would appear to be much room for improvement on both sides of the river. Coffee had been a losing business for several years prior to the abrupt price rise of 1973. Thus no one on either side of the river was motivated to innovate or invest heavily in cultivation or processing improvements. Moreover, available sources of techni- cal improvements were severely limited. Coffee specialists are scarce in Peru, and literally none were familiar with the special characteristics of the upper Zana River Valley. The Second Agrarian Zone has no specialists in coffee production. Monteseco's residents are in nearly universal agreement that the administra-- tor employed by the hacienda since 1954 was "more lawyer than agronomist" -- lacking in technological knowledge and able to remain in the owners' favor only through fast talk. He left the estate in December 1970, being replaced by a younger, inexperienced manager in March 1971. The new manager was over- whelmed by the estate's serious technical, financial, and social problems, and never gained even the passive (say nothing of active) support of the membership. He soon became demoralized, but remained in the estate until November 1972. From that date until August 1973 the estate was without a manager. The job 2.8 opening was advertised; but'no.candidates presented-themselves.. In August-two young and ambitious Ministry employees working in the Jaen-Bagua jungle area to the northwest were contracted by.the coop.- One-is a.veterinary, the other an agronomist. Coop members seem more-.optimistic.about the potential contribution of these men to the- coop's success than they-were about the previous manager -- "Es otra gente, pues." Processing is still done in the estate's own plant. Marketing is handled by EPSA. 3. Financing remains one of the coop's most severe problems. This year financial problems were resolved, by two fortuitous events:: the abrupt increase in coffee prices and the extension of rehabilitation credit to the-coop (much of which was.diverted from investment to current operating expenses). .However, neither are likely to provide long run solutions to the enterprise's liquidity and investment problems. A proposed solution is a long term loan under the Bank's new "Integral Agricultural Credit" (CAI) program (funded by BID No. 322 SF/PE). The Zonal Credit Committee (with representation of the Ministry, the Bank, and SINAMOS) has already drawn up a massive development plan for Monteseco, and approved the corresponding loan, but is holding up disbursement of funds until Monteseco and Taul's begin to function as.a single. production coop. The total amount.of the loan is S/.55,603,500, to,be invested over the period 1973-84 (over, S/.26,o0,Ooo are to be.-invested,in the 1973-75 period.). The major.investment categories specified by the loan.document are the following.:. Amount Percent (000 of S/.,) Cattle and sheep 16,111 29.0 Constructions and installations 8,885 16.0 Permanent plantations (coffee) 8,800 15.8 Cultivated pastures . . 6,551 . 11.8 Since the residents of Taulls refused to associate with those of Monteseco (in r-L personal letter, a resident of Monteseco referred to the people from Taul's as "those unsupportable neighbors on the other side of the river") the social and administrative integration of the.-two estates has.not yet occurred, and is not likely to occur, unless extreme pressure is applied by the government. Consequently, Monteseco is deprived of credit necessary for the development of the enterprise. As a representative of the coop complained recently to a Bank Official, El director de la Zona Agraria dice.que la gente de Taulis sera concientiz- ado y se integraran con la CAP Monteseco. Nosotros preguntamos, 'Hasta cuando tendra que durar este programa de concientizaci6n?' lasta que moramos de hambre! El cafe no se cultiva, el ganado va moriendo.. Ad6nde vamos? Al entierro, pues! 2.9 4. When the coop Monteseco was legally reocgnized, January 1972, there were 309 members. At the time of my visit, October 1973, 272 remained. (This is the only coop visited from which there is a heavy outmigration). Of the 272 members 36 do not work in the coop at all. Some of these persons have retired from work due to old age (without receiving severance pay), most have livestockand.private plots on the estatets land. On the other hand, there are approximately 100 estate residents who figure regularly on the coop's payrolls as "eventual workers" but have not been granted membership. All working members (both men and women) receive a cash wage of S/.25 per day plus a ration worth approximately S/.19. Non-member workers are paid less -- men receive S/.35, and women S/.21 -- and do not get the ration. To date members have not benefitted from yearend profits and the coop has not invested in any important programs. .F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group Credit has already been discus'sed at more than one point above, and there is no need to cover this ground,again, except to state that the basic problem is not in this case one of transition from pre- to post-reform institutions, but of bankruptcy and the lack bf adequate development programs (not necessarily self-financing, or profitable in the short run). Technical assistance has also been disucssed, and it has been noted that the Second Agrarian Zone is lacking in expertise in coffee production. In the area of capacitaci6n and coop motivation, SINAMOS also comes under fire for seeding confusion and dissention and not offering concrete solutions to the coop's problems. As the coop's president noted, Ellos traen problemas no mis. Dicen que la gente tiene derecho a reclamar todo, y muy bien. Pero despues se van y no tienen que confrontarsE con la situaci6n a,-. The Ministry' s intransigence over the issue of fusing Monteseco and Taulls. and the Bank's withholding of the CAI loan in lieu of fusion are points of great dissatisfaction for coop leaders and members (See Section I.E.3. above). A final public sector problem is the extreme tardiness of severance pay due ;0rkers by the previous owners. Why must it take the government over three years to determine the amounts due to members in Monteseco when this issue has been settled in other estates in a fraction of the time? II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation During the period of the Provisional Commission, member participation was active, and it seems that Assemblies continue to be well attended and lively, but the degree to which members can influence major plans seems to be minimal. As the present manager noted to me, most of the members have little or no 2.10 education, and have great difficulty in understanding the complex financial ,plans necessary for operation of the:coop.. Moreover, planning for theCAI had no peasant input, being drawn up entirely by- a committee of Ministry, Bank, and SINAMOS people. Loan-documents signed by coop officials (the coop 'ould. by no means turn down this loan) imply rather inflexible production plans imposed from outside the coop.- B. Operations and Peasant. Participation . 9. Workers felt that the administrator employed by.the ex-hacienda was both corrupt and incompetent. The man who-replaced.him was viewed as honest, but incompetent. The" two technicians recently contracted are seen,as both honest and competent. 10-11. The majority of estate residents farm individual plots and.raise livestock. A few residents have relatively large herds of cattle (e.g., 20-30 head) but most have only a few. Both.hogs and cattle.-are sold on the coast. Fruits are harvested for sale in a nearby town, La Florida, or on the coast, but fruit trees are not cultivated,simply harvested. Corn and vege- tables are tilled on a small scale, but production.methods are extremely primitive and marketable surplusses are small; 13. Capacitacion courses have been. infrequent and considered inadequate by most estate residents. C. Accounting-and Information Systems Daily and :biweekly accounts are kept by the coop's own accounting staff, but all legal accounting documents and. annual summaries are done by the Central Accounting Office-in Chiclayo.. D. Income Distribution 1. As mentioned above, all working members receive S/.25 per day plus a ration worth approximately S/.19. Non-members receive S/.35 (men) and S/.21 (women) without the ration. These pay rates are only slightly above the 1969 level in cash terms, and are much lower in real terms. Employees salaries have not.-increased at all since 1969; yearly.net pay has, in tfact, fallen since two bonuses (gratificaciones) have been eliminated. Twenty-two employees were on the monthly pay sheet at the time of my visit. The total amount due was S/.54,494 (average pay being S1.2,477). The highest salary was earned by the administrator, and amounted to S/.12,000 per month. The lowest salary, of S/.714 was received by a schoolteacher, without professional training (and probably without secondary education). 3. As mentioned earlier, a "consumption cooperative-of-sorts" existed in Monteseco prior to the reform, but has folded since the creation of the production cooperative. Just after expropriation the school building in Monteseco's central population was torn down (rather than repaired) in the expectation that a new building would be errected, but none has been built. No social investments of any magnitude have been made in the estate since the initiation of the reform process. By law,.all large agricultural estates (in- cluding coops) should provide their workers and families with free medicine, 2.11 but Monteseco fails to do so. 4. Outside income from olots and livestock is of considerable importance for some estate residents, but we have no estimates of it. 5. Since the formation of the coop, membership has fallen from 309 to 272. 6. At the time of my visit, in Ocotber 1973, a new union organization was being formed; the immediate goals of this institution are not clear, but the coop's president stated that a strong union could make the already difficult problems of management much worse. 3.1 CAP UDIMA Dept. of Cajamarca (highlands) Intervention: June 1969 Adjudication: Dec. 1971 512 members 39,500 has.- I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Udima is the largest estate in the department of Cajamarca. It covers all the land directly above the coastal estates Cayaltf, Pampa Grande, and Espinal, and between the Zafa and Lambayeque-Chancay Rivers. Most of this highland hacienda is suitable only for pasture; crops can be grown in small plots in several parts of the hacienda, but commercial production is discouraged by trans- port problems. The only road leading to the estate is a private lane constructed by the previous owners (the de la Piedra family). The road is suitable only for trucks, and is open only during the dry season. In 1972 extraordinarily heavy rains closed the road for 9 months. In warm, low sections of the estate border- ing on the Lambayeque River coffee and sugar cane can be grown, but on a very small scale. In a few very high sections no crops can be grown, and the pasture is suitable only for sheep (no alpacas or llamas are raised in Cajamarca). In most of the estate sheep and cattle graze, and small plots of corn, potatoes, wheat, and barley are cultivated. Until well into the twentieth century much of the estate was covered by scrubby forest. In two large sections forests remain, but most of the commer- cially exploitable trees have already been cut, and much of the scrub has.been cleared as pastures have been opened. In the Case Report on Monteseco, it was noted that profound ecological changes were undermining the productive capacity of the upper Zaha River Valley. In Udima, which borders on Monteseco, a similar degenerative process occurs. Interviews with hacienda residents and a review of hacienda accounts and secon- dary materials on the region indicate that more cattle were grazed in Udima in the early part of the century than today. Residents also note that over time cultivation is increasingly difficult and less productive. Several factors are responsible for the progressive loss of the estate's productive capacity, most importantly the introduction and spread of an African grass known as Quicuyo, which smothers out all other pastures and makes cultivation difficult. B. Socio-cultural Setting 1. The population of the estate is approximately 3,400. Most residents were born and raised in the hacienda; a minority have migrated to the estate from neighboring highland districts. In-migrants explain that there was no land or work in their villages, and Udima offered a better life than they could expect there. Most came in the 1930s and 1940s when the owners were actively attempting to expand hacienda production. 3.2 2. About 50 wooden houses are clustered around the Casa Hacienda and of- fice, but most hacienda residents live in adobe houses scattered widely over the estate. Most men who live in the central rancherfa work full-time for the estate; most who live outside the rancheria work only part-time, or not at all. The majority of residents in the rancherfa have small plots and a few head of cattle; people living outside the rancherfa have larger plots and more livestock. Educational -levels are lower for men in this estate than for men on coastal estates, and only a few women have received formal education. Until a few years ago residents considered schooling as unnecessary for women. One man noted that, "all they'd do with it would be write love letters to their boyfriends." Most men have visited the coast, but-far fewer women have traveled off the estate. Stores of the estate are located in the rancherfa, and most residents must make occasional trips to them to stock up on basic provisions. (Since the reform several new stores have sprung up on the estate.) Men often do this on payday; women travel to the rancherfa less often. The principal event of the year is the annual 2.day fiesta, which most estate residents and numerous out- migrants attend. The rancheria has electric light (powered by a hydroelectric plant in- stalled for a sawmill), and recently a television was purchased by the coopera- tive. The estate's principal primary school and the.only secondary school (just established) are located in the rancheria.. Several other primary schools fuac- tion in other parts of the estate. C. Pre-reform Estate Organization and Administration 1. The principal productive activities of the hacienda have always been cattle and sheep raising, but in the 1940s and 1950s cheese making and forestry were also important. The hacienda's residents grow crops and tend animals on a small scale. In the early part of the century hacienda residents had large herds of cattle, often numbering over 50. After. 1930 the administration at- tempted to expand. its own herds at the expense of individual (colono) herds. Dairying became increasingly important until into the 1950s. More recently, centrally administered (demesne) production has declined in importance relative to colono production. At the time of the LR the estate's herds included 3,400 head of cattle and 3,000 sheep. Colonos had 2,300 head of cattle and 2,200 shep. By the time of the LR, cheese production had been discontinued and log- ging nearly so. Pay sheets for 1970 indicate the following breakdown of hacienda employees and laborers: Employees 22 Salaried laborers 9 Full-time laborers 45 Part-time laborers (quiceneros) 163 (average) 2. Administratively, Udima came under the jurisdiction of Monteseco's Superintendent and the Administrator for the two estates Espinal and Udima (see Case Report for Monteseco). Important financial and administrative matters were 3.3 handled by the firm's high level management in.Pomalca and Lima. Both the es- tate's and the residents' cattle were marketed on the coast. Residents could not sell to outsiders without a permit from the hacienda administration. Most residents sold to the hacienda. During the period in which cheese was produced in the hacienda it was mar- keted in Chiclayo and Lima. Udima's cheese acquired a certain fame in national markets, but business correspondence indicates that highly variable product quality was a recurrent problem., The hacienda's wool was exported. It was impossible for-even hacienda re- sidents to purchase wool from the administration. 3. The bulk of the hacienda's labor came from its colonos, or "quincene- ros." At the turn of the century a system existed whereby hacienda residents worked a few days each year in return for the right to live, cultivate, and graze within the hacienda boundaries. Residents also paid rent (pastage) in livestock, and when they worked they received daily food rations. Later cash wages were instituted and residents were encouraged to work more days each year. In the 1930s and 1940s outside workers were contracted in large numbers for con- struction of irrigation canals, dairy facilities, and the road from.the coast to the rancheria. In the 1950s construction and labor contracting stopped. Since that time all labor requirements of the hacienda have been met by local residents. The average number of days,worked by colonos in 1969 was 86; the cash wage in this same year was S/.11. 4. The hacienda administration attempted to modernize production methods in Udima, but without the success or results they expected. Until the 1950s the administration invested heavily in livestock improvements, irrigation, transportation, and hacienda installations, and employed competent managers and advisors. In the last 2 decades, the owners have increasingly abandoned the hacienda and neglected technical aspects of production. 5.-6. In the Peruvian highlands unionization has never been as important a socio-economic phenomenon as on the coast. This is due largely to the pre- ponderance of wage laborers on the coast and colonos in the sierra. In Udima, the first significant political mobilization of the work force occurred in 1968, and had as its central objective the implementation of the 1964 LR law in the estate. The owners attempted to buy off the agitators and later threatened to expel them from their homes and from the hacienda. Workers' representatives traveled to Cajamarca and to Chiclayo, requesting that the Ministry intervene. They also filled out the legal documents for the estate's residents requested by the Ministry. The Ministry, however, never gave serious attention to the matter. In early 1969, just before the announcement of the new LR law, the hacienda residents formed an Asociaci6n de Campesinos (under the supervision of a communist lawyer from Chiclayo) and prevented the hacienda administration from holding its annual rodeo, in which colono livestock were to be counted for the determination of pasture rental charges. 7. In the mid-1960s a consumers' coop was established in Udima, under the encouragement of the hacienda Superintendent, who was feuding with the principal local merchant (who,was also the head of the hacienda office and a close asso- ciate of two other powerful figures in the hacienda). The administration - 3.4 provided the coop with free transport for one truckload of goods each month. Despite this.support from the administration, the coop never prospered. The first president attacked bitterly the-policies of the.second. The second presi- dent, in fact, held very few coop-meetings, and did-not consult the membership on most decisions. In 1970, when cooperative promoters came from the coast to Udima for the first time, residents began to take more interest in the consumer coop, but they.were soon dissuaded from investingin,the coop by ONDECOOP's in- sistance that the coop -was-not to be a profit-making venture, and should pay very low rates of interest.and profits to members. ONDECOOP's argument that the bulk of earnings should be plowed back into cooperative installations and inventories, so as to improve services to the community, fell on deaf ears. A few'large contributors withdrew their capital,, and soon the majority of members followed their example. (Some requested that their capital.contributions be returned; several requested credit in excess of their contributions.) By 1973 the coop had folded and those members who-had not withdrawn their capital early had lost it. Estate residents noted on several occasions that if the produc- tion cooperative. did not function better than the consumers' coop they were in for big trouble. Most seemed to feel that the-problems.of the consumers' coop- poor management,. indiscipline, inadequate bookkeeping--were likely to plague the production coop as well. D_ The LRProcess Initiated by the 1969 Law 1.-2. As in Espinal, the new law stopped. a grass. roots reform movement in Udima..- The Peasant Association had been formed just 1 month prior to the an- nouncement of the new LR law, but with the news of the 1969 law it ceased opera- tion altogether. A Special Committee was formed to administer the estate's operations, but- the Committee members visited Udima only once (in August 1970) and on that occasion as a mere formality.,. They marveled at the scenery viewed along the road, had lunch in the Casa Hacienda, talked business with the es-. tate's-manager for about an hour, and sat at,the front of a very brief, poorly attended meeting of coop members. All in all, they were in the estate about 4 hours during the Committee's two years' existence. The estate's administrator over this period felt that his hands were tied, and that he had the support of neither the workers nor the government. Thus, the period of Special Committee administration was essentially one of inaction. 3. Two characteristics of.cattle raising which distinguish it from.crop- ping are the following: (1) The product (the salable animal) is also capital (the breeding stock). (2) Production is in large part "natural"-reproduction and growth. Most productive operations need not be performed for production to occur. They simply increase levels of productivity. Both-of these are important in determining the impact of LR on estate pro- duction and productive capacity. Since the product is also part of the estate's capital, temporary increase in production can come at the expense of decapitali- zation. Fearing forced collectivization (a fear which-was actively encouraged by livestock merchants), Udima's residents sold their livestock in large num- bers, increasing production, but reducing the size of their herds. By 1972, however, residents had stopped worrying about expropriation of their livestock and were again increasing their herds. Since the expropriation of the estate residents have not paid rental for pastures and meat prices have been high, Thus, they are highly motivated to increase both herd size and production. 3.5 Since cattle production is much more a natural production process than is crop production, discipline is a much less critical determinant of cooperative success in livestock estates than in crop estates. Thus, even though discipline has been increasingly difficult to maintain, its effects on production are not nearly as devastating in Udima as they are in, e.g., Espinal or Monteseco. The lack of an adequate development plan has resulted in a restriction of credit to Udima. Business papers indicate that over the last several years net losses were incurred; thus Udima was effectively subsidized by the rest of the de la Piedra economic complex. When the Bank discovered this it restricted short-term credit and denied long-term credit until a development plan was ap- proved. At the outset, a high-ranking technician in Pomalca attempted to con- vince the Ministry and ONDECOOP that Udima should remain under the administra- tion and "protection" of Pomalca. In this way, funds could be channeled to the highland estate without dealing directly with the Bank. However, the Ministry decided to separate Udima from Pomalca. (It should be noted that Udima's re- sidents also saw advantages in maintaining administrative and especially finan- cial ties with Pomalca. As one employee queried, "How else will we be able to pay the workers? Where will we get the cash? Would the Bank lend us money that we cannot pay back?") The Ministry drafted a development plan which was notably "theoretical" (in the negative sense) without significant input form for Udima's administra- tor or residents.: Independent experts who reviewed the plan stated that it was entirely worthless; the Bank rejected it, and insisted that the Ministry re- study the estate's resources and investment possibilities, and propose an en- tirely new developmeat plan. In 1973 an Integral Credit Package was designed and approved by the Bank, the Ministry, and SINAMOS. Under this, the first long-term investments have been made. Aside from these financial and economic dislocations, important social pro- cesses have been unleashed by the reform process which.tend to jeopardize the success of the production coop. One relates to the frustrated expectations pro- duced by the 1964 law. The promise of land redistribution produced the first significant mass organization of estate residents in opposition to the adminis- tration. The hacienda's resident administrator was the logical target of the Peasant Association's wrath. After the expropriation of the hacienda the mana- ger remained in his position, and rather than attempting to make peace with the Peasant Association, he denounced its organizers as impersonators of Ministry officials. For over a year he denied these leadets work and attempted to expel them from their houses. After a detailed investigation by public authorities, including the PIP (the equivalent of the U.S. FBI) the leaders were cleared of all charges, but left nearly poverty striken. The day after-all charges were dropped one leaders in a drunken fit, attempted to murder the manager. Udima's residents universally disapproved of this violence, but most felt that the mana- ger should be removed from his position. The manager was understandably un- nerved by the experience and spent much of his remaining time in the estate in the Casa Hacienda (behind locked doors). A second, closely related process has been the gradual breakdown of au- thority and work norms in the estate. All employees note that workers cannot be coerced into doing the sorts of undesirable jobs that they had to accept in the old regime. For example, workers have refused to pasture sheep in the 3.6 highest reaches of the hacienda, arguing that to do so they have to leave their houses and families for 15 day periods and live under the. harshest of condi- tions. They simply refuse. The estate's control over resources within its boundaries is also weaken- ing. Not only are estate residents taking possession of larger plots of land and pasturing larger private herds,of cattle and sheep, outsiders are also in- vading the estate and establishing claim to plots of land and pasture rights. One employee stated to me, "What are we. to do? These people are dangerous. Moreover, the police take no.interest in our problems and would only come in tim.e to pick up the bodies." 4. . In Udima a production cooperative was.formed, but the operation of the estate does not correspond to the legal requirements of this type of institu- tion. In 1971 Ministry employees were sent to Udima to convince the estate's residents that they should constitute a SAIS, but before the work of these .promotores"' was done, Ministry officials in Chiclayo changed their minds and sent another higher-level contingent to the estate to hold a general meeting and convince workers that they should form a production coop. At this meeting the-highest ranking Ministry official present expounded on the value of coop- eration in general and of production coops- in particular, and noted that it was no longer reasonable for peasants to expect.to be able to "go out into the field and kiss their cows an the.,nose each morning." Everyone laughed, but. more out- spoken peasants muttered. about the cooperative's taking,their animals and leav- ing. them naked to face the cold winds of economic disaster.. When it came time to, vote for or against the formation of the production cooperative a group of men asked the president of the consumers' coop for his advice. Awakened from a drunken stupor he replied, Vote for the production coop,, that's what they want. As for us.it doesn't matter; farm and graze as we please and they won't be able to stop us. It makes no differ- ence whether they callit a cooperative or a SEIS (sic], but they want to call it.a cooperative, so call it a, cooperative.and they'll go. away and forget about us. 5. The original appraisal of the estate was a travesty of agrarian jus- tice. The principal accountant of the firm owned by the de la Piedra family was hired by the government to assist in the appraisal of estates, and he seems to have done his best to inflate the value of Udima's assets. The following was the result: Valuation for LR Value in Estate's Type of Asset (December 1970) Books (December 1969) Natural forest S/.24,408,000 0 Cattle 13,296,313 575,032 Land. 8,970,875 0 Constructions 1,702,800 0 Installations 1,161,000 0 All other assets 2,820,709 4,434,107 Total 52,359,697 5,009,139 3.7 The most scandalous value was that placed on the estate's natural forests, which are nearly all logged out and worthless, but the total value, placed at over ten times the owner's estimate, must be considered nothing short of crimi- nal. The owner's 1969 inventory, available in the estate's accounting office, was signed by the same.person who drew up the 1970 LR appraisal documents! A group of workers' representatives denounced the inflated appraisal values to the Chiclayo Ministry office, but was told that their claim could best be settled after the estate's adjudication. Thus, at the time of adjudication wary coop officials.-signed a purchase contract which grossly over-valued the estate's assets. E. Present Economic Situation 1.. Livestock numbers and sales for recent years are as follows: Ca.tle Stock Sheep Stock Cattle Sales Sheep Sales Wool Sales (at December 31....) (...... number ..... (pounds) 1968 . .3,311 2,314 747 624 8,187 1969 3,448, 3,U48 231 370 7904 1970 3,765 ' 3,074 459 348 9,033 1971 .3,064 2,601 535 441 7,414 1972 4,607 2,688 162 57 7,227 These indicate extraordinarily high cattle and sheep sales in 1968 (pre-reform) and low sales in 1972. Cattle and sheep were sold in large numbers in 1968 to prevent their starvation as a result of a severe drought. Sales were extraor- dinarily low in 1972 as a result of bureaucratic inefficiency within the Minis- try. In that year it became necessary to acquire sales permits from the Minis- try and the cooperative was unable to get Ministry officials to come to the es- tate and comply with the other bureaucratic formalities required for the acquisi- tion of these permits. In 1973 the permit problem seems to have been solved; by September 400 head of cattle had been sold. In addition to maintaining cattle and sheep production, the coop has begun cheese manufacturing again, but on a very small scale. Due to heavy rains, which destroyed internal roads and bridges, and the poor state of trucks at the service of the coop, timber has not been cut since 1969. Peasant production and incomes have increased markedly since the reform, due primarily to the termination of rental charges and the relaxation of admin- istrative controls over cropping and livestock raising. 2. As a direct result of the reform 3 important hacienda officials left the estate: the cattle boss, the veterinarian, and the head of the cheese fac- tory. To date none of these positions has been filled by men of comparable technical qualifications or experience. The estate manager employed by the pre- vious owners at the time of the LR and retained by the Special Committee was of dubious qualifications; as a result of an improper dose of disinfectant he was responsible for the death of 40 purebred Holstein cows. The administrator who replaced him made the same sort of error and killed 17 head of cattle. Neither of the administrators had the full support of the workers, and neither made an 3.8 attempt to get to know either the people of the .estate or the estate itself. (In this respect it is important to keep in mind' the vast size. of the estate and the diversity of its resources. The previous owners requested -administra-, tors to file detailed semestral reports of crop and livestock activities-in the, various sections of the estate, and made these reports available to new hacien- da employees. For a new person to become acquainted with the estate on his own, without access to such reports, it would take several years of keen obser- vation.) The reform produced a major' change in the estate's economic and financial linkages to the regional and national economy. Prior to the LR all financial matters were handled by the owners and their high-level staff in Pomalca and Lima. All cattle, sheep, wool, and other haciendd products were marketed by way of Pomalca, and Udima's accounting office got the final results of these sales from Pomalca. For the first 2 years after the reform Udima maintained close.financial and marketing ties with Pomalca, selling all its cattle to Po- malca,' and receiving short-term financing.-,in return. However, in 1972 these financial-commercial*relations- were severed by Pomalca 6n the grounds that Udima was not delivering cattle on schedule. Udima failed to do so in part because the road had been washed out by unusually heavy rains. This mattered little to. Pomalca, however, since this coastal 6oop was looking for an excuse to sever its unprofitable relations with Udima." (Cattle could be acquired elsewhere with less bother,and at lower prices, and Udima was incapable of paying'bff its loans.) When the estate's comercial-financial ti6s with-Pomalca were severed Udima's principal new problem was the acquisition of,short-term operating capi- tal. Fbr the first time the estate's employees had to work with bankers. 3. As in the case of Monteseco,"the Bank he'sitated to loan Udima money because its operations were unprofitable. Year-end losses for recent years are as follows: 1969 -' S/.2,153,00. (loss) 1970 -3,666,100 " 1971 -3,773,700 " 1972 -4,021,900 At the time of the estate's expropriation, most Ministry and ONDECOOP offi- cials believed that the owners were lying when they claimed that Udima lost mon- ey and was 'being subsidized`by other parts of their economic,'empire. According to the'fashionable"internal colonialism"t argument, the"economic surplus of the Peruvian sierra was being drained off by coastal economic interests, and there- fore it was.simply assumed that Udima was transferring profits to the owner's bank accounts. The Bank was not impressed by this argument, and insisted that the Minis- try present a well prepared development plan before it commit funds to the es- tate. As mentioned in Section I.D.3. above, the first Ministry development plan was ill-prepared and rejected by the Bank. Only in 1973 'was an Integral Credit Program approved and the first allotment of investment funds disbursed. (A rub- ber tired tractor was purchased.) 3.9 4. As mentioned above, all labor employed by the coop comes from the re- sident labor force, but not all residents derive income from work in the coop. Nearly all residents farm small plots of land and graze cattle. Since the re- form, administrative controls over farming and grazing have relaxed consider- ably, and peasant production has increased markedly as a source of employment and income. Peasant production is of course integrally related to cooperative produc- tion; the two compete for the estate's resources--land, irrigation water, pas- tures, and.labor. As peasant production gains importance the resources avail- able for coop production are restricted. Thus, the expansion of peasant pro- duction reduces the profitability of coop production and discourages the Bank from lending to the coop. The Bank's restriction of operating capital contri- butes to the curtailment of cooperative employment and encourages the expansion - of individual activities, since residents who cannot work for the coop have free time and resources for individual production. 5. Cash wages for cooperative workers were S/.30 per day in 1973. In ad- dition, ,a ration is given which is worth approximately S/.8 per day. (The ra- tion consists of 16 lbs. of rice, 6 lbs. of sugar, and 1 lb. of lard, plus 2 lbs. of meat every two weeks. The market price.of the first three items is S/.105; the charge to workers is S1.10. Meat is sold at 50p per lb.) At the time of my visit a new manager had just been contracted at S/.16,000 per month. The previous manager was paid S/.12,000 per month, and the manager before him S/.10,000. The manager earning S/.10,000 was hired by the hacienda and received a year-end bonus proportional to the year's increase in cattle numbers and sales. I do not have information on the profit-sharing clauses (if any) of the contracts signed more recently by managers and the coop. Aside from the manager, 20 employees and 4 salaried laborers were on the pay sheet, with total monthly earnings of S/.27,000 (5/.1,124 per person). Next to the manager, the highest salary, S/.1,900, was paid to the estate's nurse. The lowest sala- ry, S/.760, was received by a school teacher. Medicine is provided free to the wives and children of full-time workers. Half-time workers receive medicine at half price. Occasional workers receive medicine at three-quarter the market price. A secondary school was established in the estate in the last year. Pay for primary school teachers has been increased markedly since the LR, although they are still very poorly paid by coastal standards, and the standards of highland towns. Most teachers supplement their cash incomes by cultivating and raising animals on the side. The,coop recently purchased a television for the benefit of residents of the rancheria. 6. Individuals within the estate do a number' of jobs not directly related to cattle raising and cropping, such as carpentry, leatherworking, and petty merchandizing. The number of stores has increased markedly since the LR, re- flecting increases in the cash incomes of coop members. Two part-time residents drive trucks. Nearly all the estate's women spin thread and yarn and weave pon- chos, blankets, and bed spreads. The coop, however, has taken little interest 3.10 in fostering these activities either on an individual or. a group basis. Nearly all- this sort.of production is for personal or local use. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group -' The main complaint of coop officials with respect to public agencies is that the agencies have neglected Udima. .-:or several months after the initiation of the reform process residents-were not informed of the Ministry's.plans for the estate. (Of course, for-several'months the .Ministry had no plans for Udima.) A Ministry official spent.-several weeks in Udima measuring individual plots and telling residents that they would not be allowed- to bring other lands under cul- tivation-an order which people could not comply-with since-they employed a fal- low system of cultivation which required bringing new parcels into production -, every few years.- In fact, residents began,expanding cultivation in flagrant violation of the Ministry's instructions. In 1970 two workers' representatives-from Pomalca traveled to Udima to ex- plain the government's cooperativization policy to -the estate's residents. Un- der questioning, they.-informed a group of, workers that no one would be able to maintain privately owned cattle, and-that all cultivation would,be-centrally managed by the new coop's administration. Moreover, they indicated that people would be encouraged to leave their widely-dispersed houses and live in the cen- tral rancheria.-- All-this seemed perfectly logical to 'the workers from the coastal planta- tion, but totallyrunacceptable to Udima's-colonos. By the time Ministry,and . ONDECOOP officials came to,the estate tor,promote collectivization (1971) the workers were dead set against it. The estate's residents were also confused'and embittered by the inherent contradiction of all LR-collectivization programs in traditional Peruvian ha- ciendas--telling peasants that on one hand the LR guaranteed them self determina- tion and on the other hand that collectivization was necessary (for their own wellbeing). For the colonos, self determination meant individual farming, and was totally incompatible with collectivization. (It should be noted that the government's policy of preaching self determinration and-imposing collectiviza- tion was as distasteful and frustrating for many public officials as it was for the LR beneficiaries.) The-estate's,residents were also displeased at the Ministry's planning - methods, which involved brief trips to the estate to get data followed by long absences in which plans were drawn up in the Ministry's coastal offices. Seldom were residents consulted during the data-gathering stage, and hardly ever during the drafting stage. Once completed, little time was spent in explaining the planning methodology or even the meaning of the plans presented to the coop. As stated in Section I.D.3. above, the original Ministry plan was unsound. It is likely that greater worker participation in the practical aspects of planning could have improved the quality of this plan. .(It would also seen that peasant participation could-also increase the likelihood,of successful plan implementa- tion.) - The Ministry's gross overvaluation of the coop's assets and unexplained de- lays in correcting this error make many residents suspicious of the intentions 3.11 of some government employees. (This, of course, contributes to the peasants' traditional suspicion of outsiders, even those who purportedly intend to help them.) II. OPERATIONAL ASPECTS A. Production Planning and Peasant-Participation 1. Planning for the coop is done almost entirely by the Ministry. Members living widely scattered over the estate can.come to meetings only with great difficulty, often incurring the loss of a day or two in travel and having to sleep in the estate's stable or on a friend's floor in the rancheria. There- fore, attendance at coop meetings is understandably poor (often not arriving at a quorum). Moreover, the 3 managers employed since the expropriation have not partici-- pated actively in the planning process. Consequently, although massive, the coop's plans often do not .take into account practical considerations which could only be appreciated by persons intimately familiar with the estate, or with broad experience in livestock management. 2. In the planning area there is no clear division of responsibilities be- tween formal bodies within the coop or between individual employees. There is, in fact, little concern for planning in the coop, since plans are delivered by the Ministry. 3. The broad outlines of production plans are presented to the membership at assembly meetings; discussion is minimal and chaotic. B. Operations and Peasant Participation 1. The membership has shifted certain employees of the ex-hacienda between positions. For example, an unpopular field boss was removed from his position and placed in charge of the estate's warehouse. Later, however, his replacement was dismissed, and the original boss was given his job again. 6. Non-compliance with administrative orders was dealt with "energetically" in the ex-hacienda--pay was withheld from "uncooperative" workers, they were as- signed the least desirable jobs in the hacienda, and/or their livestock was con- fiscated by the administration, In the coop, these forms of sanctions have been eliminated and to date they have not been replaced with very effective "coopera- tive sanctions." Consequently, coop employees complain of increasingly diffi- cult discipline problems. As noted above, in Section I.D.3., indiscipline is less critical in cattle estates than in crop estates, but does of course inflate the wage bill and lower productivity somewhat. 9. Coop members have not been very satisfied with their leaders.. The men who led the Peasant Association in 1968-69 participated in the estate's manage- ment during the pre-cooperative stage, but were later accused of corruption and nepotism. The same charges have been leveled against the leadership of the con- sumers' coop. The first president of the production coop was accused of mana- gerial incompetence, and left .office at the end of his term in the face of wide- spread member discontent. 3.12 It appears likely that no local leadet could gain and retain for long, the loyaity and support of the miajority of coop tembers--for 2 basic-rteasons: (1) Many members simply do not support the coop, and thus cannot be expected to. sup- port its leadership. (2) The coop faces many nearly insoluble problems, and to the extent that members associate problems with poor leadership.; coop leaders will be damned no matter how well they perform in office. More than one coop member stated to me that the solution to the leadershipiproblem was the imposi- tion.of a strong outsider. One man stated, "What we need here is a military man, a strong but honest leader who will put the people to work and check their selfish, ignorant tendencies. Alone we- are ldst.' The managers contracted to date have not provided'.the necessary leadership. The following is a composite of sevekal statements froermy interviews:. The Engineers who come here as managers come to pass their vacations, they do not come to work. They-sit idly in the Casa Hacienda or' in their offices,- and sel- dom climb onto" a;horse. One"of the fev times the last one was seen- outside 'the, ranheria was on his way to his girlfriend's house in the middle of the night. ...The one before him was like a parrot jumping from a tree branch t6 the ground and back again: In the morning he would come down from his bedroom to the office, at noon he would go up again, in the middle of the afternoon he would jump down again. And so it went, up and down, down and up, and never did he go out of the house. ...And would you believe, both of. these incompetents fouled up the disinfectant and killed some-. of our best cattle. Given the size of the estate, the magnitude of its problems, the impor- tance of peasant production, and the low priority placed by the Agrarian Zonal Office on Udima, 'coop leaders and managers face-nearly impossible .tasks, without active support from either the Ministry or the membership. 10.-11. As mentioned at several points above, peasant production plays a central role in the coop's problems. However, it is by no means clear that the elimination of peasant production would solve the coop's problems. Could cul- tivation be efficiently organized around central cooperative administration? How could members be 'convinced or forced to give up their animals and plots to the coop? To what extent could imposed,collectivization be considered a "coop- erative solution" to the present debacle? How costly would collectivization be in terms of increased administrative costs and a reduction in production? 13. The only serious attempts to provide capacitacion and promote collecti- vization in Udima were in late 1970 and 1971, when first the Ministry and later ONDECOOP sent groups of promotores to the estate. Their attempts to convince residents of the desirability of collectivization were unsuccessful. C. Accounting and Information Systems 1. Prior to the LR, all year-end accounting documents for the hacienda were drawn up by the owner's offices in Chiclayo and Lima. .After the / . 3.13 expropriation and severing of ties with Pomalca, the personnel of Udima took over these functions. Fewer, less-detailed documents are prepared by the coop's employees than were prepared by the owner's accounting staff. Moreover, fewer statistical analyses and summary documents are prepared. 3. The membership does not take assembly meetings seriously, although most members have heard that the coop is losing money. D. Income Distribution 1.-3. See Section I.E.5. above. 4. Outside income is extremely important for coop members. The following 2 quotations are from coop members: La gente que tiene mejores terrenos viven mejor. La mayorla de los ingresos vienen de su ganado y chacras. Los que tienen ganado y chacras estan bien; los que no tienen animales estan mal.. 4.1 CAP POMALCA Dept. of Lambayeque (coast) Intervention: June 1969 Adjudication: Oct. 1970 3,300 members 16,662 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Pomalca is one of the largest coastal estates in Peru, located in the fer- tile Lambayeque-Chancay Valley on the north coast. Although;this valley was settled and larget estates were.established soon after the conquest,.ths-region's rapid economic expansion dates from the "sugar boom" of the late 19th century. Sugar production expanded more slowly in Lambayeque than in the famous Chi- cama Valley to the south (where the country's largest sugar estate, Casa Grandev is located) due primarily to less favorable natural conditions. The Lambayeque- Chancay River was more prone to flooding and more difficult to channel. In ad- diti6n,.much of the valley's floor was saampy, marshy, and malarious. Conse- quently, some of the,valley's estates which today are highly productive were not farmed at:all until the 20th century when heavy investments were made in irriga- tion and drainage infrastructure. The-sugar estate which today is known as "Pomalca y Anexos" or simply as "Pomalca" is composed of several large ex-haciendas and numerous smaller tracts which were purchased by the de la Piedra family over the course of the present century. In addition to the sugar estate, Pomalca, which now comprises nearly 17,000 has., the owners also owned 2 large estates in the upper Zafia Valley and the largest hacienda in the highlands of Cajamarca (see Case Reports Nos. 1, 2, and 3). Pomalca's lands stretch from the Panamerican Highway south of Chiclayo east- ward approximately 70 kilometers along the south bank of the Chancay River. In the lower.part of the valley irrigation is nearly totally based on river water. Higher in the valley tube wells supply irrigation water in the dry se-Ason. Two large landfilled dams were built by the previous owners to form reservoirs for irrigation water trapped during the early months of each year for use in the dry season. These allowed the owners to increase markedly the area under cultiva- tion in Pomalca and to improve the irrigation of lands already under cultivation. To date the supply of irrigation water is the most limiting factor of production in Pomalca. Large expanses of dry land could be brought under cultivation and produce a wide variety of annual or permanent crops were irrigation water avail- able. B. Socio-cultural Setting 1. The total population of Pomalca at the time of the LR was approximately 23,000. Half the residents lived in the principal population center, or company town. The other half lived in numerous other population centers within Pomalca 4.2 and its annexes. The principal ex-haciendas annexed by Pomalca over the years are Saltur, Sip6n, and Pampa Grande. Population and labor force statistics for 1970 are presented below: Total Number of Workers Population total field factory & services Pomalca 13,600 1,909 498 1,411 Saltur 3,280 479 293 186 Sip-in 1,480- '"-173 154 24 Pampa Grande 4,870 675 . 546 129 Total 23,230 3,241 1,491 1,750 These figures reveal that the labor,force.comprises.only 14%.of the estate' a total population. In the central, estate, Pomalca, where-the sugar mill and ma- jor service, repair, accounting, and administrative facilities are. located, three-fourths of the labor force is employed in non-agricultural activities. In the annexes, three-fourths of .the-labor force works in the .field... About 60% of the total population was born in Pomalca, but far:fewer workers were born in the estate. Thirty percent of all..workers came from the highlands of Cajamarca, primarily from an area-of intense,.minifundia around the town of Chota. Another 13% came from the-department:of.Piura, primarily from the poverty-striken mini- fundia around-the.coastal town Catacaos. The majority.of workers (54%) came from Lambayeque.- In total, 65% came.from the coast and 35% from the highlands. 2. In general, coastal people performed less onerous tasks on the hacienda than did highland people. -Cane cutting and loading and work on the railroad line (eliminated in-the mid-1960s) were nearly always done by "serranos." Cul- tivation tasks (palana),-factory jobs, and:administration and services positions (e.g., accounting, garbage-collection, lower and .middle level management) were generally occupied by "costefos." Each morning the hacienda administration provided field workers with a shot of strong cane liquor (known as aguardiente or llonque) and a ration of coca (dried leaves which, when chewed with powdered limestone, produce minute quan- tities of cocaine). Both these perquisites are typical in highland areas, but have'largely disappeared on the coast. By the mid-sixties the coca ration had been eliminated, and the aguardiente was being given only to cane cutters and loaders. Coastal workers generally considered highland laborers to be of a "differ- ent type"--stronger and-more willing to work, but less intelligent and civi- lized. Supposedly, the Chotanos' tall stature made them more suited to cane cutting--the dirtiest and most physically demanding job on sugar estates. 3. At the time of the reform, housing on Pomalca was better than housing on most other estates in Peru, but most houses still did not have indoor plumb- ing or windows. All workers were provided houses by the hacienda; most had in- door light and access to potable water and sewage facilities near their houses. Hacienda employees living in the company town had larger-than-average houses with indoor plumbing. Houses are generally-over-crowded and poor housing is a. critical problem in the eyes of coop members, 4.3 C. Pre-reform Estate Organization and Administration 1. Land use at the time of the LR is reflected by the following table: Directly managed area Cane 11,139 has. Rice 532 Pastures and fallow 3,162 Fruit trees 6 Area held'by colonos 867 Housing and roads 956 Total 16,662 These figures indicata the predominance of sugar cane among the estate's crops, and the fact that while colonos held nearly 900 has. of.land this..amounted to only about 5% of the estate's cultivable land. Thus, wage labor clearly pre- dominated in the estate. 2. Pomalca and several other estates in the region.(including Espinal, Monteseco, and.Udima--see Case Reports Nos. 1, 2, and 3) were owned by the de la Piedra family. The family-owned companies. 'Viuda de Piedra e Hijos" (VPH) and "Sociedad.AgrIcola Pomalca S.A." (SAP) had their principal offices in Lima. Two other offices in Chiclayo and Pomalca were strategic links in the family's administrative system. Below these came local offices in -Saltur, Sipn,,Pampa Grande, Monteseco, Udima, and Espinal. The Lima, Chiclayo, and Pomalca offices were managed by faaily members. The other offices were managed by hired employ- ees. As of 1959, the Directory of VPH and SAP was the following: President Ricardo C. de la Piedra C. General Director. . Augusto F. de la Piedra C. General Director Julio de la Piedra C. Director Boris de la Piedra E. Manager Ricardo de la Piedra Klinge Manager Augusto de la Piedra Lora Sub-Manager Juan de la Piedra Izaga Legal Representatives Luis G. de la Piedra C. Eduardo G. de la Piedra C. Federico Mevius N. The following is a list of the major stockholders of VPH in 1964: Principal Shareholders: VPH, 1964 Number of Shares Held Ricardo de la Piedra C. 40,596 Augusto de la Piedra C. 12,402 4.14 Principal Shareholders: VPH, 1964- Number of Shares Held Luis de la Piedra C. '400 Eduardo de la Piedra C. 400 Julio de la Piedra C. 400 Boris de la Piedra E. 22,486 Juan de la Piedra 1. 539 Ricardo de la Piedra K. .202' Augusto de la Piedra L. 786 Bertha de la Piedra de Pez 1,997 Adolfo Pomar, como gerente de: Inmobiliario Hda. Vieja S.A. '3,804 Inmobiliario Lambayeque S.A. 9,225 Inmobiliario Trapiche-S.A. 564 Adolfo Pomar, como gerente de: Thmobiliario Darsa S.A. 384 Inmobiliario La Giralda S.A. 203 Alejandro Bertello 20 94,408 'Until' just prior to the LR within Pomalca all key positions--general manag- er, field and factory managers, accouttant,' and head of the- industrial and la- bor-relations division--were occupied by family members. Shortly.before the LR, as a result of a familyfeud, the factory manager resigned, leaving this posi- tion vacant. The owners-employed a staff of nearly thirty professional techni- cians .(tci'cos) specialized in' the areas of agronomy, mechanics, sugar- ref in- ing, labor:relations,' medicine, and other areas necessary for the operation-of the estate. Below this technical staff cime a complex hierarchy of bosses and foremen who transmitted orders from the staff to the workers and controlled daily operations in field, factory, and service activities (which include the hospital, schools,' construction, maintenance, etc.). :A large accounting staff handled the immense amount of paper work necessary for the control of opera- tions', accounting,- payments to labor, 'and taxation. Lawyers in Chiclayo 'and Lima provided legal services; highly-paid independent specialists were contracted as consultants. The following diagtamindicates 'the basic: outlines .Of Pomalca's administrative organization: 4.5 Lima of fice General Manageil A IField boss: tan Factory.bossI Head of service -and. ILR B (Field tech- Factory tech Assistant services, Outside nicians hicians and ILR-. consultants and specialistsi ( 'Field Office Factory Services and IL eloyeeg employees emplovees lemloyees C and admin-; istrative staff D Field Factor Garbage collectors,i worker Jworkers messengers, etc. As this organigram indicates, four strata or levels can be distinguished within. the administrative hierarchy: (A) owners; (B) tecnicos; (C) employees; (D) la- borers. (Consultants and-specialists not employed full-time by the estate: would fall into stratum "B.") As mentioned above, the owners are all family members. The criterion for "tecnico" is professional training. None of the tecnicos has moved up from the strata of employees or laborers; all are college- educated personnel contracted by the firm to occupy technical positions. In sharp contrast, the majority of employees began working in the estateL as labor- ers and were promoted after a time. Very few have formal technical training for the positions they occupy. Most laborers perform routine tasks which require little discretion on their part. A few laborers, however, are caporales--over- seers--who receive the same daily pay as other laborers but control their per- formance rather than work directly in the field. Given the extremely large size of the estate and the nature of cultivation tasks--which are not machine paced--the chain of command in -field operations is long and complex, as the following diagram indicates: [Field Bosd !Field administrator4 iSpecialist [Administrator, Annexesl Pomalca Sub-administrator, Sub-administrator, Saltur-Sip9n Paipa Grande Jefes de Zona (5) Jefes de Zona (2) Jefe de Zonal Mayordomod Mayordomos Mayordomosl Caporale Caporalesi Caporales 1 WrnkrFwoi~ersi [Workers 4.6 Within the central estate Pomalca there are 5 .jefes de zona (field bosses). There is one in each of the other 3 major estates, Saltur, Sipin, and Pampa Grande. Each jefe is in charge of the control and vigilance of field operations in his zone. Below each jefe one or two mayordomos (foremen) transmit orders to the workers via a caporal, who is directly responsible for overseeing field work. A central feature of the administrative system of the estate i that all major decisions were made by family members or by technicians very near the top of the administrative structure, and orders were channeled downward through a rigid and lengthy chain of command. Workers seldom came into contact with decision-makers, and had little or no knowledge-of how decisions were made and by whom. In addition to the daily orders directly related to production, discipline was administered through the same structure. Thus it was the lower-level em- ployees, not the owners, who sanctioned workers. Consequently, workers came to see hacienda employees as "mandones" (order givers) and "guapos" (bullies). The owners were perceived by workers as distant figures who probably did not know to what extent. hacienda employees abused. their powers. In fact, the owners did know of most "abuses" committed by their employees, and condoned these unless they jeopardized the continuity of productive opera- tions or involved flagrant theft of hacienda resources.- Workers who denounced the actions of abusive employees to the owners often- found that their charges fell on deaf ears. Consequently, the only recourse to submitting to harsh treatment at the hands.of the "malos.empleados" was often-to leave the estate. For all these reasons ,-the middle-level hacienda.employees,: who enforced poli- cies determined by their superiors, were often-more hated by hacienda laborers than were the owners or tecnicos.. The following quotation reflects these points: There were never work incentives...work was simply repeti- tive. The people never complained to the owners; they were under the feet of the employees. Before the union was formed no one had job-security, or certainty that tomorrow he would have a house or anything. In the firm there was . nowhere to complain. Nor could you go to the public au- thorities. ...There never was communication outside of the "chain of command." It was like a military system. Punishments went straight down to the worker. No one ever bothered to determine whether they were just or not. In- termediate level employees made the technicians and owners believe that the workers were by nature bad and lazy. ...The owners looked for employees who could drive the workers with insults and force. Those who sympathized with the owners, informed on other workers, and by other means got into the favor of the owners were named jefe. ...No jefe had technical training; they had practical .x- perience, but were lacking in basic knowledge. ...They made people work "with the whip, not with words." ...The word of the jefe de zona was law; you had to listen and obey. ...Always the one who was the most despotic, 4.7 cruel, and mean with the workers was the jefe., ...One time, in 1964 1 think, I.saw a-worker answer back to a field boss;and the boss ran him down with his horse and whipped him with the reins; later they hauled the worker off to the jail in Chiclayo. 3. Until the early 1960s a substantial part of the estate's labor force (over one-tird) was transitory, based on the system of labor contracting via debts known as "enganche." The bulk of "peones enganchados" came from minifun- dia areas in Cajamarca and Piura, .and worked in-Pomalca during off seasons in their communities of origin. Typically such workers migrated back and forth from their communities to Pomalca several years before withdrawing entirely from the hacienda's labor-force or taking up permanent residence in Pomalca. Over the 1950s the hacienda's population had become increasingly stable, as demo- graphic, and economic pressures forced increasing numbers of peasants off their land. Two other processes, however,,are largely responsible for the .abruptly declining importance of enganche in the 1960s: unionization and modernization of cane loading and hauling. Since 1960 employment in Pomalca has fallen by nearly one half. The.re-, maining workers have become increasingly well paid in comparison with workers in non-sugar estates. Cane cutting, however, is still done by hand, and tem- porary workers are still contracted for this task. The following table presents income data for Pomalca: INCOME DATA,FOR POALCA, 1969 (in Peruvian soles) (1) (2) (3) (4) (5) Labor Number in Daily Yearly (4) As a % of Laborers' Category Categr_ %j (L Earnings Earnings Yearly Earnin4s (...per capita...) Owners 5 0.2 5,906 2,155,747 13,192 Technicians 30 0.9 476 173,710 1,063 Employees 354 10.9 100 36,653 224 Laborers 2,854 88.0 52 16,341 100 Total 3,243 100.0 In addition to cash pay, the hacienda provided workers with a wide range of perquisites. The following table summarizes the value of those supplied in 1968: Value of Services Provided to Workers Without Charge in Pomalca, 1968 (in thousands of Peruvian soles) Health 7,995 Education 2,840 Housing 6,410 Electricity 3,129 Foodstuffs 23,686 4.8 4. Pomalca, like other Peruvian sugar estates, employed highly sophisti- cated production methodg in both field and factory opeerations. Most cultivation tasks were mechanized. However, cane seeding and cutting were still,done by hand at the time of the-LR (mechanized cane cutting has been introduced in some of the sugar estates in the departments of La Libertad and Lima). Irrigation systems are sophisticated, and a complex milling schedule determines seeding and harvesting dates-atd the application of irrigation water, fertilizer, herbicide, insecticide,-dtc. Field. operations (including cutting) are carried out 6 days a week during daylight hours...- Cane loading and transport continue around the clock. Cane is milled and processed 24..hours.a day, eleven,months each year. A month-long shutdown for maintenance and repairs" is-scheduled .for the period in which sucrose levels 'are lowest in the uncut cane.. All field operations are geared to keeping the factory operating at-near full.capacity. 5. Sugar has played an important role in Peruvian politics since the late 19th century. ':The sugar ovners had well-known family names-Pardo, Aspillaga Anderson, Grace, 'Gildemeister, de la Piedra--and were conspicuous members of the Peruvian "oligarchy." A few families had representatives in high governmental, positions; all had influence in high places, if not direct representatives. While sugar was important to all these families, most also had.interests in un- related fields, such as utban real estat8,.cement production, and.merchandizing. In the special case 'of-the Grace Corporation,.sugar production,per se diminished in economic importance over time in favor'of what are often-thought of as by- products--rum and other alcoholic beverages, paper, and plastics. In addition to the important economic and political positions of the sqgar owners, the workers also had power. 'In fact, the sugar.workers played a central role in the Peruvian unionization process. Sugar.workers were the first to be unionized by Apristas, and since the 1930s the sugar estates have provided APRA's most militant supporters. Pomalca's workers.were'unionized at 3: different .times:- in the 1930s, the 1940s, and again in the 1960s. The first 2 unions disappeared when the fortunes of APRA changed and all labor organizations were crushed in the late 1930s and again in the late 1940s. The presently existing union was formed in 1961. As in other sugar estates, unionization was violently opposed in Pomalca,.and bloody clashes occurred. In 1962,7 persons were killed when 'soldiers fired on a mass of hostile workers and hacienda residents. In Pomalca resident laborers have been unionized, but employees, techni- cians, and part-time workers have not. Unionization has markedly altered pay rates and the use of power within the sugar haciondas,. The union has demanded and obtained improvements' in cash pay,-.housing'-rations, medical care, and-edu- cation. The treatment of workers by employees has also improved, and job secu- rity (guaranteed by law) has become established. Flagrant abuse of workers by their superiors has precipitated strikes 'and a gradual iniprovement in labor- management relations. In the early 1960s Pomalca established a "Labor Relations Department," which deals with problems posed by individual workers and the union, and has formulated an increasingly complex and standardized social policy. Until the election of Belaunde in 1963 the sugar unions were universally controlled by APRA. However, by this time the increasingly intimate ties of APRA with the right-wing Odrista party and the active campaigning of Belaunde's 4.9 Acci'n Popular (AP) -party resulted in the defeat of APRA candidates in several hacienda elections. In Pomalca, AP candidates won several elections after 1963. In most other sugar haciendas APRA remained in control despite opposition claims that the party and its unions were bought off by the owners. Despite APRA demands for agrarian reform in the 1930s and 1940s, by the early 1960s, when concrete reform proposals were debated in the national congress, APRA consistently opposed the expropriation of the sugar estates. Three important correlates of unionization in Pomalca have been: (1) the- liquidation of enganche, (2) mechanization, and (3) massive reduction in employ- ment. One of the principal demands of unionizing laborers was the termination of labor-contracting in the highlands,and the stabilization of the hacienda labor force. The hacienda yielded to this demand, but accelerated mechanization of field and transport operations and cut employment drastically in the process. 6. Peruvian sugar estates were exempt from the provisions of the 1964 LR law. However, the owners of Pomalca feared the loss of plots occupied by ha- cienda residents and attempted to repossess these. Cash payments were offered for crops and improvements made on the land, and'hacienda employees brought pressure on residents to accept these payments and relinquish their land. In the central estate, Pomalca, all but one resident give up their plots. In Sal- tur, Sipan, and Pampa Grande many workers would not give up their land. As the figures on land use in Section I.C.l. above indicate, over 800 has. remained in the hands of hacienda residents at the time of the reform. 7. According to an ex-employee of the hacienda, a consumers' coop was formed in the 1930s with the encouragement of the administrator at that time, but it did not prosper. In the 1960s a credit coop wias formed in the estate which continues to function. D. The LR Process Initiated by the 1969 Law 1. Pomalca was one of the first estates to be expropriated under the LR law of June 1969. The workers received the news of the reform with great sur- prise, but they in no way participated in the initial process of military inter- vention. 2. A Special Administrative Committee was formed to manage the estate during the interim between its intervention and the formation of the coop. The Committee functioned in Lima, and Pomalca's state-appointed manager and 2 workers' representatives traveled by airplane for weekly meetings in the capital. Parallel to the operation of the Special Committee, which handled the prac- tical day-to-day aspects of estate management, ONDECOOP prepared the labor force for the formation of the coop. This involved formation of an ONDECOOP team in Pomalca (about 20 employees) and the preparation of didactic materials and course outlines. Subjects covered in the ONDECOOP courses included the agrarian reform process in general, principals of cooperation, and interpretations of the LR and cooperative laws. The principal objectives of the courses were motiva- tion for participation in the new coop, strengthening of political support for the reform process, and elementary instruction in cooperative operation. 4.10 As in the. other sugar estates, ONDECOOP' s work.in Pomalca was plagued by several problems. (See Section II.B.5. of the Zonal Report for.Lambayeque.). In late June 1970 the entire ONDECOOP contingent was pulled out of Pomalca. Later a much smaller-.group of ONDECOOP officials returned to Pomalca to .complete the minimal tasks.necessary for the establishment of,.,the cooperative. -3. In Pomalca socio-economic dislocations produced by.the reform process were minimal., Since the owners had not feared the expropriation.of their es- tate, the 1964 law had not resulted in decapitalization. Sugar production fell in the late 1960s, but this was the result of poor growing conditions (drought). (See production figures in Section-T.E.1, below.). Within a week of the pronouncement of- the-1969 LR law government officials had "intervened," making it impossible for the owners to extract; financial or physical capital from the estate. Officials appointed by the,government to man- age the:estate were,highly qualified and fully supported by the public sector. Workers did not oppose cooperativization and were essentially passive throughout the process., .4. .The production cooperative model,.requiring.collective use of all pro- ductive resources, was well-suited to the pre-reform organization of the estate. The only residents whofelt threatened by,.the.process were those who cultivated small plots of land-and raised livestock. ONDECOOP told these.people that they would have to cease these forms of individual production and cede their resources to the coop. It was generally felt that the coop would.enforce.the rule against individual cultivation by.cutting off irrigation water to smallholders. How- ever, despite the threats (and there were many) water has not been cut off to the small cultivators and they all remain,in possession of their lands. The sugar industry'has a special second level institution, the CECOAAP, which performs important functions related to planning, accounting, technical assistance, and marketing. See Case Report No. 27. 5. LR officials appraised Pomalca's assets and liabilities as follows: * Land -. . . 5/.316,244,750 Plantation Crops 192,686,906 Constructions and Installations 65,562,533 Machinery and Industrial.. Equipment . , . 58,6 65,226 Cattle. 18,362,889 - Miscellaneous . 196,039,654 Total Assets . 847,561,958 Less: Total Liabilities - -234.,836,160 Net-Value .612,725,798 Of the 235 million soles in liabilities 156 million represent indemnization re- serves owed.workers. In early.1974 the government revised its appraisal of the estate's net value downward. I do,not have,the new figures. 4.11 E. Present Economic Situation. 1. The following,figures document cane and sugar production trends in re- cent years: Harvested Production Area Cane Sugar* (has.) (...000 tons:...) 1968 6,918 834 88 1969 .5,617 778 83 1970 6,108: 895 96 1971 4,881 853 ..99 1972 5,409 982 .104 *Volume of refined and raw sugar (for exportation and domestic sale) reduced to 96% purity equivalent.. The low production figures for 1969 have nothing to do with the reform and re- sult -from drought conditions prevailing-in the-region in the late 1960s. 2.-3. Since the initiation of the LR process in Pomalca in June 1969 nu- merous technicians have left the estate-. "Of course all -family members have left, and these men occupied the most important administrative-managerial posi- tions--general manager, head of field operations, accountant, head of ILR and services. In addition, the estate has been separated from the de la Piedra's main office in Lima staffed by other family members and several highly paid and competent employees. - Within the estate, the following technicians have left: -Head of machine shop -4 field technicians (one was 1he -Head of electrical plant administrator for the annexes, -Head of factory the other three were coop -man- -Mechanical engineer agers) -Administrator, annexes -Accountant (who came from the -Cashier Lima office after the LR) Since June 1969 six differeut men have served as the estate's manager. Three were contracted from outside the estate. One of the coop's member- technicians served as manager twice before being expelled from the coop in January 1972. At the time of my visit in November 1973 the head of the truck maintenance center, which maintains all vehicles used for transporting the coop's cane to the mill, announced his resignation. Most of the positions vacated by the withdrawal of technicians--of the dozen which have left only 3 have been expelled by the membership--have been filled by contracting recent college graduates or younger, less experienced technicians from other estates. Factory positions have been hardest to fill and a deficit of factory technicians remained at the time of-my visit. Technological levels have been maintained since the LR, but few striking advances have been made. Observors note that technicians and managerial per- sonnel hesitate to "define themselves" or make concrete proposals to the coop bodies largely because they fear strong member reaction in case their proposals prove less than spectacularly successful. As an employee noted to me: 4.12 Los errores de los individuos no se:perdonan. O -seav. los experimentos aqui tienen que ser infalibles. Todo tiene'que salir bien. -Si no: afuera. el t&cnico. La gente no entiende que siempre hay errores. The CECOAAP should take some responsibility for proposing alternative develop- ment plans and schemes for modernizing.,and diversifying production, but has done relatively little in this sphere to date. For over,a year a group of representa- tives from the 3 sugar coops of the Lambayeque Valley discussed the establish- ment of a cattle feedlot to be operated-as a joint venture under the auspices of the CECOAAP. But nothing concrete developed. Since: the initiation- of the LR government coop officials,-have talked of a paper factory in Lambayeque to be operated as another joint venture, but during my visit.the regional coordinator for SAFCAP stated that the entire project was now being reevaluated and no con- crete action would be taken in the near future. Prior to the reform sugar marketing-was coordinated.by the SNA.. Now it is handled by the CECOAAP. Financing is also handled primarily through the CECOAAP. 4.-5. The f611wing table presents-income and employment data for Pomalca (compare with the table in Section I.C.3. above): INCOME AND EMPLOYMENT DATA: POMALCA, JANUARY 1973 (in Peruvian soles) (1) (2) (3)& ( (5) Yearly - (3) as- a % of % Increase Labor -Number in Earnings Laborers' Yearly: over 1969 Categor Category (per worker) Earnings Earnings Member Technicians 17 176,335 494 Non-member :-8.3 Technicians 14 138,705 388 Member Employees 361 56,964 159 Non-member 5 5 Employees 94 55,333 155 Member Laborers 2,554 35,729-- 100 - 118.6 Non-member Laborers 646 19,301 54 ? A comparison with the table in Section I.C.3. reveals-that the number of techni- cians has remained constant, the number of employees has risen by nearly a third, and the number of full-time laborers (now members) has fallen by about 10%. Nu- merous laborers have moved up into the category of employees, and others have left'the coop,: usually through retirement. Very few outsiders have been admit- ted to the coop as members since the adjudication (October-1970) and the number of outside workers contracted on a temporary basis appears to be rising. This 4.13 last statement cannot be documented since the employment of most outsiders was indirect prior to the reform (via contract agents) and we have no quantitative data for the pre-reform period. Since the reform the.cash income of technicians has fallen. This is not- because salary levels have fallen, but because some of the best paid profession- als have left the coop and salary increases have been minimal for ,the remaining tecnicos. The average,salary of the estate's employees has risen by about 54% and wage rates for laborers have just more than doubled. Since the cost of living rose by approximately-26% between 1969 and 1973 the real value of techni- cians' salaries has fallen by 34% while the real values of employees' salaries and laborers' wages have risen by 28% and 93%, respectively. Pay rates for out- side laborers contracted by the coop currently fall below the pay rates for member-laborers by nearly 50%. (We do not-have data on pay rates for outside laborers prior to the reform.) The figures just cited refer only to cash pay rates and do not include the value of perquisites or year-end profits distributed among.coop members. Pro- fits are distributed equally among all coop members and thus tend to flatten the distribution of income. (We do not yet have the profit figures for 1973. In 1970 approximately S/.7,000 soles were distributed to each worker. In 1971 S/.4,500 were distributed and S/.1,500 were added to each member's capital con- tribution.) Perquisites--medical care, education, housing, electricity, and foodstuffs--are important forms of payment. Since the reform many improvements have been made in these services and laborers are the principal beneficiaries, again tending to flatten the income distribution. (Unfortunately, we do not have figures for 1973.) 6. The Ministry, the CECOAAP, and coop officials have announced fabulous plans for diversification in the sugar coops, but sugar remains by far the prin- cipal product, and to date very little has been done to create other sources of employment in the sugar estates. As mentioned earlier, well-laid plans to es- tablish a joint feedlot for the sugar estates of the department fell through, and a paper factory is still on the drawing board after over 4 years of plan- ning. (One of the ex-sugar owners from Lambayeque told me that a paper factory was planned, financed, and ready for construction prior to the reform.) F. Public Agencies, Second-level Coopso and Other Institutions Dealing with the Group Most of the coop's technicians are more highly paid and skilled than their counterparts in the Ministry, and the coop is largely independent from the Min- istry's technical assistance programs. Funding is not as problematic for Pomalca and other sugar coops as it is for smaller coops, which generally lack personnel experienced in financial mat- *ters and banking, and are often in serious economic difficulties. ONDECOOP (later SINAMOS) has maintained a permanent staff in the estate since late 1969. As stated earlier, ONDECOOP had a large group of young employ- ees in Pomalca prior to the adjudication to prepare workers for their new re- sponsibilities as coop members. After the formation of the coop a much smaller staff, including some estate residents (the earlier group was nearly entirely 4.14 composed of outsidersY, continued' working-with coop members.*.Special.courses were given for Delegates and members of the workers' 'Councils and Committees. Workers were encouraged to attend round-table sessions:(Circulos -de Estudio) where coop problems were discussed and solutions were sought through debates; at the end of each session the moderator drew up a summary of the session's con- clusions and sent these to the coop's AdministratLve Council.- ONDECOOP and SINAMOS representatives 'also attend Assembly and.Council meetings and advise coop officials on issues related to 'cooperative principals and legislation. SAFCAP (see Section II.B.5. of the Report for the Second Agrarian Zone) also maintains a staff in the coop, which includes a military "coordinator" and 5 civilians. The 3 principal functions of this staff are:- (1) to oversee, su- perintend, and control the performance of thecoop, in-both the economic and the social spheres; (2) to provide capacitacion in cooperative principals, coop and agrarian legislation, and the principal objectives, characteristics, and pro- blems of the Peruvian Revolution; and (3) to coordinate the activities of other public institutions in the coop.' Many coop members (in-all the occupational strata) see the presence of SAFCAP'officials in the,.coop as an ominous" threat to the coop's independence, although few examples of unwelcome SAFCAP intervention in the coop's affairs can be cited. SENATI '(Peru's 'National Service for Industrial" Training) has given classes in Pomalca and 6ther sugar coops since the refoam. SINAMOS officials often characterize these programs as paternalistic and alienating, but most workers interviewed indicated that they felt the SENATI programs were some of the more beneficial programs initiated since the reform. One employee noted that the main benefit was not training for job improvement within the coop but learning a profession that would allow him to leave the coop: Ahora me dedico a estudiar-dos profesiones. Estoy sembrando para cosechar dentro'de dos o tres abos, cuando'saldre de la cooperativa. II. OPERATIONAL ASPECTS - A. Production Planning and Peasant Participation 1. Planning'in large-scale, complex agro-industrial complexes such as Pomalca, which employ highly sophisticated production methods, employ huge amounts of short- and long-term credit, and rely upon foreign markets for both inputs And sales, is a complex and highly technical-matter.. The CECOAAP pre- pares lbug-term investment-development plans for all the sugar coops. .TheAs- semblies of each coop study and approve these, but have little influence over them. Most Delegates simply lack the technical expertise necessary for careful study, evaluation, and constructive criticism of these plans. Coop members who do not sit on the Assembly have practically no knowledge of the planning process or the plans which guide their coop's development. The main source of informa- tion for the membership is the weekly coop bulletin which presents very brief, non-technical discussions of the coop's performance, problems, and'plans. Whereas the coop's official bodies participate only marginally in the tech- nical aspects of production planning, they do participate actively in the prac- tical aspects involved in implementing these plans. 4.15 2. The division of labor between Pomalca's manager, technical staff, coop Councils, Committees, and the Assembly is much more real and functional than in the other coops visited. The coop is so large and complex that a division of labor within the organizational structure is mandatory. However, the formal cooperative Committees created to handle specific problem areas, such as factory production, field operations, housing, education, services, and the local pro- blems of,each annex within the coop, do not in general seem to function adequate- ly. Attendance at Committee meetings is poor and participation is often disin- terested or half-hearted. Consequently, the effective division of labor is among technicians and between them and the coop's Administrative Council and Assembly. 3. Regular Assembly meetings are held, and coop officials and technicians report to .Delegates on the coop's activities and plans. Only 120 coop Delegates (out of over 3,000 members) sit on the Assembly, however, and thus Assembly meetings do not put the leadership into direct contact with the membership. The two principal links between the coop's management -and membership are personal contacts between Assembly Delegates and non-Delegates and the weekly bulletin. B. Operations and Peasant Participation 1. The formal operational structure has changed relatively little as a re- sult of the LR. One important change is the elimination of the .position "jefe de zona" (field boss), which shortens the chain of command linking top manage- ment to field workers. Prior to the reform the jefe's principal function was to maintain order in.his zone--both on and off the job. Consequently, jefes were selected primarily on the basis of their character and loyalty to the firm, not for their technical competence. As mentioned in Section I.C.2. above, the jefes were often hated by hacienda employees. Most of these men had worked their way up over long years of service in the hacienda, and were retirement-age at the time of the reform. Nearly all withdrew from the coop and their positions were abolished. While the formal operational structure is largely the same, the reform has produced great changes in the nature of social interaction within this struc- ture. In the hacienda Pomalca the ultimate source of power was the owners' pro- perty title. Prior to the formation of the labor union, in the 1960s, the own- ers and their employees could exercise power over workers with little fear of their reprisals or sanctions from the public sector. The union brought about an improvement in labor-management relations by occasionally threatening strikes in retaliation against the indiscriminate use of power by the "malos empleados." The legitimacy of private ownership and the authority of hacienda employees was never seriously threatened, however, prior to the-LR. The LR, by removing the patr6n and transforming workers into owners, destroyed the traditional power base of the estate's employees and created a new, shakier one. Whereas pre- viously employees represented the owners in a perpetual labor-management strug- gle, now the coop's employees occupy their positions and exercise power at the pleasure of the worker-members. Their power no longer comes from an owner who wishes to maximize the extraction of surplus from the labor force but from the labor force itself, which seeks to maximize net income. Consequently, coop em- ployees who mistreat workers, who steal from the cooperative, or who's technical competence is suspect are likely to be targets for coop saactions and possible dismissal.. In order to remain in their positions employees must maintain worker support--something which was unimaginable in the hacienda! As might be expected, ,4.16 many employees complain of the coop's introducing "politics", to!what used to be strictly a business. Power in the hacienda was something to be acquired through long-years of faithful service-to the owners (or the patr6n, as workers "state), and once at- tained it was' a stable commodity, guaranteed by the monolithic support of,the owners for their employees. An old employee remained powerful until he retired from the hacienda. In the coop power can be acquired much more-rapidly,,but it is much more conditional and must be used more prudently if it is to be main- tained for long; it can be lost at any moment, due to-a change in member.senti- ment. The following 2 paragraphs illustrate these points. Prior -to the LR there was a_very, low rate of turnover-'of -technical. and managerial personnel. At'the time of the reform several-of the-technicians had 10 to 20 years service in the hacienda.' Middle-level administrative personnel generally had even more years of service. Since the reform, turnover, espe-'. cially of high-level personnel,.:has increased markedly. In one instance four technicians-the general manager, field and factory administrators, and the : head of ILR and services--were expelled on trumped-up charges of mismanagement. All four of these technicians had been employed by the hacienda, and most work- ers disliked and distrusted three of them. The pretext for a general strike and the'expulsion of the technicians-came at the end of 1971 when coop'officials announced that profits to be distributed would fall.short of those for the pre- vious year. This was not the 'result 'of mismanagement, but of substantial in- creases in;routine payments to'workers (cash pay and-perquisites) and mid-year advances on year-end profits. However, workers were enraged by the announce- ment of low'profit distribution (many had already-purchased televisions-and other costly Christmas presents 'on credit) and general workers sentiment was strongly in favor of a strike and the expulsion of the technicians. Among the technicians expelled was a man' who had been on leave from the coop during most of 1971 and could not'possibly have been guilty of mismanagement. He also was generally respected and trusted by workers. The only explanation given by workers for his expulsion was that-he occupied a high positl,on in'the hacienda and the coop and should "logically" be expelled along with the other 3. After several months of investigation and "cooling off," SAFCAP suggested to the coop that they reconsider their actions and readmit this technician (who was, by the way, strongly identified with the agrarian reform and.other policies of the military government). The coop did readmit him, and in 1973 he was elected president of the cooperative! (The othet- 3 t6cnicos.were. not readmitted.) Another caseof rapidly'changing worker sentiment,'power, and position within the coop involves the president elected in 1972.- Election laws were changed that year to allow 'coop mtmbers to be freely elected to all positions on the Delegates' Assembly and the Councils. The man elected president of the coop- was brother of the labor union's General Secretary. This was generally hailed as a victory both for-the workers-and for APRA. However, before the president finished his'year's term of office he became embroiled in a scandal which prompted coop members to expel him from-the cooperative"and throw him and his belongings physically into the street. (The scandal involved his taking possession of a house with6ut consulting the coop's Housing Committee.) 2. A Census of Workers in-1970 separated.Pomalca's workers into 7 dis- tinct "Sectors"'(Field Production; Factory Production; Field Production,Services; 4.17 Factory Production Services; General Services; Social Services; and Administra- tion, Accounting, and Statistics). These Sectors were broken down into 32 "Sub-Sectors," which were in turn divided into 54 "Working Sections." Within these Sections 399 different occupations or positions were defined. There is some shifting of personnel between these positions, especially where specialized skills are not required, but there is no generalized system of job rotation or of independent work brigades which perform several types of productive functions within a geographical area. Within each large Annex, there is a minute division of labor, so that while workers do not travel to far-off sections of the coop to work, neither do they perform multiple functions within their locality. There is no separation of profits between annexes, and no incentives for workers in one annex to attempt to outperform those of another.- 6. In the hacienda the majority of field tasks were done by-the-job ("por tarea"). A foreman marked off the distance each man was to cover for the day's work, and men who fell short of the mark (by however much) received only a half- day's pay. In the coop most jobs are still done by the tarea system, but penal- ties are less severe. Foremen state that in general workers complete their tareas. "There are always a few men who goof off and don't get done, but they can be counted on one's hand." Flagrant violators of coop rules are sanctioned by brief suspensions from work, but these cases are rare. Sanctions usuAlly stem from theft rather than poor work on the job. 7. All members are employed year around. 8. In the first elections (1970) the government restricted candidates to workers who had not participated as leaders of the labor union or as active mem- bers of political parties. In 1972 these political restrictions were eliminated from the coops' election rules. Now elections are completely free. Workers' representatives to the Delegates' Assembly are elected by working sections (e.g., field, factory, services) and by annexes in proportion to the number of workers in each. 9. As mentioned above, honesty, corruption, and technical competence are issues of great importance to Pomalca's members, and have been the motives for several work stoppages and the expulsion of several members from the coop. In the coop's biggest strike since the reform process began, December 1971, 4 tech- nicians were expgled on the grounds of mismanagement. In fact, the real issues were distrust and contempt for these men, who had been high officials in the ex- hacienda. The expulsion was triggered by a last minute (December 23) announce- ment that year-end profit distributions would be lower than workers had expected. The only general strike since the end of 1971 was a workers' protest against the coop's president, who had moved into a house vacated by a high ranking employe'e without going through the formal cooperative procedures for allocation of hous- ing. The fact that members have stopped work and expelled technicians on some occasions does not mean that the coop is "unstable." Work stoppages have been less frequent since the reform than prior to it. 11. In the main ex-hacienda, Pomalca, few workers have animals or plots of land. In the annexes upriver more workers do cultivate individually and raise animals, especially in the marginal lands along the river and in areas which are 4.18 hard to irrigate or difficult to cultivate with the coop's heavy-,equipment. Re- cently the coop ha:s distributed parcels of uncultivated land to estate residents who do not work in the coop. 13. SINAMOS, SAFCAP, and SENATI have capacitaci6n and training courses for, workers. (See Section I.F.'above.) C. Accounting and Information Systems 1. Internal accounting is extremely complex. One hundred employees,are occupied in various aspects of the,accounting process iniPomalca. In addition, employees of the CECOAAP in Lima keep accounts on-imports, exports of sugar,, domestic sales, and finances, and draw up year-end accounting documents. 2. The books are audited by-a professional auditor and by SINAMOS. 3. Accounting results are made known-to the coop's members through meet- ings of the Delegates'.Assembly,and-through.the coop's weekly bulletin. CECOAAP officials attend Assembly meetings to provide technical -information on account- ing results, finances, and the coop's plans. D. Income Distribution See Section I.E.5. above. Seventy-five percent of the profits subject to distribution are distributed equally among the membership in cash; 25% are capi- talized. Outside income is marginal to income derived from the coop. E. Employment'and'Coop-Membership 1. The coop's original members were selected through formal procedures by the Ministries of Agriculture and Labor. After the adjudication new candidates for membership have been screened and selected by a Special Committee within the coop. Very few new members have been admitted to date. A very important issue is whether' or not to admit the large number of outsiders who work more-or-less permanently for the coop, but were not granted membership (many because they were employed by a labor contractor, not directly by the coop). Most of the coop's members oppose the entry of these workers for '3 reasons: (1) their cash. pay rates would have to be increased to 'equal those of coop members-performing the same tasks; (2) providing these niew members with housing, medical care, ra- tions, educational facilities, etc., would cost the cooperative millions of soles each year; (3) year-end profits. would have to be distributed among a larger number of members. In short, the coop's members want to protect their own high incomes by keeping the outsiders out. 2. The union plays an essentially passive role in Pomalca. Men who have participated actively in union affairs are often among the leaders or spokesmen during periods of labor unrest in the coop, but there is little evidence to in- dicate that the union has actively sought to stir up labor unrest or take over the essentially spontaneous uprisings for political purposes. 5.1 GAS LA CAMPINA Dept. of Ancash (cclst) Recognition: June 1973 (adjudication of. individual parcels has not yet taken place) 106members (soon to increase to 150) 998 has. SPECIAL NOTE The CAS La Campina is the only CAS included in this study of group farming in Peru.- The history of its formation is particularly interesting. However, since it was recognized legally only 4 months prior to my visit, it is impossible to make very firm conclusions as to its performance as a coop or its long run viability. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF.THE LR PROCESS A. Natural Setting The CAS La Campina is located in the lower part of the Santa Valley on lands of the ex-hacienda Santa Clemencia., These lands are of relatively recent settlement. Lack of water has traditionally been a problem in.this area, but the lands now under cultivation receive adequate irrigation water for year- round cultivation. All manner of truck crops, industrial crops and forages can be and are g-ron. B. Socio-cultural Setting The population of the ex-hacienda is.composed entirely of independent peasant cultivators, many of whom are sons of the hacienda's original mejoreros. The incomes and wealth of these people seem to be greater than is generally found on wage labor estates. The ex-colonos have adamantly opposed the fusion of their parcels into a production coop. C. Pre-reform Estate Organization and Administration. 1-3. In the 1940s the owners of Santa Clemencia brought their lands under cultivation by encouraging mejoreros to clear and.level them and seed crops for the first time. In many cases these mejoreros were not destitute peasants. looking for work, but entrepreneurial types iho employed numerous wage laborers or sub-renters. Parcels were not necessarily small; one mejorero cleared over 100 has. When lands were cleared, the mejoreros either moved on to other virgin soils 'on the same or neighboring estates, or stayed on as colonos or renters. Upon the death of a colono, his sons could continue farming his land as a single unit, or more commonly, they divided it into several smaller parcels. The president of the CAS La Campina is the son of a mejorero who entered the estate three decades ago. The entire hacienda was operated by mejoreros, colonos, and renters. The estate employed a single employee who-distributed.irrigation water and collected 5.2 20% of the crop as rent. Land and water were the only inputs provided by the administration. 4. Technologically, the small holders of Santa Clemencia seem to have been as advanced as the large estates of the valley. According to Ministry officials, they were in no sense backward,-and produced higher crop yields than large estates growing the same crops. 5. Since the workers of the estate were independent farmers, not wage laborers, they had no labor union. 6. Under Title XV of the 1964 LR law the colonos of several estates in the Santa Valley were entitled to become owners of the lands they tilled. However, despite legal activities on the part of peasant groups (including the peasants of the estate Santa Clemencia) neither provisional nor definitive titles were granted. D. The LR Process Initiated by the 1969 Law Under the 1969 law, Ministry and ONDECOOP (later SINAMOS) officials abandoned the notion of providing individual titles, and devised a plan under which one SAIS would be formed with three service coops (CAS) as members -- each one being formed on an estate occupied by colonos .and larger renters. One of these 3 was the hacienda Santa Clemencia (now the CAS la campina). Under this plan the colonos were-not to become owners of the plots they occupied.- Instead, the. SAIS would be the formal owner but the- ex-colonos (now CAS members) would remain in possession of their plots. At a later date (early 1971) the Ministry aborted its plan to form a SAIS and attempted to force the colonos of Santa Clemencia'to join a CAP. The colonos were ordered to abandon cultivation of their lands, and a number of large renters were ordered off the estate. Their lands (about 180 has.) have lain idle since that time. Finally, in early 1972, the Ministry ceased demanding that the ex-colonos abandon their lands, and allowed the formation of a coop organizing committee. In June 1973 SINAMOS legally recognized the CAS, but to date its members have not received the individual-titles promised them. Although Santa Clemencia is by no means the only case where LR plans drawn up in Lima or in regional Ministry offices have had to be modified as a result of peasant pressure, this is the only case I know of where the Ministry failed in its attempt to form a CAP and decided to parcel an entire estate among its workers. Three important qualifications must be added to this statement: (1) The estate was only legally parceled, since it had never been operated as a single farming unit;- the reform'simply allows colonos to remain in possession of their lands they and their families have occupied for years. (2) Individual titles have not yet been given to'the colonos. (3) The 180 has. left by the, (forced) withdrawal of the few large renters may become, as CAS members like to put it "A foco of collectivization." For the last 2 years this land has not been cultivated. The CAS would like to parcel it among new members or existing members with small parcels in the coop. The Ministry would prefer thatthe CAS farm it collectively, or adjudicate it to a production coop. 5.3 E. Present Economic Situation 1. The approximate distribution of land use in the CAS is as follows: 60% corn, beans, sweet potatoes 15% alfalfa, other pastures 15% cotton 10% Vegetables The coop has 2 projects in the planning stage: The first one involves the importation of 150 Holstein heifers from the U. S. (already financed) and the construction of a stable to be operated by the coop. The second project con- templates the establishment of a number of poultry "factories" operated by coop members but financed and supervised by the coop. Of 20 coop members who express interest in operating these facilities 5 or 6 will be selected by. the coop's Poultry Project Committee on the basis of their administrative and technical capacity. Each facility is to house from 3,000 to 6,000 birds. 2. As mentioned above,, technical levels seem adequate on the small plots of: the CAS members. (This in part is due to the Ministry's technical assistance:pro- grams of the 1950s and 1960s). In the past year the CAS has purchased 3 John Deere tractors and a pick-up truck. In the near future the coop hopes to import 150 Holstein heifers froia the U.S. According to Ministry officials, yields on GAS lands are higher than those on CAP lands. 3. Until this year, the smallholders of Santa Clemencia received credit main- ly from the Bank on an individual basis. This year the CAS has initiated cooperative credit on a small scale (30 members received credit in this form); next year all coop members will receive credit through the coop. The Bank loans to the coop at 7%; the coop then provides credit to its members at 9%, clearing 2% in the operation. According to the coop's president, the principal benefits derived by members will be: timeliness of credit delivery, reduction of paper work and ability to handle all credit operations "in the field", and the ser- vices financed b6y the earnings from the coop's credit operations. (The Bank makes loans directly to small farmers at 9% -- the same as the CAS). 4. Wages paid by CAS members are far below those paid by the CAPs.of the val- ley (S/.50-60 instead of around S1.100 -- including the value of rations) and working hours are longer (8 hours instead of 4). The coop president was quick to note that the-CAS was not "backward" in the sense of employing labor more intensively than on the "m odern" large-scale operations. Mechanization, he stated, was an important goal of the CAS. Labor was utilized better by the smallholder members of the coop, but they were by no means labor intensive' (I was taken aback). 5. A very important area of study, but one which I could not pursue, is that of income and wealth distribution. 6. The principal activities of the coop include the purchase of inputs for members and the provision of machinery for field operations. Credit is now being channeled by the CAS from the Bank to about one third of its members; next year all members will receive credit through the coop. According to plans, the coop 5.4 will soon begin operating a dairy stable, and assisting selected members in the establishment and operation of individual poultry enterprises. Recently the Ministry granted-usufruct of 180 has. of idle land to the CAS to be operated collectively. F. In my interviews with Ministry functionaries in Chimbote, I was sur- prised to hear repeated reference to the satisfactory operation of the CAS La Cam- pina, compared against the unsatisfactory performance of the valley's CAPs. They noted that the Bank was also more satisfied with its dealings with CASs than with CAPs. The favorable evaluation of the CAS relaitve to the CAP is undoubtedly the result of a large number of factors, many of which are unknown to the researcher, however, a few of the more salient ones can be noted: (1) The members of La Campina-are wholehearted supporters of their coop, and are anxious.to prove to the Ministry and SINAMOS that they can make their coop work. (2) "Social problems" do not exist, in the eyes of the Ministry, since there are no mani- festations of discontent which might disrupt production or investment. Members back their coop leaders in their ambitious investment plans, and since they do not work collectively they cannot demand pay increases which might reduce funds available for investment.- (3) When coop leaders or members deal with the Ministry or the Bank, their sole interests are in increasing productivity; distri- butional or employment questions do not enter the discussion. (4) Ministry per- sonnel generally come from the "middle strata" within agriculture; and under- stand and identify with the goals and behavior of the private farmers who belong to the CAS. On the other hand, they are.not nearly as likely.to ap- preciate the lowly strata of hacienda laborers. CAS members seem-generallysatisfied with the technical assistance provided to them by the Ministry, but noted that a major problem was that of timely and adequate credit. Interviewees did not mention SINAMOS.except to note that this agency would like to liquidate their coop and transform its members into laborers on production coops. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. Member participation seems active in the formulation of this coop's plans. The president is an extremely able and highly motivated individual, and the mem- bership seems to support him in his actions. 2. The coop has 3 internal Committees which appear to function better than most CAP Committees: a Credit-Committee, a Dairy Committee, and a Poultry Committee. According to the president, the CAS plans to hire a professional man- ager, but has not yet done so. To date, the president has been responsible for management of the coop's activities. B. Operations and Peasant Participation 6. According to the president, the principal sanction used by the,CAS for non-compliance with group norms (such as repayment of loans administered by the 5.5 coop) is expulsion from the CA!. This point must be the subject of future study, since the first credit cycle has not yet ended. 9. Present coop leadership seems to be excellent; the future of the coop will depend in large part upon the performance of the current president. 10-11. All members farm individual parcels and nearly all have livestock. 13. The coop's president noted that members were in great need of courses and educational materials in the areas of service coop management and agricultur-- al and livestock production. C. Accounting and Information Systems The coop employs the services of an accountant, part time. No other in- formation is available on this subject. 6.1 Central de Cooperativas Santa-Lacramarca Dept. of Ancash (coast) Official Recognition: July 1972 8 members (CAPs, with 1,422 member beneficiaries) 8,222 has. (in the 8 CAPs) I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A, B, and C. See Zonal Report D. The LR Process 1. As stated in the Zonal Report, the initial idea for the creation of the Central Santa came -from the Ministry and CRYRZA. Given the special disaster- related problems of the valley, and the interest of numerous development and charitable institutions in rebuilding the area and promoting socio-economic development, the Peruvian government created or employed the services of several special institutions to coordinate these activities. One of these was DESCO. In the PID drawn up by CRYRZA and DESCO for the valley, a rural cooperative program was outlined which included a Central at the level of the PIAR (geo- graphically, the coastal area of the valley). In mid-1972 DESCO became respon- sible for.the implementation of this program, and particularly for the creation of the Central. 2. While the ex-haciendas of the valley were administered during the LR process by a Special Administrative Committee, the Central had to be formed from scratch. DESCO took full responsibility for this, and DESCO employees, not public officials or workers' representatives, managed the Central through- out its formative period. 4. The pre-reform agrarian structure of the valley, in which small-scale individual cultivation played an important role (both within the haciendas and outside them), has hampered the formation of cooperative institutions in the valley. Hacienda workers-colonos, not wage laborers--expected parcelization, not collectivization, and in many instances they have felt defrauded by the reform process. (The 1964 law, with its Title XV, contributed to this problem.) The fact that the Central was introduced by outsiders, without the consultation of local people, added an additional strain to the entire reform process. Another negative factor was the Ministry's requirement that all production coops be affiliated with the Central. Not only were production coops imposed on a skeptical peasantry, their coops were forced to join a Central Coop which was even further removed from their control than their own production coops. Lack of adequate financing and public support for the Central, and its inability to produce tangible results in the short run have convinced many LR beneficiaries that it is a marginal institution at best, and a potential threat to their inde- pendence and welfare. These points will be elaborated below. Formally a "Central a nivel de PIAR" is a second level cooperative, owned and operated by its members (primary level coops or SAIS), and functioning as a service coop for them. Central coops have elected Assemblies, Administrative 6.2 and Vigilance Councils, specialized Coop Committees and hired technical and managerial personnel. In practice, however, the Central Santa (Peru's first Central at the PIAR level) is run by outsiders. DESCO has constructed the Central's facilities, planned its activities, arranged for its financing, and hired its entire staff. Both in Lima and in Chimbote, government and independent observers state matter of factly that DESCO runs the central. In none of my interviews, not even those with Central officials (both DESCO people and elected workers, representatives), did member or peasant participation come up as an issue, except in the context of manifest peasant and coop apathy'or hostility toward the Central. E. Present Economic Situation 1. The Central has very ambitious plans and projects, all 6f which could ostensibly contribute to its members' and the valley's social and economic development. However, most projects have not yet'been implemented. The follow- ing table indicates the principal projects of the Central, their funding source, if CRYRZA has approved the project, if the project is now being implemented (or facilities being constructed), and if the project is now in operation: Funding Approved Project Source By CRYRZA ItPreparation In Operation 1. Marketing none not reqd. none reqd. yes ona small scale 2. Capacitaci6n DESCO not reqd. continuing yes 3. Accounting center AID yes finished yes 4, Input storage yes, on a warehouse Caritas yes finished small scale 5. Machine shop " yes yes no 6. Feedlot " no no no 7. Plant for con- centrated feeds no no no 8. Consumer store network in the Dutch member CAPs charity no no no As can be seen from this table the principal activities of the Central to date are acrounting and capacitaci6n. Marketing of produce and purchasing of inputs are also carried out on a small scale. Except for capacitaci6n and marketing, these projects are funded by charitable or development institutions. Expenses for the capacitaci6n and marketing projects and all overhead costs of the Central are paid by DESCO. In total, DESCO employs 23 persons in the region; it has paid for the construction of the Central's present facilities, and 6.3 maintains 4 vehicles at the disposal of its employees and elected officials of the Central. 2. Ministry officials state that the Central should employ a professional staff and take on many of the technical assistance-related functions currently performed by the Ministry. To date, however, no precedent has been set. The little experience the Central has in capacitaci6n, marketing, and storage indicates that proponents of second level cooperation may have over- estimated the importance of economies of scale in marketing and storage, and underestimated economies in capacitaci6n. Moreover, they have underestimated the levels of technical and business expertise and of public sector support necessary for the creation and operation of a viable Central at the PIAR level. By overestimating the value of services which can be provided by a Central to coop members in the short run, they have also contributed to the attitude of many LR beneficiaries that new cooperative institutions are products of, by, .and for young professionals who are unable to find remunerative employment elsewhere in the economy. DESCO's capacitacion courses are hampered by lack of financing and appro- priate didactic materials, and by the inability of yot.ng, urban-born professionals to communicate effectively with coop members. None of these problems can be effectively eradicated on a regional basis. Moreover, when DESCO people prepare their own didactic materials and solve problems in an innovative way (as they often do) their solutions do not benefit capacitaci6n personnel in other institu- tions and other areas. These problems should be attacked on a national level. Without adequate support from the public sector, the Central's capacitaci'n efforts will be extremely costly for the benefits derived. In marketing and input purchasing DESCO officials have discovered, somewhat to their surprise, that "managing the market is no easy task." An initial pro- blem is the Central's lack of liquidity and its need to rely upon short term credit extended by merchants. A second drawback is the inexperience of Central officials with the markets involved. A third comes from the fact that the move- ment of inputs and products for the 8 CAPs is, after all, not so much larger than the movement of each coop alone; price differentials resulting from coopera- tion in input and product transactions are not always great enough to offset costs resulting from delays and poor administration. In one specific case, the CAP Tambo Real was prevented from repaying a loan to the Bank due to a delay in corn marketing by the Central. Coop officials in this coop blamed Central offi- cials for the problem, and since that time have boycotted all operations of the Central. The Central's operations are also hampered by a counteroffensive launched by merchants in Chimbote and Lima. In some cases the Central found that prices for inputs quoted in Lima (the production point) exceeded those charged in Chimbote! In other cases (and possibly an explanation for the above-mentioned phenomenon) the Central found that Chimbote merchants were requesting that their Lima suppliers not. sell to the Central, or sell at inflated prices. It has also come as a surprise to DESCO officials that storage of inputs and produce in the Central's wirehouse is not inherently more economical than storage in the coops' own warehouses. Coops complained (justifiably) that it 6.4 made little sense to haal fertilizer from the city to the Central's-warehouse, unload it, store it a month, reload it, and finally deliver it to the coops when it could have been delivered directly to each coop with a saving in handling and truck rental. A major failure of the Central involves its proposed machinery pool. Since the Central could not acquire adequate financing (the Bank would not lend to ' it--see Section I.E.3. directly below) heavy machinery could not be purchased. and the coops were forced to acquire their own machinery on an individual basis (which is what they preferred to do anyway). When the Central becomes adequately financed it is doubtful that the coops will want to turn over their machinery to it. If forced to do so, this-expropriation would be interpreted by coop members as a move in the- direction of nationalization and a threat to their independence and welfare. Where the Central seems to have functioned'most admirably is in the area of accounting. This program has two main elements: bookkeeping and training. Only two of the 8 member coops maintained accounting personnel after the LR, and most coops decided against hiring office employees from outside the coop. Moreover, they decided that coop members should fill accounting positions on a rotational basis. Each year new field workers come into the office, receive training, and take on bookkeeping tasks. Office personnel from the Central visit each coop 2 days per week. Accord- ing to the Central's accountant, they spend roughly half their visiting time tending the coops' books and half in personnel training. He assured me that the necessary accounting tasks could be performed in less time by the existing Central personnel, if it were not for their functions as'instructors. But he emphasized that the training was, after all, one of the fundamental needs of the coops and one of the principal goals of the Central's accounting program. "How else would members ever become equipped to take on the management of their own enterprises?" The accountant noted that, as in the case of most Central initiatives, the accounting program was opposed by member coops at the time it was initiated (October 1972). Coops refused to turn over their accounting documents to the Central and several nasty confrontations ensued. However, with time the coops have seen direct benefits from the program, and now support it. (No charges are levied for these services as yet.) 3. Financing has been one of the Central's most serious problems. Odd as it may seem, the Bank denied loans to the Central on the grounds that its opera- tional rules did not permit transactions with second level cooperative institu- tions. The failure of the public sector to provide either short or long term credit, and the absence of private sources of capital, has forced DESCO to fi- nance the whole operation itself and through whatever charitable sources could be found. This means that to many coop members the coop is a logical extension of the (inefficient, corrupt) network of public and charitable institutions operating in the region, not a cooperative enterprise owned and controlled by them and functioning in their behalf. 4. The staff of the Central is paid by DESCO, out of its own funds and those received from charitable institutions. DESCO's contract terminates in 6.5 June 1974; after that date a reduced staff may remain in the valley, but the bulk of the financial burden for the Central will have to be absorbed by the 8 member coops and/or the state. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group As mentioned in the Zonal Report, several public and semi-public agencies operate in the zone, and inter-agency relations are often strained. Collabora- tion and coordination often give way to competit,ion and criticism. Relations between DESCO and SINAMOS are particularly poor, since the former agency per- forms in the Santa Valley many of the functions which the latter performs on the national level, and takes full responsibility for the Central. Given the many shortcomings in DESCO policies and the functioning of the Central, SINAMOS has no trouble in finding points to criticize. The operation of the Central Santa is plagued by administrative delays in its dealings with public agencies for 3 principal reasons: (1) Being the first Central Coop of-its nature in Peru, noone knows how to deal with it; in order to protect themselves, public officials demand more formal papers from the Central than they do for "ordinary" coops, and request authorization and information from their own superiors more often than is the case in "ordinary" transactions. In the special case of the Bank, lengthy discussions between Central and Bank personnel have come to nothing. (2) Since the Central is a second-level coop- erative institution, with no real economic base of its own, both public and private institutions are wary of entering into contracts with the Central, es- pecially where money is involved. (3) The Central is not authorized to engage in most types of contracts without the authorization of its members. This often requires lengthy sessions with coop representatives, in addition to negotiations with public officials. It also multiplies the paper work of the Central, since both sides of any agreement (the membership and the outside party) are likely to want concrete proof of the position of the other side, and the Central, as mediator, often must assume the burden of providing the necessary documentation. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. The Central has a formal planning board, formed by the presidents of the member coops and technical personnel of,the Central. However, many of the ideas and most of the technical expertise for the Central's plans come from DESCO employees. 2. The Central's organization is diagrammed below: 6.6 Delegates Planning - jAdministrative lVigilance Board 'Council jCouncil Manage4, Ianpower Production Accountinj !Social. fEducatio General Cdmmitted lCommittee I Committee, es Comtte Services . Committee Committe ALabo - Aricultur -Accounting . LHealt -EuainC ercia jForce Livestocl jEconomic -4Housi -Recreatio Jnput . and Machinery Finincial Electricit Consumptio Statistics Transpor -QOthers My interviews indicate that DESCO employees and the Central's president take most responsibility for decision making, implementation, and control of operations; the numerous Committees and Sub-committees occupying the lower part of the formal organigram function only sporadically and to grant legitimacy to decisions made elsewhere. 3. The Central's Assembly holds regular meetings in which Central and DESCO officials report on the plans and operations of the Central. Each coop's delegates to the Central, in turn, report to the membership of their coops in their respective General Assemblies. B. Operations and Peasant Participation 13. Capacitaci6n has been one of DESCO's principal activities in the valley. Training in coop principals and operation, and in technical aspects of coop management, accounting, agronomy, and livestock breeding have been provided to the coops' general membership, to selected coop representatives, and to coop managers and technical personnel in several short courses held in the coops themselves and in the facilities of the Central. Since DESCO was responsible for the creation of the Central, and since DESCO personnel are conspicuous in both the management of the Central and in carrying out capacitaci6n programs, coop members seldom distinguish between DESCO and the Central itself. However, when DESCO leaves the valley or reduces its staff (mid-1974) the Central will remain, but its capacitacion program will have to be cut back substantially 6.7 for lack of funding and capacitacion personnel. When this occurs, it is likely that SINAMOS will attempt to fill the vacuum caused by DESCO's withdrawal, but will not be able to maintain the capacitacion program at its present scale. C. Accounting and Information Systems 1.2. The Central employs a full time accountant and 4 assistants to handle its own internal accounting and that of its member cooperatives. As discussed earlier, an important aspect of the Central's accounting services is the train- ing it provides for coop members selected annually to serve as accounting personnel. In addition to the training provided to these coop members who work full time (only for a year) as office employees, accounting personnel attempt to provide useful instruction during their periodic accounting reports to the assemblies of the Central and the individual coops. A DESCO employee stated to me that in his view the most important contribution of the LR and the crea- tion of the coops and the Central was the increasing understanding and involve- ment of rural people in the management of their estates. The accounting- capacitaci6n program has certainly played an important role in this area. Another benefit of the Central's accounting program has been to simplify and standardize the accounting documents and procedures employed by member coops. D. Income Distribution 1. There has been no attempt to equalize pay rates in the valley. Each coop determines its own pay rates, and no policy of the Central is binding in this area. 2. Income distribution, on the other hand, is a subject of great concern to the Central. One of the principal reasons for establishing a Central in the valley was to provide a mechanism for redistributing profits among coops and.between agriculture and other sectors of the valley's economy. In a meet- ing of the Central's Assembly, its members voted to require member coops to turn over 100% of their nondistributed profits to the Central (45-70% of total profits, depending upon the bylaws of each cooperative). However, at the end of the first accounting year no member coop complied with this agreement. Several coops claimed to have no profits, others argued that the existance of bookkeeping profits did not necessarily mean that the coop had cash available to deliver to the Central. Others refused to meet their commitment on the grounds that it was unreasonable to expect some coops to pay in while others did not. According to DESCO officials, the refusal of member coops to deliver fear-end profits to the Central poses a serious threat to one of the most im- portant functions of the Central, and perhaps to the very survival of the Central. 7.1 CAP CERRO ALEGRt Dept. of Lima (coast) Intervention: June 1971 Adjudication: Dec. 1972 265 members 1,087 has. I. HISTORICAL AND NATURAL SETTING, AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting The CAP Cerro Alegre is located in the Valley of Caftete, south of Lima, on the central coast of Peru. As in all coastal valleys, the climate here is hot and dry and agriculture depends upon irrigation. The CAP lies a few minutes inland from the town of Cahete on a paved road. The valley's land is fertile and highly productive, and this CAP owns some of the best land in the valley. A wide range of crops can be grown, including sugar cane, cotton, potatoes, corn, and truck crops. The principal crops grown now are-cotton, corn, and potatoes. B. Socio-cultural Setting 1.2. When sugar was grown on the estate a strong flow of migrants came from the highlands. Since the -1930s the estate's population has fallen and become more;stable. 'By 1970 the full-time labor force of :the estate had dropped to 170. In addition, vip to 150 laborers were.contracted-on a short term basis for cotton harvesting. All full-time workers and the bulk-of occasional workers lived on the estate in houses provided by the administration. 3..'Housing -and living conditions are better on this estate than on the others visited-in the valley.- A religious order operates a primary school in- the company town. 'C." Pre-reform Estate Organization and Operation 1. Since the 1930s cotton has been the principal crop of the estate. No precise data on the area, volume, or value -of pre-reform production are avail- able, but accounts for the 1971-72 crop year are as follows: Crop - Value of Production (in soles) Cotton 15,470,000 Potatoes 5,503,000 Corn 3,791,000 According to administrative personnel, little change has occurred in the crop mix between 1969 and 1972. 7.2 The owner of the estate prior to the LR was a Foundation in Lima. For several years the Foundation operated part of the property directly and rented the rest to 3 distinct individuals. Thus, 4 enterprises operated independently in the area which is now owned and operated by the CAP. Each of these enter- prises had its own labor force and accounting office. As in most coastal estates, rocky hills divide the flat fertile land, and not all of the cultivable land was farmed for lack of water and improvements. In 1962 the Foundation gave lots of rocky, marginal land to a number of long- time employees, free of charge, and with no rental obligations.. Aside from these small plots (about 30) all cultivation on the estate was done on a large scale by wage laborers. 2. Each of the 4-enterprises maintained a .small administrative staff, including an administrator, field boss, foreman, and-accounting personnel. In 1969 the rental contracts wereterminated and the Foundation took over direct management of the entire estate. The following administrative staff was main- tained: 1 manager 1 accountant 5 office employees 2 storehouse employees 1 field boss 2 foremen 3. At the time of the LR the.Foundation employed 172 workers on a full- time basis and contracted day laborers for seasonal jobs such as cotton har- vesting. Temporary workers usually were relatives or friends of full-time workers, and most lived in the houses of hacienda residents. Both men and women were hired for field-work; women were particularly adept at cotton pick- ing and potato sorting. In 1969 the average wage rate was S/.55.60 for men and S/.50.00 for women. In addition to cash pay, full-time workers received free housing and education- and all workers could buy foodstuffs in the-company store at less-than-market prices. 4. Most field operations were mechanized and carried out with machinery owned by the estate and the 3 rentors. According to coop members fieldwork was well managed and land use was intensive. In contrast to the other estates in the valley, machinery was maintained ina-reasonably good state of repair. Chemical fertilizers and pesticides were employed, 5. For several years prior!to the LR a labor union functioned in the estate, but it appears to have been less combative than those of several other haciendas in the valley, due in part to the fact that wage rates and working conditions were better in Cerro Alegre than in other haciendas. 6. Thirty-two workers who had received the use of parcels from the Founda- tion in 1962 gained titles to these lands under Title XV of Belaunde's LR law. More importantly, the law discouraged the operators of the estate from replacing and renewing their machinery, and encouraged them to increase their reliance upon rented equipment. 7.3 1D. The LR Process 1.3. Being bne of the most important agricultural enterprises in the valley,' Cerro Alegre was also one of the first to be affected under the agrarian reform program. The Foundation did not remove any equipment, and no serious social or economic dislocations occurred. The Foundation's manager left, but all other employees and laborers remained in the estate. (It would have been more difficult for the Foundation to dismantle the estate due to its bureaucra-., tic management than it would have been for a private individual.) 2. A Special Administrative Committee was created to manage Cerro Alegre, prior-to the formation of the Cooperative. During the period of its adminis- tration (June 1971-December 1972) profits totaled S/.8,000,000. Of these, 70% were allocated to Reserve Funds and 30% were distributable. Of this 30%, one quarter was retained for capitalization, and the remainder (S/.1,814,909) was distributed among the coop members in cash (S/.6,849 per member). 4. In December 1972 a CAP was formed in the estate. According to several high-ranking employees and coop officials interviewed, coop members would have been more than able to manage their own business, but the Ministry of Agricul- ture insisted that a pnofessional manager by employed. The man hired for the job is clearly qualified technically for his position but is resented by many coop members as a condescending outsider. 5. LR officials appraised the estate's assets as follows: Value of Lands S/.20,325,169 Value of Constructions 1,741,890 Value of Crops in the Field 504,504 Value of Machinery and Others 1,468,584 3,714,979 Total 24,040,148 Interest (@4% for land and 7% for other assets) 12,884,456 Contract Costs 250 Total 36,924,854 (to be paid in 20 annual payments of S/1,846,242, beginning in 1973) E. Present Economic Situation 1. To date, LR has had little impact on the mix of crops produced in Cerro Alegre. The high price of cotton makes this by far the most lucrative product, and the coop manager notes that if it were not for Peruvian agrarian legislation requiring all coastal estates to plant at least 40% of their land in food crops, the coop would cultivate nothing but cotton. Corn and potatoes have tradition- ally been sown on a large scale, and continue to follow cotton in importance. It is. important to note, however, that while the CAP has not yet altered cropping patterns significantly, the manager and president of the coop are 7.4 actively searching for more labor-using (but lucrative) crop and livestock ac- tivities. Since the coop's soils and growing conditions are ideal for a wide variety of truick crops which could'be sold in the nearbyLima market, the pos- sibilities seem good. In some cases increased labor use can be combined with an expansion in area under crops. Grapes have been recently planted on pre- viously uncultivated, stony lands. The Foundation failed to invest in such a venture largely-because of the uncertainty produced by pressures for LR in the 1960s. 2. According to field employees and Ministry of Agriculture officials, Cerro Alegre was considered-well managed and progressive prior to theLR, and few significant-changes in the technological sphere have resulted from the re- form. Production levels have by no means fallen below,their pre-reform levels, but neither have they increased markedly. In contrast-to many estates visited, Cerro Alegre was relatively adequately capitalized prior to the reform and all machinery was received by the coop from the previous owners.. Consequently,. little new machinery has been purchased by the coop. -According to coop officials, one factor hampering diversification of .crop and livestock activities and other forms of-- technological change is the lack of adequate information and technical assistance-. -The-previous owners occasionally contracted experts and benefited from the technical services of the SNA. The new coop depends primarily upon the Ministry of Agriculture and other public sector institutions (e.g., the Ministry of Housing) for technical assistance and finds these institutions lacking in technical competence and manpower. 3. Cerro Aiegre is the most financially liquid coop in the valley. Not only does the coop not have to rely upon short term bank financing, the coop has made substantial loans to other coops in the region; .these coops now owe Cerro Alegre S/.4,000,000. 4. Whereas the ex-hacienda employed 172 full-time laborers, the coop's membership'includes 234 laborers, all of whom are employed on a full-time basis. (Total coop membership also includes a number of salaried employees.) The field boss reported to me that during slack periods this labor force exceeded the em- ployment capacity of the coop and members were employed by repeating tasks. However, he felt confident that cultivation of grapes (already begun) and labor intensive truck crops, such as garlic, tomatoes, and melons, (planned) would allow the coop to absorb the available labor and provide employment for in- creasing numbers of outside workers. In the meantime, cultivation tasks were being done with increased care. During the 5 month cotton harvesting season, from 100 to 150 non-members are contracted on a day-to-day basis. 5. Average daily wages for field workers in 1969 and 1973 are as follows: 1969 1973 Men 55.60 73.00 Women 50.00 60.00 We do not have complete salary data for-all coop employees; the manager earns S/.30,000 per month and the field boss S/.7,000 (or roughly 14 and 3 times the pay rate for coop members, respectively). Non-members hired by the coop earn 7.5 the same pay as.members, -and may purthase foodstuffs at subsidized rates, but do not receive the-other non-monetary perquisites or a share in year-end coop profits (nearly S/.7,000 per member for the period June 1971-December 1972). Estate profits reported'by the Special Committee are as follows:- Profits: June-December 1971: S/.4,085 January-December 1972: S/.8,066,261 80% of these were reinvested; 20% were distributed among members. F. Public Agencies, Second Level Coops, and Other Institutions Dealing with the Group As in -most'cases, the principal agencies dealing with the coop .are the Ministry and the BFA. The'general impression given by the coop's manager and, president is that the'technical assistance provided by the Ministry was lacking in both quantity and quality, and that the BFA was a thorn in the side of the coop. The following quotations illustrate these points: Es muy facil hacer planes al nivel del escritorio, pero en el campo no-funcionan. ...El Plan de Vivienda que . nos di6 el Ministerio de Vivienda era demasiado costoso, y el Plan de Producci6n del Ministerio de Agricultura era'demasiado te6rico. (the manager)- Yo ni he viato el Plan de Desarrollo que prepar6 el Ministerio parA la coop. Aca hacemos- nuestros,:,proprios planes. ...Mucho se-friega.con el cr6dito. Antes el patr6n consegi6 plata por telgfono. Somos los mas ricos en todo el valle, y todavia nos exijan un mont6n de papeles. (the president) El Ministerio hace estudios fabulosos, pero no tiene la capacidad tecnica para hacer estudios bien fundamentados. (the field boss) II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. In the interim between expropriation and adjudication the estate was managed by a Special Committee controlled by public officials. Once the coop was formed, however, its own officials have acted with considerable independence from the state. This is in part due to the fact that the coop's officials -are skeptical of the value of plans and projects proposed by the Ministry and other public agencies. In addition, the public sector lacks the manpower to provide plans and advice to the coop. In an interview the field boss stated: El Ministerio de Agricultura no nos ayuda mucho. Son muy jovenes; muy te6ricos. Fueron con nosotros a Ica para ver el asunto del vid, pero despues no vinieron -as y seguimos con nuestros propios planes. 7.6 According to the coop's dynamic, aggressive manager, a-principal problem faced by the coop is indecisiveness on:.the part of .the Council and Assembly. He stated: . - Somos ricos, pero la gente no-entiende la necesidad de inversiones tanto en producci6n como las sociales.... No entienden de estudios econ6micos.,.... Siempre,cree que hay intereses particulares. No hay. confianza en -: sus dirigentes o en sus asesores.... Es la asemblea que tiene la -U1tima palabra.. Y la masa obrera tiene la mayoria. Hay plata, pero se necesita educaci6n.... La gente es indecisa. -Felizmente-la -empresa aguanta mucho. 2. There appears to be no really.clear division of administrative func- tions between, e.g..,. the manager, Council,.Assembly, and Committees. The mana- ger noted that he passes social problems (for,.example, member complaints, re- quests for pay increases, or changes in job assignments) on to the Council or the respective Committee. However, it appear.s that he would like to monopolize all technical decision making, and resents having to deal with the workers' representatives. "Ahora en vez de un patr6n hay,250,'' Interviews with field workers, office employees, and coop officials indicate that they resent having been coerced into-contracting a manager, and are covetous of his powers. 3. The coop's Councils and Assembly hold regular sessions,. but (as in most coops visited) the Committees function only marginally. Assembly meetings appear to be taken seriously by both coop-officials and the.general membership. They are well attended, and-the manager and president'are-expected to present reports on coop production, investments,- social programs, and other issues of importance to coop members (e.g., the,formation.of a'Central Coop and price negotiations with Lima buyers). B. Operations and Peasant Participation 1. In the coop, as in the ex-hacienda, most jobs,are assigned in a rather routine fashion by the field boss and foremen in accordance with production needs. Now, however, several jobs considered especially easy or lucrative are assigned on a rotational basis. (The least desirable jobs are given to non- members.) As in the ex-hacienda, field workers in the coop work in large groups supervised by foremen and the field.boss. 3. According to the field boss, the,main change brought about by LR in field operations has been a marked improvement in the personal treatment of workers, accompanied-by what he considered a rather minor relaxation of disci- pline and standards of work quality. 7. To date unemployment has not been a severe problem in the doop. When surpluses of member labor have arisen, they have been handled through-make-work projects; overt unemployment has not occurred. 10. Within the estate, 32 parcels are owned by individuals with titles granted under Title XV of the 1964 LR law. Being private landowners,-these people have not been allowed to become coop members. A particularly fe-esting 7.7 case is that of the field boss, who is young, well-trained, andhighly esteemed by coop members, but who was presented (by the Ministry) with the choice of turning over his parcel, without compensation, and becoming a coop member, or retaining his parcel and working for the coop as a contracted employee (with no job security or coop benefits). According to his personal estimate, his parcel generates a yearly net income of about S/.36,000 (his salary from the coop amounts to z/.84,000 per year). 13. Prior to the formation of the coop, the Ministry and SINAMOS held capacitacion courses for future coop members. Once formed, the coop has re- ceived little attention in this area. Both the manager and the president noted the great need for coop and technical education. The Education Committee or- ganized its own course on accounting for members of the Councils. (The presi- dent of the Committee is the coop's accountant.) C. Accounting and Information Systems 1. The coop has an accountant, and the books seem to be in good order, but the coop's president noted the need for more timely information and analyses, so as to keep members abreast with the operation of the coop. 3. Coop officials present reports before each meeting of the Assembly. D. Income Distribution 1. In this coop members and non-members receive pay for piece work (tareas) or by the day (jornales) in accordance with the customs of the region. (For example, laborers sacking potatoes are paid by the day; cotton pickers are paid by the amount harvested.) Members and non-members earn the same rates of pay. As in most coops, tractor drivers and other relatively skilled and responsible workers earn more than do unskilled laborers. Current rates reflect those paid in the ex-hacienda, but there is pressure on the part of coop workers to level the distribution of pay. (See also Section I.E.5. above.) 2. Year-end profits are distributed equally among all coop members. Pay- ments are in cash. 3. The coop provides members with the same non-monetary perquisites which were granted by the ex-hacienda (housing, cheap foodstuffs, day care center for children of working women). The coop plans to improve housing and build a coop store, but work has not yet begun. E. Employment and Coop Membership 4. A burning issue in nearly all coops is membership criteria. The Minis- try increased the full-time labor force by granting membership to 265 workers, many of whom were part-time workers. Administrative personnel indicate that there is not sufficient work all year for this number of workers (even though non-members are hired throughout most of the year). The Ministry now states that the coop's theoretical employment capacity exceeds 265, and that the coop should admit an additional 40 members. In view of this, the coop has begun the culti- vation of grapes, and is experimenting with tomatoes and garlic--crops which have a short growing season and can increase labor use in slack periods. 7.8 F. Continuing Role- of the Union The coop's, president is an ex-union leader. The manager stated to me that the union opposed hiring any new employees. The president and other coop mem- bers,stated that, this was not true, and that the manager did -not want to hire any other employees in. order to maintain- his "technical monopoly" in the coop. 8.1 CAP SANTA BARBARA Dept. of Lima, coast Adjudication: June 1972 137 members 443 ha. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Santa Barbara is located in the lower part of the valley on lands bordering to the east on the Panamerican Highway and to the west on the Pacific Ocean. Although near the ocean, the lands of the CAP are not saline, thanks to abundant irrigation water and good drainage. As in the rest of the Canete.valley, soils and growing conditions are ideal for-a wide variety of crops. B. Socio-cultural Setting 1-3. No demographic data on the coop are available. Housing and living conditions are below average for the valley's estates, and far below those of, e.g., Cerro Alegre. Housing for the estate's resident labor force was construe- ted during the period of sugar production (prior to.1935) and has received only the most rudimentary repair and modification since that time. The estate's electrical generator fell into disrepair several years ago and was never fixed. No -otable water or sanitary facilities are available to the estate's popula- tion. C. Pre-reform Estate Organization and Administration 1. Until the 1930s Santa Barbara was the valley's principal sugar mill. At that time the estates known today as Santa Barbara, Cerro Azul, and Casa Blanca were owned by the same company and operated as an integral unit. Since the mill closed)this farming unit has undergone a long process of disintegration. First the three principal fundos were separated,; later (in the 1960s) Santa Barbara itself was divided into 3 legally separate tracts and another section of the hacienda was sold off in small parcels. In 1968 the owners of the three estates within the boundaries of the CAP Santa Barbara (three brothers) decided to sell these tracts, but a dispute with their labor unions prevented this. In recent years the principal crops grown in Santa Barbara, as in the other estates of the valley, have been cotton, corn, and potatoes. Estate crops are grown exclusively under the wage labor system. Years ago marginal plots were given to a few workers, who received titles to them under the 1964 LR law. These colonos never were required to pay rent. 2. Administration of Santa Barbara seems to have been worse than that of any other hacienda in the valley. The following quotations reflect this: 8.2 Era la mala administracion que levo la hacienda a la quebra. El administrador no cuidaba y el dueno no se interesaba (president of the Vigilance Council). El dueno ten(a mas interes en sus gallos que en su fundo.. .El ad- ministrador era un incapaz y incumplido. Explotaba al maximo y trataba de evitar todo impuesto y deber social...Cada ano habla mas problemas, y a veces dejaron de cultivar campos por la falta de dinero. Habia. chacras botadas, pues' (the present administrator) It is difficult to know precisely why the administration of the hacienda was so abysmal, but the personal character of the managing owner (two brothers left the administration of their shares of the original estates in the hands of the third) is certainly important. While better-managed estates in the valley reaped handsome profits Santa Barbara came closer and closer to bankruptcy. According to.the&head of Canete's Ministry Office loans from the BFA and commer- cial banks, intended for productive purposes within the estate, were used for the owners' personal expenses. The general picture is one of a mining opera- tion, with the owners extracting the maximum possible surplus from the land and people for consumption and investment elsewhere. 3. See corresponding section of Cerro Alegre report and I.E.5. below. 4. Abysmal administrative and financial conditions were correlated with technological backwardness (relative to e.g., Cerro Alegre and Cerro Blanco). All forms of capital (both economic and social) were in sad disrepair at the time of the LR. 5. Oppressive living and working conditions and low wages provoked the workers' union to wage a nearly continual battle against the administration throughout the 1960s. In*1968, when union leaders discovered that the three brothers were planning to sell their sections of the estate to 3 separate buyers, they demanded that the estate be sold as a unit with all the laborers, or that it be sold directly to groups of workers. The owners rejected both these alternatives, but failed to sell their lands to anyone before the new LR law was announced. In 1970 the owners nailed the doors of their adminis- tration office closed and trucked off whatever salable equipment remained on the place. At this time union leaders organized workers into teams which maintained vital cultivation tasks (such as irrigation and fertilization) on the-estate. This informal management continued for 5 months before the valley's Special Administrative Committee intervened. During these 5 months no wages were paid and no compensation for this unpaid work has been made to date. 6. The direct impact of the 1964 law was marginal: a few workers received titles to their marginal plots. The indirect effects were far more important: (1) the owning family divided the estate legally (although not administratively) into 3 separate tracts each owned by a family member; (2) the family divided a section of the estate into small parcels which were sold to outsiders; (3) decapitalization was accelerated. D. The LR Process 1-2, Before Caiete's Special Administrative Committee was formed the owners of Santa Barbara abandoned their estate and the workers took it upon 8.3 themselves to organize production operations for 5 months without pay. Al- though the workers did administer the estate for this period, no Provisional Administrative Commission was formally established. 3. Prior to the formation of the valley's Special Committee, estate pro- duction suffered from the lack of credit, equipment, and management. Machinery was loaned to Santa Barbara by another estate (Casa Blanca) and workers carried out essential field work without-pay, but only the most essential. tasks were performed. Once formed, the Special Committee purchased tractors and trucks and obtained financing from the BFA and from neighboring coops. E. Present Economic Situation 1. No major changes have occurred.in cropping patterns. An old stable has been refurbished and 50 dairy cows have been purchased. 2. The manager of the hacienda left with the initiation of the LR, and has been replaced by a middle-level employee. The coop plans to contract a professional technician, but has had so far been unable to find one willing to work in the coop. No changes in market channels have occurred. Four new tractors, two new trucks, and a new tractor drawn trailer have been acquired. According to Ministry and coop officials, work is now better organized and more intensive than before (e.g., the time lag between harvest and reseeding has been reduced), but few significant technical changes have occurred. 3. A significant change has occurred in the estate's financial management. Whereas previously a substantial part of loans for productive purposes was channeled into the owners' consumption and off-farm investments, all credit is now utilized on the coop.. 4-5. Since a number of previously temporary workers have been admitted to the coop, the full-time labor force has grown. According to the manager, the coop has approximately 40 members in excess of the full employment capacity of the estate. He believes that through seeding of more labor-intensive truck crops part (not all) of this excess labor can be absorbed. He feels that the real solution would be acquisition of more land. 5. Pay rates for field workers in 1969 and 1973 are as follows: 1969 1973 Men 42 75 Women 36 65 In contrast to the situation in most cooperatives, pay rates are the same for all laborers, including most office personnel. Only the manager and a few employees earn higher salaries (1o salary data are available). Profits for the period of Special Committee administration were as follows: March-Dec. 1971: S/.1,412,970 Jan.-Aug. 1972: S/.1,706,859 (20% distributed among coop members, and 80% reinvested) * 8.4 6. The only non-agricultural activity carried out by the coop is dairying. 50 cows are maintained in a stable. Green fodder is harvested and transported to the stable each day. Six men are employed in the entire dairy operation, including fodder (mechanical) chopping and transport. Coop members maintain their. own barnyard animals.. F. Public Agencies, Second-level coops and other Institutions Dealing with the Group 1. According to the coop's manager and vice president, the Ministry "has many plans and pretensions, but offers little practical assistance .to the coop;" SINAMOS is staffed by "unos jovenes que faltan experiencia.. .Los buenos no haya; falta de materia humana...Necesita gente que ha vivido.' SENAFER charges less for its fertilizers than do private firms, but does not deliver the fertilizers when needed. Loan procedures'of the BFA involve much paper work, but coop officials do not see this as an important problem. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. Members of this coop seem actively concerned with participation in management.. The original president of the coop was removed from office because he attempted to monopolize management decisions.. As a member explained to me: Antes el patron hizo todo. Ahora pensamos que desde que somos duenos todos, debemos .ver y saber como se hacen las cosas. No queremos que uno solo maneja todo. On the other hand, members (including the present temporary manager who was in charge of disease control (entomology) in the ex-hacienda) seem to agree that a qualified manager should be contracted, in part because it is felt that technical agronomic, and administrative competence is needed, and in part because a professional from outside the coop could command the respect of the members easier than could one of the members. ("Aca todos. quieren mandar; necesita un Ingeniero para que haya mas respeto.) 2. No clear division of functions exists between the manager, president, and coop bodies. 3. The coop's Assembly meets Gccasionally, and over time member partici- pation is increasingly active, but no formal system has been instituted for keeping members informed of coop activities. 5. The major investments made since the LR were made by the Special Committee not by the coop itself (See Section I.E.2. above). B. Operations and Peasant Participation 1-7. Daily operations, the division of work, piece rates, etc. are or- ganized today in much the same way as in the ex-hacienda. Deferred payments are not employed, nor are group incentives (aside from the equal division of 8.5 year-end profits). Individual sanctions (e.g., receiving half-pay for less than a full tarea of work) are less severe than in the days of the hacienda, but according to the administrator there have been no important cases of in- discipline or poor work quality. 9. There are no complaints with respect to incompetence or corruption of coop or public officials. 10. No coop members have parcels, but most do own animals. 13. SINAMOS occasionally gives courses for coop member and officials, but persons interviewed complained that they were too few and too abstract, with too little practical information. C. Accounting and Information Systems The coop has its own accountant; we have no information on the adequacy of coop accounting or the provision of information to members. D. Income Distribution 1. All laborers earn the same wage. We lack information on the salaries of the coop's few employees. 2. Year-end profits are distributed (in money) in proportion to days worked. 3. Non-monetary income of members is minimal 4n this coop. Very poor housing is provided. No potable water, sanitary facilities, or light are provided. Neither cheap foodstuffs nor rations are provided. A primary school is operated by the coop. 9.1 CAP CERRO BLANCO Dept. of Lima (coast) Intervention: Aug. 1971 Adjudication: Dec. 1972 150 members 532 ha. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Cerro Blanco is located just south of Canete on the Panamerican Highway. Its case hacienda is a major landmark, known as the "Castillo de Unanue." Soils are excellent; no drainage.or salination problems exist. As in. the rest of the valley, growing conditions are excellent for a wide variety of crops. B. Socio-cultural Setting 1. The resident population of this estate has fallen drastically in the last decade. In the early 1960s, before the formation of the labor union, Cerro Blanco cultivated oranges and garlic, and processed these as well as coffee and tea for export. According to residents, the full-time labor force in these years was around 360, and up to 800 temporary laborers were contract- ed for Deak periods. During the 1960s ,these labor intensive activities were abandoned in favor of cotton, and the full-time resident labor force fell to less than 70. Under the LR, 150 workers (including many non-residents) were granted membership to the coop. 2. Coop members show clear traits of cultural assimilation. Hale dress is typically coastal, but workers speak quechua among themselves. Hany women wear hats and skirts typical of the Huancayo region; a few spin wool thread and weave; nearly all women speak quechua. 3. Housing is provided by the administration. Several barracks which housed migrant workers until the mid-1960s are now being renovated for the non- residents who have become coon members. -Houses have light, and public running.water .and sanitary facilities are provided. Housing is far better than in Santa Barbara and Casa Blanca, probably not as good as in Cerro Alegre. C. Pre-reform Estate Organization and Administration 1. It seems that until the mid-1960s cropping was more diversified in Cerro Blanco then in most other estates of the -alley (See 1.B.l. above). However, by the time of expropriation cotton, corn, and potatoes were the principal crops. As in the other estates of the valley, cultivation was mechanized and colonos were not present. 2. The owner of Cerro Blanco was a well known and respected Peruvian agriculturalist, who also owned a large tea plantation near Tingo Maria. He came to the estate each week and took an active interest in its management. A full time administrator was directly responsible for overseeing operations. An 9.2 office staff, a field boss, and a small corp of foremen were maintained. 3. Until the mid-1960s large numbers of day laborers (up to 800) were trucked into the estate during periods of peak labor demand. At the.time of the LR about 80 extra laborers were needed for the cotton harvest. In recent, years the principal source of temporary labor has been the slums of a nearby town, El Imperial. Prior to the LR men earned S/.58 per day and women-S/.43. In addition to cash wages and housing, few perquisites were offered. No cheap rations or foodstuffs were provided. 4. Operations were mechanized, but in the last decade or so (the ad- ministrator says last 15 years) machine repair and replacement were lacking. Fertilizers,,pesticides, insecticides, etc. were employed. 5. A labor' union was formed in 1962,' and-*workers cite- thisi development as a crucial factor in the- reduction of em'plbyment in the estate. ' The union was not as combative as in Santa Barbara,"and played no major rolein the early- post - LR Deriod. 6. See Zonal Report. D. The LR Process 1-4. The transition from hacienda to cooetative has been relatively smooth. In order to forestall'the LR process the owner began improving housing and sanitary facilities in the estate sho-rtly after'the announcement of the' new LR law. This however,' did"not 'prevent the- overnment, from expropriating the estate. During the period of Special Committee administration the workers' representative was censured and"remonved fro- the Committee foraccepting per diem allowances from both the Special COmMittee and the estate's labor. union, and not informing workers of the' former allowance. (Thel:Special Committee paid S/.1,000 per session and the union paid S/.500.' Four sessions were held each month for a total of S/.6,000, or approximately $150). Later in the period' of the Special Committee a mu6h more serious-event occurred; laborers decided 'that all employees-should be denied coop membership, and be expelled from the estate. They were, in fact,- expelled, and remained so for an entire year. The Ministry and SINAMOS however, granted them member- ship and insisted that they be allowed to return to their jobs. An agricultural engineer was contracted as manager and he convinced members that the coop simply could not function without qualified personnel (in particular the ex- pelled employees). A laborer exDlained the process of reincorporation of the ex- pelled members in the following way:- Cuando regresaron, la gente todavia quedo un poco resentida; pero con la cooperativa y el Ingo, todo se ha normalizado..La gente, poco a poco, se da cuenta de que todos tienen que tener sus funciones. Se esta viendo de que todo no es "hablar no mas." La cosa es ver, y entender los asuntos. 9.3 Whether production suffered markedly while the employees were expelled is not known. 5. Lt officials appraised the estate's assets as follows: Value of: Land 18,605,192 Constructions 3,322,375 Machinery and others .1,066,255, 4,388,630 Sub-total 22,993,822 Interest (@4% and 7% respectively) 12,671,610 Total 35,665,432 E. Present Economic Situation 1. To date the LR process has not resulted in any major alterations in cropping patterns, but there is a great deal of discussion as to the merits of intensification of cropping to increase labor use. Asked why the coop was not interested in the operation of a dairy stable (as are many other coastal cooU4) the manager responded that many such facilities are not profitable. 2. The cooperative employs a professional manager (ex-employee of :the local experimental station).' During the period of the Special Committee administra- tion, 3 new tractors were purchased, for cash. The coop has also purchased machinery and equipment. Aside from this no technical changes are visible. Marketing channels remain unchanged. Coop members discuss renewing the operation of the ex-hatienda's processing facilities as a means of increasing income and employment, but to date nothing has been done on this score. 4. The coop has absorbed a large number of the estate's previously tem- porary, non-resident laborers. They have been provided housing in old barracks which are now being renovated. During the cotton harvest about 80 laborers are hired from El Imperial. 5. Cash wages for field workers in 1969 and 1973 are as follows: 1969 1973 Men 53 72 Women 43 63 These wages aoply to tasks done "by the day" -- that is, on an 8-hour schedule, Tasks performed "by the job" or "por tarea" are usually completed in 4 hours and earn a S/.63 pay rate, for men. We have no salary data for employees. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. Members manifest interest in decision making, particularly in questions of pay and social issues. They make it clear that no one person or small clique will be allowed to monopolize decision making. 9.4 2. Some coop members in this coop (particularly ex-union leaders) seem more interested than those in other coops visited in the establishment of workable Committees specializing in, e.g., education, sales, production, mach- inery, and social welfare. However, it is impossible to say to what extent these committees presently do or could in the future play an active role in coop administration. 5. The manager seems to be-highly.respected,.and his opinions are sought out by coop members. Coop members made a point of mentioning that he got directly involved with field operations and "got. his.,feet dirty like an or- dinary man." B. Operations and Peasant Participation 1-6. Daily operations ,continue largely as in.,the .days of.the ex-hacienda. 7. According.to the manager, the coop can. prvide wprk for all its members year around. 9. One workers' representative was removed from his position for failing to report to members.that he-was.receiving daily allowances from 2 sources. Workers seem quite satisfied with the technical competence of their manager and his treatment of the.workers. 10. There are no individual Darcels, but members do have animals. D. Income Distribution . 1-2. . See.Section I.E.5. .above. 3. In-addition to the perquisites of the ex-hacienda the coop (1) has begun providing free medicine for the spouses and children of coop members; (2) is improving coop housing; (3) sells coop produce at reduced prices; and (4) plans to initiate adult education courses. F. Continuing Role of the Union The cooperative's president is an ex-union-leader. Other workers with union experience also play an active, and positive, role in the coop's formal management bodies. . . 10.1 CAP CASA BLANCA Dept. of Lima .(coast) Adjudication: June 1972 72 members 668 has. I. HISTORICAL AND NATURAL SETTING A11D ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Casa Blanc a.is located on the extreme north margin of the lower Canete valley. Its soils include some of the most poorly-drained, most saline in the valley. B. Socio-cultural Setting 3. The coop's housing is in the worst state of disreDair of any of the cases visited in the valley. Only about one third of the coop members live in housing constructed by.the ex-hacienda; the others live in the nearby villages of Puerto Cerro Azul and San Luis. C. Pre-reform estate organization and Administration 1. See corresponding section of the Valley Report 2. Until recently, this estate formed part of a larger business which in- cluded Cerro Azul and Santa Barbara. The quality of administration was below the valley's average; working and living conditions were also poorer than average. 5. The estate's labor union was strong and played an important role in the early phases of the LR process. 6. Under the 1964 law several hacienda residents received titles to the marginal plots they occupied. D. The LR Process 1. Long before the Ministry had planned to intervene, the workers of Casa Blanc initiated a strike which prompted the owners to abandon the estate. From this time the union organized and maintained field work for 7 months without pay. As the administrator stated, "The Special Committee arrived when the patient was already on his deathbed." E. Present Economic Situation 1. A major project of the coop, in conjunction with the Ministry, is to expand the area under crop by reclaiming saline land. This involves land level- ing, deep plowing, and improvement in irrigation and drainage systems. The col- laboration of public offices is necessary, since the success of the project depends upon the construction of a new drainage ditch and alteration of a bridge across the Panamerican Highway. According to the coop's manager, 400 has. can 10.2 be brought into cultivation in the next -ew years. The head of Canete's Ministry Office stated that in the entire lower valley 1500 has. would be brought into cultivation in the next 5 years. The coop's land reclamation project is beyond the planning stage. A crane has been purchased for the construction of irrigation and drainage canals, and work has begun. 5. Losses for the period of Special Committee administration were S/.500,000. Coop profits for June-Dec. 1972 were S/.70,000. 6. The coop is expanding an existing dairy operation, and is purchasing grinders, choppers and transportation equipment for this purpose. F. Public Agencies, Second-level Coops and Other Institutions Dealing with the Group During the period in which the owner had abandoned the estate and the Ministry had not yet intervened formally, the workers of Casa Blanca saw quite clearly that the government could not be relied upon to solve all the problems of the coop. The manager seemed to have the very pragmatic view that the Minis- try and other public institutions should be exploited to the extent possible, but their advice and plans should be carefully scrutinized by the coop, not accepted naively. 11.1 CAP CALDERA Dept. of Lima (coast) 150 members 900 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A;. Natural Setting Caldera is located in the central part of the Huaura Valley on the paved road leading eastward from Huacho to Sayan. Its soils are among the most fertile in the valley, and irrigation water is abundant. The principal "natural" problem has to,do with the river itself; its course alters somewhat from year to year, and several hundred hectares could be claimed for cultivation if the river were adequately channeled. This type of land reclamation, however, requires the cooperation of all landowners along the river's course,.or, alternatively, state action.- B. Socid-cultural Setting 3. Housing in the estate was adversely affected by the earthquake of 1970. C. Pre-reform Estate Organization and Administration 1. Cotton was the hacienda's-principal crop,.however,.corn, beans, peppers, and tree crops were also grown. Several workers owned a few head of livestock, but very few had plots of land. All hacienda operations were done by wage laborers. 2. The estate's owner was a lawyer -- according to the coop's manager, un despota que no sab-a.el agro." Administration was handled by a paid employee. 3. Labor came largely from resident laborers, but outsiders were contracted for cotton harvesting and other-peak demands. 4. Cropping.was mechanized, but the present manager notes that machinery was run down and insufficient for intensive cultivation. Cultivation tech- niques on intensity have been improved markedly since the reform. 5. Workers belonged to an extremely well-organized Apri:ta union. The union held weekly meetings which were attended by nearly all workers. D. The LR Process Like other estates of the Huaura Valley.(except Vilca Huaura) Caldera was managed by the valley's Special Committee prior to the formation of the coop. No serious socio-economic dislocations occurred during this period. 11.2 E. Present Economic Situation 1. The following crops are grown: Cotton 500 has. Fruit trees 125 Beans 120 Peppers 60 Corn 60 A recent agreement of the General Assembly calls for the coop to purchase all livestock (not poultry) held by members2 and the establishment of a .cooperative livestock division. Hembers own approximately 50 head of cattle, 40 sheep, and 300 goats. According to the manager, the coop plansito expand the area, under fruit trees and truck crops, and to increaise livestock.aid 'poultry production in the coop. After waiting 2 years for public.action the coop -has decided to. go ahead. on its own and construct levies along the river. Some 200 hectares have been. brought under cultivation so far, but according to Ministry officials these may be endangered by spring rains if neighboring estates -do ndt also construct levies. 2. According to coop officials, production methods have been imporved mark- edly since the reform. Capitalization has been .rapid;:prior"to the reform, the estate owned 5 rundown tractors. After the reform 4 new ones were purchased, and the old ones were repaired; At. the. time- of' my visit' (early November 1973) one of these was being rented to -the sugar coop Andahuasi. 3. The financial position of the coop is extremely good, due in part to the current high price of cotton. 4-5. There is no,'problem of underemployment in this coop. .On the contrary, outside laborers must be contracted much of the year. During the cotton har- vest some 200 migrant laborers are hired. The current pay rate for field workers is S/.70 formen and S/.65 for women. Both members and non-members earn the same pay. In addition to the cash wage, workers receive a.free daily ration consisting of.1 kilo of rice, 1 kilo of beans or pof'.toes, -50 cc...of cooking oil, and 20.0 grams of sugar. Meat is given to workers on a weekly basis. The value-of.this ration is estimated to be S/.30 per day. Both members and non-members receive the ration. In the field,'all positions except that of tractor driver are rotated. Tractor drivers earn S/.100 per day (plus the ration). Both the rotation of jobs and the ration are innovations of the coop. The manager stated that the old-fashioned economists of the Ministry's Direccion de Produccion opposed a cash pay hike, so the coop 'decided to give an increase in non-money perquisites. Members voted to reinvest the entire amoint of year-end profits, and dis- tribute nothing among themselves. 11.3 The coop is planning 'a number of social programs to improve living condi- tions. Among these are a housing project, potable water, a cooperative dining, room and medical and dental care for members. 6. The coop plans to diversify into livestock operations and to operate a cooperative dining hall (eliminating the ration currently given). It also plans to launch a cooperative housing construction project in which the coop will provide materials, technical direction, and the services of a team of professional bricklayers, and coop members will provide their own labor free. (Nothing has been done on this score to date). F. Public Agencies, Second-level Coops, and Other Institutions Dealing- with the Group 1. The manager of Caldera is an ex-employee of ONDECOOP, strongly iden-.: tified with the goals of the present government, but quick to point out that the government'must not be relied upon to solve all the coops' problems. He noted that his coop had waited 2 years for the government to build levies along.. the river, but finally had to take on the task independently. He also noted that bureaucratization was an evil to be avoided, citing the case of Andahuasi as a negative example (See case report for this CAP). Public agencies were seen as sources of potential resources and support, but internal management was viewed as a crucial variable in determining the success or failure of each coop. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. In this case the manager clearly plays a leading role in suggesting alternative courses of action and expousing their strong and weak points before the coop membership. On the other hand, the cooperative Councils and the Assembly function more perfectly in this coop than in most other cases visited.. The Administrative Council meets weekly and the Assembly monthly; attendance is reported to be near 100%. The president said that to date no proposal of the manager or the president had been rejected by the Assembly, but noted that such proposals were carefully studied before submission to the member- ship, and their rejection would in essence be a vote of no-confidence., A curious union-cooperative relationship is observed in this cooperative which play3 a positive role in coop decisionmaking and facilitates the jobs of coop leaders. As mentioned above, the union was well organized prior to the LR and attendance at union meetings was near-universal.. Since the cooper- ativization of the estate, the union has continued to function and its weekly meetings continue to be attended by nearly all workers, incl6ing coop officials. Thus, while coop officials are not union leaders, they are kept in close contact with the membership. The meetings in effect provide a soundingboardfor worker sentiment which coop leaders can put to good use in their own weekly meetings. 2. In coops*of this size it is unusual to -find a clear division of func- tions between coop Committees and members of the administrative staff. Managers and coop presidents are generally responsible for most decisions. This coop is no exception. 11.4 3. Careful accounts of coop activities and plans are presented to the membership in monthly Assembly meetings. 5. This coop operates quite independently of public offices, thanks to the aggressive, competent administration of its manager.and. cop,officials. As outlined above in Section II.A.1. the union plays a special.role in keeping coop officials well iriformed of -worker sentiment.. B. Operations and Peasant Participation . 1-2. A major change from the days of the hacienda is that most jobs are now assigned on a rotational basis. However, the coop-maintains roughly the same administrative structure as the ex-hacienda, with administrator,, field boss, and foremen. Personal treatment of workers has, of course, improved markedly under the cooperative. - . 5-6. There are no deferred payments. Sanctions are levied primarily through suspensions from work and verbal reprimands. 7. Underemployment is not a problem in this coop, 9. High standards of discipline.seem to be maintained by coop leaders and the management. ... 10-11. Individual parcels and cattle are held by about 10% of the coop's members, but a recent assembly agreement calls for the purchase of livestock by the coop. According to the manager, only 3 persons have cattle in large num- bers. 13. The coop's manager and president noted that throughout the valley SINAMOS was rejected by rural people., and faulted for inadequate training programs. The Education Committee.of Caldera-was ,currently searching "or a private instructor who could give-night.classes in'cooperative.educatiLq. D. Income Distribution 1. Neither coop nor:union officials receive time off from work for routine coop or union activities. 2.' Last year coop members.ecided to reinvest all coop profits. 3. Rations, housing, and education are the principal non-monetary per- quisites provided by the coop. 4. Members earn very little outside income. Very few members have sub- stantial numbers of livestock. E. Employment a:nd Coop Membership 1. Original coop members were selected by the government through rigid, legal criteria. Since then, the coop has expanded its production and the Ministry has decided that the coop should increase its membership accordingly. In order to have candidates of its liking (rather than have the Ministry select 11.5 new members) the coop has recently presented a list of 20 candidates to the Ministry. F. Continuing Role of the Union As neted in Section II.A.l. above, the union plays an especially important role in facilitating communication between coop officials and the membership, and in facilitating the decisionmaking process. 12.1 CAP ANDAHUASI Dept. of Lima (coast) Intervention: June 1969 Adjudication: 375 members 1,084 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS 'A. Natural Setting .The sugar coop is located in the central and upper part of the Huaura Valley, just west of the town of Sayan. Soil and climate are excellent, and irrigation water is abundant. As a worker stated, "Natural conditions here are excellent, what we need is knowledge -- an educated workforce and able technicians." B. Socio-cultural Setting 3. Housing was severely damao-ed by the earthquake of 1970. Since then only the most essential repairs have been made; there is still an obvious need for repair and reconstruction. C. Pre-reform Estate Organization and Administration 1. Sugar is the principal crop grown by the coop. As in all-of Peru's coas- tal sugar estates field operations are,highly mechanized. Production is centrally directed via a complex administrative structure. Colonos are not present. Cane produced is milled and processed in-Andahuasi's factory. 2. Sugar estates are the largest and most complex crop farms in Peru. An- dahuasi is a relatively small sugar estate, but still its administrative structure is much more complex than that found on, e.g., the cotton-corn-potato estates visited elsewhere in the Department of Lima. Four main sections exist within the administration -- field, factory, management-accounting-personnel, and services -- each of which is headed by a full-time employee (usually a tecnico). The management of field operations is more complex than management of other activities. The field manager is seconded by one or more assistants (also tecnicos), and by a field boss (a non-professional employee) who is directly responsible for the day-to-day direction of field work. Individual work gangs are supervised by foremen. Prior to the LR, sugar marketing was organized by the Sugar Committee of the SNA. Approximately half the sugar produced is sold domestically, the remainder is exported. 3. Traditionally, labor came from highland and coastal villages which were unable to employ their young people. The bulk of the estate's population is of highland origin. In recent years (especially during the 1960s) the estate population has stabilized and fewer migrant laborers have been hired than in earlier times -- due both to the mechanization of sugar production and growing population pressure in the traditional areas of temporary outmigration (resulting 12.2 in permanent out-migration and settlement in coastal estates). At present about 50 workers are contracted on a part-time basis for cane cutting.', 4. Technological levels in Andahuasi fall below those of, e.g., Casa Grande, but iot by much. Field and factory yields are high relative to both national and worlk standards. 5. Andahuasi was one of the few Peruvian sugar estates not to be unionized. (Tuman is the other major exception). 6. The 1964 law had no visible impact. ,D. .The LR Process 1. Peru's sugar estates were the first. to be expropriated under the 1969 LR law; Andahuasi was affected in June 1969 along with the others. The estate's population played no significant role in the process; the driving force behind the intervention was a political one coming from Lima. 2-3. A Special-Committee was created to manage both Andahuasi and El Ingenio (the other sugar estate in the valley). No serious socio-economic dislocations resulted from the LR process. The effects of the 1970 earth- quake were much more severe. E. Present Economic Situation 2. Workers interviewed expressed concern over a decline in the quality of technical personnel and management since the reform. One factory employee stated: Los patrones sablian tener gente buena aca, pero con la cooperativa se han metido todo tipo de elemento...Nuestros consejos son jovmnes, sin experiencia en la contratacion de personal. Cuando traen alguien nuevo, no sabemos hasta que estin act si son buenos tecnicos y saben trabajar. The same man, (the coop's delegate to the CECOAAP) noted that, due to management problems, the 1972 balance sheet was not yet approved by the coop's assembly. When questioned about technical assistance provided by the CECOAAP, he stated that the CECOAAP, too, lacked technical personnel (e.g., it has no specialists in electricity or in mill construction and maintenance) and could provide individual coops with only sporadic assistance. Prior to the LR, an independent consultant in factory technology had been employed on a part time basis by the majority of Peru's sugar companies. After the cooperativization of the sugar industry, several coops, including Andahuasi, terminated their contracts with this expert on the grounds that his services were too costly. At present, Andahuasi's Factory Committee is debating whether or not to rehire him. One worker noted: Si el hombre rinde, se le debe pagar. Vale la pena traer un buen consultor, parque sabe su trabajo y dice la verdad. Esto es lo que queremos--la verdad, no falsedades. 12.3 4. At present most labor employed by the coop is supplied by the member- chip. Only about 50 outside workers are hired for cane cutting (year around). 5. Cash wages paid to field workers are about S/.90. Factory workers earn slightly more. No salary data are available, other than the fact that a field technician hired recently is paid S/.15,000 per month. Aside from cash pay, members receive a daily ration of rice and cooking oil. Housing, medical care for members' families, and schooling is provided by the coop. According to coop members, since the LR cash pay rates for specific jobs have become more nearly equal and some leveling has occurred between workers, em- ployees and technicians. The food ration has been increased, and medical care for family members has been introduced. A major social problem in the coop is housing, which was severely 'amaged by the earthquake. Members note that both the coop and the Ministry of Housing have spent too much time and money in lavish, but unworkable plans; nothing concrete has resulted in the more than 3 years which have passed since the disaster. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. In all sugar coops the CECOAAP plays an.-important role in planning. Each coop has a delegate to the Central's Administrative Council; in the case of Andahuasi the Delegate is an employee (not a tecnico). However the bulk of planning is done not by the Delegates but by the Technical Division of the Central, which functions relatively independently of the Council. The coop itself has a technical staff which reviews the proposals of the CECOAAP, amends these, and draws up plans of its own. The role of workers in the entire plan- ning process is rather marginal for 2 reasons: (1) they lack the technical training necessary for engineering calculations and cost accounting; (2) tech- nical personnel tend to downgrade the possible contribution of "ordinary workers" to the planning process. As one worker noted, "Nunca le da importancia a lo que dice el trabajador." Legally all plans must be approved by the Assembly, and plans rejected by this coop body may not be Implemented against its will. However, an incident- from Andahuasi indicates how a nlan designed by the technical personnel of the coop can be railroaded through despite member opposition. Andahuasi's factory was in need of a new electrical generator. Coop members, led by a number of factory employees, argued that a large, (1,500 kilowatt) generator should be purchased, since the electrical demand of the coop was increasing as a result of growth in both production and social needs. The coop's technical staff argues that a smaller, generator would be sufficient. Before the dispute came before the assembly, technicians had already placed an order for a 1,000 kilowatt size, making debate on the issue meaningless. 2. A much clearer division of functions was found in this coop than in the non-sugar coops visited in Lima. (See Section I.C.2. above). A member of the Administrative Council described the division in the following manner: 12.4 .Los ingenieros conocen la teoria (el numero); y los trabajadores conocen la practica. Entonces, los trabajadores, por intermedio de sus Comites tienen que estar viendo a los ingenieros. El Consejo tiene que recibir -informes de los Comites y preguntar si los trabajadores estan de acuerdo con los ingenieros. Despues de-estudiar tanto los opiniones de los ingenieros como los informes de los comit6s el consejo tiene que hacer su decision y comunicarla a la gerencia, para que resuelva'la situacrn. 3. According to the coop's bylaws, coop officials and technical personal must report periodically to the membership, via meetings of the Delegates' Assembly. However, the 1972 balance was not yet prepared-for approval at the time of my visit (early November 1973). Moreover, one -,Torker stated that 77hen Che 1971 balance sheet was presented no one understood it because many different types of costs were lumped into summary accounts. "What the hell are 'gastos varios'?" he asked. B. Operations and Peasant Participation 9. Coop members interviewed were dissatisfied with the technical compe- tence of their hired employees. One man remarked, "We get young people just out of school who come here to learn, to practice, not to help us." C. Accounting and.Information Systems 1. The coop has an accounting office and maintains detailed accounts of production and costs. Account sheets are also sent to the CECOAAP office in Lima, where year-end accounting documents are drawn up and financial decisions made. 2. The CECOAAP reviews each sugar coop's books, as does a specialized agency within SINAMOS (known as AUDICOOP). 3. Accounting information is formally presented to coop members, but they complain that it is either too complex or too simplified to be meaningful to the general membership. (Is this intentional?) D. Income Distribution 1. See Section I.E.5. above. 2. Yearend profit is distributed eqaually among coop members regardless of their salaries or capital contributions to the coop. (Capital contributions earn a fixed, low rate of interest). 3. Aside from cash pay and yearend profits, the coop provides members with housing, light, sanitary facilities, medicine for family members, daily food rations, and educational facilities. 4. A few members on small numbers of livestock, but the coop provides the primary source of income for its members. E. Employment and Coop Membership 12.5 1-2. Original coop membership was determined by inistry officials at the time of adjudication. Since that time no new members have been admitted. Non-members are contracted primarily for cane cutting (throughout the year). F. Continuing Role of the Union This is one of the few large coastal estates in Peru which has no labor union. 13.1 CAP EL POTAO Dept. of tima (coast) Intervention: Sept. 1971 Adjudication: Jan. 1973 98 members 717 has. I. HISTORICAL-AND NATURAL SETTING AND-ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting El Potao'lies in the Valley of Barranca (in the.northern-part of the Dept. of Lima) a few miles east of,the town of Barranca. It.s soils are among the best in the valley, and it is served by a major irrigation canal, which supplies abundant irrigation water year around. B. Socio-cultural Setting As in most coastal estates, the population of El Potao has come primarily from te highlands, and the resident population manifests traits of this rural background. They consider themselves to be "cholos", socially and culturally distinct from "mestizo" public officials and their coop manager. Housing is typical for the coast: adobe 3 room houses built in city-like blocks with one door in the front, another in the rear, and no windows. Floors are of . cement. Poultry and guinea pigs are raised in or behind the houses, and occas- ionally enter the houses unnoticed. Inside, the houses are poorly lit and usually disorderly. C. Pre-reform Estate Organization and Administration 1. Cotton is the most lucrative crop, and.according to the manager it would be the only crop if it were not for the "ley de panllever," which requires that 40% of the land of coastal estates be seeded to foodcrops. Of the estate's 717 has. 537 are cultivated; of these roughly 60% is in cotton, the rest is -in. corn, potatoes, watermelon, and squash. Due to low corn prices and disease problems /the coop does not plan to cultivate corn next year, and will seed beans instead. For years the estate has operated under the wage labor system. Only 3 or 4 residents cultivate plots of .land and only about 20 have livestock. 3. Aside from the resident labor force thL hacienda typically employed a number of outside laborers. According to the present manager about 50 or 60 non-member workers lived with relatiVes or close friends ou the hacienda. Others came from the valley, and in the cotton harvesting season from the highlands or as far away as Piura. 5. Prior to the LR the workers were'unionized, and according to one laborer, "Cada momento habia lucha." 13.2 D. The LR Process 1-3. When the estate's owner left, he attempted to dismantle the enterprise and remove all movable capital, however, the Special Committee and workers prevented him from taking the heavy equipment. E. Present Economic Situation 4. Of the coop's 98 members, 78 are men and 20 are women. In addition to these, some 40-50 outside laborers are:hired throughout much of the year. Dur- ing the 3-4 months of cotton harvesting up to 220-240 workers are employed. 5. Members currently earn a cash wage of S/.70 in field work, supplemented by daily and weekly- iations worth appro.imately -S/.35 per..day. Rations include 1 lb. rice and 1/2'1b. vegetables per.day and a.bpttle of cooking oil.and,2 kilos of rice,per week. At the end of the period of Special Committee administration members were paic year-end dividends of S/.13,000 each. The coop provides medical care for-the spouses and children of members; the monthly cost to the coop is in the order of S/.40,000., The coop has recently opened a primary school. Housing, however,inadequate, isp rovided free to members by the administration. The manager's monthly salary is-S/.20,000.. II. OPERATIO14AL ASPECTS A. Production Planning and Peasant Participation 1. The coop's manager sees his role as largely technical and advisory. He handles technical matters (such as the drafting-of detailed production plans, purchase of seed and fertilizer, and credit negotiations) under the suipervision of a coop representative or representatives, and he suggests,courses of action to the Administrative Council. He is not an aggressive decisionmaker, at- tempting to convince coopmembers that they should or must follow his advice. As he stated, "Son los Consejos y la.Asemblea que mandan." In one instance the manager proposed the purchase of a large Volvo track, but the assembly voted him down on the grounds that the coop did not have a sufficient volume of activity to keep the truck busy year around, and,that the coop had no business launching into a commercial trucking operation for lack of experience and the-high risks of an accident or financial loss. In another instance the manager and Administrative Council proposed that the working day be altered so as to shorten the working morning and extend the afternoon, but the assembly voted "no" on the grounds that the proposed change sould make it difficult for coop members to tend their own animals and crops or take on part timejobs in the .afternoon. 2. Cooperative Committees have not yet been formed in El Potao, except for the Education Committee. (As a rule, if any Committee functions in a coop 13.3 it is the Education Committee). Therefore, all management tasks fall under the responsibility of the manager and the Administrative Council. According to the manager, the Vigilance Council barely functions. 3. The Administrative Council meets weekly and the'General Assembly monthly. At these sessions management and coop officials are expected to report on coop activities and plans. B. Operations and Peasant Participation 1. In this coop the field boss ("jefe de campo") was elected by the general assembly. Aside from this innovation (an important one) day-to-day management of coop activities coutinues much as in the ex-hacienda. The manager does-not give orders or discipline workers. He manages through the field boss and the formal coop bodies. 3-6. Sanctions are primarily verbal and social. "Unos miran a los otros... la unica verdadera sancion que hay es la suspensi6n...Hay mas discIplina cada da." A worker interviewed noted that in the coop members worked "with interest;" in the hda. they only worked under compulsion. 7. Underemployment is no problem. On the contrary, outside workers must be hired throughout the year. 8. Coop leaders do not come from the ranks of union leadership. Union leaders seem to prefer to retain their traditional positions outside management. 9. Members seem satisfied with the performance and honesty of their leaders, and manager. 10-11. The manager reported that very few workers had parcels and animals, but we noted that the majority of men were not present in the coop's popula- tion center in the late afternoon. Several were playing or watching a soccer game, but many seemed to be off in the fields. A worker interviewed noted that many were tending their anirmals or plots. 13. The coop officials interviewed indicated that classes in cooperation were important for the coop's future. "No contamos con una poblacion entusiasta, pues. Esta cooperativa es independiente de la Liga Agraria [pro- government] pero es asociada con la Federacion de Campesinos [leftist]...SINAMOS debe capacitar y motivar a esta gente,. pero no viene muy en seguida, y-no tiene el personal necesario." The coop's Education Committee was looking for a professional Instructor in cooperative principals and operation at the time of my visit (November). D. Income Distrib,tion 1. Field workers earn S/.70 per day plus a ration worth S/ 35. The manager earns S/.20,000 per month. 13.4 2. 70% of profits earned during the administration of the Special Committee were reinvested; 30%.were distributed Equally among members -- each receiving S/.13,000. 3. Aside from cash pay and profits, members receive rations, medical care for family members, housing, and education for their children. 4. Except for a few members, outside income sources appear to be marginal. E. Employment and Coop Membership 1. The original members were selected through formal.criteria by the Min- istry and SINAMOS. Later, tb Ministry decided that the.coop could provide fulltime employment for more workers than were initially admitted .as members, and that coop membership should be increased from 100 to 150. Recently the coop has presented a list of 20 candidates (approved by the Assembly) to the Ministry. Later, 30 more candidates must be.proposed and approved for membership. F. Continuing Role of the Union : .. The manager stated that the union was relatively dormant since the LR, but noted that it had by-no means disappeared: Ahora el sindicato ha bajado, porque no tiene motivo para reclamar. Esta a la expectativa. En cualquier momento puede levantar:la cabeza. He also noted that the coop's membership took more interest in the valley's lef- tist Peasant Federation-than in the government's Agrarian League. These were seen as mildly distressing facts, and the manager was less than optimistic in his appraisal of the role of the coop in stabilizing rural discontent: Antes, todos los sindicatos eran Apristas., ahora son ultraizquerdistas. Son bastante fuertes, y estos movimentos tienen que.seguir. Si el pro- greso tecnico es r6pido, se puede=controlar, pero si no, la gente se agita. A worker stated that the coop's union was affiliated with neither the Agrarian League-nor with the Peasant Fedaration, but that-,the latter merited more careful attention by workers than the former. As for, the union .itself, this worker, felt that it would be imprudent to .abandon this time-tested institution in favor of the new cooperative: Pagamos:S/.5 por quincena para mantener-el sindicato. No es como antes, la cooperativa soluciona los problemas alli no mas. Pero de todos modos vale la pena tener el sindicato porSue representa al trabajador en cualquier apuro. Todavia no se presenta ningun caso, pero en los meses pr6ximos podrfa. 14.1 CAP SAN SIICOLAS Dept. of Lima (Coast) Intervention: (spontaneous) Nov. 1969 Adjudication: July 1972 300 members (increasing) 1,432 has. (increasing) I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting The coop is located near the coast south of the town of Barranca, in the valley of the same name. Being located in,the lower,,southern fringe of the valley a larger proportion of its soils are marginal than is found in estates such as El Potao in the central part of the valley. However, the land under cultivation is of excellent quality. B. Socio-cultural Setting Housing is particularly inadequate. An earthquake destroyed most housing in 1966, and while the owners bulldozed down the company town to prevent oc- cupation of unsafe buildings, they did nothing to provide workers-with new housing other than allow them to build their own houses on a sandhill not far from the original population center. The casa.hacienda remained standing, and continues to serve as the estate's office. A few other structures also remain largely intact, but the general impression given by the area around the office, where the town once stood, is one of total destruction. The rubble of col- lapsed adobe houses lies where it fell or was piled by bulldozers 7 years ago. C. Pre-reform Estate Organization and Administration 1-2. For several decades the principal crop of San Nicolas has been sugar cane, transported to the Grace-owned estate Paramonga (north of Barranca) for milling. In addition to cane, corn, potatoes, and beans have been grown.. Until the 1960s the'entire estate was operated as a single operational unit. In the 1960s it was divided into 2 properties owned by different.com- panies: "Agrfcola Oja Redonda" and "Constructora Auxiliadora." At this time the labor force was also*divided into two)and the two new firms operated independently. Productive operations on the two sections were mechanized and centrally administered. Colonos were not employed. In the wake of the 1969 LR law, both these sections of the original efitate were parceled for sale to 24 individuals. At this time an unsuccessful attempt was made to divide the labor force among the 24 new owners. (See Section I.D.l. below). 3. The bulk of the estate's labor force was resident. In 1969 cash wages were S/.56.75 for field workers, plus a ration worth S/.8.50 per day. 4. Technology was on a par with that of other coastal sugar estates. 14.2 5. The estate was unionized prior to its division into 2 independent pro- duction units, and after the first division the union split into 2 new units. In 1969 the union helped organize a movement which prevented the division of San Nicol'as into a number of tiny farming units, and resulted in the formation of a cooperative. 6. The impact of the 1964 LR law was not discussed, but-probably related to the first division. D. The LR Process 1-3. In November and December of 1969 a number of strangers introduced. themselves to the workers of San Nicolas as the new owners. They explained that the owners of the estate had sold'off their land-in 110 parcels to 24. individuals. Twenty-three individuals had purchased 109 plots of cultivated land, the 24th had purchased what remained of the company town. - Leaders of the 2 unions met and called a meeting of all workers in which a special committee ("comite gestora") was formed to deal with the issues raised by the parcelization scheme and to bargain with the Ministry and,the new owners. One of the first actions taken by this committee was -to visit the local Ministry Office to denounce the parcelization scheme and"to request state intervention. To the workers' dismay, the Ministry informed them that the actions taken by the owners in parceling their-estates were legal and proper. A second action taken by the committee was to call- a general strike. The 24 new owners had attempted-to divide the existing labor force into 24 independ- ent laboring groups. -Workers opposed this and refused to work. Moreover, they prevented outside workers from entering the estate, and thus prevented the new owners from cultivating their parcels. The strike lasted 59 days, from Dec- ember 1969 into January 1970. During this period the committe -demanded the total withdrawal of the new owners and the formation of a single production coop; the owners offered partial withdrawal,in order to allow themselves to cultivate the bulk of the estate's land aid permit the workers to operate a production coop on a small part. The Aprista Federation of Sugar Workers (far more interested in the political fortunes of its leaders than in the welfare of-its members).advised moderation. on the part of the workers, and suggested a solution whereby workers would receive 1 ha. each for individual cultivation and return to work as usual on the remaining estate lands. By the end of the strike, 2 main victories had been won: (1) the workers had attracted the attention of the public and the government; (2) four of the original buyers had relinquished their claim to land. Later in the year the buyers agreed to turn over more land to the workers, and in July (1970) a production coop was formally organized and legally recognized by ONDECOOP (the only case we know of where a production coop was recognized before acquiring legal possession of farm land). Throughout the process, the workers' committee argued (correctly) that the parcelization scheme was illegal since the 1969 LR law stated clearly that each purchasor could own no more than one 14.3 parcel of land, while. each new owner. in this case owned several. By the end of 1970 the Ministry had decided to enforce this provision of the law, and to expropriate all but 24 of the original parcels (one per customer). In January 1971 a Provisional Administrative Commission was established to manage pre- cooperative production (an incongruous development in light of the existence of legally reocgnized production coop!) In 1970, prior to the coop's legal acquisition of land, the 2 companies which owned the estate prior to 1969 sold their machinery, and the workers surprised both the government and the new owners by investing the funds they had received from the ex-owners as severance pay in 2 of the estate's tractors (the severance, payments had been held until that time in an account in the Banco de la Nacion). The man elected president of the negotiation committee (a bookkeeper in the estate) stayed on as president of the pre-cooperative and as president of the coop's.first Administrative Council (July 1972-July 1973). Throughout the period of the pre-coop and until November 1972 the estate had no professional manager. In 1972 the coop proposed a list of 3 candidates for manager, drawn from the ranks of the coop's membership, but these were rejected by the Ministry. The head of Barranca's Ministry Office stated in an interview that since the workers initiated and carr ed through the collectivization and operation of their estate over a period of years in which production and financial results were good, they now resent the Ministry's insistence that they employ a professional manager. E. Present Economic Situation 1. Peruvian agrarian legislatipn requires that landowners farm their land directly (not rent it) and live on their farms. None of the new landowners which the Ministry allowed to remain in possession of their parcels live on their farms, and thus they fail to meet the second of these 2 conditions. Thus, all are legally subject to expropriation. -Since the initial formation of the CAP San Nicolas, se,reral of the remaining, privately held plots have been expropriated and adjudicated to the coop, and more land is certain to be trans- ferred to the coop in the future. Nevertheless, numerous islands of privately- held land remain within the boundaries of thie larger production coop. Coop lands now amount to about 1,600 hectares, with 1,000 has. seeded to sug- ar cane, 500 to corn, and 100 to potatoes. 2. According to the present manager, productivity fell during the pre- cooperative interim because of poor management: Fertilization was inadequate,- seed was poorly selected, and weed and pest control was lacking. Since these inadequacies have been corrected corn yields have increased from 3,000 to 5,000 kilos per ha. The manager stressed the need for competent, well in- formed management, and lamented peasant attitud-s in this respect: La tecnica se va renovando y el hombre tiene que ir leyendo y cambiando sus metodos. Una gran falla del campesinado es su rechazo del personal tecnico-administrativo. 14.4 5. Cash wages for field workers are presently S/.80 plus a daily ration worth approximately S/.9. (The ration consists,of 1'lb. rice, 1/2 lb. vege- tables, 35 cc. cooking oil, and 35 grams salt). The coop has 31 female members who earn S/,65 per day. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group Since the formation of the coop, San Nic6l's has had'close and fruitful relations with the Ministry. Until the manager was hived, Ministry personnel visited the coop on a nearly daily basis, assisting in the formation and con- solidation of coop institutions: and, more importantly, in the technical- administrative aspects of estate management. As the head of Barranca's Ministry office stated, "No se hizo maravillas, pero se hizo lo que podia, y marchaba." Despite the statements of the coop"s present manager and Ministry officials, indicating that the members of San Nicolas-reject the idea that they should have a technically trained manager, my interviews with coop members indicate that they appreciate the necessity of a qualified manager, but are dissatisfied with the performance of the present manager. The past president of the coop stated: "We have learned that it is not advisable-to depend upon--the technical. assistance provided by the Ministry. It is not that their advice is bad, but that the Ministry is too occupied to provide the necessary attention. We need full-time technical personnel." A careful observer, familiar with both coop leaders and the present manager, stated that .the leadership now appeared willing to have a manager from outside the coop, but was disappointed with the present manager. In this man's opinion the manager was lacking in technical-training and practical experience, and many of the workers' complaints were well foxinded. (The manager is an ex- employee of the'linistry,'a specialist in legal aspects of agrarian reform). Ministry officialslof courselfeel strongly that the coop needs its own resident technical'staff. Thus while both parties are generally satisfied with the services provided by the Ministry during the period of coop formation, both see clear limitations to the role which the Ministry can and should play in coop management. Members expressed considerably more doubt as to the potential role of SINAMOS, One worker stated flatly: "No se puede esperar mucho de SINAMOS; son jovencitos que no saben ni de la agricultura ni del cooperativismo.."" II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 5. To date, the manager is the only non-member employee. However, the general assembly has agreed to hire a professional'agricultural technician and anaccreditedaccountant. When employed, it is likely that the technical staff of the coop will take on greater importance in decision of worker participation and the role of the Ministry. 14.5 B. Operations and Peasant Participation 13. The coop hired an instructor in cooperative principles and operation, but members were dissatisfied with his classes and he was fired. The ex- president of the coop noted that he was a very apathetic, poorly prepared teacher, and that the coop would employ a better instructor if one could be found. C. Accounting and Information Systems 1. A standardized accounting system promoted by SINAMOS is being introduced in the coop. In the near future accounting is to be computerized. D. Income Distribution 3. Initially, on the grounds that it was an anachronistic carryover from paternalistic hacienda life1the daily food ration was abolished by the coop. Workers (and their wives) opposed this change, and subsequently the ration was reinstated as a form of non-monetary remuneration. The coop plans to provide coop family members with free medical care, but has not yet done so. F. Continuing Role of the Union This case illustrates the point that traditional union leadership is not necessarily the source of worker leadership under a new cooperative system. When workers became aware of the scheme to parcel the lands of San Nicolas in 1969, the 2 existing labor unions provided the natural vehicle for organizing worker opposition. However, it was not a traditional union leader, but an office employc who headed the special committee formed by workers to wage their battle to gain control of the land and form a production coop. In January 1971 this same man was elected president of the Provisional Administrative Commission. In July 1972 he was elected president of the coop's first Administrative Council. A Ministry official stated that this man, who never participated in union activity, remains the "vertebral column" of the cooperative; his opinions are more scught out and respected than those of the manager -- "El ingeniero es mas bien decora- tivo." The principal reason for this man's unusual stature within the coop, and his lack of union experience, seems to be that in the pre-reform period it would have been impossible for him -- being the head of the company's account- ing office -- to participate in the union. Since the reform, however, he has sur- faced as the most capable and responsible leader in the estate. 15.1 CENTRAL DE COOPERATIVAS AGRARIAS Y COMUNALES "PASCO" Dept. of Pasco (highlands) Establishment: June 1972 23 members (cooperatives with approximately 2000 individual members) I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A.. Natural Setting The Central's office is located in Cerro de Pasco, Peru's highest city and principal mining town. The 23 coops which are members of the Central acquired most of their land from the immense livestock complex "Algola"n," owned by the Fernandini family, which covered approximately 300,000 has. of land prior to its sale to the government in 1963. Within this property there was a wide range of land quality and climactic conditions, and the 23 coops formed within its boun- daries are now endowed with very different natural resource bases. Most of the coops are located in the highlands, with lands around 4,000 meters over sea level. Three are on the eastern slopes of the Andes and have land in the selva. Most land in the highland coops is too high for crop production; commercial crop- ping in the lowland coops is limited by inadequate transportation and markets. Highland pastures support about one head of sheep per hectare. B. Socio-cultural Setting The carrying capacity of land in this area is poor and population density is low. Transportation and communication between the Central and many of its mem- bers are poor. Educational levels are low, particularly in the lowland coops. A study carried out by the Ministry in the mid-1960s found that 67% of the heads of families in the estates of the Algola'n complex and neighboring communities were illiterate. Prior to the reform, income levels in the peasant communities were low (S/.6,600 per family per year in 1964) and employment opportunities were severely limited. In the past few decades outmigration toward Lima, JunJn, HuInuco, and the ceja de la selva was heavy; seasonal migration was especially important. In- creasing demographic pressure, the lack of employment and access to resources, contact with unionized workers in other areas (including the mines), improved. communications, and better education led to rising expectations and frustrations. In 1963 peasants invaded several haciendas in the area, among them Algol6n. (Much of the background material for this Case Report is drawn from Gamaliel Carrasco, "ALGOLAN: Ana'lisis econ6mico y financiero de un proyecto de Reforma Agraria en el Per" [CIDA, Pan American Union: Washington, D.C., 19681.) C. Pre-reform Estate Organization and Administration 1. Prior to the reform Algola'n was one of Peru's largesu and most efficient- ly operated livestock complexes. Very little land was cropped; the enterprise's principal economic activity was sheep raising. The labor force was small in pro- portion to the total land area; full-time resident laborers were supplemented by part-time workers from neighboring communities. Peasant communities were located on the margins of most of'the complex's estates, and there was a long history of boundary disputes and litigation between the communities and Algolan. 15.2 Workers grazed their own huaccha sheep on lands of the enterprise. Where natural conditions permitted they cultivated small plots of land. Comuneros were employed on the enterprise primarily during,periods of peak labor demand, such as during the shearing season. 2.-4. Algola"n- employed a large and well paid professional staff. Over time the administration had sought to reduce the number of workers employed to a mini- mua and to eliminate individual grazing and cultivation.. Breeding stock was im- ported and careful programs of crossbreeding had improved the quality of the en- terprise's herd. Pasture use was well planned and professional veterinary care reduced mortality and morbidity. Indices of productivity are presented in the following table:* Algolan Communities % of Sheep Sheared 78.8 60.2 5 of Sheep Marketed . 21.1 14.6 Wool per Animal (lbs.) -. 6.4 1.8 Carcass Weight'(lbs.). 34.9 . 11.0 Source: G. Carrasco., "ALGOLAN: Analisis econ6mico...." 5. In recent decades population growth in the communities far outstripped the growth of employment opportunities, and community leaders became increasingly aggressive in their demands for land reform. Mary communit,s had long standing legal'disputes, over lands. occupied by Algola'n and the Cerro de Pasco Corporation. Comuneros§who worked in the mines returned to their communities.with valuable skills in union organization. In,the early 1960s community "invasions" of estate lands began in several parts of the highlands.- Large sections of Algoln were occupied by hostile peasants. -The enterprise's system of pasture rotation was upset, pastures were overcrowded, and much physical capital--notably fencing--was destroyed. Profitable operation of the Algola'n complex became impossible. In view of these developments the Fernandini family offered to sell the 309,000 has. hacienda to the -government. 6. The expropriation of these lands took place in 1963, and was not the product of the 1964 LR law. If anything, the causality runs in the opposite di- rection. However, the "Project Algola'n" became 0TRA's principal IR project ad- ministered under the 1964 law. D. The LR Process - . - 1. '.Algolin is one of the few cases in Peruvian history where a peasant move- ment has resulted in significant land redistribution in favor of the peasantry. (Another well known case occurred in the coffee-producing Valley of La Convenci6n, north of Cuzco.) Peasant occupation of estate lands resulted in the collapse of Algolan's administrative structure-and rapid decapitalization The government arranged for the purchase of the complex as an emergency measure, not as.part of a coherent LR program. . 2. At the time of the land invasion and emergency purchase of Algola'n, the government was not prepared to finance the land transfer or to plan and execute a 15.3 rational land redistribution program. The Fernandini family demanded over five million dollars in compensation. The government agreed to pay approximately three million dollars in cash (half of which was borrowed from the Bank of Ameri- ca and the New York Chemical Trust Co.) and 1.8 million dollars in 20-year bonds. Under the Algolan Project, ONRA set up 3 distinct programs: (1) the "Em- presa Algolan," which provided interim management for the, complex prior to its adjudication to peasant groups; (2) an Agrarian Reform Center, which provided technical assistance; and (3) a Capacitaci6n Center, which provided technical and cooperative training for peasant leaders. At the time the government purchased Algola'n approximately 79,000 hectares were invaded by peasants from neighboring communities. The government requested that the peasants vacate these lands in order to bring them under central adin- istration prior to the formal division of land and other assets into independent cooperatives. ONRA had no previous experience in land redistribution,, interim.management, or the establishment of production coops. ,Socio-economic studies were carried out to determine the type and number of cooperatives to be set up and the optimal distribution of land and sheep between them. Ministry and coop officials inter- viewed in November 1973 indicated that these studies were poorly executed and re- sulted in a highly inequitable distribution of resources--with important long- term effects on the productivity of individual coops and the wealth and incomes of their m'embers. The following table indicates the land area and number of sheep delivered to the 12 original communities benefiting from the LR: Land and Sheep Adjudicated to Peasant .Communities, Algolan Project, 1965 Community Land Sheep Cochamarca 3,819 has. 2,650 Huamanmarca 6,241 2,650 Huaychao 6,500 3,432 Huayllay lo,668 5,058 Ninacaca 15,458 6,705 Sacra Familia 4,860 2,657 San Pedro de Raco 4,867 2,657 Ticlacay6n 10,686 2,650 Yanacachi 5,011 2,857 Vicco 11,399 5,941 Yurajhuanca 4,112 2,650 Villa de Pasco. 4,701 2,743 TOTAL 88,284 42,650 Note: Since this initial adjudication 2 more communal cooperatives and 9 CAPs have been established. Source: G. Carrasco, "ALGOLAN: Analisis econ6mico...." 15.14 Interim management was extremely poor and massive decapitalization occurred. Cooperative officials indicate that prior to the invasions Algola'n owned approxi- mately 130,000-150,000 sheep; at'the time the coops were set up the total number of sheep had dropped to less than 70,000. Technical-managerial problems and im- prudent behavior on the part of peasant beneficiaries were by no means the only causes of decapitalization. A study carried out by CII)A (Carrasco, "ALGOLAN: Analisis econ6mico...") indicates that the government consciously liquidated the livestock of the enterprise in order to finance the project's current expenses. In 1967 and 1968 twelve communal cooperatives were set up. More recently two more communal cooperatives and nine CAPs have been established. Since the formation of the reform enterprises management has improved markedly and the number of cooperatively owned sheep.has frisen to about' 120,000. The Central's manager stated to me that it would 'be very difficulT for the coops to reach pre- reform levels of herd size and production die to the adjudication of ecologically complementary zones to distinct cooperatives. Prior to the reform livestock was moved between ecological zones to use each at the time and for the purpose which maximized total production (in accordance with principles of "comparative advan- tage").' With the legal divisior of the original.unit into 23 separate legal en- tities this movement of livestock has been terminated, and consequently, the pro- ductive capacity'of the availabie-resources has been diminished. 'Some coops have lands which are ideal for parturition -but less suited-for fattening and year- round grazing. Other coops have pastures'which are excellent in the rainy season but of limited productivity during dry periods. Yet'others have pastures which are not so highly productive during the rains but which provide more feed during the dry periods. The Central's manager stated' that in his view the only way to regain pre- reform levels of production would be to ihtegrate the presently independent coops into a single centrally managed.unit, jsuch as a SAIS. The Agrarian Reform Center, which the Ministry established to provide tech- nical assistance to the new reform enterprises, operates in an estate known as "La Quinua," which has about 10,000 has.' of land with 7,000 sheep and 450 head of cattle (current figures). Over 100 ex-workers of Algola'n were employed by the Ministry in this Center which provided services for the LR beneficiaries in the area andproduced a net profit for the Ministry. To complement this facility the Ministry set up four "Basic Technical Assistance Units" which worked directly with the reform enterprises. Each Unit employed an agronomist, a veterinarian, and a social worker. In 1968 the Ministry eliminated the Technical Assistance Units, and created three new "Service Units," each employing an agronomist, a veterinarian, and four or five "pricticos ganaderos." Since 1968 the Service Units have given practical courses for coop managers and workers in technical as- pects of livestock production and management. According to both Ministry and coop officials the technical assistance provided to the coops has improved mark- edly since this reorganization of the Ministry's service. Accounting was a major problem for the new coops until 1970 when a Central Accounting Office (Peru's first) was establishea. Prior to the creation of this office most coops contracted the services of accountants in Cerro de Pasco. Quite often accounts were poorly handled and year-end balance sheets were not drawn up. 15.5 4. Under the reform the ex-workers of Algolan and the estates of the Cerro Corporation expropriated in this zone received land and sheep in 9 CAPS; neigh- boring peasant communities established 14 "communal enterprises" which were later transformed into "communal cooperatives." The difference between communal enter- prises and cooperatives is that in the first case all members of the peasant com- munity are members of the enterprise and the community's governing institutions manage the enterprise, whereas in the second case not all community members need be members of the cooperative and the coop is managed by its own Assembly, Coun- cils, and officials (which are distinct from the community's governing bodies and officials).. Another important reform institution was the special technical assistance service set up by the Ministry, which is discussed in point 3. immediately above. The Central Accounting Office established in 1970 by ONDECOOP has provided valu- able services to the coops, and has opened the way to more substantial forms of second-level cooperation. Initially the coops and their accountants staunchly opposed the formation of the Accounting Office, and in several cases they refused to turn over their account books to the Central's officials. As an official of the Central stated, Al principio habla problemas graves, porque las cooperativas no querlan entregar sus libros. ... Fue una lucha terrible quitarles a los contadores sus libros de contabilidad. ... Ademias se negaron a,pagar las quotas. ... Al fin vino una Resoluci6n Directorial de Lima obliga'ndoles a entregar sus libros. Despu6s, viendo el trabajo se comenzaron a pagar las quotas. In May 1971 the Peruvian government created a special committee to evaluate the Algol6n Project and to recommend ways to consolidate the reform enterprises and to reduce the Ministry's costs in providing technical and managerial assis- tance to them. The committee produced a plan for the creation of a Central Coop- erative and for the progressive re-integration of the 23 independent coops set up during the Belaunde administration. In June 1972 the Accounting Office was transformed into a Central Coopera- tive which now provides its members with delivery and market services, legal ad- vice, planning, and technical assistance, in addition to accounting services. Operation of La Quinua and the three Service Units has been taken over by the Central, and the Central now provides veterinary supplies and consumer goods to its members at less-than-market prices. A new Development Unit has been created to foster socio-economic development within each coop by providing technical as- sistance for infrastructural and other non-directly productive activities. The Central.s administrative structure is diagrammed below: 15.6 ORGANIGRAM CENTRAL DE COOPERATIVAS AGRARIAS Y COMUNALS PASCO General As seimbly Education- Marketin Administrative Vigilance Accounting Council Council Special Services Management Planning .3 .4 Legal Assistance Seeretarial Staffl Veterinary Services Cooperative General Industrial Development Services and Manual Unit i Unit . .ts Unit Accounting Commercializtion Department Department Three Service Sub-units (technical Ayor acra Huanca 'Pacoy6. assistance) Rine S2 31 Sectors J 23 C 0 a "-I ej 0CH ej e o o.H 0\i 0 Cd Coops : ø e r d c ø d r-- -H2 9o Q) 4 e ej 95 0 dI Cd 0 0EiC 9 15.7 The staff of the Central as of September!1973 -was the following: Position Number Monthly Salary Manager 1 S/.30,000 Legal Advisor 1 17,000 Accountant 1 18,000 Sub-accountant 1 7,500 Accounting Assistant v 11 2,500-5,500 Sub-unit Chief 3 15,000 Statistician 1 4,500 Secretary 2 3,500 Sales Assistant 1 2,500 Livestock Assistant 1 4,500 Total 23 139,400 Later in the year the Central advertised job openings for the following posi- tions: 1 veterinarian, 1 social anthropologist, 1 doctor, 1 dentist, 3 coopera- tive instructors, 3 nurses. Only 3 candidates presented themselves for the 10 openings. In 1964 the government appraised the value of Algolan's assets at 128 mil- lion soles (approximately three million dollars). S/.79.5 million were'paid to the owners in cash, and the rest in bonds. E. Present Economic Situation 1. To date,,the principal activities of the Central are accounting, techni- cal assistance, purchase. of inputs and consumer goods, and marketing of wool and other commodities produced by the member coops. The Central's officials hope.-to staff and promote their Cooperative Development Unit in the future; plans for the Industrial and Manual,Arts Unit remain tentative. 3. The principal sources of funds for the Central are the following': (1) earnings of the Central in its delivery and marketing operations; (2) member pay- ments for accounting services; (3) the Central's share in its member coops' pro- fits (one-half of non-distributable profits, which equals 22.5-35% of total pro- fits, depending on the internal bylaws of each member coop); (4) earnings from the operation of La Quinua (the technical assistance'center raises sheep and cat- tle, and the.sale of its products produces a net profit). At the time of my visit (late November 1973) the Central was negotiating its first loan with the Bank. Prior to this time the Bank's bylaws prohibited it from financing the Central's operations. inputs were often purchased by the Cen- tral from commercial outlets on short term credit. 4.-5. Data on membership and incomes in 17 of the 23 cooperatives affili- ated with the Central are presented in the folInwing tables: INCOME PER MEMBER, BY SOURCE, FOR 17 COOPERATIVES AFFILIATED WITH THE CENTRAL "PASCO" (2) (3) (4) (5) (6) (7) Number Number Income Derived from the Coop Outside Total of. of Coop Wages per Profits per. Total Income* Income Families Membei's .Member Member (3) + (4) per Member (5) + (6) Communal Cooperatives (.................... in Peruvian soles .................. 1. Yurajhuanca. 142. 113 3,080 1,587 4,667 1,387 6,054 2. Ticlacaya'n .449 46 4,169 646 4,815 3,739 8,554 3. Cochamarca -72 26 . 18,027 .10,092 28,119 4,097 32,216 4. Huamanmarca . 172 92 4,380 2,949 . 7,329 256 7,585 5. Huaychao 198 63 7,968 .2,718 10,686 7,212 17,898 6. Yanacachi 88 90 .. ,283 8,191 12,474 12,727 25,201 7. Ninacaca 750 .431 1,802 2,005 . 3,807 9,339 13,146 8. Villa de Pasco .390 17 14'839 20,ok 34,913 1,843 36,756 9. San Pedro de Racco 84 . 75 5p113 -6,769 11,882 11,536 23,418 10. San Antonio de. Rancas 222 228 i 1,591 1,520 3,111 11,581 14,692 11. Quiulacocha 146 71 2,134 2,422 4,556 _3,130 . 7,686 Sub-total 2,713 1,252 3,374 3,101 . 6,475 6,076 12,551 Production Cooperatives 1. Andachaca 22 20 36,836 10,626 47,462 318 47,780 2. C6nocQuislue 55 . 57 . 22,244 2,852 25,096 745 25,841 3. Racracancha 19 27 23,595 38,097 61,692 2,842 64,534 4. Lancari . 20 24 29,255 6,880 36,135 800 36,935 5. El Diezmo Palcan 20e 18 14,788 :14,177 . 28,965 n.d. n.d. 6. Alcas5Chiric 555 1501 3,674 20,175 7,327 27,502 Sub-total. 191 197 22,599 10,210 32,809 3,047** 35,856** Total: 17 Cooperatives 2,904 1,449 5,988 4,o68 10,056 5,664 15,720 (cont.) O0 15.9 (INCOME PER MEMBER, BY SOURCE cont.) *Income derived from agriculture and livestock production in 1971. **Average for.the 5 CAPs for-which data are available. n.d. No data. ,e 'Estimate Sources: Cols. (1) and (6): SINAMOS, "ALGOLAN: Estudio con fines de Re- forma Agraria" (Lima, 1973). Data apply to,the year 1971.. * Cols. (2), (3), and (-4): Accounting documents of the Central Pasco for the period April 1972-March 1973. INCOME PER:MEMBER, BY SOURCE, COMMUNAL,-AND PRODUCTION COOPERATIVES AFFILIATED WITH THE CENTRAL "PASCO" Communal Production Cooperatives Cooperatives Income Derived from the Coop Wages 3,374 22,599 Profits 3,101 . 6,475 10,210 32,809 Income Derived from Crops and Livestock 7,600 3,800 Other Income- 11,250 0 Total Income per Member 25,325 36,609 . *"Other Income" is a rough estimate (probably.too high) based on data in the SINAMOS study cited above. Sources,: Based on previous table with "income derived from crops and livestock" adjusted upward by 25% to compensate for inflation. A household survey taken in 1971 and reported in the SINAMOS document "ALGOLAN:. Estudio con fines de Reforma Agraria" (Lima, 1973) indicates that at that time the average family income-of residents in the same peasant communities (including many families which were not members of the communal coops) was S/.20.,024, while the average income of families residing in the production coops, (nearly all members of the coops) was S/.23,415. The reported incomes of pro- duction cooperative members in 1972-73 were considerably higher, either as a re- sult of higher wages and profits paid by their coops* or as a result of under- reporting of income derived from the coop in the 1971 survey (perhaps not report- ing profits).. As can be seen from the tables, less than half the resident families of the peasant communities are coop members; all resident families (or very nearly all) of the production coops are members, and a few people living outside the coops belong to them. The communal coops are much larger than the production coops in terms of membership- -an average of 114 members as compared to 33--but members of 15.10 the communal coops work far fewer days each year than:db members of the produc- tion coops. Wage levels do not differ radically between the coops; the range is from S/.6o to S/.130, but the majority pay between S/.80-and S/.L00. Yet pro- duction cooperative members earn nearly seven times as much.as members of com- munal cooperatives in wages each year. Production cooperative members earn three times as much in year-end profits, but only half as much from their own livestock and crops. Production coop members are generally full-time workers in their coops, but members of the communal coops ofteh work part time elsewhere. Earn- ings from work in the mines and from-commerce and other' ources provide several thousand soles each year in income for communal coop members. -Total income de- rived from participation in the coops is five times higher for production coop members as for members of commuiial coops. Other income sources provide five times as much income for communal coop members as for members of production coops. The average total"incbme of productioh coop members- is 44% higher than the average income of members of- communal cooperatives. Se table.in Section I.D.4. above for employment and income data corresponding to the Central. F., Public Agencies, Higher Level-:Coops, and Other Institutions Dealing with the Group One of the principal goals of the government in evaluating the LR process in Algolan and proposing a restructuring of the original cooperative organization was to arrive at a means of reducing the expenses of the-_-Ministry in providing managerial and technical assistance. The creation of the Central-Pasco and the long-run goal of re-integration of the lands of Algoin in a SAIS are the two principal outcomes of this eveluation and planning process. By centralizing cer- tain operations of the coops--such as accounting, planning, purchasing, and mar- keting--and by turning over the Ministry's technical assistance service to the Central, the dependence of the new reform enterprises upon the Ministry is re- duced. The Ministry's services were provided free to the coops, but the Cen- tral's activities must be supported' through payments -by the coops. Thus, it is likely that in the near future the communal and production coops may begin to complain of the high cost of these services and some may even attempt to withdraw from the Central. -To date"only one coop has-withdrawn,, but an- official of the Central warned that it the future member dissatisfaction with the high cost -of services provided by the Central was bound to increase and that other coopera- tives would probably like to withdraw. Central officials stress the need for cotinued coperative and technical capacitacion as a means of consolidating member support for cooperative-institu- tions and improving the operation of both the member coops and the Central. SINAMOS'does not operate in the area. The Central plans, to continue and. improve the Ministry's capacitacion programs. Until late in 1973 the Bank's bylaws prohibited it from lending money to. the Central. The bylaws were being modified at the time of my visit, and the Central hoped to acquire a long-term loan from the Bank in the near future. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1.-2. The Central's manager is an extraordinarily dynamid and competent professional who worked previously in estates owned by the Cerro de Pasco 15.11 Corporation. Several Central officials stated that much.of the Central's.success to date is the direct result of his work. -Peasant participation in planning and implementing the Central's activities is made very difficult by the great distances between individual coops and,the Central, and by the inadequacy of transportation and communications in the area. Council members complain that it takes them several days traveling and waiting for each meeting, and that often meetings are delayed or missed because of the absences o-f members of the Councils or of the Central's staff. The Central's statutes 2all for monthly sessions of both Councils. However, an official told me that ince the formation of the Central in June 1972 the Vigilance Council had never met; the most -recently scheduled session of the Administrative Council was skipped. Within the Central, the division of labor between specific aspects of plan- ning and management is more theoretical than real. The manager and the president take joint responsibility for most actions, .and.other members of-the Central's staff concern themselves -primarily with the implementation of-the Central's pro- grams. Within the individual cooperatives members participate much more actively in planning and management; the Ministry and the Central provide technical assis- tance, but do not run the coops. In preparing each coop's annual production plan and budget the following procedure is followed: (1) The president of the coop brings a draft plan and budget to the Central which was prepared by the Adminis- tra6ive Council of his coop. (2) Members of the Central's staff, working direct- ly with the coop's president, prepare a formal plan and budget. (3) A,member of the Central's accounting- staff travels to the coop to present and explain the plan and budget before the coop's General Assembly. (4) In many cases members of the Assembly propose-modifications of the plan and budget, which are voted on and accepted or rejected. (In one specific example the purchase of a truck was in- cluded in the original plan prepared by- the coop's Administrative Council, but was later rejected by the Asembly.) B. Operations and Peasant Participation 10.-11. According to the Central's managerthe ex-workers of the ex-complex Algol6n have a few head of huaccha sheep and cattle, and till small plots of land where cultivation is possible. Comuneros neither graze nor cultivate on lands adjudicated to their communities under the reform process. Coops have a policy of selling livestock to members, thus upgrading the quality of huacchas. Never- theless, huacchas produce only about 2 1/2 lbs. wool per head per year while coop animals produce over 6 lbs. 13. The Ministry has carried out numerous technical capacitaci6n courses for coop leaders. Ministry and Central officials stress the importance of tech- nical and cooperati-7e capacitaci6n for both officials and members. C. Accounting and Information Systems 1. Until the formation of the Central Accounting Office in 1970 each coop was responsible for its own accounts. Most coops contracted professional ac- countants on a part-time basis, but accounting was not adequately performed. 15.12 Coop officials seem to be satisfied with the performance of the Central's ac- counting service. Accounts are kept up to date (year-end balances for coops closing their accounts March 31, 1973, were delivered in June). The Central's accounting staff assists each coop in preparing yearly plans and budgets. Mem- bers of the Central's staff also countersign all checks signed by the officials of affiliated cooperatives, keeping a check on finances and preventing the coops from overdrawing on their bank accounts. 2. The accounts of both me1bers and the Central are audi-ted by SINAMOS. 3. Accounting results are presented-by Central officials to the members of each affiliated coop in annual-Assembly.meetings.. Neither the Central nor the member coops have cooperative bulletins or information sheets, l.-2. See Section I.E.5. above. 3. The Central is now taking on responsibility fbr the technocal assistance facilities previously operated by the Ministry.. These services include regular parasitic contrQl measures administered on privately owned livestock as well as cooperative animals. The coops also have a policy of selling livestock to mem- bers, thus upgrading the quality of huacchas. E. Employment and Membership 1. All ex-workers of Algol'an Were eligible for coop membership, as were members of peasant communities receiving landlunder the reform. The majority of the ex-workers joined the coops;.many of the comuneros did,.not.. Several factors have restricted membership in the communal coops. Some comuneros did not .join because they had outside sources of employment and/or income and did not wish to work as laborers on the coops. Others were too:poor to pay the membership quotas.- Some. opposed the coops on-principle. Once formed, some coops do not wish to expand their membership, since this would result in a reduction in the original members' shares in profits. 2. In nearly all the coops members provide the bulk of all labor employed. A Central official remarked that in one very special case--a communal coop--none of the members worked except the administrator. He did not mention the coop's name. 16.1 SAIS CAKUIDE Dept. of Junin (highlands) Intervention: Oct. 1969 Adjudication: April 1971 30 members (29 peasant communities and 1 service cooperative) 268,182 has. (not including area in peasant communities) I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting The SAIS Cahuide occupies some of the department's best pastureland around Huancayo on both sides of the Mantaro River (see map). The lands operated directly by the SAIS are dedicated nearly exclusively to cattle and sheep grazing. Most are above 3,500 meters above sea level and are not suitable for cropping, The peasant communities which are members of the SAIS are located in areas of lower altitude, and their lands are more suited to cropping. It is generally assumed that over the last century the expansion of sheep ranches in this highland area forced the peasant communities off their best lands and onto marginal areas. This is not quite true. The large estates wanted pastures, not crop lands. Thus, the region's best pasturelands were purchased or usurped by haciendas, but the most productive agricultural lands remained in the possession of peasant communities and smallholders. B. Socio-cultural Setting 1. One of the principal precipitants of LR in the Central Highlands was growing demographic pressure. Due to the high variability of soil quality and natural conditions in the region, simple man-land ratios provide only the roughest measure of demographic pressure, but the disparity between ratios existing on communities and haciendas at,the time of the reform is striking: Total Total Area per Population Area Person Haciendas* 2,468 268,182 has. 108.7 has. Peasant Communities** 44,847 39,279 has. 0.9 has. Seven haciendas which now are Production Units of the SAIS Cahuiae. Sixty-five bordering peasant communities. Sources: These and other data in this Case Report are from the following documents: Peru', Direcci6n de Comunidades Campesinas ; ZAC-Mantaro No. 4, "SAIS CAHUIDE: Datos para el desarrollo" (Lima, no date--data were collected in 1970); SAIS CAHUIDE, "Memoria Anual, 1 abril 1972 - 31 marzo 1973" (Huancayo, 1973); SAIS CAHUIDE, Divisi6n de Desarrollo, Jatari (3) 1973; "Situaci6n real de la SAIS Cahuide," in Peru', Comisi6n Nacional para Apoyo y Asesoramiento de las SAIS y Central Pasco de la Sierra Central, Comite Integrador Campesino; "Seminario sobre .integraci6n de las SAIS del Centro y Central Pasco, Documento Final" (Lima, 1973). /-:―…―&7 부’& *，긺낱 &&＊』날7… --,-－…－，■－--－뱀，--.．∥ & & · 16.3 Heavy outmigration flows from the communities in three directions: to Huancayo, to the selva, and to Lima and other parts of the Central Coast. Many peasants farm and graze livestock in their communities of origin and migrate-temporarily each year Jn search of work. 2. Most workers on the ex-haciendas which now form the core of the SAIS Cahuide came originally from neighboring peasant communities, but they settled on the estates and became full-time workers.- Culturally the communities are 11 open." Their members sell part of their produce outside the communities, and many have traveled extensively in search of work or as the result of mili- tary conscription. Nearly 90% of the heads of families in the communities speak both Spanish and Quechua. In the haciendas nearly all workers are bilingual. Around Huan- cayo educational levels are high in comparison to other highland areas. In the haciendas under study 38% of the population over 5 years of age was illi-- terate in 1970; in 'the neighboring -peasant comm=ities the corresponding figure was 27%. 3. The haciendas generally provided adequate housing, with electric light and indoor plumbing, for t1l,.eir technical and office personnel. Full- time laborers had poorer housing; shepherds, who were responsible for watching hacienda sheep on a 24-hour basis, were required to move with their herds each day and sleep the nights in primitive stone and sod-huts. C. Pre-reform Estate Organization and Administration 1. Most of the land which is now operated. by the SAIS Cahuide was owned by the "Sociedad Ganadera del Centro" prior to the reform. This livestock company specialized in the production of wool, meat, and dairy products which were sold locally, in Lima, and in foreign markets. At the time of the reform the corporation turned over 103,000 sheep and 6,500 head of cattle to the SAIS. It appears that over the last few years prior to expropriation the company had increased its sales of animals, but there is no evidence of massive deca-pitalization. Two major policies of the corporation were to economize on labor and to reduce the number of huaccha animals grazed by workers on-its land. At the time of the reform only about 500 workers were employed and the number of huacchas had been reduced to about 4,000 sheep and 2,000 cattle. Rent was not charged for pasturage, but huaccha numbers were strictly con- trolled. Workers were prohibited from purchasing livestock; their huacchas were pastured apart from the enterprise's livestock by shepherds paid by the enterprise. Workers who had no huacchas received cash bonuses. Cropping was relatively unimportant within the enterprise. Where crops (primarily potatoes) could be grown workers tilled small plots. 2. The Sociedad Ganadera was one of the best-managed and most productive of Peru's highland livestock enterprises. The company employed a number of technicians and office personnel who operated out of its Huancayo office. Another office'in Lima was responsible for puxchases and sales in Lima and. abroad and for most financial matters. Each of-the estates owned by the company was under the direct responsibility of an experienced manager; most of the managers had technical university education. 16.~ 3. Nearly all the enterprise's labor came from. the,resident population. Workers were employed tfull-time by the enterprise on a year-round basis. Outsiders were employed only during periods of' extraordinary labor demands, principally for sheep shearing. in 1969 the minimum -wage paid by the enter- prise was S/.27-50. h. The enterprise's large-scale operation permitted. the employment of' a highly-paid technical-administrative staff'. Technical levels of production and yield.s were among the highest in the country. These were attained through improvements in the quality of' livestock by importation and crossbreeding (including artificial insemination), rationalization in the use of' pastures (fencing and rotations), and improved sanitation and disease control. Not only were huaccha numbers reduced,' their quality was upgraded through conscious policies of the enterprise; hacienda livestock was sold to workers, and veteri- nary care was made available to the huacchas. Consequently, huaccha produc- tivity did not fall so far below the productivity levels of' enterprise sheep as was the case in most highaland estates; sheep of' the Sociedad Ganadera del Centro yielded about 6.5 lbs. wool per head per year; huacchas yielded 4.5- 5 lbs. 5.-6. At various tines in the twentieth century hacienda expansion, growing population pressure, and increasing relative poverty in the peasant communities generated rural tensions and occupations of estate lands. The most recent and. widely publicized land invasions were those of the early,;196os. During periods of peasant unrest hacienda workers, most of' whom had originally come from the communities, found themselves defending estate lands against members of neighboring peasant communities. Thus, land disputes caused divi- sions -within the lower stratum of rural society as well as betwVeen hacendados and peasants. The peasant "invaders" of the"early 1960s, like those of earlier times, were forced off estate lands by the police and military. The promise of LR under the 1964 law helped to defuse the peasant movement., but outside Algola'n little land was redistributed in the Central Highlands. In 1967 a special'commnittee was appointe.d by the government,.to study the feasibility of expropriating the lands of the Cerro de Pasoo Corporation (now the SIAIS T6pac Amaru) and alternative methods of' adjudicating these lands to potential LR beneficiaries. By this time Algola'n had already been expro- priated;-thus, it seems highly likely that the large landowners of the Central Highlands expected,LR actions to be taken. Despite this, decapitalization was not as extensive in the highlands as on the coast, probably because: (1) the main form of capital on these highland estates--livestock--was produced on the estates (and thus could be maintained without cash outlays); (2) this same capital was readily salable, and could be easily liquidated if the threat of LR became imminent; and (3) Algol6n had been well compensated for its live- stock expropriated under the reform in the early 1960s. My interviews width administrative personnel in the SAIS Cahuide indicate that meat sales did increase somewhat in the late 1960s, but no massive sale of livestock occurred. (One would expect that costly livestock improvements would not have been made in the late 1960s, but I have no information on this point.) 16. 5 D. The LR Process Initiated by the 1969 Law 1.-3. The Sociedad Ganadera del Centro was directly affected by the reform in October 1969. Peasants in the estates and in neighboring communities played no role whatever in motivating the government's intervention or in the design of the adjudication model for the new reform enterprise. No major socio-economic dislocations were produced by the reform.. A Special Adminis- trative Committee provided interim management. The Ministry Office in Huancayo gave top priority to expediting the LR process in this and the three other principal SAIS formed in the Central Highlands--Tfpac Amaru,.Ramn Castilla, and Pachacutec. 4. Motivated by what the government considered the "unfortunate and un- satisfactory" experience of Algola'n--where livestock numbers fell dramatically, the pre-reform administrative structure disintegrated, income disparities continued, and the Ministry's technical assistance costs soared--Peru's military government created a novel adjudication model knc'wn as the SAIS--Sociedad Agricola de Inter6s Social. The concept of the SAIS was first introduced in Peru's Cooperative Bylaws (D.S. No. 24o-69-AP). In this document the SAIS is conceived primarily as a pre-cooperative institution, to be created when the government determines "that a group of LR beneficiaries does not fulfill one or more of the requirements demanded for the legal recognition of a coop- erative.... When the special conditions which required the creation of the SAIS cease to exist, the SAIS should become a cooperative." (Articles 143 and 146). In practice the SAIS is not a temporary pre-cooperative institution but a special, complex cooperative-like enterprise established by the Reform Agency in cases where highland estates are surrounded by peasant communities threaten- ing land invasions. Legally a SAIS is an enterprise owned and managed by a service cooperative (made up of the workers of expropriated estates) and by a number of peasant communities which have been designated by the Reform Agency as LR beneficiaries. (The service cooperative differs from a production cooperative in that its members are not owners of the land and capital they employ in the production process. The service coop differs from an Agrarian Service Coop [CAS] in that in the former enterprise the members are workers who exploit the resources of a SAIS collectively, whereas in the latter each member is an independent smallholder who benefits from services [delivery, marketing, etc.] provided cooperatively.) In addition to ownership and management, the members of the SAIS--the service coop and peasant communities--also participate in the profits generated by the SAIS. These profits are generated on the lands of the ex- estates. The members of the service coop are the SAIS' workers. Members of the peasant communities participate in management and profits, but not in work. A document prepared by officials of the Tenth Agrarian Zone summarizes the advantages of the SAIS as follows: A. Social Advantages (1) Maintenance of the pre-reform economic unit, which maximized produc- vity 16.6 (2) Maximization of the number of beneficiaries (3) Integration of the ex-estates and peasant communities (4) Efficient provision of services, including social and technical as- sistance (5). Leveling of incomes within the area (especially as-related to the heterogeneity of natural resources) (6) Progressive technical and cooperative capacitaci'n of the peasantry B. Technical Advantages (1) .Optimization of,the use of pastures and other resources through, e.g., fencing, comprehensive planning, and pasture (2) Livestock improvements through programs of importation, selection, crossbreeding, and veterinarial services (3) Employment of technical personnel over a-greater area C.. Economic Advantages (1) Economies of scale (2) Optimal use of installed facilities and infrastructure- D. Financial Advantages (1) Maintenance of the existing, well-functioning financial system (2) Provision of financial assistance to peasant communities E. Administrative Advantages (1) Maintenance of the existing, well-functioning administrative structure (2) Provision of management training for the peasantry In determining which peasant communities should become members of the SAIS, the Ministry evaluated each.of 65 communities in terms of the following criteria: (1) Member communities must border on lands adjudicated to the SAIS (2) Over 40% of the comuneros' income must come from agriculture and live- stock raising (3) Less than 90% of their income must come from agriculture (4) The per capita productive capacity of the member communities (essentially the man-land ratio) must be below average for the area (5) Income per family must fall below the average for the area (6) Communities with border conflicts with estates adjudicated to the SAIS are favored over those with no conflicts , (7) Communities which receive no lands under the reform are favored over those which receive land Of the 65 candidates, 29 peasant communities with 3,237 .families were selected as members of the SAIS Cahuide. The following hacienda vads were adjudicated to the SAIS: 16.7 Production Unit* Area (has.) . Previous Owner Acopalca. 40,065 Sociedad Ganadera del Centro Huari 23,575 .T "f f it Laive 33,045 t T I Punto 13,948 11 if IT 1t Runatullo 105,742 " I f Antapongo . 30,885 Sociedad Lanera Antapongo Tucle 20,922 Sociedad Ganadera Tucle Total Area 268,182 The Production Units have the same names as the ex-estates. The ex-workers of these ex-estates became members of the thirtieth member of the.SAIS, the Cooperative de Servicios "Alta Sierra." The formal organization of the SAIS Cahuide is diagrammed below: Delegates' Assembly Plannin Office jEducati .Administration Vigilance lCommittee Council Council Special lCommittees Management - Legal Advisor! Development 1,Agriculture [Administrative Division and Livestock Division I ___ _ Division Agriculture A ccounting and Livestock Purchases Health Sales Education Personal 'D Infrastructure Organization of Peasant Enterprises I Veterinary Services Tuclet [Runatullo !Acoalca La Antapongo Production Units 16.8 The Delegates' Assembly is composed of 2 representatives from each of the SAIS' members. Since 29 peasant communities and one service coop are members of the.SAIS, 58 of the 60 Delegates come from the communities. The Administrative-and Vigilance Councils are elected by and from the Delegatest Assembly. Consequently, the communities control the principal governing bodies of the SAIS. Formally the ex-workers of the ex-estates, who are now the workers of the SAIS, are organized into a service cooperative. However, the service coop does not, in fact, manage production; the governing bodies and staff of the SAIS manage the Production Units directly. A recent CENCIRA study of the SAIS Cahuide concluded that the service cooperative was essentially non- functional. The SAIS has two principal spheres of activity: (1) production on the lands adjudicated to the SAIS--the Production Units; (2) technical and organi- zational assistance to -the member peasant communities. The SAIS' operations in the former sphere fall under the jurisdiction of the Agriculture and Live- stock and Administrative Divisions; activities in the communities fall under the jurisdiction of the Development Division. (The Development Division is one of the principal innovations to be operationalized under the SAIS concept. The first Development Division was created in the SAIS Tilpac Amaru, which is considered Peru's 'model" SAIS.) 5. The adjudication value of assets received by the SAIS Cahuide under the LR is detailed below (in thousands of Peruvian soles): Lands 37,891 Constructions and Installations 20,727 Crops and Pastures 256 Sheep 46,971 Cattle 33,011 Other Livestock 787 Machinery, Equipment, Tools, Furniture, Inventories, etc. 5,689 Sub-total 145,332 Interest 92,085 Total (Agrarian Debt) 237,417 I have no data on the acquisition value of these assets. E. Present Economic Situation 1. Livestock numbers and production data for the SAIS Cahuide are pre- sented below: 16.9 Livestock Ntumbers* .Wool Production Cattle Sheep Animals Sheared Lbs. Wool Lbs./Animal 1969 6,482 103,043 n.d. n.d. n.d. 1970 6,906 113,841 103,453 596,952 6.42 1971 7,369 116,459 99,052 565,822 5.83 1972 7,641 121,750 97,964 659,047 6.60 1969 figures refer to the number of animals adjudi(-ated; data for 1970, 1971, and 1972 are year-end figures. n.d. No data. The principal sources of income for the SAIS are sales of the following commodities (data refer to the period 1 April 1972 - 31 March 1973): Sheep S/.17,212,795 Cattle 16,215,793 Wool (in storage) 14,300,000 Other Livestock 401,345 Bread 270,927 Potatoes and Other Agricultural Commodities 81,682 Trout 19,848 Artisan Goods 10,920 The principal activities of the Development Division are indicated in the following table: Projects of the Development Division, SAIS Cahuide, 1971-1973 Beneficiaries 1971-1972 1972-1973 Com-- Com- Departments munities Indivuduals munities Individuals Infrastructure Roads 1 7 Potable Water 4 3 Civil Engineering 1 5 Urban Planning 0 1 School-Construction 0 3 Agriculture and Livestock 15 650 22 1,189 Education Cooperative Education 17 1,394 '10* 633* Home Improvement 6 258 15 7,251 Health Dentistry 1,798 1,887 General Medicine 800 3,002 Organization of Peasant Enterprises Capacitaci6n 18 1,097 8 1,374 Enterprises Established 0 6 16.10 (Projects of the Development Divsion cont.) * The sociologist responsible for cooperative education courses resigned after 5 months' work in the second period. Source: SAIS "Cahuide," Divisi6n de Desarrollo, Comit6 de Educaci'n. Jatari (3) 1973. Data on the 6 Communal Cooperatives established in the SAIS are presented below: Funds Loaned Cooperative Commity Departments By the SAIS "Sto. Domingo de Cachi" Cachi -Consumption S/.80,000 -Transport -Livestock "Llamapsill6n" Ltda. Llamapsill6n -Consumption 30,000 -Livestock "Chuya" Ltda. Chuya -Consumption 0 -Marketing "Sta. Rosa de Sta.-Rosa de -Livestock 0 Huacramasana" Ltda., Huacramasana "Jose C. Mariitegui" Ltda. San Marcos de -Consumption 400,000 Rocchac and: -Transport San Isidro de -Marketing Acobamba . "Canchapalca" Ltda. Canchapalca -Consumption 50,000 -Livestock -Artisan production In 1972-73 sixteen persons were employed full-time by the Development Division of the SAIS. These included 4 engineers (agronomists, civil engi.- neers), 3 home improvement specialists, one doctor, one nurse, one sociologist, 3 livestock specialists (non-professionals), one topographer, one secretary, and one driver. The Division's budget for the year was S/.2,358,000. 2. The administrative structure of the SAIS is outlined in Section I.D.4. above. Interviews with-officials of the SAIS indicate that the administrative staff of the SAIS is somewhat smaller than was the staff of the Sociedad Gana- dera del Centro prior to the reform. No serious administrative problems were detected. The technical-administrative staff of the SAIS includes the following personnel: 16.11 Monthly Salary -Manager. S/.30,000 -Assistant Manager 20,000 -Accountant 15,000 -Economist 15,000 -Head of the Development Division 12,000 -Legal Advisor (part-time) 5,000 -Veterinarian 16,000 -Dentist 8,500 -Business Management Specialist 5,300 -Administrator of a Peasant Enterprise 8,000 -8 Administrators and Assistant Administrators of Production Units 8,000-23,000 Of these 18 positions the first three are occupied by individuals who worked in the estates prior to the reform; all other technical-administrative posi- tions are occupied by individuals who have been hired since the reform. A total of 66 employees (including the above mentioned 18) work in Cahuide; of these, 31 have been hired since the reform. (A few employees have been promoted within the enterprise from the ranks of laborers, but these are in the distinct minority.) Prior to the reform the principal livestock ranches of the Central High- lands had offices in Lima which were responsible for marketing meat and dairy products, exporting wool, and handling financial matters, accounting, etc. Since the reform the SAIS Tpac Amaru and Pachacutec have retained offices in Lima; the SAIS Cahuide and Ram6n Castilla use the Lima office facilities of these 2 SAIS. in September 1973 an important meeting of the 4 SAIS of the Central High- lands and the Central Pasco was held to discuss their integration into a higher- level institution--a "Central Cooperative" or "Central SAIS," This Central would have offices in Lima to carry out delivery and service functions for the affiliated reform enterprises and would establish and operate'.processing facilities for the enterprises' products--primarily wool and meat. (Integration of the SAIS and the Central Pasco is discussed in some detail in Section I.F. below.) Investment data for the post-reform period are presented in the following table: 1970 1971 1972 (.......... 000 soles . ...........) Equipment and tools 246 344 630 Livestock 597 223 269 Vehicles 1,548 1,101 823 Constructions and Installations 1,170 965 1,079 Total 3,562 2,633 2,801 16.12 4.-5. At the time of the reform the Sociedad Ganadera del Centro employed the following personnel in its estates: Employees 45 Specialists, laborers, etc. 192 Shepherds 266 Total 503 Since the reform the number and distribution of*personnel have remained roughly constant. The principal changes have resulted from the creation of the Development Division, which employs,13 individuals. The leveling of incomes between estates and neighboring peasant communi- ties, through profit re-distribution and stimulation of communal development, is one of the most often stated objectives of the SAIS. According to an offi- cia] study (IZAC-Mantaro No. 4) in 1970 the ratio of family incomes on the ex- estates of the Sociedad Ganadera del Centro to those in bordering communities was about two to one. (W/.17,937 compared to S/.9,741.) Of the 65 bordering communities those selected for membership in the SAIS were among the poorest, with annual family inc--mes averaging S/.5,500--less than one-third the average for estate residents. The SAIS attempts to reduce the income gap between ex-estates and peasant communities through two principal mechanisms: (1) distribution of SAIS 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. A table presented.at the end of this Section in- dicates that the SAIS distributes 97.7% of its year-end profits among the 29 affiliated communities. In the 1971-72 accounting year this amounted to just under two million soles; in 1972-73 profits were over four million soles. Of the 1972-73 profits the "average" community received S/.148,000, which im- plies a profit distribution of S/1,300 per family. In the same period each of the SAIS' workers (residents of the ex-estates and members of the service cooperative) received only S/.186. Profits of the SAIS are not delivered to individual community members but to the community as a unit, and must be used by the community for development-related projects. The uses to which the various communities put their profit shares are detailed in a table at the end of this Section. The SAIS' Development Division operates exclusively for the benefit of the affiliated communities. The principal activities of its various Departments were outlined in Section I.E.l. above. The budget of the Development Division for the period 1971-72 was S/.2,482,000; in 1972-73 the budget was S/.2,358,000 (expenditures of between S/.700 and S/.800 per family in the peasant communi- ties). The extent to which the reform has helped to level incomes within the Production Units is not known. It seems likely that leveling has occurred for two reasons: (1) since the reform wage levels have increased significantly; (2) most of the pre-reform technica2 staff has left the enterprise, and the new personnel is less highly paid. 16.13 Pay Rates,* Personnel of the Service Coop "Alta Sierra," 1973 Number in Average Average Category Montbly Pay Annual Pay Technicians 18 S/.12,850 5/.154,200 Employees 48 4,220 50,640 Laborers and Shepherds 490 2,181 26,172 Total 556 2,702 32,425 * Pay rates cited for technicians and employees are "sueldos normales." The total value of these salaries for technicians and employees in October 1973 was s/1433,849. Special payments in the amount of S/.39,000 are not included in these calculations, since the distribution of these between technicians and employees is not clear. The number of laborers and shep- herds is an estimate. The pay rate for this group which appears in the table applies to the Production Unit "Acopalca." The SAIS' accountant noted that this rate is approximately the same in the SAISt other Production Units. Source: Accounting documents, SAIS Cahuide. Income per Family on Haciendas Adjudicated to the SAIS Cahuide and 65 Neighboring Peasant Communities, 1970-71 Peasant Communities Haciendas Agriculture S/.3,468 S/.1,768 Livestock 947 1,170 Other Sources* 3,364 14,999 Total 7,779 17,937 Primal-ily wages and salaries. Source: ZAC-Mantaro No. 4. Membership, Income, and Profits; Service Cooperative and 29 Peasant Communities Affiliated with the SAIS "Cahuide" (1) (2) (3) (4.) (5) (6) Annual Participation Heads of Income in Ownership Profits Distributedb Use to Which 1971-72 Families per Familya and Profitsb 1971-72 1972-73 Profits Were Put (S/.) (%) (... 000 S/. ...) Peasant Communities 1 Los Angeles 156 4,760 3.71 50.3 160.8 Community building 2 Yanacancha 238 5,749 3.33 72.3 144.6 Bridge 3 Chongos Alto 306 4,358 4.23 89.0 183.3 Bank depositc 4 Llamampisillon 143 8,706 2.36 48.0 102.6 Communal cooperative 5 Palaco 53 4,395 4.47 94.5 194.0 Livestock 6 Palmayoc 122 5,784 3.12 67.7 135.1 Bank depositc 7 Chicche 157 8,966 2.26 47.2 98.0 School building 8 Sta. Magdalena 49 8,034 2.38 41.0 103.2 Bank depositc 9 Potaca 130 5,947 3.14 64.0 136.4 Sheep 10 Quishuar 99 8,320 3.17 56.3 137.11 Road 11 Sta. Rosa de Huacramasana 85 3,650 4.31 93.5 186.8 Sheep 12 Sto. Domingo de Cachi 94 14,448 1.53 28.3 66.5 Communal cooperative 13 Coricocha 104 6,628 2.53 54.9 109.8 Potable water 14 Huancallpi 143 4,271 4.72 92.3 204.5 Road 15 Vilca 186 4,755 3.56 67.2 154.3 Road 16 Chuya 87 6,096 3.05 63.2 132.4 Cooperative building 17 Huayllahuara 270 3,924 4.50 81.5 195.1 Road and others 18 Buenos Aires 30 5,562 2.87 52.2 124.3 d 19 Canchapalca 231 5,169 3.33 72.3 144.6 Communal coop and school 20 Punco 89 7,695 3.32 67.6 143.8 Construction materials 21 Huanuco 72 7,113 3.34 72.5 144.7 d 22 Racracalla 160 4,999 3.55 77.0 154.1 d 23 Talhuis 84 5,497 3.07 56.6 133.1 Cooperative building and bank deposite 24 Marainiyoc 65 7,444 2.44 36.9 105.6 School building 25 San Isidro de Acobamba 79 4,099 4.61 69.6 199.8 Communal cooperative 26 Carampa 110 3,963 4.17 90.5 181-0 Transportation (Membership, Income, and Profits cont.) (1) (2) (3) (4) (5) (6) Annual Participation Heads of Income in Ownership Profits Distributedb Use to Which 1971-72 Families per Familya and Profitsb 1971-72 1972-73 Profits Were Put (W/.) (Z) (... 000 S/. ...) Peasant Communities 27 Chaquicocha 92 5,023 4.25 82.1 184.2 d 28 Paccha 121 7,389 2.56 53.5 111.1 Medical post 29 Rocchac 109 1,1493 3.82 72.9 165.8 Communal cooperative Sub-total 3,664 5,491 97.70 1,919.0 4,287.0 Service Coop "Alta Sierra" 536 17,937 2.30 49.9 99.8 Merchandise Total 4,200 7,079 100.00 1,968.9 4,386.8 aData for 1969-70 bEach of the 30 members of the SAIS participates in the ownership and profits of the SAIS according to the schedule presented in Col. (3). The profits received by each community (used communally) for the SAISI bookkeeping years 1971-72 and 1972-73 appear in Cols. (4) and (5). The use to which these funds were put is noted under Col. (6). cSeveral communities are saving their funds in order to finance larger projects in the future. dThese 4 communities have not yet collected their profits from the SAIS. Sources: ZAC-Mantaro No. 4; "Situaci6n real de la SAIS Cahuide." 16.16 income and Profits per Family for the Service Coop and 29 Communities Affiliated with the SAIS Cahuide, 1973 Peasant Service Communities Cooperative ,Income per Family (notLincl. SAIS-prPfita)*. S/.6,864 S/.29,844 Profits Distributed by the SAIS, per Family, 1972-73 1,324 186 Estimates. Family income in the communities was S/.5,491 in 1970. This figure was increased 255 to compensate for inflation. In 1973 labores and shepherds earned an average of S/.26,172 from the SAIS. Their income from agriculture and livestock was S/:2,938 in 1970. This figure was in- creased by 25% to compensate for inflation,'bringing the total to S/.29,844. Sources: ZAC-Mantaro No. 4; "Situaci6n real de la SAIS Cahuide.t" F. Public Agencies, Higher-Level Cooperatives, and Other Institutions Dealing with the Group The SAIS Cahuide has a large, highly paid technical staff, and is largely independent of the Ministry's technical assistance programs. Short-term Bank financing is not required. Aside from its (incomplete) work in restructuring the peasant communities, SIAMOS has had relatively little contact with the population of the SAIS. An institution which is likely to take on great importance in the Central Highlands is the proposed Central SAIS, which would provide services for the four SAIS of Junln--Tipac Amaru, Cahuide, Ram6n Castilla, and Pachacutec-- and for the Central Pasco. In late September 1973 representatives of these 5 reform enterprises and government officials met to discuss the objectives, functions, and organization of the proposed Central. An official document coming out of this meeting (cited above) summarizes the principal objectives of integration -. follows: (1) Provision of social and economic plans for the affiliated enterprises (2) Minimization of delivery and marketing costs (3) Provision of technical assistance ad other necessary services to affili- ated enterprises (4) Creation of employment, by promoting diversification and intensification of production in the affiliated enterprises and by installing industrial plants (initially for cold meat storage and textile production) (5) Provision of technical and cooperative capacitaci6n for workers (6) Promotion of and assistance in the restructuring of peasant communities (7) Establishment of "compensation mechanisms" which tend to level incomes and equalize development rates within the area of influence The principal functions of the Central are to be the following: 16.17 (i.) Coordination of planning, and assistance to affiliated enterprises in formulating their plans (2) Purchase and provision of inputs to members (3) Marketing of commodities produced by members (4) Installation and operation of processing plants (5) Installation and operation of storage facilities for joint use (6) Provision of financial services for members (7) Promotion of and assistance in the formation of "empresas sociales" (8) Promotion of peasant participation in management and profits (9) Coordination of capacitaci6n programs and centralization of capacitaci6n activities where advisable (10) Centralization of technical assistance services (11) Establishment of uniform accounting, administration, and supervision and control systems, and centralization of these where advisable (12) Promotion and supervision of infrastructural investments (13) Coordination of the activities of the affiliated enterprises and repre- sentation of members before national and international institutions (14) The Central will act as an arbitrator between affiliated enterprises and between members and non-members in cases of conflict The Delegates' Assembly is to be made up of 6 representatives of each affiliated reform enterprise. At least one of the 6 representatives must be a technician. The original memoers of the Central will be the four SAIS of Jun'n and the Central Pasco; other SAIS and Central Coops may join the Central SAIS when they are formed. The Administrative and Vigilance Councils are to be elected by and from the Delegates' Assembly, and will include one represen- tative of each affiliated enterprise. The managers of affiliated enterprises will form a part of the Delegates' Assembly, with voice but without vote (unless elected as Delegates). No formal dates have been published, but the Central should be organized and functioning some time during 1974. II, OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. The governing structure (Assembly, Councils, Committees) of the SAIS are controlled by the peasant communities. Of the 60 seats in the Delegates' Assembly, 58 are occupied by comuneros. All positions on the Administrative and Vigilance Councils are occupied by comunerot. The peasant communities' control over the Assembly and Councils has had several important, and often curious, results: (1) Delegates from the member peasant communities (who do not work in the SAIS) control the enterprise's governing institutions. (2) The SAIS' workers (members of the service cooperative) are not adequately represented in the governing institutions of the SAIS, and have practically no influence over SAIS policies. (3) The main objectives of the affiliated communities are to raise SAIS profits and to improve the services provided by the Development Division. These objectives come into direct conflict with the economic interests of the workers (members of the service coop), who wish to raise wages and salaries and to increase the number of huaccha sheep. (4) The SAISI workers find themselves allied against the technical staff of the SAIS and the representatives of the peasant communities. (5) Recently, the workers of the SAIS formed a union; prior to the reform no union existed. 16. 18 I have very little information of the relative importance of peasant participation in production planning, but what few data I have indicate that there are relatively few conflicts between comunero representatives and SAIS technicians, and that the recommendations of the t6cnicos are generally accepted by the peasant representatives. 2. The division of labor among governing institutions of the SAIS'and between these and the technical staff is not so much along technical lines (special committees for credit, management, sales, etc.) as between the essen- tially technical and social areas. The technicians specialize in solving technical problems related to profit maximization; the Assembly and Councils concern themselves primarily with social aspects of the .SAIS' plans and opera- tions--review, approval, and amendment of proposals from the technical staff, control and discipline of personnel, public relations, social events, member- ship questions, etc. - During the period 1 April 1972 - 31 March 1973 the Delegates' Assembly held 2 "ordinary" and 3 "extraordinary" sessions. In the same period the Administrative Council held 11 ordinary and 5 extraordinary sessions. (I have no data on the frequency of Vigilance Council meetings.) In the SAIS'.Annual Report ("Memoria anual") 12 pages are dedicated to a listing of the Assembly's and Administrative Council's principal decisions and activities. A very rapid content analysis indicates that roughly one quarter of the Assembly's and Council's,decisions and activities involved economic, financial, administrative, and technical aspects of SAIS-operations. Half treated questions of pay, employment, social problems and programs, public relations, and organizational aspects of the SAIS. A quarter dealt specifically with the Development Division and matters directly related to member peasant communities, Activities of" the Vigilance Council are summarized on 2 pages. About one- third of the Council's actions involved inspection and control of work in progress, notably volunteer work of peasant communities. Labor problems (an abusive foreman), petty embezzlement, and border conflicts with non-affiliated peasant communities were also dealt with. 3. Technicians and SAIS officials report to Delegates in periodic Assembly meetings. However, since only 2 individuals represent each community and the service cooperative, only 60 Delegates are present at these Assemblies out of a total member population of 4,200 (1.4% representation). A frequent complaint of members of the service cooperative and affiliated peasant com- munities is that they are poorly informed of decisions made by SAIS officials. The SAIS Cahuide has no periodic bulletin or information sheet. Once each year a fat volume, entitled "Jatari," is produced by the Development Division for distribution among the population, but this document has two important disadvantages: (1) It appears only once each year, and thus cannot keep interested individuals up to date:on SAIS operations and.activities. (2) This document is the product not of peasant initiative and work but of the technical staff of the Development Division. In general, the language employed is far above the level appropriate for the supposed readership. Much of the document is filled with articles dealing with abstract subjects such as "development and underdevelopment in peasant communities," "the destiny of the peasant woman in her community," and "the concept of social property." 16. 19 Little of the content deals with concrete problems and activities of the SAIS and its affiliated institutions, expressed in terns easily understood by the general population of the SAIS. The SAIS' Annual Report is detailed, compre- hensive, and more readable, but does not fill the need for current information. B. Operations and Peasant Participation 9. Interviewees did not complain of the incompetence or dishonesty of SAIS officials or technicians, but did note that the previous manager was antagonistic to member participation in decision-making)and that his attitude had frustrated the operation of the Development Division and its capacitaci6n programs. The current manager was previously an administrator of a Production Unit and is more sympathetic to the need for peasant participation. SAIS officials stated that workers and peasants were content,with this man: "La gente anda bien con el gerente. Ya le conoce." 10.-l. In most of the lands controlled by the SAIS cropping is not possible; private plots do not pose important problems for management or provide an important source of income for workers. Prior to the reform the number of huacchas grazing on the lands of the Sociedad Ganadera del Centro had been strictly controlled and gradually reduced. At mid-1973 the huacchas numbered 3,600 sheep and 1,900 cattle, in comparison to the SAIS' 122,000 sheep and 7,600 cattle. The total huaccha population, expressed in sheep equivalent units, represented 10M of the total livestock population of the SAIS. Ren: is not charged for pasturage, but huaccha numbers are strictly limited. No one may own more than 60 sheep equivalent units of livestock (the cu,7-,t level is about 35 per worker), and workers who own fewer than 60 receive cash bonuses. No one is permitted to purchase livestock or graze animals owned by non-members on the lands of the SAIS. Only the workers of the SAIS (members of the service cooperative) are allowed to graze livestock on lands of the SAIS; community members have no such rigts. Thus the representatives of the peasant communities (who control the governing institutions of the SAIS) ally with the SAIS' technicians in demanding a reduction in huaccha numbers, arguing that the huacchas undermine the SAIS' profitability. 13. The SAIS' Development Division organizes capacitaci6n courses for members of the service cooperative and affiliated peasant communities. See again the data presented in Section I.E.1. above. D. Income Distribution: See Section I.E.5. above. F. Continuing Role of the Union It is generally assumed that labor unions have little purpose in reform enterprises, since the governing bodies of these enterprises are controlled by the vnrkers themselves. In the SAIS, however, this is not the case. A CENCIRL publication on the SAIS Cahuide noted that the SAIS has not generated adequate mechanisms for worker participation in decison-making, and that few substautial benefits have accrued to the ex-workerE of the ex-estates. Workers often feel that "if before we had a patr'n, now we have thousands!" They resent 16.20 the lack of worker control and the fact that profits generated by their work on the Production Units are paid to peasant communities whose members do not participate in the production process. Prior to the reform the workers of the Sociedad Ganadera del Centro were not unionized. Since the reform, however, they have formed a union. The principal demands of the union are for higher wages and: for a relaxation of control over huaccha grazing. Letters in the union bulletin include the fol- lowing statements: When I began work for the former owner in 1957, I had a,monthly wage of 150 soles, but I had the advantages of my huacchas--sheep, cattle, horses, donkeys. The wage was very small but being able to rear huacchas made up a little for it. Nowadays with the SAIS Cahuide, we hardly have any privileges because, to start with, they are reducing The number of our huacdhas and they are kept separately. Each herder is allowed only 60 sheep of his own, and our wages are nothing. We want to fight to get an increase in wages, and also in our huacchas. (Cited b- JUan MHartin6z-Alier in "Peru: Letters from Shepherds' Union Bulle- tin," Jo .'1 o- ?easant Studies 1,1 [October 1973].) 17.1 COMMUNAL COOPERATIVE QUEHUAR Dept. of Cuzco (highlands) Adjudication: 1973 280 members (increasing) I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting The peasant community Quehuar is located just outside of the provincial capital Sicuani along the main road leading north to Cuzco. The lands woiked by the community are flat, fertile, and irrigated. Growing conditions are as good here as anywhere in the region. B. Socio-cultural Setting 1. The community Quehuar has 700 members; however, only about 450 live in the community itself--the others having migrated and settled.permanently in other areas. The population of the community is not entirely stable; many members leave the community temporarily each year to work elsewhere. As one member noted, "No somos peones firmes; tenemos nuestros negocios, pues." The man in question had traveled to La Convenci6n Valley several times to purchase coffee, which he later sold in the highlands. According to him other com- munity members traded in wool and other commodities. 2. All members of the community spoke Quechua among themselves. Only a few spoke Spanish, and interviews had to be conducted through a translator-- the Ministry Sectorista with whom I traveled to the community, and who was in charge of providing technical assistance to the community. Of the 27 cooperatives and SAIS I visited in Peru, this was the only one in which members were overtly suspicious and intimidating.: On several occa- sions members demanded to know who sent me and wanted to see "my documents," Three individuals asked me if I was "a spy" or "a CIA." One old man--the founder of the community's consumer cooperative and first "agrarian commit- tee"--stated abruptly in the middle of an interview that he distrusted-all Americans because "the Americans are always engaged in war and are always on the wrong side. Why do you defend Israel?" he asked,,"And why do you destroy Vietnam? Why have you killed Chile?" I was walking through a field in which about 150 men and women were seed- ing potatoes when a women shouted out, in Quechua, "The gringo should have sex with every woman in the field!" The coop's president turned to me and asked, "You couldn't could you?" Everyone laughed, including me. (Que se hace, pues.") Peasant communities have waged a long campaign against the hacienda system and outsiders in general. As one man stated, "We have been exploited in ways you cannot imagine. Night and day we have been at the service of the hacen- dados. We have fought back, but we have also been beated and sent to jail. Many of us have died. For this we give thanks to the present government and 17.2 its Agrarian Reform, but we continue to be on the guard." The Sectorista men- tioned that in the late 1960s the community shut itself off completely, and did not permit any outsiders on its lands. A Ministry official in Sicuani, who had recently come from the coast, stated that it was "impbssible to work with these people." The Sectorista, who was born in the region and spoke Quechua fluently, and who apparently had the trust and respect of community members, stated that it would be impossible for anyone who did not speak Quechua and did not understand the cultural and social background'of the peo- ple to work effectively with the community. C. Pre-reform Estate Organization and Administration 1. Prior to 1969 the community rented a small privately owned neighbor- ing estate, paying half the crop in rent. No hacienda employees worked on the estate; the community managed all productive activities. The community itself has no communal pastures or cropland. All community- owned lands have been subdivided and are used by individual members. 2. Administration of the estate was handled by the community's.tradi- tional governing bodies. Individual members were assigned the tasks of over- seeing and participating in production operations on a temporary basis. At the end of each crop year proceeds-were divided among members according to the number of days each worked on the ostate, a part being retained for community projects. 3. All community members earned the same wage. 5.-6. In the 1960s, encouraged by the 1964-reform law,,the community sought possession of the estate it was renting. Agrarian Reform officials did not intervene in this matter. In 1969 a group of community members closed a transaction with the estate's owner for the sale of the estate to them. 7. In 1967 the SIPA Office in Sicuani organized a course on cooperatives which was attended by a representative of the community. In February 1968 he and 32 other community members'organized a consumer cooperative. The original capital of this coop was S/.2,800. The coop's founder worked in the coop for 6 months without pay; at the end of this period he began earning 3% of the value of sales. The coop continues to function and appears to be quite suc- cessful. The coop's capital has reached S/.60,000. The person in charge of operating the store is now paid 4f% of the value of sales. The coop handles all types of foodstuffs, soft drinks, beer, and cheap manufactured goods. Later in 1968 the same 33 community members who.organized the consumer coop formed a "Comite Agraio" which negotiated the purchase of the 14 has. estate which was rented to the community. Beach of these 33 men contributed a few thousand soles, and the Committee paid the owner S/.85,000 in cash. The Committee took possession of the land on June 14, 1969--just ten days before the pronouncement of the government's new LR law. Only a small part of Quehuar's members participated in the Agrari-n Committee which was set up to purchase and operate the estate, and the Committee managed its own affairs in- dependently of the community. Administration and Vigilance Councils were elected, and the Committee took on the form of a production cooperative. 17.3 In contrast to the performance of the consumer cooperative, the produc- tion cooperative has been a failure in the eyes of its founders. Several fac- tors have produced this failure: (1) The announcement of the new LR law just ten days after the formation of the coop demoralized its members. Why had they paid cash for land which the government would have given them [sic] under the new law? (2) Coop members often did not show up for work. (3) The coop had no professional manager, and problems of authority developed. (4) The members invested all their savings in purchasing the land and were left with insufficient operating capital. (5) The coop did not have a tractor or ma- chinery. (6) The Bank would not loan the coop money for the purchase of equipment. (7Y Equipment provided by the Ministry and credit supplied by the Bank came late. (8) A few community members not taking part in the coop (the "illegitimate sons of the hacendados") spread the rumor that the cooperative would lead to the enslavement of all community members and the confiscation of their property. D. The LR Process Initiated by the 1969 Law. l.-3. The community demanded the expropriation of the estates finally received under the 1969 law long before they were affected by the reform. The owners abandoned neighboring estates and some lands lay uncultivated for three years. The first year the community planted lands received under the 1969 law was 1973. At the time of my visit members and.coop officials complained bitterly that the Ministry and the Bank were not providing services needed to make the coop a success. An official stated that the tractor, seed, and fertilizer were all late, and that the coop would need luck to get its crop out before the frost. 4. Since the adjudication of lands to the community under the new LR law community members have decided to fuse the old coop (in which only 33 members participated) and the new coop, and operate them as one single communal enter- prise. This new enterprise will not have administrative bodies which are dis- tinct from those of the community (as was the case in the old coop). The new coop will be managed directly by the Councils and Assembly of the peasant com- munity. (The community has been "restructured" by SINAMOS, in the sense that its traditional governing bodies have been replaced by Administrative and Vigilance Councils and Special Committees.) 5. The estate purchased in 1969 cost S/.85,000. I have no data on the appraisal of estates adjudicated to the community under the 1969 law. E. Present Economic Situation 1. I have no data on the area of crops or pastures. The principal crop grown is potatoes. The first crop was being seeded at the time of my visit (mid-November 1973). Livestock owned by individual community members were pasturing on lands adjudicated to the community under the 1969 reform. 2.-3. The community manages the coop directly. The president of the community performs the principal managerial activities. The Ministry provides continual technical assistance and organizes (inadequately, in the view of 17.14 community officials) the'supply of credit, seed, and fertilizer. Wo major in- vestments have been made since the formation of the community, in part for lack of credit. A community official stated vehemently that the original coop had applied for a loan to purchase a tractor 4 years ago, and that the new coop had also requested funds for a tractor, but the Bank had "cheated" the community and denied them credit. Community officials are scathing in their criticism .of the Bank and the tardiness of credit necessary for seeding. 4.-5. All labor employed by the coop comes from the membership. To date, cash wages have not been paid. The original, smaller coop kept account of la- bor provided by its members and paid wages in cash and commodities at the end of the crop year. The new coop plans to operate its first year under the same system. If sufficient credit is available it plaas to pay cash wages next year. The wages which the coop promises to pay workers at year-end are S/.30 for men and s/.15 for women. These wages apply to all members. No employees (office personnel, jefes, caporales, etc.) are employed by the coop. As one member noted, "Ac9L todos nosotros somos caporales; no necesitamos empleados." On the day I was in the.coop about 150 men and women were seeding potatoes. Work progressed rapidly, and workers seemed to be competing with one another to see who could set the pace. No loafing was observed. When a small group of men gathered near me during an interview with a community official, a man soon came up and yelled, "Que trabajen y no hablen con el gringo!" One of the group clapped and. whistled and everyone went back to work, including the interviewee! This incident occurred at just 8 minutes before noon. At noon sharp the work- ers began leaving the field for lunch. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group As stated at several points above, community officials are harshly criti- cal of the Ministry and.the Bank. The-ex-president of the coop noted, "lo que se necesita aca' es buena gente en el Ministerio. No son buenos ni cumplidos." At the time of my visit, coop officials were annoyed because a Ministry offi- cial had promised them the use of a pickup truck for hauling seed potatoes, but had not delivered the truck. As-a result, coop members had to haul the pota- toes on their backs. On several occasions people in the field mentioned this fact to me, and my interpreter (a Ministry Sectorista) said that there was a good deal of muttering among the workers with regard to the forgetfulness and bad faith on the part of the Ministry official who had promised the truck. Several statements reflect the members' view of the Ministry and the problems created by their inadequate services: El Ministerio de Agricultura no cumple con sus fun- ciones. No es una cosa legal. Por falta del tractor, semilla, y abono se ha atrasado el sembrio. Todo esta. muy atrasado. Toda la gente.ya tiene su chacra sembrada. La camioneta ha debido de estar aca'; el Ingeniero se ha olvidado! 17.5 Con este atraso la cosecha est6 en peligro. Si la cosecha se malogra el Banco nos joda, y por falta del Ministerio! The Bank is criticized even more severely than the Ministry, both for denying the coop financing for a tractor and machinery and for delaying loans of operating capital. Eace 5 anos nos engat6 con la miquina. No nos di6; y ahora ha subido el precio, Necesitamos una maquina para trabajax mejor, y no estar como burritos aca. Deben cambiar los funcionarios en el Banco. E1 Banco es el problema numero uno que tenemos. Le joda a la cooperativa porque el ano pastdo la helada malogr6 la cosecha. The work of SINAMOS is rejected: "SINAMOS le hemos rechazado, Es una farsa lo que hace." When questioned about SINAMOS' work in restructuring the community, a wise old community leader stated, "Todo se ha hecho pero no se cumple. Debemos cumplir? Si la ley del gobierno cumple, nosotros tambien cumplimos." Despite the kejection of SINAMOS, 2 coop officials interviewed stated that capacitaci6n courses were needed to convince more community members to join the coop and to teach cooperative principles to the members. When questioned about the principal problems and needs of the coop, an official stated that inadequate public support was the main "problem," and that the coop's principal "needs" were the following: -A tractor -Livestock (both cattle and sheep) -Veterinary services -Analysis of soils -Refcrestation -A truck for transporting inputs and products -Housing -A saw mill II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. In this cooperative there is very active member participation in the planning process. Each Wednesday during periods of cooperative activity (not during the off-season) the community's 40 officials meet for the entire day to discuss the plans, activities, and problems of the community and its coop- eratives (both the agrarian and the consumption coops). According to members interviewed, nearly all officials attend the meetings, and debates are lively. The coop employs no technical personnel. The Ministry's technical assistance is welcomed, but the Ministry does not play a leading role in determining the coop's plans. In addition to the weekly meetings of community officials, monthly Assembly meetings are held. 17.6 2.-4. All major questions are dealt with in the weekly meetings of com- munity officials and the monthly Assembly meetings. Thus all major decisions are made with active member participation. Decisions made in these meetings are carried out by appointed community officials and Committees, but community members keep close watch over-these, and often question or challenge the per- formance of community authorities. No rigid division of labor or chain of com- mand seems to exist. Community officials present detailed reports on all ac- tivities before the weekly and monthly meetings. Members demand to be kept in- formed! B. Operations and Peasant Participation 1. The community's president is the operational boss. It is his re,pon- sibility to see that cultivation,-seeding, harvesting, marketing, and all other tasks of the cooperative are -carried out correctly. The community's treasurer keeps the coop's books, with the assistance of an accountant in Sicuani. The president may delegate responsibility (particularly to other community offi- cials), but such responsibility is usually delegated on a temporary basis. In field operations members seem to work without compulsion. No rigid chain of command exists. As a member noted "Todos somos caporales." 3. Informal sanctions are used to control work time and quality. During my visit, workers were obviously aware of the time, several asking me for the hour, but everyone worked up until precisely noon, and then everyone left the field together. Workers seemed-to be competing to see who could set the work pace. No loafing was-observed. 4. All workers earn the same wage rate. 5. Pay is deferred until the end of the crop year. Workers are to re- ceive pay in cash and commodities worth S/.30 for men and S/.15 for women for each day worked during the year. 6. Year-end profits are to be distributed. Strong, informal sanctions also motivate workers. Formal sanctions have not yet been discussed by the coop. 7. To date the coop has not had to deal with the issue of excess labor. Work is given to all members who present themselves for work, but members do not expect to work full time for the coop, They continue their traditional pattern of working intensely during the planting and harvest seasons, and rest- ing and/or occupying themselves in other activities--often outside the region-- the rest of the year. (See Section I.B. above.) 3.-9. The community's leaders are elected, and can be removed at any time from their positions. Two months before my visit (November 1973) the president of the Administrative Council had been removed from office for the following reasons: (1) He was participating in the local Liga Agraria--peasant organization recently organized by the government--without the knowledge of the community's membership. A member noted that, "We don't kno* what the Liga Agraria is, or what it means for us, and we doun't want our president sneaking off to meetings without informing us." (2) He purchased over 3 has. of land outside the community without giving up the land he had in the community. - 17.7 Several members told me that the cooperative did not have a manager be- cause the members did not feel their enterprise could support the salary de- manded by a competent professional. However, an old peasant leader stated to me that another reason was also important: "If we were to have a manager from outside the community, he would soon become a patr6n, and this we do not want." A member of the community was appointed "manager" but he declined the honor. 12. Member interest in cooperative activities was greater in this case than in any other visited. (The communal cooperative Uni6n de Soratira and the CAP Caldera ranked second and third.) Community members and officials stated that Assembly meetings were well attended and that every imaginable subject was discussed. 13. Little technical or cooperative capacitaci6n has occurred here de- spitethe fact that SITAMOS has gone through the formal procedures of "restruc- turing" the comunity. C. Accounting and Information Systems Accounting is handled by the community's treasurer and by a professional accountant in Sicuani. Coop officials stated that they had just changed ac- countants, because the accountant they had last year (for the original, smaller coop) had not produced adequate balance sheets. D. Income Distribution 1. All members earn the same wage (S/.30 for men, S/.15 for women) re- gardless of the jobs they perform. Wages are paid at the end of the year in cash and commodities. The coop plans to pay wages on a weekly or bi-weekly basis next year. 2. To date the coop has not earned a profit, although coop officials state that funds will be distributed when profits are produced. 4. Members derive the bulk of their income from non-cooperative activi- ties. E. E=loyment and Membership 1. All members of the coop are also members of the community, but not all community members have joined the coop. Interviewees gave two reasons for this fact: (1) Some community members oppose the coop out of ignorance--"los que no sa^ben." (2) Some community members--large landholders, blacksmiths, merchants, large cattle raisers--are not interested in joining the coop be- cause they have economic interests which would prevent them from participating in cooperative work or which come into conflict with coop interests. Of the community members who reside in the community (about 400-500), less than 300 were members of 'he coop at the time of my visit, although coop officials ex- pressed the view that more would join in the near future. 2. Non-members are not employed by the coop. 18.1 CAP TUPAC AiARU II -- ANTA PAMPA Dept. of Cuzco (highlands) Intervention: 1969 Adjudication: June 1971 (followed by several annexations) 2,800 members (increasing) 37,351 has. (increasing) I. HISTORICAL AND NATURAL SETTING AND ECONOMIC,ASPECTS 0 THE LR PROCESS A. Natural Setting The cooperative T6pac Amiaru II -- the largest in Cuzco -- is located north of Cuzco on the fertile "Pampa .de Anta" near the provincial town Izcuchaca. Natural conditions are ideal -for.cattle raising, and potatoes, wheat, oats, corn, quinua, barley, and certain types cf beans can be grown in the area. B. Socio-economic Setting 1-2. The coop's lands come from estates expropriated under the 1969 LR law, but the majority of the.coop's members live in neighboring peasant communities. Neither the Ministry, SINAMOS, nor the cooperative have accurate membership or demographic data for the cooperative or the region. According to Ministry figures, 1,309 estate workers were eligible for coop membership as of September 1973. In addition, a large number of community residents who did not often work in the estates prior to the reform have been granted membership in the cooperative, bringing the total membership to 2,800. (This figure was cited by both the coop's vice president and by the Ministry official directly in charge of overseeing the coop's activities.) Many of the residents of the ex-estates retain close ties with the communities, in cases cultivating plots of community land. C. Pre-reform Estate Organization andl dministration 1-3. Land has been adjudicated to the cooperative in several stages: Funber of Properties Total Area Number of Workers First Adjudicaticn (June 1971) 65 21,270 has. 1,166 Second 9 11,467 26 Third 4. 590. 7 Fourth 8 715. 37 Fifth (August 1973) 19 .3,310 73 Total 105 37,351 1,309 The fifth adjudication is not the last; in the future more lands are to be annexed by the cooperative. The bulk of all lands adjudicated to the coop came from haciendas, but not all properties affected by the LR process were large. The two largest estates turned over to the coop are of 10,666 and 2,747 has. (These two ex- estates now occupy 36 percent of the coop's total area.) Many properties of 18.2 less than 50 has. have been affected. The majority of the remaining pro- perties are of less than 150 has. In the fifth stage a plot of 9 has. was adjudicated to the coop. The majority of the estates in the area employed a few resident laborers on a full time basis for tending their livestock. Labor for cropping was provided by part-time laborers living on the estates and in neighboring communities. All hacienda residents grazed their own livestock on hacienda pastures and tilled small.plots of hacienda land. In some cases community residents were also granted pasturage rights. Sheep owners generally paid one tenth of their annual production to the landlord as pastaje. Cattle owners paid S/.20-30 per month. Prior to the reform,laborers in the zone typically earned S/.5-10 per day. In some cases no wages were paid at all. Educational and medical facilities were poorer here than in most other parts of the country. Hous- ing was provided entirely by the estate residents themselves. The proximity of the Pampa de Anta to Cuzco meant that the area was favored by an.ample market for its principal products. 4-5. According to technicians in the Ministry, technology was primitive in most estates on the Pampa, despite favorable natural and market conditions. A principal cause of this was the peasant unrest of recent years, which discouraged land-owners from investing in their rural properties. Estates frequently changed hands, and in some cases were sold to peasant groups. Private owners "mined agriculture" and invested their proceeds outside the region. 6. Few estates were directly affected by the 1964 law, but there is no doubt that the ineffectual legislation spurred peasant demands for land distribution and better working conditions, and prolonged the decapitaliza- tion of agriculture. For both these reasons the non-implementation of the 1964 law has made implementation of the 1969 law more difficult -- peasants demanded land distribution, not cooperativization, and had become convinced that the government bureaucracy was corrupt and unresponsive to their.needs; by 1969 the estates were seriously undercapitalized, jeopardizing cropping activities on the newly formed coop. D. The LR Process Initiated by the 1969 Law 1. Under the new law, the first LR actions in Cuzco were taken in the Pampa de Anta because of the region's economic and political importance. However, peasant participation in the process was minimal. 2. The government fozmed a Special Administrative Committee, which manag- ed the estates from the time of their intervention (beginning late in 1969) until January 1971, when a worker-controlled Provisional Administration Commission was formed. 3. Socio-economic dislocations seem to be more serious in this case than in any other visited, in large part due to the inability of new manage- ment bodies to manage the coop's affairs effectively. Production (especially 18.3 crop production) has suffered markedly, loans have not been paid off, wages have hot been Daid, the coon's leaders have misused resources and abused their authority, and the general membership is ready and waiting for the coop to disintegrate. Adequate accounts have not been kept, and the membership is nearly as ignorant of the coop's many plans and problems as are outside observers. The only thing that seems totally clear is that no one -- neither public officials nor the members -- thinks the coop can survive for long as it is presently organized. This fact is very important both for the future of the coop and other reform enterprises in the Pampa and for the course of reform activities and their success in other parts of.the country, since the failure of the Tupac Amaru II has been as widely publicized as the government had hoped its success would be. Peasants who know of this failure are now much more skeptical of cooperative institutions than they otherwise might be. The Tupac Amaru II is a gigantic "negative showcase" for all the bad things that can result from cooperativization. As a Ministry official in the Zone remarked "Ya tienen miedo en todas partes de lo que puede pasar con la cooperativa, porque han visto 10 que pas6 aca." 4. The CAP Tupac Amaru II is a large production unit which owns the lands of over 100 properties which were individually owned prior to the reform. It is often said that both ex-estates and peasant communities have been fused in the formation of the cooperative. This is not true. What has been done is that members of numerous peasant communities in the region (47 according to the coop's vice president) have been allowed to join.the coop as individuals.' Thus, all members of the coop are individual persons; no communities or cooperatives are considered members -- as is the case of the SAIS of Junin and Pasco and a few cooperatives in Puno (See Section II.B.4. of the Tenth and Twelfth Zonal Reports.) E. Present Economic Situation 1. The seeded area and total crop production have fluctuated widely over the last few years, due both to administrative inadequacies and volatile weather conditions. In the 1972-73 crop year the seeded area was about 950 has. In the 1973-74 crop year the following crops are being cultivated: Potatoes 588 has. Wheat 330 Oats 150 Quinua 162 Beans 142 Barley 50 Total 1,1422 The coop owns about 2,200 head of cattle. Unfortuantely I do not have data on Pre-reform cropping and livestock numbers. Coop members cultivate about 1,400 has. and own 6,000-10,000 head of cattle. Pasturage is nearly uncontrolled, and no precise figures are available on member-owned livestock. The coop's accounting is a shambles, and neither the ILnistry nor the coop could provide me with data on net returns oi profits for the two main Division: within the coop -- Agriculture and Livestock. However, all intervJewees agreec. 18.4 that the Livestock Division had a better performance record than did the Agricultural Division. A Ministry official explained this fact in the follow- ing way: La ganaderia es mas facil de capitalizar. Agricultura es m9s susceptible al factor clima...Tambien en la ganaderia se emplea poca gente y firmes. En la agricultura-se necesita bastante mano de obra pero solo en las epocas de sembrio y cosecha.,...No es que la gente rechaza la palana, sino que tiene sus propias- chacras. En la fecha 6ptima quieren trabajar en su propia chacra, y esto pone la cooperativa en desvantaja. 2. Formally, administrative decisions are made and implemented through the channels outlined below: General Assemfbly (the membership)l TElegates' Assepbly j (10% of members) _71 [--riechnical Advisors Vigilance Administrative Council Council egal Advisors gricultural Livestock Administrative -Education ivision Division 'Division -Employment -Production -Development a -Services a -Administration 13 Departments 2 Departmentsl 9 Production Production nits n its In practice, however, Ministry officials (technical advisors) the coop's tech- nical personnel,and a few coop officials make most decisions and perform most administrative tasks. The General Assembly never meets in formal session, and communication between the Delegates and the general'membership seems inadequate. The Delegates' Assembly and the coop's Councils meet only sporadically. The Vigilance Council was removed from office shortly before my visit (November 1973) "por ser falt6n y desinteresado." For two months prior to its dismissal, the Vigilance Council had not met at all. The coop's vice president noted that the Administrative Council should meet on a weekly basis but that in fact it met only once a month or so. The coop's 5 Production Departments have ceased to function entirely; the Production Unit Heads nov receive orders from,and coordinate actions directly with)the Division Chiefs and with the coop's technical personnel, the president, and technical advisors from the Ministry. 18.5 The total number of employees on the coop's payroll at the time of my visit, was 47, broken down into the foll owing categories: General Administration: 12 non-members (including 3 accountants and a lawyer) 8 members (including a social assistant) Agricultural Division and Production Units: 4 non-members (including 2 agricultural advisors). 10 members (including 1 Division Chief and 9,Production Unit Heads) Livestock Division and Production Units: 4 non-members (livestock advisors) 9 members(including 1 Division Chief and 5 Production Unit Heads) The lawyer, accountants, social assistant, and technical advisors,all have technical education. All but one of the agricultural advisors and 3 of the livestock advisors are college graduates. The,Division Chiefs and Unit Heads are peasant members who have not benefited from technical education. For several months prior to my visit the coop was without the services of a professional manager. At the time of adjudication a manager was contracted -- coop officials state that they were pressured. into hiring a manager by the Ministry, anddidso unwillingly. After the poor economic results of 1971 and 1972 the government appointed a special Reorganization Commission. At this time the worker representatives of the Commission demanded the dismissal of the manager. According to Ministry officials and the coop's vice-president, SINAHOS officials recommended the dismissal of the manager. Administration was poor prior to the dismissal of the manager and has not improved since. The Ministry and coop officials interviewed agreed (somewhat less than enthusiastically) that.the coop ne.eded a manager, and that one would soon be contracted, but noted that his job would not be an easy one for several reasons: (1) SINAMOS has taught the members "their rights, but not their duties." Both the coop's vice-president and local Ministry officials felt that SINAMOS' capacitacion had had a negative impact on the cooperativi- zation process by telling workers that they had the right and the ability to manage their own coop without the intervention of technicians. The following statements reflect this point: El gobierno le di6 el concepto de la autogesti6n. Ahora ellos se ven todopoderosos y todocapaces, enclusive frente a los t6cnicos. ...La capacitaci6n de ONDECOOP y SINAMOS le ha sacado el campesino de su sitio. Le ha dado muchas alas, y abora ellos queren adminis- trar el fundo. Han estorbado el manejo de la empresa. (a Ministry official Le dijo a la gente sus derechos y no sus deberes... Esta gente no es capaz de manejar una empresa tan grande e importante, y tampoco sera dentro de 10 at0s. Ellos saben al fondo esta verdad, pero no lo quieren admitir publicamente, en parte porque los promotores de ONDECOOP y SINAMOS les han dicho que si, son capa7es de manejar su propia empresa. (a Ministry official) 18.6 Los promotores vinieron antes y dijeron que "Ya van a estar traquilos no va a haber part6n. Si no quieren trabajar, no tienen que hacerlo." Ahora no nos quieren obedecer. Nos meten ajo; no quieren trabajar, (the vice president) (2) The coop is so very large and complex that-no single technician can nerform all necessary managerial tasks in addition to keeping an eye on technical aspects of work performance. Communication has -been a very severe problem within the coop. A student working in the area reported that often Division Chiefs had no idea what work their Production Units were doing, and that Production Unit Heads often were ignorant of recent Assembly or Council decisions. Technical advisors were faulted for spending too much time in their offices and in their pickup trucks, and too little time working with coop officials and workers in the field.- The coop's vice president stressed the communication problem in the follow- ing statement: Nosotros los mismos Cons"ejeros fallamos en el manejo:de una empresa tan grande." Perdemos contacto con las bases. Nos falta ir al campo. Queremos salir al campo pero no podemos. Nosotros ya no conocemos el campo y los otros no conocen la administraci6n. Ministry and coop officials agreed that for any manager to have success in his job, a more major administrative re-organization would- 1ave to be implemented. (3) The coop's members would not be satisfied with the performance of any manager who was not willing and able to work,actively with them, "como un amigo mi's". An older man, no matter how well trained and experienced, is not likely to be accepted by the membership, because he would not be able to keep up the hectic pace required to handle both the office and field aspects of management in -such a large enterprise. Moreover, 'ferolder technicians would be willing and able to tackle the complex social aspects of managing the coop. Not only are members -politicized and quick to criticize the performance of any technician, they often expect the manager to act as arbiter in local disputes, Godfather to members children, and even family counselor. (i) Most of the coop's members expect the coop to be fragmented in the near future, and thus do not work actively to make the Onterprise successful. Moreover, most members have very little stake in the cooperative and would not be greatly-affected if the coop were to fail. A Ministry official stated, "Si la cooperativa fracasa ellos no tienen ningin problema... La gente no cree en la cooperativa porque no les da nada." Thus any manager is likely to lack active member support. (5) Members here, as in all cooperative enterprises, tend to place the blame for poor'enterprise performance on coop officials and the manager, no matter-what the ultimate cause of this poor performance is. Thus, in a case such as the Tpac Amaru II, which is doomed because of its inappropriate adjudication model, any manager is also doomed, regardless of his performance. 18.7 (6) Many members and non-members would benefit from the demise of the cooperative, and actively work at eroding the coop's economic, social, and political footing. The following statement is from the coop's vice president: Los pequefos y medianos propietarios de la zona (algunos socios de la cooperativa) mueven a la gente, diciendo que "la cooperativa y el gobierno van a morir, y que sus miembros van a quedar con nada." Y la gente entiende esto bien rapido. Despite its administrative problems, the coop has managed to capitalize heavily since the reform. The following pieces of eauipment have been purchased. -5 trucks -6 pickup trucks -18 tractors -4 combine threshers -2 forrage choppers -2 bailers -2 wagons -1 welder -35 hand-carried sprayers -4 tractor driven sprayers 3. The coop's poor economic performance is reflected in its weak financial position. At the end of the 1971-72 crop year the coop's outstanding debt to the Bank was 32 million soles. By NOvember 1973 this debt had been cut to 16 million soles, but for several months during 1973 liquidity problems prevented the coop from paying wages. The Cuzco branch of the Bank considers the Tupac Amaru II its most pro- bl6natic reform enterprise. Initially the Bank delt with the coop directly ("fondos propios" -- see the Section on credit in the body of this report). Later the Bank decided that the coop was not capable of handlin., the technical aspects of borrowing on its own, and transferred its account to the supervised credit division ("fondos en fideicomiso"). 4. In addition to the coop's 47 employees (27 members, 20 non-members) the coop employes the following laborers on a full-time basis: Administration: 30 members, 6 non-members Agriculture: 21 members Livestock: 49 members, 27 non-members From these figures it can be seen that out of a total membership of 2,800, the coop employs only 127 members on a full-time basis. The rest of the.members work for the cooperative only sporadically, principally during the seeding and harvest seasons. During these times the members are also seeding their own crops, and thus are not eager to work for the cooperative. SINAMOS employees travel to the various settlements on the ex-estates and neighboring communities with sound trucks, encouraging coop members to report for work. 5. The ex-administrator of the coop earned S/30,000 per month. Technicia. employed by the coop earn around S/,15,000; Division Chiefs earn S/.2,500. The basic wage paid by the coop is S/.35 per day. 18.8 F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group As stated at several points above, public agencies consider the coop Tupac Amaru II a failure, and most public officials expect ti to be parti- tioned in the future. One-official stated faltly, "It was created for ipolitical reasons, and politics is the only thing which prevents it -from being broken up now." In 1970 Cuzco's Ministry office proposed the formation of 3 or 4 inde- pendent enterprises and a Central Cooperative on the Pampa de Anta. It appears very likely that this will be fihal solution to the coop's organizational prob- lems. Division of the coop's lands into ten or fifteen independent units (say one for each of the Production Units within the coop) is not likely, since the Ministry believes that none of these small units could afford the trained personnel needed to handle technical aspects of management. Personnel in the Ministryls Agency in Izcuchaca provide continual technical assistance to the cooperative, but are quick to point out that no amount of Ministerial support can substitute for necessary structural enterprise reforms and the presence of competent technical personnel in the coop itself. SINAMDS (earlier ONDECOOP) has spent a great deal of time and resources with capacitaci6n courses in the coop, but with limited success. Coop and Ministry officials seem to feel that no amount of training and motivation can overcome the coop's administrative problems and lack of member support. A special aspect of this topic, and'one viewed negatively by most inter- viewees has to do with the large number of public agencies and officials who visit the cooperative for predominantly political reasons. Members and coop officials have grown weary of the many "official" visits which seem to produce more frustrations than anything else. A Ministry official noted cryptically that the coop should have a special loan from the Bank for official visits'-- "tanto militar que viene!" II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. The coop's planning seems chaotic.and implementation even moreso. Ideally the Production Unit Heads (with input from the coop's members in their individual Production Units) should prepare production plans for each locality. The Unit Heads and Division Chiefs and central coop officials should then integrate these Unit plans into one plan for the coop, and arrange for the provision of inputs to the Units in accordance with the plan. In practice, the production plans for individual Units are hastily drawn up, and the bulk of responsibility for these seems to have fallen upon the coop's technical advisors and the Ministry. Implementation of plans is poorest in the Agricultural Divisi, due to the complexity of providing inputs for cultivation in the various sec- tions of the immense coop. Financial mismanagement has created liquidity problems which in turn have resulted in late deliveries of seed, fertilizer, an and other inputs. Labor shortages compound these problems. (Members are seed- ing at the same time as the coop). Communication and coordifation problems often result in production bottlenecks -- e.g., having seed but no fertilizer, or having tractors and equipment standing idle in one part of the coop while 18.9 work remains to be done in another. 2. Despite the existence of a complex formal system of administrative bodies, in practice the division of labor between coop bodies and officials is not clear. The majority of the Coop's formal bodies (Councils and Committees) do not meet regularly, and the majority of decisions seem to be made in an ad hoc fashion by individual coop officials and their advisors. The Ministry plays an important role, in both planning and day-to-day operations. 3. Reporting on cooperative activities before the Assembly has been difficult for coop officials, since the coop's accounting and information system. are highly inadequate. At the time of my visit (Novehber 1973) the coop's balance for 1972 had not yet been dra.n up for lack of necessary accounting docu- ments. (See Section II.C. below). 4. The diagram presented in Section I.E.2. above outlines the broad lines of the coop's formal administrative system. As noted in that Section, the Departmental Level has become non-functional. More importantly, this diagram does not reflect the importance of Ministry and Advisory personnel in decision- making and the chain of command. A Ministry official who works nearly full-time with the coon stated that most important' decisions were made by technical per- sonnel who were formally the advisors of the coop's officials, but who spent a great deal of their time working directly with the Division Chiefs and Pro- auction Unit Heads. B. Operations and Peasant Participation 1. Administration on the day-to-day level is primarily the responsibility of the Unit Heads and Division Chiefs, with the assistance of the coop's technical advisors and Ministry officials. 2. Full-time workers are generally specialized by function -- shepherds, tractor drivers, carpenters, electricians, etc. Part-time workers do whatever tasks are assigned to them. A few specialists must travel between the various Production ,Units to perform their tasks; the majority of workers remain in or near their place of residence. 3. Discipline is a major problem in the coop. Three major types of indiscipline can be cited: (1) not reporting for work; (2) working poorly; (3) theft and misuse of cooperative resources. In the hacienda system managers could coerce hacienda workers to report for work, even during the seeding and harvest season, by threatening them with expulsion from the hacienda. Consequently, hacienda residents worked extremely hard during these busy seasons -- working all week on the hacienda's land and on Sunday on their own plots. In this way, residents were also forced to employ their spouses and children for cultivation and harvest tasks -- otherwise they cou2d not comply with hacienda demands and get their own fields seeded and harvested. Wages were low, and thus hacienda residents had to seed to survive economically. Since the reform coop members have reduced the total amount of family labor expended during the peak seeding and harvest seasons. More children now go to 18.10 school, and members spend more time on their own fields and less time on the fields of the ex-haciendas. The coercion of the hacienda has not to date been replaced by adequate market or "cooperative" incentives. Members simply do not choose to report for work. Discipline has been difficult to maintain on the job. As a coop official stated: La cosa mas urgente es concientizaci6n mas drastica de nuestro hermano campesino....No nos quieren obedecer; nos meten ajo y no quieren traba- jar. Si trabajamos-8 horas o m6s,.salimos adelanto, si no, fracasamos .El Hacendado exigla que la gente sembrara domingo. For eso habla todo el sembrio a la vez... En la cooperativa hay un serio problems de disci- plina en el trabajo; no se puede exigir...Siempre hay falta de trabaja- dores, y si vienen no les interesa su trabajo. Theft and.misuse of cooperative resources have also occurred on several occasions. Recently two Council members were expelled from the coop -- one for stealing potatoes, the other for misuse of a pickup truck. 8. Coop officials are all popularly elected. Technical personnel are hired by the coop, with the-consent of the Ministry. At present the coop does not employ a manager. Coop officials seem to agree with the Ministry that a professional manager should be hired, but there seems to be little member support for this move. The coop's vice president stated to me half-heartedly, "Es necesario tener un gerente. Muchas instituciones nos exigen, y posiblemente vamos a tener uno." 9. See Section II.B.3. above. 10-11. In this coop, as in most of the reform enterprises visited, individual parcels occupy a very small part of the total land area, but here individual holdings employ a significant part of the region's labor force during the seeding and harvest seasons, with important repercussions on the coop's activities. According to a Ministry official in *the region each coop member holds about 1/2 ha. of the coop's land. Thus the total area cultivated individually is around .1,400 has. (The coop also tills some 1,400 has.) In- dividual members own between 6,000 and 10,000 head of cattle. (No census of cattle numbers has been taken since the reform). Members do not pay rental for pasturage, and cattle numbers are increasing over time. A Ministry official stated that in many cases coop members graze the cattle of non-members, charging them for pasturage under the "partir" system. 13. Both coop and Ministry officials emphasized the importance of capacitaci6n courses to reduce discipline problems, increase member identifi- cation with their cooperative, and improve the quality of member participation in cooperative bodies. However, they are doubtful that capacitaci6n will be able to solve the coop's principal problems, most of which derive from the inadequate adjudjcation model. C. Accounting and Information Systems The coop employs three professional accountants who, in the words of a Ministry official, "still can't keep the coop's books straight." 18. 1 Accounting tasks are made particularly difficult by three factors: (1) The enterprise is entirely new, and thus all accounting procedures have had to be established from scratch since the reform. Being a very large and complex en- terprise, the accounting procedures necessary for maintaining control over the flow of inputs, products, and productive activities must also be very complex. Setting up an entirely new accounting system for such a large reform enterprise is a difficult task, necessarily frought with problems. (2) Being very large, the coop has no central gates or warehouses through which all inputs and pro- ducts must flow. In cases, individual Production Units have purchased inputs or sold products without the knowledge of the central accounting office. (3) The peasants of the area are not accustomed to handling accounting documents or requesting or keeping receipts, As a Ministry official stated: El campesino nunca ha sabido levar sus cuentas...No trae facturas. No les da importancia a questiones de papeles ....Capacitar al campesino en estos asuntos administrativos demora. Esto no se puede hacer rapido, por mas valor que tenga. D. income Distribution: See Section I.E.5. agove. E. Employment and Membership About half the coop's membership is derived from the workforce of the numerous private properties adjudicated to the coop. The remainder comes frrom neighboring communities. Membership criteria are not altogether clear to me. It appears that any residents of some 47 neighboring communities may be- come members of the coop Tipac Amaru II. The communities themselves, however, are not members, as is the case in the SAIS of the Central Highlands and a few coops and SAIS of Puno. F. Neither Ministry nor coop officials cited union activity or peasant organization as a reason for the coop?s many problems. However, a student in the area noted that prior to the reform peasant leaders in different sec- tions of what is now the coop T6pac Amaru II were affiliated with different political organizations, and that since the reform they have not collaborated wholeheartedly. The government has recently established Ligas Agrarias in the area; a leftist Departmental Peasant Federation was inaugurated in November 1973. 19.1 CAP TAHUANTINSUYO Dept. of Cuzco (highlands) Intervention: Feb. 1970 and later (5 estates) Adjudication: June 1973 187 members 11,017 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting The main office of the cooperative Tahuantinsuyo is located at the foot of a steep descent into the hot, humid valley of Limatambo, about two hours north of Cuzco on the main road to Abancay. The climate and natural setting are deter- mined by the coop's location within the micro-region. On the floor of the valley fruits and vegetables can be grown; on some of the slopes above the valley floor wheat and barley are cultivated; on the steeper slopes cattle are pastured. B. Socio-cultural Setting 1. The coop was formed by the fusion of two rather large estates and three smaller properties. The total population of these estates was-about 200 families. According to my interviews very little migration to and from these estates oc- curred in recent years. The hacendados in the region did not accept new workers and discouraged the out-migration of hacienda residents. No schools operated on the estates and the illiterate workers were afraid to leave the haciendas. Ac- cording to coop officials, only 20-30% of the members can read. As one man stated, "El analfabeto se deja manejar con patadas." Moreover, hacienda workers did not want to leave their houses, livestock, and plots of land in search of work elsewhere. 2. All hacienda residents speak Quechua as their mother tongue, and only a few speak rather broken Spanish. MW interviews indicate that hacienda workers throughout the region felt culturally distinct and inferior to their mestizo patrones, and now feel roughly the same toward the public officials who implement the 1R program. C. Pre-reform Estate Organization and Administration 1. Of the 5 estates that now form the coop Tahuantinsuyo, Sondorf contributed nearly 80% of the land area. The coop members interviewed were all from Sondorf, and most of what follows in Section I.C. refers to this estate. We do not have precise data on cropping and livestock numbers prior to the reform, but estate residents interviewed agreed that both crop and livestock pro- duction had fallen markedly as a result of the reformand still were below the pre-reform levels. A coop official stated that prior to the reform Sondorf had 260 head of cattle. In 1971 there were 136 head; by November 1973 the number had risen to 176. Estate residents lived primarily from their own cattle and crops. A few people worked full-time tending the cattle of the estate; the majority worked 19.2 for the estate part-time, primarily during the seeding and harvest seasons. The majority of all cattle in the estate was owned by the workers, and more than half the area cropped was tilled by individuals. Residents did not pay rent for crop land; pastaje was S/.3 per month per head of cattle. 2. The owner of Sondorf lived on the hacienda and made all major adminis- trative, financial, and marketing decisions himself. In addition to the owner, the hacienda's administrative staff consisted of 5 men--an administrator, a "mand6n" (foreman), and 3 "mayordomos" (overseers). Interviewees agreed that prior to the reform the estate was well managed in technical terms, but that the work force was ill treated: Con el patr6n Sondorf era bien administrada, no hay nada que hacer; pero la gente estaba mal.... Manejaba la gente a pura patada.... El patr6n no querla 5ue fueramos a la escuela, y por eso la gente io tenia in- strucci6n suficiente para ir-a otro sitio.... Habia un sindicato desde 1962, pero no era muy combativo.... El patr6n podia hacer con nosotros lo que queria. La administraci6n era forzada. 3. The estate was nearly self-sufficient in labor prior to the reform. The basic wage rate was S/.7 per day. The work day was from 7 a.m. to 6 p.m. with. half an hour or an hour off for lunch. 4. The estate was well capitalized prior to the reform. The owner had 3 tractors,' 3 trucks, a trailer, a bailer, and 2 threshing machines, in addition to the usual hand eqipment. (None of this equipment was expropriated under the re- form.) 5. Sondorf's workers were unionized in 1962, but 'according to workers inter- viewed, the union was not combative and did not give workers the power to increase pay rates or improve working conditions significantly.. D. The LR Process Initiated by the 1969 Law 1. The following table presents data on the 5 estates which now form the coop Tahuantinsuyo: Total Area Held Date Appraised Estate Area By Colonos Expropriated Value (has.) (has.) (000 soles) Sondorf 8,489 2,556 2/70 2,496 Chinchaybamba 338 141 6/71 366 Mamaco 297* 297* 5/72 132 Tomocaya 1,848 1,304 1/72 119 Ayllohuayllos 45 45 1/73 42 Total 11,017 4,343 3,154 *In response to the LR, the owner of Mamaco parceled the entire estate among his workers. The Ministry has voided this land bale scheme, however. 19,3 The residents of these estates played no part in initiating cir guiding the LR process. In the case of Mamaco the owner attempted to parcel the estate prior to its expropriation. Individual plots were sold to residents wh'o made cash payments to the landlord. However, this land s4le scheme was not approved by the Ministry, and an attempt is now being made to recoup the money paid for the individual plots. In all the estates which now forn the coop Tabuantinsuyo the Ministry and SINAMOS attempted to convince the LR beneficiaries to give up their private plots and utilize all the coop's resources collectively. The workers have opposed this staunchly. In the special case of Mamaco, residents first had to be convinced that they should give up the land they-purchased from .the landlord. After a great deal of effort the government has achieved this. But the residents refuse to 'give up the individual plots they cultivated prior to the reform: "La gente ya est6 de acuerdode que la tierra del ex-patr6n sea entregada a la cooperativa', pero no en- tregarn sus chacras--habria guerra!" 2.-, A Provisional Commission was established to provide interim management in Sondorf. This Commission functioned poorly,and cropping and cattle management suffered. A principal reason for the Commission's poor performance is the lack of qualified managerial personnel in the estate, but three other factors also in- fluenced the outcome: (1) The local Ministry Office was not yet prepared to pro- vide necessary technical and managerial assistance to the Commission. (2) The government!s insistence upon collectivization upset the estate's residents and made the task of the interim management body m6re difficult than it would other- wise have been. (3) The estate's residents feared dependence upon the Bank, and refused to allow the Commission to take out a loan: Habla mala asistencia t6cnica de parte del Ministerio de' Agricultura, y muy infrequente.... Los labores agricolas no se hicieron en su tiempo debido. No cuidaron la gana- derla todavia.... La Comisi6n Provisional produca des- concierto porque queria la parcela.... En la Comisi6n, Provisional los socios ten!an miedo y no querian cr6dito. No entendian. Dijeron, 'Nosotros mismos tenemos que tra- bajar.' Since the formation of the cooperative,economic problems have abated, but by no means disappeared. The most important reason for the improvement in the coop's performance seems to be a marked improvement in the Ministry's technical assis- tance. The local Ministry Office is responsible for providing assistance to only 2 reform enterprises in the area, and these are both short distances from the Ministry Office. A Sectorista works nearly full-time in Tahuantinsuyo advising on management and technical aspects of production. A second reason is that the coop's members have become convinced that collective operation of the "demesne" lands of the ex-hacienda (not collectivization of their individual plots) is an acceptable and workable solution. While still fearful of dependence upon the Bank, coop members no longer reject Bank credit out of hand. Several problems continue to plague the coop: (1) the lack of capacitaci6n courses--most members know very little of the technical aspects of cooperative operation; (2) the lack of qualified managerial personnel within the coop's mem- bership, and the inability of the coop to hire a manager (largely due to its small size); (3) the coop is severely undercapitalized, (4) the number of member-owned 19.4 livestock is on the increase, threatening the economic base of the coop; (5) the ex-owner of Sondorf continues to live in the Casa Hacienda, to own the estate's central facilities--office, storage facilities, stable--and to farm 8 has. of land at the entrance to the coop. For the last two years the coop's members have requested that the Ministry expropriate the land and installations still owned by the ex-patr6n, and these are legally subject to expropriation--the land had been abandoned for 8 months prior to my visit, and any land not farmed for 6 months may be expropriated under the LR--but no government action has been taken to date. This is the only reform enterprise visited in which the ex-landlord retains a portion of the original estate. Coop officials stated that the patr6n had not in any way interfered with the operations of the coop, and that coop members had not interfered with the ex-patr6n's affairs, but they saw no reason why he should be allowed to continue in possession of the 8 has. and the estate's installations. 5. The Ministry utilizes two distinct methods for calculating the value of estates for LR purposes:* (1) landlords are compensaeted for assets in accordance with the self-assessed values recorded on tax statpTaents; (2) LR beneficiaries aze charged in accordance with the "productive capacity" of these assets, where these valuations fall short of the-self-assessed values. In the case of Tahuan-. tinsuyo, these two calculations produced the following values: Landowner Compensation Value of Adjudication (......000 soles...... Lands 2,069 488 Constructions and Installations 399 233 Plantations 27 27 Livestock 659 645 Total 3,15 1,393 (These values do not include interest.) E. Present Economic Situation 1. As noted above, both cropping and livestock production have declined as a result of LR. During- the 1973-74 crop season the following crops were seeded: Wheat 25 has. Potatoes 10 Corn 10 Beans 3 Total 48 Coop officials noted emphatically that if tractors and machinery were avail- able another 100 has. could be seeded. Without eauipment the coop "cannot affor(i to seed" for two p:rincipal reasons: (1) insufficient labor is available within the coop to seed and harvest this extension of cropland; (2) the coop could not afford to pay the legal minimum wage rate (S/.35) for outside laborers and still turn a profit. "En vez de perder, preferimos n, sembrarlo." When questioned 19.5 whether or not individual peasants could farm this land if it were divided into small plots, coop-officials stated that they could, -but the officials did not fa- vor this alternative since it would require admitting more members to the coop, reducing each member's share in profits. The figures presented in the table in Section I.D.l. above indicate that each coop member holds about 20 has. of-land. The bulk of this land is pasture. Less than 1 ha. is seeded annually by each resident, implying that the total area seeded by individuals is -around 150 has. Prior to the reform the landlord had about 260 head of cattle ih-Sandorf. In 1971 the estate had 136 head of cattle; at the time of my visit (November 1973) the number had risen to 176 head. In addition, coop members have over 1,000 head of their own cattle. 2. Under the reform 4 Production Units have been established, one in each of the principal ex-haciendas. in each Production Unit the residents have elected representatives to a Local Production Committee, and the president of each Commit- tee functions as a field boss in his locality. The coop employs no manager or ad- ministrator, and no members occupy the traditional positions of mayordomo or capo- ral. As a coop official stated: En cada zona es el presidente que da las 6rdenes. Hasta la fecha no han habido discussiones, y no hay necesidad de tener empleados. The coops decision not to contract a manager is a formal one, incorporated into its bylaws. To date the Ministry has provided the coop with technical and managerial assistance on a nearly daily basis. However, the Ministry official in charge stated that this could not be expected to continue forever, and that in his view the coop was in need-of management.services on a full-time basis. As pointed out repeatedly in the preceding paragraphs, one of the principal problems faced by the coop is the lack of adequate machinery and equipment for cultivation. Under the LR not even hand tools were turned over to the coop, and while these minimal necessities have now been acquired by the coop, the lack of tractors and trucks still hampers cultivation. The coop has purchased one rubber- tired tractor and a threshing machine, but still needs a caterpillar-type tractor and a truck. (It was pointed out by coop and Ministry officials that a track- driven tractor was necessary for cultivation on steep slopes.) 3. Coop officials complained that Bank financing for both current operations and necessary investments was inadequate. Timeliness was a major issue: "El Banco no da credito a tiempo, sino cuando ha pasado el sembrio." The coop has re- quested funding under the Bank's CAI program in the amount of 8/.5,000,000. The loan request contemplates the purchase of a caterpillar tractor and a truck. During the administration of the Provisional Commission neither profits nor losses were recorded. At present the coop owes the Bank S/.70,000. 4.-5. Except during the seeding and harvesting seasons, the coop employs only about 25 workers on a daily basis. Non-members are not employed by the coop. All members employed by the day earn the same vage--S/.35. Menbers who tend the coopts livestock earn S/.15 when cattle are grazed in natural pastures and S1.20 when they are grazed in alfalfa. 19.6 Work rotation takes two forms in this coop: (1) Responsibility for tending coop cattle is rotated between members, "para dar mejor ingreso a cada socio." (2) Work is not refused to coop members who report for day labor--"Si necesitamos 15 personas y vienen 20 les damos trabajo." Members of this coop receive few-perquisites. Neither a school, nor a medi- cal facility, nor a cooperative store function in Tahuantinsuyo. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group During the interim between expropriation and adjudication the coop suffered from inadequate attention from public agencies. In the past year the Ministry has greatly intensified its technical assistance. It appears that the Bank will soon process the coop's request for an "integral" long-term loan; this should help solve the coop's present financial problems, and allow a marked increase in cropping. Coop officials did not mention SINAMOS except to note that the coop's members needed a great deal more capacitaci6n. The model coop bylaws presented by SINAMOS were discussed by members in lengthy Assembly meetings and modified extensively. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. Members seem actively interested in and informed about coop affairs, but formal worker participatioix in coop.-bodies is poor. A coop member stated., "Acg discutimos todo." Yet the Administrative Council had not met during the three weeks preceding my visit. Production Unit Presidents meet with the coop's presi- dent often on an informal basis and members seem to feel that they have adequate contact with and control over formal coop bodies and officials. They seem to trust the opinions of Ministry officials on technical questions,and coop decisions are greatly influenced by advice given by the Ministry. 2. No clear division of labor exists among the.formal coop bodies created to plan and implement coop policies. Most important decisions are made by the coop's President and by the Production Unit Presidents, with the assistance of- Ministry officials. 3. The coop is small enough that reporting on coop activities to the member- ship is not especially problematical. Most of the coop's members are illiterate, and no bulletin is distributed. Most information passes informally by word of mouth. Assembly meetings are held occasionally. 4. The administrative chain of command is quite simple. Decisions made by the President and the Administrative Council are communicated,to the Presidents of the four Local Production Committees, who implement them directly. The coop's livestock operations are under the responsibility of the ex-administrator of the estate Sondorf. 19.7 B. Operations and Peasant Participation 1. Daily administration is handled primarily by the coop's President, the Presidents of the 4 Local Production Committees, and by the (elected) Head of Livestock Operations. 2. The majority of the coop's members are not specialized, but work at what- ever tasks -. they are assigned. To date, few workers.have been required to work outside the estate on which they lived and worked prior to the reform. 3. Discipline has not been a particularly important problem in this coop. Since the reform the work day has been cut from 9 1/2-10 hours to 8 hours, and wages have been increased from S/.7 to 5/.35. Coop members seem quite satisfied with present conditions. A coop official stated that everyone worked a full b hours and that loafing was uncommon. The same official noted that problems of in- discipline and poor work performance were dealt with by the Vigilance Council. To date no formal sanctions had been needed to assure adequate performance on the job. 7. See Section I.E.4. above. 10.-11. Since the reform the area cultivated by estate residents has remain- ed roughly constant (between 1/2 and 1 ha. per family), but the number of indi- vidually owned cattle grazed on estate lands has risen. At present over 1,000 head of individually owned cattle graze on the coop's land. No pastaje is charged. 12. A coop member stated that in the Assembly, "Aca' discutimos todo." 13. Capacitacion has been minimal in this case, and both Ministry and coop officials cited capacitaci6n as one of the most pressing needs of the coop. C. Accounting and Information Systems 1. The Ministry provides no formal assistance in the area of accounting. The coop's accounts are drawn up in a very primitive fashion by the coop's offi- cials. 3. Information is provided to the membership primarily through informal channels. Occasionally Assembly meetings are held. D. Income Distribution 1.-3. Day laborers are all paid S/.35. Persons responsible for tending the coop's livestock are paid S/.15-20 per day. To date no profits have been distri- buted. Perquisites are unimportant as a source of payment. 4. The income earned by coop members from their individual cropping and livestock raising exceeds their income from work in the cooperative. E. Employment and Membership The coop's membership was determined by the formal procedures carried out by public officials at the time of expropriation. No new members have been admitted since that time. Non-members are not employed by the coop. F. Continuing Role of the Union. The union has ceased to function. 20.1 CAP MARISCAL RAMON CASTILLA Dept. of Cuzco (highlands) Intervention: Sept. 1969 and later (5 estates) Adjudication: June 1973 82 members 2,331 has. I. HISTORICAL AND iATURAL SETTI11G AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting The coop Ram6n Castilla is located not far from the capital City Cuzco. During the dry season it can be reached by auto or truck, but in the rainy season a river must be forded. The coop includes land of widely differing qualities. Corn, beans, potatoes, wheat, and oats can be cultivated. Some pastures are suitable for cattle; on others only sheep can be grazed. C. Pre-reform Estate Organization and Administration 1-3. Over half the land in the coop Ramon Castilla came from the estate Angostura. Much of what follois in Section I.C. is based on interviews with residents of this estate; tie interviewees stated that conditions on the other haciendas in question were similar to those on Angostura. As in all estates in this part of the highlands, the 5 estates which were fused to form the coop Ram6n Castilla were "enfeudadas" -- workers cultivated private plots and grazed their own livestock on estate lands. In addition, the residents worked part-time for the hacienda administration, particularly during the seeding and harvest seasons. Hacienda residents did not pay rent for their cropland or for pasturage, but neither did the hacienda pay cash wages. Each family was required to provide 3 man-days of free labor per week. The-bulk of labor employed by the haciendas came from the resident population. According to Ministry figures, over half the land area of the 5 estates which now form the cooperative was held by individual residents at the time of the reform; .wever, the bulk of this land (especially in the case of Angostura) was pastureland. 4-6. According to Ministry officials technological aspects of production were deficient prior to the reform, in part due to uncertainties created by the Belaunde reform. A coop official noted that the owner of Angostura liquidated his livestock and sold the estate in 1966, "porque ya sab'a lo que iba a pasar," The estates' workers were not unionized. D. The LR Process Initiated by the 1969 Law l-". After expropriation, Angostura was managed by a worker-controlled Provisional Commission; the other 4 estates which now form parts of the coop, and which were expropriated later, were managed by the Zone's Special Adminis- 20.2 trative Committee. The following table presents summary data on four of the five estates: Total Area Eeld Appraised Number of Date Estate Area By Colonos Value Workers Expropriated (....000 has.....) (000 soles) Angostura 1,306 1,252 461 28 9/69 Condebambilla 193 100 113 18 7/71 Chingo Grande. 335 31 359 14 11/71 Huayllapampa 497 26 126 3 11/71 Total 2,331 1,409 1,059 63 After these data were compiled another estate "Usphabamba" was added to the list, bringing the total value of assets expropriazed under the reform to S/.1,277,078. Only 38 head of cattle were expropriated on the five estates. 3-4. The economic dislocations suffered by this estate were not as severe as those suffered by Tahuantinsuyo (See Case Report no. 18), but total production (especially crop production) has fallen. The principal rea- son for this is the decapitalized state in which the owners left their estates upon expropriation. Livestock and machinery and even shovels and other hand tools were removed by the owners. Coop officials stated that the estates' residents never questioned the benefits to be derived from the formation of a production coop, and did not demand parcelization. They did, however, refuse to allow their individual parcels to be integrated into the collectively operated area. In its first year of operation, the Provisional Commission produced a net profit of some S1.130,000, which was distributed among Angostura's resi- dents in commodities: 24 sheets of tin roofing were given to each family, in addition to hats, cloth for women, shirts and pants for men, a.d school uniforms for children. The decision to distribute profits in this form was made in the General Assembly; the Commission's president made the purchases in Cuzco. 5. The five estates which have been fused to form the coop Ram6n Castilla were expropriated for a total value of S/.1,.77,078: they were adjudicated to the coop for S/,1,030,103, on the basis of the calculated potential economic capacity. These values do not include interest -- three percent on land, 7 percent on other assets. Payments are to be made over a 20 year period, beginning June 1978. E. Present Economic Situation 1. In the 1973-74 season the coop was seeding 74 has of land, distributed in the following fashion: 20.3 Potatoes 23 has, Wheat 16 Oats 13 Beans (habas) 12 Corn 10 A coop official noted that cropping could be increased markedly if a tractor were available. The lack of a tractor and adequate tillage equipment is considered by ,1inistry officials to be the coop's principal problem. Prior to the reform the owner of Angostura grazed 400 sheep in the high pastures of his estate which are unsuited for cattle raising. Before expro- uriation he sold these animals, and while the coop has not yet replaced them it hopes to do so. (Fo definite plans had been made at the time of my visit). 2. No professional management personnel are employed by the coop, all managerial personnel are elected coop members. The president is the principal executive. Local Production Committees have been elected in each of the coop's ex-estates, and the presidents of these are the bosses in their localities. No full-time office staff is employed; the coop's books are kept by an accountant in Cuzco contacted on a part-time basis. Ministry personnel interviewed stated that the coop would never be able to afford the services of a professional manager, but hoped that a "practico" could be found to manage the coop. The coop's president stated that within perhaps three years a manager could be hired. When asked whether he thought the coop would be better off with more land and members, so as to provide the necessary economic base for a professional manager, the president stated: "No, entragar m'i fundos seria para romper la cabeza. La administraci6n serla muy dificil. La gente tiene poca educaci6n y es dificil mandarles. Ademas, con poca gente trabajamos con m't gusto." Undercapitalization is still one of the principal problems of the co- operative; even hand tools are not available in sufficient Quantities for optimal cultivation. 3. At the time of my visit, in 7,vember 1973, _ie coop was experiencing serious liquidity problems as a result of a long delay in negotiating a loan from the Bank. The delay was due to three principal factors: (1) the absence of competent and experienced managerial personnel in .the coop; (2) the Bank's legal requirements; (3) delays in complicated procedures necessary for the coop's legal recognition. Before any reform enterprise can receive a loan from the Bank it must be inscribed in the local Public Property Register. Acquisition of the appropriate Certificate of Registration is the responsibility of the individual enterprise. Fam'n Castilla's officials did not know how-to go about getting the inscription, and had to request assistnace from the Ministry. Delays resulted and as a result the Bank could not process the coop's loan request. For lack of cash, the coo could not pay wages from the time of its adjudication (June 1973) until the time of m;r visit (iovember). The problem yas to be solved shortly, but 20.4 seeding had been delayed and the lack of pay had created member unrest. As the coop's president noted, "Ahora recien vamos a sacar el prestamo y normalizar el pago de jornales. Hay algunos que dicen que la cooperativa es un engafio." 4-5. Of the coop's 82 members,an average of 40-50 are employed throughout the year (not full-time, but on a rotational basis). During the seeding and harvest seasons employment is, of course,-greater. The coop's basic wage rate is S/.37 per day. Profits are distributed equally among the membership. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group The Ministry provides technical assistance to the coop on a continual basis. The local Sectorista works nearly full-time on the coop's plans and operations. In addition, coop officials travel frequently to Cuzco to discuss problems with the Head of the Ministry's Cuzco Agency. This small coop (like Tahuantinsuyo) is extremely dependent,upon the Ministry-for technical-managerial assistance. Relations between Hinistry agents and coop 'officials are cordial, but strongly reminiscent of traditional patron-client relations. inistry officials address coop officials in the familiar ("tu") form.- Coop officials address Tinistry employees in the formal ("Ud.") form.. During my visit the coop's president repeatedly addressed the Head of the Cuzco 11inistry Office as "mi ingeniero." According to the coop officials interviewed neither ONDECOOP nor SITNAMOS has held capacitaci6n courses in the estate, and capacitaci6n is seen as one of the coop's most pressing needs. Coop officials have been frustrated in their dealings with the Bank for two main reasons: (1) the cumbersome legalistic nature of Bank lending procedures; and (2) the inexperience and lack of technical expertise of coop officials. IT. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1-3. The formal aspects of cooperative administration are highly deficient in Ram6n Castilla. From the time of the coop's formation in June until my visit in November 1973 neither the Administrative nor the Vigilance Council had met. The coop's president noted that during the period of interim management the Provisional Commission never held a formal session. The Min- istry provides continual technical-managerial assistance to the coop. Thus, it would seem that in fact the Ministry manages the coop. On the other hand, the coop is relatively small -- 82 members -- and coop leaders do seem to keep in contact with the membership through occasional Assembly meetings -- three have been held since the formation of the coop -- and more importantly through informal contacts. To date there have been no "crises of confidence" or blatent cases of member dissatisfaction with manage- ment decisions. 20,5 4. The administrative system of the coop is quite simple. Within the coop, the president performs the principal management tasks, with close supervision and professional assistance from Ministry officials. The president transmits orders to the presidents of the coop's Local Production Committees, who are the executive personnel in their locality. Four of the five estates which now form the coop's land base are contiguous, and no major communication problems exist within these. The fifth estate lies at some distance from the other four, and from the coop's administrative center, and as a Ministry official put it "No es pr9ctico administrarlo." B. Operations and Peasant Participation 1. Daily administration is handled by the coop's president and the elected presidents of the Local Production Committees, under the close super- vision of inistry officials. 2. Few snecialists are among the coop's members. Workers often travel between the ex-estates of the coop to perform necessary tasks. Since the coop is relatively small they can return to their houses each night. 3. The coop's president noted that there was a scarcity of member-labor for necessary cultivation tasks: "Hay que exigir que los socios trabajen." However, he made no complaints with respect to discipline on the job: "Todos trabajamos tranquilos... No hay nadie parado." The coop has not yet instituted formal sanctions for work indiscipline. 4. All meribers earn the same wage -- S/,37. 8. All administrative personnel in the coop is elected from the member- ship. No technical personnel is hired. The Ministry provides its technical- managerial services without charge. 9. Problems of leadership dishonesty have not arisen. Competence, however, is another issue. The coop is notably dependent upon the 11inistry for assistanc in resolving technical problems of coop planning and operation. 13. Neither ONDECOOP nor SIIAMOS has given capacitaci6n courses in this coo and both Ministry and coop officials stress the coop's need for capacitaci6n. In addition to material on cooperative principals and operation, members need technical courses in accounting, business management, etc. C. Accounting and Information Systems The coop has no office staff of its own, and has contracted an accountant in Cuzco on a oart-time basis. D. Income Distribution 1. All members are paid the same wage -- S/.37. However, due to a liquid ity problem the coop was not able to nake wage payments to workers from June to November of 1973. At the time of my visit this problem was being resolved. 2. The profits of the Provisional Commission were distributed to members in products, in accordance with the needs of each family -- e.g., clothes for all members and for their spouses and children. 21.1 SAIS YOCARA.. Dept. of Puno (highlands) InteXvention: 1969 Adjudication: Dec. 1970 56 Members 9,421 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting The SAIS Yocar-' is located just off the main road from Juliaca to Arequipa about half an hour's drive from Juliaca. Most of the SAIS' land lies between 3,800 and 4,000 meters above sea level. Corn cannot be grown. Oats and ra.pe are cultivated for fodder and quinua and potatoes are grown for human consumption. Most of the estate's land is used for pasturing cattle and sheep (no alpacas or llamas are raised). B. Socio-cultural Setting Interviewees stated that the entire population of the estate was born on the place. Outmigration occurred at a modest rate prior to the /R, since employment was unavailable for most young people. After the expropriation of the estate several ex-residents have returned to Yocara in hope of becoming cooperative members. About 30 such return-migrants now live on the estate, working for the coop when employment is offered (particularly during the seeding and harvesting seasons) and cultivating small plots of land and raising their own livestock. They have not been granted coop membership. Housing is provided by each family without assistance from the estate. However, the coop's administration has discussed the possibility of con- structing a central rancheria. C. Pre-reform Estate Organization and Administration 1. Cattle and sheep raising were the principal economic activities of the hacienda, and continue to be the principal activities of the coop. Prior to the reform, the estate maintained around 15,000 sheep and a few hundred head of cattle. (We do not know precisely how many, for lack of business records.) At the time of expropriation the hacienda turned over to the coop 8,000 sheep and 200 head of cattle. The labor-tenure system used in the estate was colonato -- all workers cultivated individual plots of land and grazed individually-owned Livestock. The hacienda charged rent for pastures, but not for cultivated land. Pastaje was levied at a flat rate per head of livestock: S1.1 per month for sheep; S1.10 per month for cattle, Until shortly before the LR wages were not paid. By the time of the reform they had reached approximately S/.20 per day. 21.2 2. Administration was indirect. The estate's owner resided in Arequipa, where he maintained the main office for the four estates he owned in Puno. Yocard's administrator was a "practico" who was experienced in livestock management but had no formal professional training. The hacienda's accounts were kept in the Arequipa office. In recent years the estate suffered a period of gradual decapitalization. Fearing expropriation, the owners reduced the size of their livestock herds and failed to maintain the estate's productive capacity (e.g., fencing and constructions). Profits were not reinvested in the estate. 3. The hacienda's resident labor force was sufficient for most tasks related to livestock production. During periods of maximum employment -- seeding, harvesting, and sheep shearing -- laborers from neighboring parcial- idades were hired. The rate of pay at the time of the reform was S/.20. 4. According to Ministry officials the estate was lagging in technologi- cal advance, due in large part to the lack of investment in recent years. Fencing and livestock improvement were two principal areas neglected by the hacienda. 5. The hacienda had one of the more aggressive labor unions in the depart- ment. D. The LR Process Initiated by the 1969 Law 1-2. Yocara' was one of the first estates to be affected by the 1969 LR law. However, this was not in response to active peasant agitation for reform; throughout the process the residents appear to have been essentially passive observers of the reform. At the time of the expropriation no Special Committee had been created in Puno and no Provisional Commission was created in the estate. Since the estate was very close to Juliaca the Ministry managed it directly, without creating a special interim management body. 3. Upon hearing that the estate maintained 15,000 head of sheep prior to the reform but turned over to the coop only 8,000, I presumed that the estate had sold large numbers of its sheep in order to avoid expropriation. Later I was informed that the Ministry had not accepted all the estate's sheep, and requested that the owners remove the poorest quality animals. How many animals were sold in order to avoid expropriation and how many were sold at the request of the ministry is,not known. However, in total about 7,000 animals were liquidated in 1969 and 1970. Since the reform Yocar' has received purebred sheep imported by the coops and SAIS of the department, and has pur- chased about 50 head of dairy cattle. At the time of my visit (late October 1973) the number of sheep owned by the coop had risen to 19,000 (not including the huacchos). h. Legally, Yocar6. is a SAIS, but unlike the SAIS of the Central Highlands (e.g., Tupac Amaru and Cahuide) in that no peasant communities are associated with the ex-estate. A single ex-estate has been transformed into a production unit which is organized and operated for all practical purposes as a production coop. ( For information on the reasons for this type of adjudication model, see Section II.B.4. of the Agrarian Zonal Report for Puno). SAIS officials noted that it would be desirable to fuse Yocara with the neighboring 21.3 estate Yanarico and a number of neihboring peasant communities and parcialid- ades to form a "real SAIS." The following reasons were given: (1) By enlarging the economic base of the enterprise they could better afford full- time technicians. (2) A larger unit would be in a better position to negotiate with the other, larger enterprises in the department's Central Cooperative. (3) Making neighboring communities and parcialidades members of the SAIS would reduce existing tensions between them and the estate. (A mem- ber noted specifically that it would prevent land invasions). 5. At the time of the LR the estate's assets were appraised as follows: Livestock s/. 4,245,000 Land 2,322,000 Other Assets 2,823,000 Total 9,390,000 (These figures do not include interest). E. Present Economic Situation 1. As in most estates in Puno, crop production is unimportant in Yocarg. Of a total area of over 9,000 has., less than 200 hectares are cultivated by the coop. (In addition to this, small plots are cultivated by the estate's residents). Twenty-five has. of pastures are cultivated and about 150 has. of oats and barley are grown for fodder, A few small plots of potatoes are seeded. The coop consumes most of its crop production internally. Pasture and fodder crops are fed to the livestock. Most of the potatoes are sold to members at less-than-market 3rices or delivered at no cost as vacation pay or year-end profit distributions. The principal activity of the coop is sheep raising. The wool is exported, Part of the milk from the dairy cattle is sold in Juliaca's central market; a small amount is converted into cheeses which are also sold in the market. (Coop members stated that fresh milk could be sold for S/.10 per liter, and cheese for S/.60 per kilo. Since it takes about 10 liters of milk to produce each kilo of cheese, it would seem most profitable for the SAIS to abandon its small-scale cheese operation). 2. According to a SAIS member the present manager is "un poco ma's despier- to y con mas experiencia que el administrador de la hacienda." Prior to this job he worked for the Ministry. He also bas previous experience in estate management. The manager is an energetic man who demands complete autonomy in technical decision making. in an interview attended by several SAIS members he stated flatly that the Council attends strictly to social matters, and does not interfere with technical decision making. El consejo no se mete en los asuntos tecnicos...En la parte ticnica la gente no se mete. A member noted that at times conflicts arise between the manager and the mem- bers, in his view because the people did not yet appreciate the need for 21.4 technical management and the functions of a professional manager. Prior to the reform the estate had no accountant or office staff; the records were kept in the owner's office in Arequipa. At present the SAIS employa a full-time accountant and two office assistants. Three other employees are on thQ payroll -- the manager and two school teachers. Two significant technical improvements since the reform are improvements in fencing and in breeding stock. Marketing is now handled by the Ministry. Since the reform three tractors, a pickup truck, a large truck, and a forage mill have been purchased. 3. SAIS officials had no complaints in the area of financing. At th .enr of 1972 credit extended by the BFA equalled S/.156,000 for the purchase of a tractor, S/.61,000 for fencing materials, and S/.478,000 for sheep imports. 4. The SAIS' members are employed full time. In addition, a few non- members are employed much of the year; considerably more are employed during the seeding, harvesting, and kheep-shearing seasons. Several non-members work nearly full time for the coop. Approximately 20 percent work 260 or more days each year, and thus qualify for, a month's vacation pay. 5. The basic wage for members is S/.40 per day. Non-members receive S/.35 (the minimum legal wage for Puno). Tractor drivers and the few other specialized workers are paid S1.60. The manager receives S/.20,000 per month; the two office employees (the only two SAIS members with secondary education) earn S/.1,500 per month. In 1970 the SAIS lost S/.449,000; in 1971 losses equaled S/.22,000. In 1972 profits amounted to,S/.24,000 of which S/.50,000 were distributed among the members (approximately S/.%430 per member). Profits were not distributed in the form of cash, but in products, such as chufo (frozen, dried potatoes). In addition to cash pay and year-end profits, workers were allowed to purchase potatoes and other foodstuffs produced on the SAIS at less-than- market prices. A new primary school building has been constructed since the reform, two new instructors have been hired (there was only one prior to the reform and a secondary school has been established.) II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation As mentioned above, the manager of the SAIS dominates the technical- managerial area, and neither seeks nor tolerates "interference" from the membership. The degree to which management decisions are communicated to the membership is unclear. The administrative chain of command remains much the same in the cocp as it was in the hacienda. B. Operations and Peasant Participation 1. In addition to planning and technical maznagement, the manager is directly responsible for day-to-day management as well. 21.5 9. Members seem to feel that their SAIS leaders and the manager are honest and competent. The main criticism voiced was that the manager tends to monopolize decisionmaking. 10. Individual parcels are cultivated by nearly all members, but they are small. The principal crops grown are potatoes, quinua, barley, and oats. Most production is destined for home consumption or sale to close neighbors. 11. The SAIS owns 19,000 sheep; individual residents own 10,000. Both the Ministry andSAIS officials emphasize the importance of reducing the population of ganado huaccho. As we entered the SAIS the Ministry official at the wheel of our pickup shook his head and stated, "El ganado huaccho, este es el problema que tenemos ahora! No podemos eliminar el ganado huaccho.' Yocara's Annual Report for 1972 was equally emphatic: El primer problem que resolver es la reducci6n de HUACCHAS que en un promedio de 10,000 ovinos estgn impideindo la expansin ganadera de la SAIS. The manager stated that by 1975 the huacchas "should" be eliminated. However, there is no eivdence of a marked drop in the number of huacchas since the reform. In contrast to the other estates visited, Yocara still charges a flat rate per animal for pasturage. (S1.1 per head per month for sheep; S/.10 for cattle). C. Accounting and Information Systems 3. In 1972 Yocara prepared one of the most extensive and informative year-end reports of any coop or SAIS in Peru. The three principal chapters detailed the economic and social activities of the SAIS during 1972, the current financial situation, and projects and plans for 1973. 22.1 CAP SANTA LUCIA Dept. of Puno (highlands) Adju&ication: October 1972 235 Members (plus four peasant communities with 936 members) 74,115 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting The coop Santa Lucia is located about an hour and a half's drive out of Juliaca on the main road to Arequipa. Most of its lands are over 4,000 meters above sea level, and not suitable for cropping. B. Socio-cultural Setting As in most of Puno's estates, there has been a slow but steady migra- tion of people from this area in recent years. The land reform has attracted a few of the previovs out-migrants back. (See especially Section I.E.l. below). Nearly all of Santa Lucii's residents were born in the place. Only a few employees have been hired from outside. Mbst people speak Quechua as their mother tongue. Except for high-level employees, all residents..con- structed their own houses, withoul help from the hacienda administration. C. Pre-reform Estate Organization and Administration In this case we cannot speak of the organization of "the" ex-hacienda, since the CAP Santa Lucia has been formed by fusing 14 previously-independent properties. (Many, but not all, were latifundia; some were small and medium- sized properties which were rented or occupied by colonos.) 1. In most of the estates in question no cropping was possible, due to ecological factors (primarily high elevation). Where cropping was possible, it was done primarily by individual hacienda residents. In all the estates the principal economic activity was livestock raising. Hacienda residents grazed their own herds of sheep, llamas, alpacas, and cattle on estate lands, and worked for the estates. A small part of the estates' residents were employ full-time as shepherds and paid wages. The majority were required to work in unpaid "faena" labor, in cultivation, repair, and maintenance, and all tasks other than shepherding. Non-residents were employed in times of sheep shearing and other labor-intensive tasks. Since several estates were fused in the formation of the CAP, and since not all the account books were turned over to the new administration, we have no data on crop production or livestock numbers prior to the reform. (35,000 sheep were delivered by the ex-estates to the coop). 2. Prior to the LR the 14 properties which are now parts of Santa Lucia were managed independently. We have no data on marketing and financing. 22.2 3. The principal source of labor for most estates in the region was their resident population, although a few peasants from neighboring peasant communities and parcialidadesalso worked on the estates. 4-7. We have no specific data on technology, political conditions, the impact of the 1964 LR law, or previous cooperative experience. D. The LR Process Initiated by the 1969 Law 1. Peasants have apparently been relatively apathetic to the LR process. This is particularly true of those in the member communities and parcialidades. In no way did they participate in the initiation of the process or in the determination of the adjudication model. 2. The estates were managed for two years by a Provisional Administrative Commission. Each of the 14 estates and 4 peasant. communities and parciali- dades which were to become members of the coop elected representatives to the Commission, and at the outset attendance was good. -Later, the community and parcialidad delegates stopped coming to the meetings. The manager noted that these delegates soom become aware of the fact that their communities were going to derive very few benefits from the LR process and they simply got bored with the meetings. 3. In the absence of statistical data for the pre-reform period, it is difficult to estimate the economic dislocations resulting from the reform process. As in other estates decapitalization had begun long before the pro- nouncement of the 1969 LR law, but was greatly accelerated by the immediate threat of expropriation. Moreover, the Ministry ordered the owners to sell several hundred head of their poorest livestock. Social dislocations were caused by the forced fusion of the 14 proper- ties. Naturally, residents of the richer estate opposed fusion with poorer estates, since this threatened to lower their incomes. However, once a core of estates had become fused, its successful operation encouraged the last holdouts to join the coop. The manager stated that at present the vast majority of the coop's members are satisfied with the fusion, and would not break up the unit if they were given the opportunity. (We did not discuss this important point with coop members). 4. The CAP Santa Lucla is by no means an "ordi nary" production coopera- tive, since four peasant communities are among its members. This, of course, is inconsistent with Peru's cooperative legislation, which requires all members to be natural persons. The communities have 936 members, but each has only one representative in-he coop's Assembly, so that the 14 ex-estates with 235 members, have complete control over the coop's management. Community members can purchase goods in the coop's store, but %3side from this they derive little if any benefit from their association with the coop. As noted above, community representatives attended meetings of the Provisional Commission prior to the coop's adjudication, but soon became disillusioned <nd withdrew. They seldom attend coop meotings and have not participated in the coop's management in any significant way. 22.3 5. LIR officials appraised,the coop's assets as follows: Livestock S/.22,221',OOO Land 10,856,000 Other Assets 2,539,000 Total 35.616,000 (These values do not include interest). E. Present Economic Situation 1. Of its 74,115 has. only about 70 has. of forages and 12 has. of potatoes are cultivated by the coop. According to the coop's president, members cultivate no more than one hectare each, and most do not cultivate at all., Livestock is the coop's principal source of income. At the time of my visit (October 1973) the coop owned 58,000 sheep, 14,000 alpacas, and 1,074 head of cattle. We do not have precise data on huaccha numbers. The president noted that workers had around 300 each, which would indicate a total number of 70,000. (This must be considered a very rough estimate, probably inflated). In addition to the traditional livestock and cropping activities carried out in Santa Lucia, the coop has launched a number of innovative diversificatior projects, including rug and sweater weaving, metalwork, and carpentry. The coop now has four small shops in which non-member residents (.women and young people ) produce these readily-marketable goods. Santa Lucia is the only reform enterprise visited in which diversification projects of this type had been initiated. It would seem, however, that there is great potential for similar projects in many other coops and SAIS. Although the coop's manager did not originate the idea to establish these shops, his open-mindedness and ingenuity seems to have contributed a great deal to their success. He explained that he did not have any particular skills in these areas, but helped to establish the shops in order to utilize the skills of unemployed workers in the estate. In the case of the metalwork- ing shop, a young out-migrant returned to the estate to visit his parents and see if there was any chance of his being admitted to the coop. In Arequipa he had worked in a metalworking shop, and he proposed the establishment of a similar shop in the coop to produce bedframes and springs. The manager liked his idea and promoted it before the Administrative Council, noting that such a shop would benefit the coop by providing employment for unemployed residents and by producing necessary products. The coop's Council voted to finance the project, and to put the shop's workers on the coop's payroll. Similar processes were followed in the establishment of the coop's rug and sweater weaving and carpentry shops. To date their workers (about 30) are all paid di- rectly by the production'coop, but in time they are to become more independent sub-units within the coop -- self-managed and paying their own vages and profits, relying upon the "mother enterprise" primarily for accounting and marketing services. The bulk of production from the metal,' carpentry, and sweater shops is marketed locally (to members of the coop and to residents of the nearby village Santa Lucia). The rugs, however, are marketed in Lima. In 1973 22.14 the coop took a number of rugs to the Feria del Pacifico (Lima's annual Show of capital and consumption goods from Chile, Peru, Ecuador, and Colombia) and not only sold them all, but got orders from Liman merchants for several more. The coop's manager feels that employment in the rug shop could easily be increased to 50 full-time workers. 2. The coop's manager is an ex-functionary of the Ministry. (The Ministry paid him S/.9,000; the coop pays him S/.20,000). He seems to maintain cordial relations with the Coop's employees and workers and is highly respected As noted in the previous section, he is credited for having fostered the development of several new lines of activity in the coop. In addition to the manager, the coop employs the following employees: an accountant, a social assistant, a cashier, and several accounting assistants storehouse keepers, and schoolteachers. The coop's administrative structure involves three distinct levels: the Central Administration, four Sectors, and ten Annexes. Since there were 14 independent prod.iction units prior to the LIR, the Annexes approximate, but do not correspond exactly to, the old estates. Since the LR, two trucks, a pickup, a Land Rover, and three motor bikes have been purchased. Five hundred twenty ewes and 50 rams have been imported, and the coop plans to import 2,000 more ewes. A sheep stable, a dairy facility and a dipping tank (for parasite control) have been constructed. This is the only coop visited in which innovative, processing facilities (rug and sweater weaving) have been installed since the LR. 3. The coop has soliciated a long-term develdpment loan from the Bank. The loan has been approved, and four million soles have been disbursed; the remainder of the loan amounts to some twenty three million soles. 4. This is one of the only reform enterprises in Peru in which a faena system is still retained; all coop members are expected to work three days each week without pay in cultivation, harvesting, building and fence repair and construction and related tasks. The president noted that this isan improvement over the haciendas' system in which work was more onerous and more ,iork days were demanded without pay, Beginning in 1974 the coop intends to pay cash wages to all workers. Coop officials noted that wage labor (at S/.40 per day) was offered reside- of the member communities, but that the comuneros generally refused to work. In the view of the coop's officials this was due in part to the comunerost backward cultural traits: Les ofrencian S/.40, pero no esta'n acostumbrados a horarios fijos, y les parecla trabajo forzado. Tienen su parcela y su ganado, y no tienen interes en el trabajo asalariado de la cooperativa. 5. The manager earns S/.20,000 per month. We do not have salary data for other coop employees. Shepherds from the ex-estates and laborers from the communities earn 8/.40 per day. Each week members from the ex-estates must work three days in the faena without receiving wages. Since the reform a small medical post and an especially well-stocked cooperative store have been built. A social assistant has been contract,A and the six schools within the 22.5 coop have been improved (the buildings have been cleaned and repaired and better teachers have been hired). The coop has ambitious plans to construct a large educational complex, a clinic, and a movie theater in a new, central rancher'a, but to date these have not been implemented. To date all profits of the coop have been reinvested. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1-2. As in other large reform enterprises, planning of Santa Lucia's ac- tivities is a highly technical matter in which the general membership does not participate actively. However, it appears that in Santa Lucia relations between the manager and the Council are particularly cordial and that the manager seeks advice and suggestions from the workforce. The coop's Special Committees function only marginally; decision-makinig is concentrated in the hands of the manager and the coop's president. 3. Each month the coop holds an Assembly which all members may attend. Given the immense size of the coop -- nearly 100 kilometers across it -- the far off Annexes must send delegates. In addition to the monthly General Assemblies each Annex holds regular meetings -- at least one per month -- in which local problems and important cooperative activities and plans are discussed. Copies of the minutes of these meetings are sent to the coop's main office, for consideration by the Council. 4. Since the reform has replaced several independent estates with one large cooperative, an entirely new administrative structure has had to be established to channel orders and information from the coop's central manage- ment to far-removed points of production. As mentioned above, three adminis- trative levels have been created: the Central Administration, four Sectors, and ten Annexes. B. Operations and Peasant Participation 1-2. Day-to-day operations are handled primarily by the Sector and Annex chiefs. These positions are occupied by long-time residents of their respec- tive areas; to date neither administrative personnel nor workers have been rotated between physical areas within the coop. 3. The manager stated that discipl,nary problems have not arisen within the coop. 9. Coop leaders and the management seem to be honest and competent. 10-11. Individual parcels are not of great importance in this coop, how- ever ganado huaccho certainly is. The manager noted that it would be desirable to eliminate the huacchas for three reasons: (1) they competed with the coop's animals for scarce pasture; (2) they interbred with cooperative animals, reducing the quality of the coop's livestock; (3) they carried diseases and parasites. 22.6 Prior to the reform, pastaje was not charged. The coop has introduced the following progressive rate schedule: Less than 100 sheep no charge 100-199 head 41 per head per day 200-299 head 50 per head per day Over 300 sheep 10 per head per day In addition to charging rental for pasturage, the manager said that more drasti measures were under consideration, including the following: (1) requiring all privately-owned rams to be castrated; (2) separating the huacchas from the coop's livestock; (3) paying cash bonuses to coop members who owned no huaccha (4) reauiring the total elimination of the huacchas within a specified timg limit (e.g., 6-10 years). The manager pointed out that coop members have important reasons for owning livestock, and that their elimination was likely to involve a long and delicate process, for the following reasons: (1) people in this area have always owned livestock, and value livestock ownership per se. The traditional life-style of rural families is intimately related to livestock ownership. (2) Livestock ownership plays an important role in the rural household's economy, both as a ~regular source of income and as a source of funds in time of emergency -- a multi-purpose insurance policy. These two factors indicate that the elimination of huacchas may take a genera- tion or more, since young people are less rigidly tied to traditional life styles than their parents. Moreover, the coop can expect to eliminate these animals only if it can offer residents increased cash incomes and insurance mechanisms which compensate for the loss of these privately-owned assets. 13. Coop officials noted that capacitaci6n courses in the member cormunities might help ease the tensions which now exist between them and the ex-estates. 23.1 SAIS BUENA VISTA Dept. of Puno (highlands) Adjudication: Dec. 1972 750 members (not including 1,300 families in member communities) 49,383 has. (increasing) I. HISTORICAL AND NATURAL SETTING AND ECONOIC ASPECTS OF THE LR PROCESS A. Natural Setting The SAIS Buena Vista borders on Lake Titicaca and its administrative center is located between the towns of Puno and Juliaca. Even so, much of its land is too high to be cultivated. B. Socio-cultural Setting, 1. The SAIS is composed of a Service Cooperative, whose 750 members were workers on several estates expropriated under the LR, and 12 parcialidades ("restructured" by SINAMOS to constitute peasant communities) which have a population of approximately 1,300 families. 2. According to a social worker-employed by the SAIS there are-signifi-, cant cultural differences between comuneros, residents of parcialidades, and estate workers in the area. The parceleros are the wealthiest, most intelligent, and most entrepreneurial of the three; comuneros are more traditional and less business-like than the parceleros, but more wealthy and better educated than the estate workers; estate workers are less wealthy and educated than either the comuneros or the parceleros, more docile, and more accustomed to being bossed around. All residents of the region speak Quechua as their first language; many men but very few women also speak Spanish. 3. Housing on the estates was provided by the residents, not by the management. C. Pre-reform Estate Organization and Administration 1. To date some 32 properties with 50,000 hectares have.been fused to form the Service Cooperative. Prior to the LR the principal estate among these was the Hacienda Moro, which had over 30,000 has. Most of the properties were strictly livestock operations, their lands being too high for cultivation. Where cultivation was possible workers cultivated small parcels (generally less than 1 ha.); in all areas workers grazed privately-owned livestock. We have no data on pre-reform cropping or livestock numbers. 2. The owner of the Hacienda Moro was a veterinary, who took great interest in the management of his estate. According to Ministry and SAIS officials, other estates in the area were less-well managed. 23.2 D. The LR Process Initiated by the 1969 Law 1. As in most other estates in the region, peasants here participated only marginally in the LR process. As a SAIS off-cial noted, "toda la organ- izaci6n de la empresa vino del Ministerio." 2. interim management was handled by a Provisional Commission. 3. We have no verifiable production data for the pre-reform period, and can say nothing about the importance of economic dislocations caused by the reform process. One of the principal goals of the government in forming SAIS is to reduce tensions between ex-estates and neighboring communities by integrating these two types of units into complex social and economic units. In the case of Buena Vista this goal has by no means been reached. Officials of the Service Cooperative were openly critical of and antagonistic toward the communities, giving the impression that the communities could be expected to bring nothing but trouble to the SAIS. Cases of fence stealing, invasion of the Cooperative's lands, and poor work discipline were cited. But most damning of all, the communities were accused of not meeting their financial obligations contracted under the LB. According to these officials, the communities should pay (over a 20 year period) 37 million soles, out of the SAIS' total agrarian debt of 49 million! For understandable reasons the communities refused to pay "their share." Since most community members did not work in the SAIS and no communities had received benefits from their membership in it -- no profits have been distributed and no development pro- grams have been prepared for the communities -- I can imagine no reason why the communities should be expected to share the burden of the agrarian debt.. Nevertheless, the SAIS officials seem to feel that the communities' refusal to pay is a clear sign that they are incapable of collaborating with the reform process. The social assistant summed up her interpretation of the matter by stating, "el Quechua es flojo y sin verguenza, pues." 4. To date 32 ex-estates and 12 peasant communities (actually "re- structured" parcialidades -- See*Section II.B.4. of the Zonal Report for Puno) have been legally fused to form the SAIS. With time more estates and possibly more communities will be integrated into the unit. Half the delegates to the SAIS' Assembly come from the communities, and half come from the Service Cooperative. The majority of the cooperative's members were resident workers on the ex-estates prior to the reform. About 100 were residents of neighbor- ing communities who worked full-time (or nearly so) in the estates, and owned no land in their places of residence. 5. The agrarian debt, including interest, amounts to S/.49,000,000. E. Present Economic Situation 1. Of the SAIS' 50,000 has., 700 has. of forages, 170 has. of potatoes, and 70 has. of barley and quinua are cultivated. The SAIS owns 60,400 sheep and 1,600 head of cattle. Of the cattle, 100 are dairy cows maintained in a stable, and 200 are animals being fattened for sale. 23.3 2. For administrative purposes the lands of the SAIS are divided into 11 Sectors. Three of these are near the lake and have some cropland, the other eight are strictly pastureland. Each of the 11 Sectors has an overseer, (or " vigilante" as he is lkown in the SAIS) who is entrusted with the manage- ment of L1 productive activities in his sector, and 1reports directly to the SAIS' general manager. Since most of the Sectors have no agricultural production, the principal jobs of the overseers are to keep tabs on shepherds, administer periodic sanatation measures, and organize local breeding, culling, marketing, and sheering operations, The SAISI employees are the following: the administrator, the sub- administrator, the accountant, four accounting assistants, a social assistant, and three school teachers. Sector Heads are laborers, not employees. The SAIS plans to hire a veterinary. The SAIS' administrator was the administrator of the hacienda Moro prior to the reform. On several occasions since the adjudication he has come into conflict with the SAIS' president. The president is said to have stated on one occasion, "El sistema ha cambiado. Ya no eres patron, eres empleado mlo." According to SAIS and Ministry officials, levels of productivity on the SAIS fall shorft of those on the hacienda Moro prior to the reform, but exceed the pre-reform productivity levels of the.other estates incorporated into the SAIS. They feel that total SAIS production now exceeds the produc- tion of the ex-estates, as a group, prior to the reform. 3. The SAIS has received a long-term development loan from the Bank (BID funds) for 47 million soles. 4. Of the 750 members of the Serivce Coop the average number who work is about 540. In addition the SAIS must employ non-members on a year-round basis. The number of outsiders working for the SAIS averages about 40-50 during most of the year, but increases to 150 or more during the harvest season. 5. The basic wage level in this SAIS is S/.42-45. Truck and tractor drivers earn S/.85-90. Sector heads earn about S/.70. Profits in 1972 equalled three million soles, but were not distributed among the members. The SAIS has recently constructed a primary school and small dormitory for students, and a small medical center for SAIS members. The medical post is staffed by two highschool graduates who have taken brief.nursing courses. A doctor treats patients in the post every Monday, but the nurses noted that only 7-10 persons come each Monday, out of a total SAIS population of over 2,000 families! F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group SAIS officials interviewed were highly critical of Ministry "interven- tion" in SAIS affairs. In the first place, officials complained that the Ministry had created an enterprise which is too large to manage effectively. The social assistant noted that "the entire enterprise's organization came from the Ministry," and that it would have been much better to have "a 23.4 smaller and more manageable" unit. Later she qui-pped that rather than calling such large enterprises "empresas asociativas",they should be called "empresas de desorganizacion." Coop officials also stated that ineffective Ministry bureaucracy hamp6red the operation of the SAIS. Marketing, which is now regulated by the Ministry, seemed an especially sore point. Apparently, during last year's potato harvest Ministerial delays in issuing permits caused serious spoilage and economic losses. The social assistant was also scathingly critical of the Ministry's "paternal" attitudes and behavior in dealing with the SAIS. She noted that when SAIS members were asked, "Who is the patr6n of the SAIS?" the vast majority answered quickly "The Ministry." She concluded, summarily, "o hay autogesti6n aca!" (Throughout my interview with the social assistant a Ministry official was present and presented mild rebuttals.to her criticisms of the Ministry. After leaving the SAIS, the official noted matter-of-factly that she was a disruptive, counterrevolutionary element, and would soon be removed from her position by the Ministry, on the grounds that she was sabotaging the agrarian reform process). SINAI4OS was criticized for presenting too few courses, and courses which were of little practical importance to SAIS members. The social assistant noted that in general2 courses had little impact on the members, since they understand Spanish only with difficulty and, not being accustomed to sitting in classrooms, soon became bored and slept through the classes. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. A long-run development plan was drawn up for the SAIS by a committee of technicians from the Bank, the Minsitry and SINAMOS. The major economic decisions made in the SAIS, then, involve plan implementation, not planning per se. One half the delegates to the SAIS' Assembly come from the member communities, and one half come from the service cooperative. Thus, in theory, the communities should be able to influence the social and productive investment priorities of the SAIS in ways which are beneficial to them (e.g., construction of schools and bridges and financing of development projects in the communities). In fact, however, the communities have been able to influence SAIS activities only marginally. Unlike the pros- perous SAIS of the Central Highlands, Buena Vista has no Development Division to promote the economic development of the member communities. The social assistant remarked that after eight months in the SAIS she had not yet been able to visit all the communities even once. It appears that even the members of the service coop have only marginal participation in the planning process. A Ministry official stated that the manager and the social assistant attempted to monopolize control over SAIS planning, but were countered by the SAIS' president. 23.5 2. A workable division of labor among SAIS Committees and between these and the SAIS' employees does not exist. The Committees do not function, and most important decision-making seems to be monopolized by the manager, the social assistant, and the SAIS' president. 3. SAIS officials report on plans and activities in periodic Assembly meetings, but these are poorly attended, especially by delegates from the communities. 4. An entirely new chain of command has had to be constructed since the reform, due to the fact that several ex-estates were fused in forming the SAIS. The largest among the ex-estates, Moro, is now the administrative center for the SAIS, and its administrator has become the SAIS' manager. For administrative purposes the lands adjudicated to the SAIS have been divided into 11 Sectors, each of which is under the supervision of a long- time resident (a laborer, not an employee). Most work is done now, as in the past, by shepherds and small groups of laborers under the control of caporales. B. Operations and Peasant Participation 1. The SAIS' manager spends a great deal of time outside the office overseeing operations in the field. The SAIS is immense, and this involves a great deal of travel and long working hours. As stated in the previous section, each Sector has it Overseer, but the manager attempts to "drop in" unexpectedly in order to chek up on the performance of productive activities. 2. Since the reform, there have been very few personnel changes. In general, overseers have remained overseers, shepherds have remained shep- herds, tractor drivers have remained tractor drivers, etc. However, the SAIS is attempting to rotate personnel between different geographical areas, in order to break down pre-reform patron-client systems which hampered efficient management. Hopefully, bosses who are unacceptable within the estates can begin work in another "with a clean slate." At the time of my visit several Sector Heads had been moved between Sectors temporarily (their families remained in their original place of residence). The SAIS' president stated that in the future shepherds and laborers would also be rotated between working places. (Tractor drivers and other specialists have always traveled from area to area). 3. Tines are used in Buena Vista principally for sheep lost by workers and unaccounted for. In addition, the SAIS has fined one member who was responsible for two tractor breakdowns. The president noted that the first incident was excused; the second one, however, was unexcusable, and the member was removed from his position (given another job, not expelled from the SAIS) and required to pay for the repair costs of the second breakdown in monthly installments, 4. There is not a single wage rate for each type of work performed in the SAIS, but a narrow range, within which individuals receive different pay rates as a function of their senority and performance on the job, 23.6 7. Not all of the SAlS 750 members seek full-time work. The average number of members working on any given day is about 540. Other members occupy themselves tending their own livestock, crops, and other economic activities (e.g., marketing) or working outside the SAIS. 8-9. The SAIS' manager was the manager of the estate Moro prior to the reform. Some members (and the president) accuse him of continuing "paternal" management practices. 10-11. Only a small part of the SAIS' membership has private plots, and these are quite small. Ganado huaccho is*much more important, but members own fewer animals here than in most other enterprises visited in the de- partment. The total number of huaccha sheep is 12,840 (or only 17 per member); members own 1,700 head of cattle. (In comparison, the estate owns 60,400 sheep and 1,400 cattle). Pasture rental for the huacchas is more costly than in the other enterprises visited: members with less than 40 animals pay nothing, but those with over 40 pay S/.3 per head per month. 13. The social assistant emphasized the need for capacitaci6n, but was skeptical of the value of SINAMOS courses, the main reasons being: (1) the lack of sufficient personnel to provide courses for the widely-dispersed population; (2) most SAIS members understand Spanish with difficulty, and most SINAMOS officials do not speak Quechua; (3) SAIS members are not accustomed to sitting in classrooms, and become bored with the formal courses. D. Accounting and Information, Systems 1. The SAIS' accounts are kept by a full-time accountant and four assistants. Given the size and complexity of the SAIS, accounting is difficult, but seemed to be adequate and up to date. D. Income Distribution 1. See Section I.E.5. above. 2. To date, all SAIS profits have been reinvested, and members have not received a share in year-end profits. Profits for 1972 were three million soles; profits for 1973 were expected to be around 6-8 million. The SAIS' president and secretary stated (in separate interviews) that they felt all profits should again be reinvested rather than distributed. In their view, livestock improvements should be given top investment priority. Expansion and improvement of educational facilities was given second priority; the SAIS has just constructed a new primary school with cafeteria and dorm- itory, but needs beds, desks; blackboards, cooking equipment etc. 3-4. Members do not receive rations or housing; medical and educational facilities have been improved since the reform. Members do not, however, seem to be taking advantage of the medical services available, in part, due to the great distances that most members have to travel to reach the SAIS' medical post (which is located near the main office). 23.7 E. The membership of the service cooperative is made up largely of resident workers of the 32 ex-estates which were fused in the formation of the SAIS. About 100, however, were community members who worked nearly full-time on the estates and owned no land in their communities. Accord- ing to the social assistant, these "ingresantes" are resented by the old- time estate residents, since they are now moving to the estates, grazing their livestock on estate lands, and demanding cultivable plots -- thus increasing the already severe demand for pastures and cropland. 24.1 CAP MICAELA BASTIDES Dept. of Puno (highlands) Adjudication: August 1972 586 members (not including 1,586 families in member communities) 60,250 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF. TH LR PROCESS A. Natural Setting The CAP is located a few hours outside of Juliaca just beyond the provincial capital Lampa. The administrative center is approximately 4,300 meters over sea level. Potatoes and forages can be cultivated in only a few parts of the CAP. B. Socio-cultural Setting 1. As in the other enterprises visited in Puno, a slow, steady stream of outmigration flowed from this area prior to the LR. Since the reform many outmigrants have returned; the manager spoke of a "population explosion" in the estate. C. Pre-reform Estate Organization and Administration 1-2. The CAP was formed by,fusing several estates, thus we cannot speak of the'pre-reform organization and operation of a single enterprise. Moreover, we lack statistical data for the pre-reform period. The largest hacienda among those fused to form the CAP, known as "Huyta," was owned by the Sociedad Ganadera del Sur. The Sociedad employed a.full time manager who traveled continually between its 12 estates in Puno. In addition, each estate owned by the Sociedad had its own full-time administrator. The manager was a professionally-trained technician, the administrators were usually "practicos" -- men with experience but without formal technical training. Within each hacienda owned by the corporation geographically determined sub-units were under the supervision of Jefes or Vigilantes de Campo. 4. The estates of the Sociedad Ganadera were among the best-managed haciendas in Puno-, hovever, they were inferior to, e.g., Picotani and Posoconi (See Case Report No. 25). D. The LR Process Initiated by the 1969 Law 4. The CAP Micaela*Bastides is an unusual cooperative in that several of its "members" are peasant communities. This contradicts Peru's cooperative legislation, which requires all coop members to be natural persons. The number of "natural" members in the coop is 526; the number of families living in associated communities is 1,586. 24.2 The manner in which the communities participate in the coop's activities is a bit unclear, but my interviews with coop officials indicate that the communities' participation is very marginal. Most important decisionmaking is done by the coop's manager, the Council, and the Ministry. ro profits are distributed to the communities, and the Development Division of the coop does not fu:nction. E. Present Economic Situation 1. The coop cultivates only 60 has. of-potatoes and-100 has. of forages. The livestock population of the enterprise includes 100,000 sheep, 4,800 alpacas, and 1,800 head of cattle. Average wool production is 4 lbs. per sheep per year. According to the manager, overgrazing is a serious problem in the coopera- tive. Whereas the Ministry calculates the theoretical capacity of the pastures at 60,000 sheep-equivalent units, the ioop now grazes 100,000 sheep in addition to the 47,000 huacchas. To date, the coop has not diversified its activities away from the tradi- tional livestock and cropping patterns of the :ex-hacienda. The manager out- lined several ambitious projects, including the establishment of machine, car- pentry, weaving and welding shops, but at the time of my visit nothing definite had been done in this area. 2. The coop employs only one technician -- the manager... He stated that the coop was sorely lacking in technical personnel, and that four more techni- cians -- a veterinary, an agronomist, a- social assistant, and a medical doctor -- should be contracted. The membership, however, opposes the hiring of new employees. The coop is divided geographically into 10 Sectors, each with a full- time employee as overseer. In several Sectors the _iembership has requested that the overseer be changed. Two reasons seem to be responsible for these demands: (1) Prior to the reform, overseers and their "allegados" had developed-networks of patron-client relationships which allowed them to exploit hacienda workers and to use hacienda resources and products for their own personal gain. Coop members now want to break up these mafia-like organi- zations. (2) Under the hacienda system the overseers were typically abusive, and now the workers want to get their revenge by throwing the overseers out. The coop"s solution to these problems has not been *co exphl the overseers or make them work as laborers, but -to shift them to other Sectors within the cooperative. The enterprise has acquired a great deal of new capital since the expro- priation. Two pickup trucks, three large trucks, an ambulance, and a tractor have been purchased. Several hundred head of sheep have been imported, and a stable and dairy barn have been constructed. The coop plans to import 4,500 more sheep and 300 kilometers of fencing in the near future. 3. According to the manager, financing is not as probiematic as is the coop's technical investment capacity. Recently the Bank granted the coop a long-term development loan under the CAT program, but very little of the 24.3 available funds has been spent by the coop for two reasons: (1) the members are more interested in economizing funds (in order to save on interest) than in expanding the coop's productive capacity; (2) the members oppose hiring more technical personnel, necessary for the implementation of the development programs. The manager stated that he was in the very difficult position of having funds available but not having member support Ifor necessary investment projects. On the one hand, Bank and Ministry officials who drew up the loan document demand to know why the available funds are not being put to use; on the other hand coop members demand to know why such costly development projects are necessary, and refused to hire more technical personnel. The manager stated flatly that alone he could not manage the enterprise effectively; he needed help 4-. Employment for members is a pressing problem in the coop. The coop officials interviewed stated that whereas each shepherd could pasture 900 sheep, each was now pasturing only 500. This was not the result of worker inefficiency but a form of work sharing. In additionto employing excess members in shepherding, the coop has also initiated constrictiof projects with-the specific intent of absorbing labor. "Los socios exagen trabajo," stated the coop's president. The measures taken to date are obviously merely stopgap measures. The diversification projects mentioned in Section I.E.l. above could help the Situation if implemented, but no progress has been made to date. Not all of Icael Bastides' present members work full time for the coop. Some of the members do not wish to work, but as stated above, the lack of employment opportunities most want to work but.have no opportunities in the coop. During 1973 employment increased somewhat. In January 500 laborers and 44 employees were on the payroll; in September 517 laborers and 53 employees were working. Coop officials note that the employment problem is likely to become serious in the future for several reasons: (1) the number of feasible con- struction projects is limited; (2) the Ministry insists that the coop increase its membership. (3) the coop's population is expanding rapidly, and members try to obtain jobs for their children; (4) coop finances will not be able to support massive employment schemes which are not productive. 5. The coop's manager earns S/.18,000 per month. The basic wage level is S/.46 per day. To date the coop has not distributed profits among the member- ship, and the manager and coop's president noted that.they did not think this year's profits should be distributed either. Instead, they felt that profits should be used for investment which would increase employment and improve the quality of life for the coop's members. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group CooD officials noted that SINAMOS functionaries had not visited the coop since the adjudication. A neatly-painted sign on the wall of the coop's mess hall read as follows: El hombre propone, la mujer dispone. Viene SINAMOS, lo descompone. 24.4 When questioned about the sign the manager first laughed and then became auite serious SINAMOS ha venido y dicho 'Uds. los trabajadores son los patrones ahora. Uds. son los dueios de todo. Ahora Uds. son los que hacen y deshacen.' Y despues se han ido y dejado una mala situacion aca. No han hecho nAda positiva para la:cooperativa. According to coop officials, the Ministry has played a more positive: role than the SINAMOS in the reform process, but even the Ministry can do relatively little in direct benefit of the coop, since the local Ministry Office lacks a sufficient number of well-trained technical personnel to visit all the new reform enterprises often. Their visits are too few and too brief,' and Ministry officials often do not follow through on promises made to cooo officials and members. II. OPERATIONAL ASPECTS A. Production Planning and Peasant ParticiDation 1. As mentioned above, the coop's principal plan was drawn up by the Bank, the Mizistry, and SINAMS as part of their CAI program. The document was approved by the coop's Assembly, but problems have arisen; ,he present manager does not have the support of the coop's membership in contracting technical personnel necessary for the implementation of the plan (the plan assumed that these technicians would be hired),"nor do members feel that the costly projects outlined in the plan sould now be implemented. 2. The coop's Committees set up to deal with problems of credit, marketing, production, housing, .education, etc. do not function, -and thus the bulk of the responsibility for day-to-day operational decisions falls upon the coop's manager and,president. During the interviews in this coop,,both of these officials stated that they were overworked and needed assistance either both the Committees and from new technical personnel. (The manager again.stressed the need to contract technicians). 4. Even though the enterprise is large in both physical and economic terms, the administrative chain of command is extremely simple; the manager (the only professional in the coop, aside from the social assistant) is followed by the 10 Sector Heads, who relay orders directly to the laborers and shepherds and are responsible for the smooth flow of work in their Sectors. B. Operations and Peasant Particination 1. Most daily administrative tasks (assignment of personnel to particular tasks, technical supervision, etc.) are handled by the Sector Heads. Every two weeks all Sector Heads meet with the manager to discuss cooperative pro- duction and plans. -The manager also spends a part of each week traveling to distinct sections of the coop to observe and supervise work. When problems arise Sector Heads often travel to the central office to consult with the manager. 2. After the reform, many coop members complained that the Sector Head in their area was abusive and should be removed. In the Assembly it was decide: 24.5 that all Sector Heads should be rotated among the various Sectors on a tempor- ary basis. This measure has been opposed by the employees in question, since it requires them to be sonarated from both their families and their ganado huaccho. To date they have not been forced to comply, but the manager stated that they would soon be required to ao so. Aside from these 10 employees, a few other workers, such as tractor and truck drivers, are required to work wherever their services are needed within the coop; all other workers have remained within their Sector. 7. See Section I.E.4. above. 8. Prior to this job, the manager worked for a cattle ranch in Cerro de Pasco. The Sector Heads were all employed by the ex-haciendas in this area. They are long-time residents ,of.their Sectors, with ample experience in hacienda administration, but do not have technical training. 9. The manager, who seemed to be a very well-grepared, active, and compe- tent technician, was obviously overworked, as a result of the numerous demands placed on him by the coop's membership and the Ministry. According to him,, one factor making his job difficult was the members' lack of confidence in all technical personnel, and their ignorance of the importance of office work and management per se: El criterio de la gente es que el t6nico debe estar todo.el dia con ellos en el campo. Cuando hay que hacer papeles en la oficina dicen que estg descansando; cuando hay que hacer gestiones afuera de la cooperativa, dicen que esti paseando. Pero si uno est6 siempre en el campo, Lquien planea y quien administra? Ser mayordomo es una cosa y ser administrador es otra. 10-11. As in the other enterprises in Puno, parcels are relatively unimportant in Micaela Bastides. Ganado Huaccho is the most pressing problem of the coop, in the view of the manager. The ex-haciendas of the area charged 605 per month for each sheep grazed on estate lands. The cooperative is now charging rental according to the following progressive rate schedule: Number of sheep in category Category Charge per sheep (Sept. 1973) Less than-60 sheep no charge 1,125 60-200 sheep S/1.50-per month 17,408 Over 200 S/.3.00 per month 15,000 Even despite the sharp increase in pasturage rental'charges, the number of huac- chos has risen in the past year. in January 1973 there were 64,000 huacchas in the coop; in September there were 67,000. According to the manager, "Hay que tomar medidas fuertes ahora, o el numero de huacchas va a aumentar mas todavia." In the next Assembly meeting he planned to propose castration of the huschos, but expected strong member opposition. At several points in our interview, the manager noted that the cattle ranches oftheCentral Highlands (where levels of productivity are high and huac- chas do not exist or are kept under strict control) must be the model for the modernization of Puno's cooperatives and SAIS. 24.6 13. SINAMTOS has not taught capacitaci6n courses in the coop since the adjudication. The cooperative has hired a social assistant who gives talks to the members on cooperative principals and the coop's statutes and bylaws. It was not nossible to evaluate the effectiveness of these activities, but .our experience in other areas indicates that it is very difficult for a young woman to teach these sorts-of courses to illiterate rural men who are less-than enthusiastic about the agrarian reform and. cooperation. D. Income Distribution 1-2. See Section I.E.5. above. 3. The manager lamented that to date the coop had not been able to implement social programs of any magnitude -- neither medical care, nor schooling, nor housing. A consuners' cooperative was being organized; it is to be financed through member contributions apart from the production coop's funds. 4. This is one of the very few reform enterprises where even a rough esti- mate of the income derived by members from the sale of their own livestock was made. The figures presented are based on interviews with four coop employees: Production Ganado huaccho: assuming a stock of 200 animals, production of 1.5 lbs. of wool per year per animal, and annual sales of 40 animals Wool: 250.lbs. x S/.15 = /.3,750 Meat: '40 animals x S/.260 l0,400 Total 14-,150 Pastaje (the principal cash expense): assuming a charge of S/1.50 for 200 animals Cash expenses S/. 300 Net cash income S/ .13,850 E. Employment and Membership Coop officials noted that the Ministry was attempting to force the coop to expand its membership. At the beginning of this Case Report it was stated that several peasant communities were members of the coop. However, during my interviews these communities were never mentioned by coop officials, and it must be concluded that their participation in the coop is of little or no operational significance. 25.1 CAP POSOCONI Dept. of Puno (highlands) Intervention: Nov. 1969 Adjudication: 1971 75 members 1,769 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural.Setting The cooperative Posoconi is located outside the provincial town Ayaviri. Its pasturelands are among the most productive in the department of Puno, and the value of -,roduction per hectare in Posoconi is higher than in any other estate in the department. B. Socio-cultural Setting 1. This is one of the smallest production coops in the department, both in terms of land area and in population. The coop has only 75 members. 2. Ministry officials interviewed noted that the population of Posoconi is more "culturally advanced" than the populations of many other estates in the region, especially those remotely located in the mountains. Prior to the reform Posoconi was owned by the Sociedad Ganadera del Sur, and its workers were unionized. Under the reform, the estate's residents initially opposed the formation of a production cooperative, and a greatdeal of capaci- taci6n and motivation were necessary before the adjudication. General acceptance was achieved only after the coop paid its first year-end profits. C. Pre-reform Estate Organization and Administration 1. In addition to wool and mutton production, common to all estates in Puno, Posoconi maintained a large cattle herd and produced cheese and butter. Cropping was,very limited. 2. The Sociedad Ganadera employed a professionally-trained manager who traveled between its 12 estates in Puno, and a "pra"ctico" in each of them. Prior to the reform there had been a very high rate of turnover of estate administrators in Posoconi, and generally poor labor-management relations. (This is one of the reasons why residents now oppose the contracting of a manager for the coop). 3. The bulk of the estate's labor came from its resident population. Pay rates for November 1969 were as follows: Stable hands S/.20 (part-time, for milking) Laborers .25 Shepherds .30 Overseers .o Specialists (e.g., tractor drivers) .60 25.2 There was no medical post in the estate. Rations were not given. All housing was constructed by the hacienda residents. 4. in technological terms Posoconi was one of the most advanced estates in Puno, and had the highest value of productionper hectare of any estate in the department. 5. The estate's labor force was unionized prior to the reform. D. The LR Process Initiated by the 1969 Law 1. Posoconi was one of the first estates in Puno to be affected by the LR program. However, the estate's residents opposed the formation of a production cooperative. As an official in the Ministry Office of Ayaviri noted to me, this opposition to collectivization had two main causes: (1) the peasantry.of haciendas in Puno has always distrusted the "misti" -- "all of us mestizos and white people," as he so aptly put it -- and has strived to achieve the greatest possible degree of independence from outsiders. (2) After the 1964 LR law, hacienda workers expected the LR to result in parcel- ization of estates, not the creation of collective production units. Con- sequently, when Ministry and ONDECOOP officials began preparing the workers of Posoconi for the creation of a production cooperative, they felt that this was a fraud (not a true land reform ) aimed at creating state farms which would channel the estates' profits to the state, and not benefit the workforce. Only after lengthy capacitaci6n and motivation courses, and especially after,the first year-end profits were paid to members, did they begin to trust government functionaries and believe that the cooperative was indeed beneficial to its members. 2. The estate was managed by a Special Committee during the interim between expropriation and adjudication. According to the coop's present manager -- a member and long-time employee in the hacienda's office -- "El comite casi no se hizo nada." 3. The owners were not allowed to sell their livestock indescriminately, however the Ministry requested that they liquidate 800 sheep and 800 head of cattle, which were not deemed worthy of purchase by the cooperative. A pickup truck, a large truck, and all of the office equipment were removed by the owners. (The estate had no tractors). Aside from these forms of decapitalization, production was not signifi- cantly disrupted by the reform. In Nov.1969 estate owners turned over to the Special Committee 6,857 sheep and 1,541 head of cattle. 5. in Hovember 1969 the Ministry appraised the estate's assets as follows: Sheep S/.3,240,o0o Cattle 5,748,000 Land 1,018,000 Installations and Constructions 1,032,000 Other assets 12,000 Total 11,050,000 (not including interest) 25.3 E. Present Economic Situation 1. Piror to the LR the hacienda did not cultivate forages for livestock feed, but the coop now cultivates 300 has. of forages. One of the principal reasons for this is that -rior to the reform the owners could move their livestock between Posoconi and other estates they owned in accordance with seasonal pasture growth. (As noted in the Zonal Report for Puno, pas- tures are best in high areas during the rainy season, but lower areas are better in the dry season). Posoconi is one of the few enterprises visited in which the leadership actively seeks integration of their coop with other estates, In 1972 the coop requested that the Ministry adjudicate other lands to it. The manager was quick to note that they did not want to form a SAIS with community members -- they simply wanted more lands to complement the coop's limited resources. At present the estate has 10,429 sheep and 2,122 head of cattle. In addition, the coop's members have 2,513 head of huaccha sheep. The coop's sheep yeild 5.8 lbs. of wool per head per year; huaccha sheep yeild less than 2 lbs. The coop's manager noted that the number of cattle had reached or possibly exceeded the capacity of the coop's pastures, and that a determined effort was necessary to lower the number of huacchas. Cheese and butter production continue to be important sources of income and employment. To date, important diversification projects have not been implemented. 2. The coop's manager was the hacienda's cashier prior to the L. The coop does not plan to hire a professionally-trained manager. The principal reason stated for this is that the enterprise is too small to support an experienced technician's salary, and the coop certainly does not want to contact an inexperienced manager. The absence of a professional manager does not seem to have jeopardized the coop's levels of productivity or technical advance. 'Livestock numbers have increased markedly since the expropriation of the estate (cattle up 38 percent, sheep up 52 percent). Two new tractors, two trucks, and a pick- up have been purchased. A pump has been installed to provide water for livestock during the dry season (prior to the reform the animals were moved out of the area in the dry season). 4. Employment has risen as a result of the intensification of pro- duction. Employment is offered all Coop members. The average number of mem- bers employed is 70, In addition about 25 non-members are employed, on the average. 5, Pay rates for November 1973 are as follows: Stable hands (milking cows) s/.4o Laborers .40 Shepherds .50 Overseers .55 Specialists (e.g., tractor drivers) .65-75 25.4 The coop does not provide its working members with a ration, but all members may purchase consumption goods in the coop's store at less-than- market prices. The coop has installed a medical post and greatly expanded and improved the existing primary school. The number of students has tripled and three instructors with normal school training have been hired. Students now receive free schoollnches. The coop plans to construct new housing for its members in two parts of the estate. The Assembly voted to do,the bulk of the work using the "faena" system. The coop has requested housing plans from SINAMOS, but has not yet received them. F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Group The coop's officials expressed displeasure with the operation of Puno's Central Cooperative, stating that quite often consumption goods and inputs could be purchased more conveniently from private merchants -- "La Central ya no cumple con sus deberes. Muchas veces la Central sencillamente no tiene lo que necesitamos." The coop's manager noted that an important service which the Central could, but does not, provide is accounting. At present the coop has to draw up its accounts in preliminary fashion, have them approved by the Ministry, and then draw them up in final form -- a waste of time in the manager's view. II. OPERATIONAL ASPECTS A. .Production Planning and Peasant Participation 1 Member participation in planning and implementation of cooperative plans is more significant in the coop than in many others visited due to the absence of non-member professional manager. B. Operations and Peasant Participation 3. The ccop's manager noted that while discipline was not an important problem, it was to be expected that in any coop discipline would be more problematic than in a capitalistic enterprise. Absences from work and disregard for orders are sanctioned by warnings on first offense and 8-15 day suspensions on later offenses. 9. Both the coop's members and the Ministry seemed to feel that the coop's present manager -- a member, who -was the cashier in the hacienda prior to the reform -- is able and honest. No problems of corruption have arisen. 11. The coop is actively, and successfully, engaged in a campaign to reduce the number of ganado huaccho. The ex-hacienda charged a flat rent for pasturage -- 3-4 per day per head of sheep. The cooperative now charges rent according to the following progressive rate schedule: Less than 100 sheep 2 per head per day 101-200 sheep b per head per day over 200 sheep 5 per head per day 25.5 The majority of members have less than 100 sheen (the average is 34), and as can be seen from the following figures, the total number of huacchas is falling slowly but steadily: Date Number of Huacchos January 1971 2,870 January 1972 2,625 January 1973 2,513 The huacchas are kept apart from the coop's livestock, and no interbreeding occurs. C. Accounting and Information Systems 1-2. The cooDIs office staff does the coop's accounting, but must have a preliminary version of all accounts checked by an official in the Ministry's Office in Ayaviri before the final version can be drawn up. The manager is quite dissatisified with this arrangement, since it requires the coop to duplicate paper work. He felt that the Ministry's check was a formality of limited use, since very few errors or omissions were ever found as a result of this procedure. Both the coop's president and manager expressed hope that the Central Coop would some day provide accounting services for the coop. (They felt that the coop's office staff could handle most accounting tasks, but noted that for legal reasons many accounting documents must be signed by a licensed accountant). D. Income Distribution: See Section I.E.5. aoove. F. Continuing Role of the Union Since the LR tbe estate's labor union has ceased to function. 26.1 COMMUNAL COOPERATIVE LA UNION DE SORATIRA Dept. of Puno (highlands) Adjudication: Sept. 1966 87 Members 6,539 has. I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Union de Soratira is located.about two hours outside of the provincial capital Ayaviri, just across the .river from the village San Antonio, and- near the peasant community Soratira. B. Socio-cultural Setting 2. The idea for the formation-of a cooperative came from the peasant Com- munity Soratira'in the early 1960s, prior to the legislation of Belaunde's 1964 reform law. C. Pre-reform Estate Organization and Administration 1-2. The estate known as .La Union was owned.by the Sociedad Ganadera dEl Sur. The cooperative .was formed in 1966, and we have no data on estate produc- tion and administration prior to this date. D. The LR Process 1. In 1962 the peasant community Soratira began negotiations with the Sociedad Ganadera del Sur and with the national government which culminated in the expropriation of the estate La Uni6n in 1966. Members of the peasant community hoped originally that the government would give them the land free under its land refnrm program. 3. We have no data on pre-reform production or livestock numbers. The estate was turned over to the peasant community with no livestock. A major social dislocation produced by the reform was the fragmentation of the community Soratira. Not all of the community's members wished to participate in the cooperative formed to operate the estate; those who joined the cocp moved from the community to a new population center constructed in the estate; the leadership and administrative system of the cooperative differed from those of the community. About half the cooperative's members are not community members, but ex-laborers of the estate and a few "ingresantes" from outside both t'ae community and the estate. 4. Initially, the estate was operated as a "Granja Comunal" under the traditional leadership of the peasant community. But this proved an unworkable arrangement since the coop's membership differed from the membership of the community -- not all community members were coop members, and not all coop members were community members. Thus, an entirely independent organization, 26.2 with an independent leadership structure, had to be established. The term Communal Cooperative is a misnomer since the majority of the coop's members are not, in fact, members of the peasant community.- 5. At the time of the expropriation, the estates value was appraised at S/.1,200,000. The coop pays this amount to the national government over a 20-year period. E. Present Economic Situation 1. The coop cultivates small plots of potatoes, barley, quinua, and forages. We do not have precise data on the areas involved or quantities produced. At the.time the cooperative was constituted, each member turned over a few head of his own sheep-to form the original cooperative herd of 900 animals. Sinc that time the coop's herd has growu to 6,000 sheep. in addition, the coop owns 225 head of cattle and 340 alpacas. The coop's sheep yield about 3 lbs. of wool per head per year. 2. The coop's administration is composed entirely of coop members. No manager is employed. The coop's president is an "ingresante," not a community member. According to the coop members interviewed, levels of technology are about the same on the coop as they were on the estate prior to the reform. The president stated that he and many members felt that the coop needed a profession-- al manager, but could not afford one. The coop has requested technical assistance from the Ministry, but little aid'has been forthcoming. One specific example of the type of advice needed concerns the ensilage of fodder for cattle feed. The president noted that "In Posoconi they know how to make silage, but we do not. Of course there are a few of us who have experimented with some success, but that's no good; what we need is expert advice." Coop officials also noted the need to mechanize in order to expand fodder and livestock production. A tractor is needed to expand the area which can be plowed and seeded. (In this area timeliness is extremely important for plowing and seeding). Rental does not seen to be an adequate alternative to ownership of a tractor; in the past the coop has rented a tractor, but the machine did not arrive at the optimal time. 3. In 1973 the cooperative took out its first loan. This was in the amount of S/.1-,665,000,,for 535 imported sheep. 4. The coop cannot provide full-time employment for all its members. Twenty two shepherds and seven overseers are employed on a full-time basis; all other work (including office work) is done by part-time workers. There is a great demand for the shepherding positions, and these are rotated among the members -- each member occupyies the position for no more than a year at a time. Whereas members compete for the shepherding jobs, the coop has great' difficulty in getting members to report for cultivation and other tasks. The president noted that "In the Assembly the members decide to do all sorts of things, but the next day only half of them show up for work." The principal 26.3 reason for this seems to be that members all have crops'and livestock of their own to tend. The peak labor demand for cultivation on the coop's lands comes at precisely the same time as the peak labor demand for cultivation on the members' Ilots. 5. All workers receive the same wage rate -- S1.50 per day. Pay accounts are settled on an annual basis-, however, advances are made throughout the year. UTni6n de Soratira is the only reform enterprise visited in which wages were paid in commodities and livestock as well as cash. Each year at the ead of the accounting cycle the Assembly decides how much to distibute in profits, and in what form to pay both wages and profits -- generally part in cash, part in commodities produced, and part in livestock. In 1972 profit distributions amounted to S/.500 per member. At times coop members receive advances in excess of the wages due them. In these cases their debt to the cooperative is carried over to the coming year. The president noted that sooner or later all accounts are settled, and that there was no risk of a member's accumulating large debts and then leaving the cooperative without settling these: "No puede desaparecer, porque es de aqui; tiene su casa, su ganado,..." F. Public Agencies, Second-level Coops, and Other Institutions Dealing with the Grouo I was interested in visiting the cooperative Uni6n de Soratira primarily because I was told by Ministry officials in the Ayaviri Office that this was the only'reform enterprise they knew of in which the members had eliminated their ganado huaccho. Since the "huaccha problem" was considered one of the most important problems in all the other enterprises visited, I was acutely interested in learning how the coop's leadership had convinced the members to give up their livestock, and to what extent their approach could be adopted in other reform enterprises. Ministry officials indicated that La Uni6n Soratira was a very special case -- a communal cooperative in which the members had strong traditions of communal ownership and work, and thus their success in eliminating the huacchas was not likely to be replicated in other reform enterprises without lengthy programs of capacitaci6n and motivation. It should be noted that both official Ministry documents and two independent interviews indicated that: (1) the huacchas had been entirely eliminated in. La Uni6n de Soratira; and (2) this was the only reform enterprise under the jurisdiction of the Ayaviri Office which had eliminated the huacchas. I traveled to the cooperative with a Ministry official from the Ayaviri Office. (The official who drove me to the cooperative was not one of the officials in the Ayaviri office who told me there were no huacchas). Once in the coop, I was startled by two occurances: First, upon our arrival the Ministry official blew the horn of his Land Rover, apparently expecting a man sitting by the coop's office to jump up and greet him. When this man failed to do so, the Ministry official jumped out of the car and yelled, "Oye cojudo, no sabes presentarte cuando haya visita?" I cringed. Second, I was told by the coop's president and several members that the huacchas had not been eliminated. "Of course not," stated the president, "the members would never give up their livestock! We try to reduce the number 26.4 of huacchas, and hope to eventually separate them from the coop's livestock, but I doubt if we will ever be.able to eliminate them entirely, at least not for a very long time." These occurances indicate that Ministry officials know very little about the cooperative and tend to treat its members abusively and paternalistically. The president stated that the coop was .in great need of technical assistance from the Ministry, but had not gotten.much help to date. He also noted that SINAMOS had never visited the coop. Until 1973, when the Ministry arranged for the importation of several hundred sheep for each of the department's reform enterprises, La Uni6n de Soratira had never borrowed money from the Bank. The president was dissatisfied with the quality of sheep delivered'to the coop, stating, "El ganado no es tan bien. No parece importado." The coop purchases fertilizer from the Central, but buys the foodstuffs for its cooperative store from private merchants (in addition to the coop's own products which are sold in this store). The president stated, "It's not worth buying consumer goods from the Central. They want to sell only in large scale and do not offer credit." II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. There is active memoer participation in the planning process. All major questions are deliberated in the coop's Assembly, and the coop's officials and Councils see their principal function.as implementing decisions made by the Assembly. Public officials have not participated in the decision-making process, except in the case of the sheep imports of 1973. (The members have not been entirely satisfied with the imports, feeling that the imported animals were not of a sufficiently high quality to merit their high cost)". 2. There is no clear division of labor between specialized areas of plan- ning and implementation. No specialized Committees have power of decision. All major questions are delt with by the Assembly. 3. The Assembly meets the first Sunday of.each month, and discusses all aspects of the planning and administrative processes. B. Operations and Peasant Participation 3. The coop's president stated frankly that in La Uni6n de Soratira discipline was a major problem, "as must be expected in any cooperative." The principal form of indiscipline mentioned was failure to show up for work. "It makes my head ache," he said, "to keep after these people and make them work. They would rather tend their own livestock and crops." 7. Coop members compete for the shepherding jobs, and these must be rotated among the members. Each member (or more correctly, family, since the vi and children often do the shepherding) occupies the position for no longer than a year at a time. All other work in the coop is part time, and the problem here is not an excess but a shortage of workers. 26.5 10. The members' individual parcels are insignificant for the coop in terms of area and demand for land and water, but they do compete with the cooper- ative for one scarce resource -- labor. 11. In contrast to information provided by the Ministry, the huacchas are alive and well in La Uni'n de Soratira, and there is no sign of them disappear- ing, regardless of the communal traditions of many of the coop's members. The huacchas are not allowed to gra7e on the coop's best lands (the flat areas), but both huacchas and cooperative livestock graze on the slopes. Thus inter- breeding is a problem. The coop's president noted that with time the huacchas would be completely separated from the coop's sheep, but that this could not be expected to occur "overnight." In his view the segregation could not occur immediat'ely because of a lack of "education and discipline." 12. Assembly discussions are open to all types of questions. 13. Capacitacion courses or programs have not been conducted in the coop. C. Accounting and Information Systems 1. The coop's accounting is handled by a professional accountant employed by the Central. D. Income Distribution 1. Allmembers receive the same wage -- S/.50 per day. Wages are paid on a yearly basis, but advances in foodstuffs are provided throughout the year. 2. Profits are distributed in cash and in foodstuffs and livestock produced by the coop. In 1972,S/.500 were distributed to each member, part in cash, part in products. 3. The coop operates a store which sells products to coop members at less-than-market prices. The coop does not have a school; children attend the primary school of the nearby peasant community Soratira. (The school was constructed under Belaunde's Acci6n Popular program in the mid-1960s). No medical post is located on the coop. Housing is provided by the members not by the coop. E. Employment and Membership 1. The coop's original members came from three sources: (1) the peasant community Soratira, (2) the estate La Uni6n, and (3) neighboring areas, such as San Antonio. The approximate distribution of members between these three sources is as follows: Soratira 40 La Uni6n 35 Other places 10 Total 85 2. Only members are employed by the coop. 3. Pay rates are equal for all member-workers. 27.1 CENTRAL DE COOPERATIVAS AGRARIAS DE PRODUCCION AZUCARERA DEL PERU (CECOAAP) Dept. of Lima (coast) Installation: December 1970 12 members (sugar production coops with 24,000 members) I. HISTORICAL AND NATURAL SETTING AND ECONOMIC ASPECTS OF THE LR PROCESS A. Natural Setting Peru's Central Sugar Cooperative (CECOAAP) is located in Lima, the national capital. The 12 sugar production cooperatives which are affiliated with the Central are all located on the coast. Seven sugar cdmplexes,, producing 86% of the industry's sugar,, are located on the north coast, in the valleys of Lambaye- que, Zaha, Chicama, and Santa Catalina. Four other complexes are located north of Lima on the central coast. A single complex, Chucarapi, is located in the south. The 12 members of the CECOAAP produce all of Peru's granulated sugar, in- cluding all of the exported sugar. Cane is still grown on a small scale in a few coastal valleys and in several warm spots within the highlands, but this cane is used for the production of raw sugar (chancaca) and alcoholic beverages (aguardiente and chicha), not -granulated sugar. All cane in the members coops is irrigated. Irrigation water comes primarily from river water, but wells provide supplementary irrigation throughout most of the year. B. Socio-demographic Data 1. The following table presents data on population, area, location, member- ship, and adjudication dates for5 the CECOAAP's members: BASIC DATA: 12 SUGAR CAPs, MEMBERS OF THE CECOAAP Popu- Total Date of Cooperative lation Members Area Department Adjudication Tum6n 14,500 2,168 8,541 has. Lambayeque 19 June 1970 Cayalti 16,620 2,276 5,171 " 19 June 1970 Pomalca 21,93 3,457 15,819 " 1 Oct. 1970 Pucala' 22,500 2,966 22-,286 " 1 Oct. 1970 Casa Grande 33,543 4,499 30,089 La Libertad I Oct. 1970 Cartavio 22,264 3,429 17,268 " 1 Oct. 1970 Laredo 10,774 1,472 4,713 " 19 June 1970 San Jacinto 8,130 1,026 6,696 Ancash 1 Oct. 1970 Param.-nga 21,265 1,818 6,178 Lima 1 Oct. 1970 El Ingenio 552 146 764 " 13 June 1971 Andahuasi 1,794 375 1,083 IT 13 June 1971 Chucarapi 2,242 461 1,549 Arequipa 4 Feb. 1971 Total 176,147 24,093 120,157 Source: CECOAAP 27.2 2.-3. Socio-cultural differences are greater within the member coops than between them. Each coop is managed by a highly paid technical staff. The t6c- nicos--agronomists, chemists, mechanical engineers, doctors, etc.--are college- educated. Several are foreign born. Others have lived several years in Lima. Their fathers were generally agricultural or industrial technicians or: estate owners. In sharp contrast, the bulk of the sugar complexes' labor force is made up of relatively uneducated rural people who came to work on the estates from areas of poverty-striken minifundia in the highlands and other parts of the coast. In many cases, the tecnicos' houses are rustic by urban (Liman) standards, but they are luxurious in comparison to those of the laborers. Tecnicos always have indoor light and plumbing, and ample living and sleeping rooms. In several com- plexes--notably Cayalt', El Ingenio, and Chucarapi--housing for laborers is abys- mal. Tecnicos generally earn between S/.15,000 and S/.40,O0O per month; laborers earn less than S/.6,000. (These figures reflect cash wages ,and salaries, and do not include perquisites and year-end profits, which tend to reduce income dis- parities somewhat.) C. Pre-reform Estate Organization and Administration 2. Prior to the reform, the majority of Peru's sugar complexes were owned by Peri1vian families. The two principal exceptions were estates owned by the Grace Corporation--Paramonga.and Cartavio. Whether nationally or foreign-owned, each sugar complex was organized legally as a corporation. Each sugar corpora- tion employed a technical administrative staff on its estates and operated a business office in Lima. Offices in Lima were maintained for several reasons: (1) most of the owners lived in Lima and thus preferred to,hold board meetings there; (2) most owners hadnon-sugar interests in the capital; (3) the marked centralization of Peruvian economic, financial, and legal institutions in Lima made it almost impossible to handle all aspects of estate operation from the pro- vinces. Excellent communications were maintained between the estates and their prin- cipal Lima offices, usually by-radio. Routine administration was handled by the technical staff of each complex; major decisions were made in Lima. Each complex drew up its daily and weekly accounts and sent copies to Lima, where they were checked and where year-end balances were drawn up. Taxes were paid in Lima, and many legal matters were handled there. Financial operations were planned and executed by the Lima offices. Importation of equipment and other inputs was han- dled in Lima, as were marketing operations for both the domestic and the' foreign markets. Laborers and intermediate-level employees working on the complexes were paid locally; technicians employed in the complexes were hired in Lima and paid directly from the Lima offices. Expert foreign and national technicians were contracted on a part-time basis by the Lima offices to advise top-level manage- ment on improvements in field, factory, legal, financial, and other operations. Most operations of the sugar corporations were handled by each company on an individual basis. However, the Sugar Committee of Peru's National Agrarian Soci- ety (SNA) provided a degree of coordination and collaboration in certain matters. Among these, marketing was perhaps the most important. The Sugar Committee de- termined how both the domestic and the American market quotas were to be distri- buted among the sugar producers. The American market paid higher-than-world mar- ket prices. The Peruvian market often paid less-than-market prices.. A dual quo- ta system was created whereby producers were required to sell a.portion of their 27.3 total production on the domestic market in order to acquire the right to sell part on the American market. At the time of the reform approximately half the sugar produced by the major sugar corporations was being sold on the domestic market and half on the American market. The Sugar Committee also coordinated propagandistic and political activities of the sugar corporations and arranged for bringing foreign sugar specialists to Peru on certain occasions. 4. In technological terms Peru's sugar complexes are the most advanced of all Peruvian agricultural enterprises. Most operations are mechanized. In the- Chicama Valley the Grace and Gildemeister Corporations have mechanized cane cut- ting; in Lambayeque the' estates have experimented with mechanical cutting.but found hand cutting to be more profitable. Natural conditions for sugar cane cul- tivation are excellent on the Peruvian coast, and harvesting proceeds year around (except for a month when the factories are shut down for cleaning, repair,, and overhauling). Yields on the Peruvian complexes are among the highest in the world. 5. Most of the sugar complexes were unionized prior to the reform. The sugar union movement began in the Chicama Valley near Trujillo (Peru's third largest city) in the 1930s. At this time the sugar complexes were among the largest enterprises in the country and the large concentrations of first- generation laborers provided fertile ground for APRA party activists. Since the 1930s Apristas have been conspicuous among the leadership of the sugar unions and unionized sugar workers have provided the most dependable source of support for the APRA party. APRA and the sugar unions have been traditionally anti- military, and periods of military government have generally been periods in. which the APRA-controlled unions have been suppressed. In the 1960s the appearance of new populist parties (Christian Democrats and Belaunde's Acci6n Democritica) and the political compromises which APRA made with reactionary parties caused sugar workers to question for the first time the legitimacy of APRA control-over their unions. In,several sugar complexes Belaundista candidates ran for union office and in-some they won. By the time. of the reform, in 1969, APRA's control of the union movement was seriously threatened and factional conflicts and evidence of corruption within unions had made many workers skeptical of the labor movement. Of the larger sugar complexes, only Tum9Ln was not unionized. (The small estate Andahuasi, in the Huaura Valley, was not unionized either.) The owners of Tuma'n (the Pardo family) had been able to keep the union out by maintaining extremely tight control over the work force. No one could enter or leave the complex without permission from hacienda authorities. All political and union meetings were strictly prohibited. A vast corps of "spies" was paid by the ad- ministration to provide information on secretly held political or union meetings. Any workers caught fomenting union or political activity were dismissed from the estate immediately. No demands presented by groups of workers were accepted by the administration. Pay rates varied widely between individuals, and the owner maintained the guise of a "good patr6n." As one resident put it, If a poor, humble man came to the patr6n and told him that he needed a pair of shoes, the patr6n was likely 27.4 to buy shoes for his entire family. 'If another came and asked politely for a piece of tin to fix . his roof, he was likely to get a whole new roof.. But if ever any group of workers demanded better pay they and their belongings were loaded into a truck and set out on the road! 6. The sugar complexes were exempted from the provisions of the 1964 law. Nevertheless, the law motivated them to begin recouping the small plots of land many had granted to ,older workers. (The law's Title XV provided for the expro- priation of small-plots.) 7. Many of the sugar complexes had credit. cooperatives prior to the reform; however, experience with production coops was zril. D. The-LR Process Initiated by the 1969 Law 1. The sugar complexes were the first Peruvian estates affected by the 1969 law. Peasant or worker participation played no part in the decision to affect the complexes;*the decision was made on political and economic grounds: (1) The sugarcomp1exes were the largest agricultural enterprises in the country and their intervention had an immense impact on the national political scene. (2) The sugar owners were traditional political manipulators; by expropriating their estates they were denied the economic base from.which to attack the government's reform program. (3) The-few large sugar complexes were relatively easy to take over--they were going concerns with competent technical.staffs, established mar- kets, adequate capital, etc.. (4) The government wanted.to prevent the decapi- talization and managerial disorganization of these enterprises by affecting them immediately. 2. Within a week of the reform .the principal sugar complexes were taken over by the government. Military "interventores" were sent to each complex and to their offices in Lima to prevent both financial and physical decapitalization and to ensure that.normal production operations continued.. The sugar complexes' technicians were encouraged to remain "on the job," and the owners were allowed to remove from their offices personal papers and documents not related to the complexes. Most of the-complexes were family-owned, and members of the owners' families often occupied important administrative positions in the complexes and in their Lima offices. These people were encouraged to continue working until the state had promoted intermediate level personnel and contracted new techni- cians to take over their functions. In August 1969 a Supervisory Committee (Comite de Supervigilancia) was created by the government which was responsible for resolving administrative pro- blems related to production, finances, and marketing on the 12 sugar complexes affected by the reform. This high-level Committee was presided over by the Director General of Peru's Agrarian Reform Office and had one representative from each of the following institutions: Ministry of Economics and Finances, Ministry of Industries and.Commerce, Central Reserve Bank, National Bank, Agricultural De- velopment Bank, Ind.ustrial Bank, Ministry of Agriculture, ONDECOOP. Between December -1969 and February 1970 a Special Administrative Committee was established for each of the 12 complexps;.each Committee had the following 27.5 members: two representatives from the Ministry of Agriculture, one from the Agricultural.Development Bank, one from the Industrial Bank, one from the execu- tive secretariat of the Supervisory Committee, two workers' representatives (a laborer and an employee elected democratically by these two major groups of workers.), and the president of each pre-cooperatives Organization Committee. Soon after the initiation of the reform process the government contracted state managers for each of the complexes. In general these men were highly qualified professionals -with ample experience in the sugar industry. During the period of the Supervisory Committee they were relatively independent from state or worker control. With the creation of the Special Committees .their powers were restricted. Both the Supervisory Committee and the Special Administrative Committees met in Lima on a weekly basis. Executive Secretariats were established in order co maintain continuous administrative operations. Many staff members for the Supervisory and Special Committees were hired from the offices of the sugar corporations, which were, of course, closing down or reducing their staffs. Consequently, the state did not find it necessary to train a large number of new people to occupy desk jobs in the interim management institutions. The same people who had handled the paper work for imports in" Cayalti's Lima office continued to do so for Cayaltlls Special Committee; the same person responsible for handling Pomalca's sugar sales continued to do so in the complex's Special Co:mmittee; etc. Of course not all the sugar enterprises' employees went to work for the Special Committees. MAny of the older and more responsible employees chose to stay with their employers, or to retire or work for other private corporations. The Supervisory and Special Committees took over the functions of not only the Lima offices of the various sugar corporations, but of the SNA's Sugar Com- mittee as well. The Supervisory and Special Committees took up residence in a single building, and so all major administrative, financial, and commercial de- cisions for Peru's sugar industry came to be made under one roof. 3. No serious social or economic dislocations occurred during the .period of iaterim management. As pointed out under point 2. directly above, much of the office staff for the $upervisory and Special Committees was hired from among the office personnel of the .ex-sugar corporations' Lima offices. However, many of the higher-level employees did not choose to work with the new Committees. It appears that this loss of high-level employees did not cause serious problems for the operations of the Committees, due-to the economies of scale in centralizing all Lima operations. A somewhat smaller office staff and a much smaller corps of "bosses" were needed. 4. Prior to the reform the Lima offices of the sugar corporations provided both management and services (finances, marketing, accounting, purchasing). In- terim management bodies perpetuated this system. But since the formation of in- depenlent sugar coops each production unit-has become responsible for its manage- mentl)and a second level institution--the CECOAAP--provides services for the coops. According to a publication of the CECOAAP, the Central's principal func- tions are the following: (1) marketing of the products of the affiliated coops; (2) installation and operation of processing facilities; (3) management of credit 口 27.7 general services. The Comptrollership Unit concerns itself with the evaluation, control, and supervision of accounting and administrative,operations. Within the operational structure of the CECOAAP the Technical Division is of central importance. Its principal functions are the-follow-ing: (1) scientific investigation oriented toward the improvement, of cultivation, milling, and refin- ing operations; (2) extension and technical assistance in these same areas; (3) technical studies designed to-promote the expansion of sugar production and the agro-industrial diversification of'the member coops; (4) solution of special-pro- blems of coops affected by, e.g., earthquakes, floods, and fires. The CECOAAP's Financial Division administers the Central's finances, grants loans to member coops, negotiates loans from other financial institutions for members, advises members on specific financial matters, and. manages the insurance policies of all themembers. The Organization and-Systems Division specializes in the analysis of organi- zational methods and systems and the planning and implementation of improved methods and systems. The Division operates a co.mputec service in the Central's main office in Lima which processes accounting data for memb ' er coops. A comput- er facility is being installed in Chiclayo, and a study,is being prepared on the feasibility of installing a data processing center in Trujillo. The Social Promotion Division provides advice, support, and coordination for member coops in the following types of programs: health, education, cooperativ- ism, housing, public relations, and social services. The CECOAAP's budget for 1973 is summarized below: Governing Bodies S/. 430,000 General Management 2,386,ooo Administrative Division 17,927,000 Comptrollership 1,530,000 Legal Department 1,742,000 Technical Division 19,561,ooo Financial Division 5,n6,ooo Purchasing Division 12,702,000 Marketing Division lo,412,000 Social Promotion Division 4,76o,ooo Organization and Systems Division 6,782,000 Data Processing Center 18,364,ooo Legal Assistance Washington, D.C. 2,o46,ooo International Sugar Organization 319,000 Total 104,077,000 (slight difference due to rounding) E. Present Economic Situation 1, Production data for the 12 members of the CECOAAP are presented below: 27.8 PERUVIAN COASTAL SUGAP PRODUCTION DATA, 1963-72 Area Production Cultivated < Harvested Cane Sugar (-000 has.) (000 metric tons) 1963 72.7 50.2 · - T439. 807.0, 1964 76.3 48.9 T,380 769.5 1965 82.9 46.o 7,428 761.6 1966 83.3 50.1 7,855 825.1 1967 82.7 45.9 7,373 731.2 1968 74.8 52.1: 7,206. 751.8 1969 76.2 ih4h.1 6,193 632.7 1970 78.9 48.2 7,531 770.8 1971 83.6 47.7 8,291 882.5 1972 83.6 48.7 8,582 898.7 Sources: 1963-67: SNA 1968-72: CECOAAP 27.9 SUGAR PRODUCTION DATA, 1968-72 1968 1969 1970 1971 1972 (1) Cultivated Area (has.) 74,803 76,218 78,864 83,575 83,595 (2) Harvested Area (has.) 52,087 44,090 48,212 47,742 48,716 (3) Cane Milled (000 m. tons) 7,206 6,193 7,531 8,291 8,582 (4) Sugar Production (metric tons) ha Refined and White 204,361 193,343 219,249 265,1o4 270,273 4b Brown 136,634 169,461 162,262 169,134 184,422 4c Export Grade 409,838 269,850 389,253 447,958 444,007 4d Total 751,833 632,654 770,764 882,496 898,702 he Total Converted to 96% Purity 771,989 650,102 794,902 913,274 922,236 (5) Yields Sa Sugar Production per Cultivated ha.: (4e) - (1) 10.3 8.5 10.1 10.9 11.0 5b Sugar Production per Harvested ha.: (4e) -(2) 14.8 14.7 16.5 19.1 18.9 5c Sugar Production per ha.-yr.: (5b) con- verted to m.t./ha.-yr. 12.6 13.4 13.7 13.1 12.8 〕州 2-T CULTIVATED AREA 12 SUGAR CAPs, 1968-1972 (in has.) Year Cooperative' 1998 1,069 1970 1971', 1972 CAYALTI, 5,035 5098 5,732, 5,697 4,725 ANDAHUASI 1,358 1,288 1,581 1,502 1,522 CARTAVIO. 11,853 11,029 12,012 11,827 1:L,118 CHUCARAPI 1,326 1,264 1,334 1,334 1,394 CASA GRANDE. 15,339 17,335 18,596 19,864 20,056 INGENIO 385 301 .354 355 446 PUCALA 8,487' 8,lo6 8.3 118 8,148 8,198 LAREDO 4,296 4,181 3 j,646 3,685 4,813 SAN JACINTO 4,255 4,41o 2,709 3,255 3,359 TUMAN 7,672 T.,63.4. 8,727 lo,476 8,149 POMALCA 8,426 9'312-94: 9,584 10,055 12,589 PARAMONGA 6,371 - 5,978----- 6,471 7,377 7,226 TOTAL 74,803. 76,218. 78,864* 83,575 83,595 Source: CECOAAP HARVESTED AREA: 12 SUGAR CAPs, 1968-1972 (in has.) Year Coopera lve---- 1968 1969 1970 1971 1972 CAYALTI 4,433 3,224 3, 67 3,071 3,319 ANDAHUASI. 6ol 924 917 '.1,038 1,o67 CARTAVIO 8,198 6,326 6,izo -6,493 6,169 CHUCARAPI 797 74o 74o . 833 741 CASA GRANDE 10,398 8,032 10,761 lo,805 11,221 INGENIO 218 214 205 212 173 PUCALA 5,7o4 4,724 5,137 4,320 4,4o8 LAREDO .2,522 2,518 2,56o 2,770 2,865 SAN JACINTO 2,286 1,876 1,370 1,696 1,525 TIMN 5,855 5,775 5,832 6,237 6,528 POMALCA 7 252 6,195 6,753 5,885 6,152 PARAMONGA 3,823 3,542 3-2950 4,382 4,548 TOTAL 52,Q87 44,o,2o 48,212 47 742- 48,716 Source: CECOAAP 27.12 SUGAR'CAIE MILLED: 12 SUGAR CAPs, 1968-1972 (in metric tons) Year Cooperative 1968 1969 1970 1971 1972. CAYALTI 380,786 360,071 487,105 490,078 465,431 ANDAHUASI 108,542 175,904 179,677 183,439 163,270 CARTAVIO 1'13G,218 744,041 901,979 1'136,763 11159,710 CHUCARAPI 86,554 85,544 84,386 93,852 88,64o CASA GRANDE 1'772,643 1'196,326 1'797,798 2'117,239 2'207,245 INGENIO 35,761 34,144 34,391 35,032 29,672 PUCALA 826,879 779,647 867,470 857,103 913,596 LAREDO 402,819 403,851 478,398 506,078 546,222 SAN JACINTO 219,126 178,284 162,912 309,790 305,799 TUMAN 822,262 888,974 955,414 997,990 1'016,609 POMALCA 833,877 778,222 895,207 852,871 982,220 PARAMONGA 586;447 5682020 686,212 710,453 704,o54 TOTAL 7'205914 61193,028 7'530,949 8'291.356 8'5826468 Source: CECOAAP SUGAR PRODUCTION: 12.SUGAR CAPs, 1968-1972 (in metric tons). Year Cooperative 1968 1969 1970 1971 1972 CAYALTI'. 36,428 31,962 44,876 45,948 39,579 ANDARUAsi 9,156 17,520 17,420 21,273 18,893 CARTAVIp 122,654 76,247 89,673 109,228 123,975 CHUCARAPI 7,604 T,683 7,oo8 8,393 7,397 CASA GRANDE 178-,346 114,249 183,357 226,684 244,687 INGENIO 3'312 3,093 3,142 3,757 3,031 PUCALA 94,824 80,441 96,300 98,513 95,208 LAREDO 42,263 40,573 45,771 52,4o9 53,891 SAN JACINTO 23,778 16,691 17,097 34,423 29,929 TUMAN 92,,486 97,054 107,199 116,440 114,098 POMALCA. 83,663 79,090 92,307 94,898 100,210 PARAMONGA 57,319 59;051 66,614 70,529 7,808 TOTAL 751;833 632,654 770,764 882,495 898,702 Source: CECOAAP 27.13 These data show that over the last decade the area harvested has not changed appreciably, except during 1969 when a sharp drop occurred. In contrast, the. amount of sugar produced has increased substantially over time. Both cane and sugar production fell markedly in 1969, but this decline was not a "dislocation" caused by the LR process but the result of a drought in the late 1960s. Since 1969 production has increased steadily. Yields have not increased so sharply because cane has been allowed to mature longer in the field between cuttings. (Sugar cane is a perennial which is cut five or more times between reseeding in Peru. The longer cane matures)the higher its sucrose content, and the higher the yield in sugar per hectare. After a point, however, the sugar yield per hectare-year falls.) There has been much discussion of agro-industrial diversification on Peru's sugar complexes, but to date little has been done in this area. A great deal of time and resources was spent in planning two projects to be operated jointly Yy the sugar cooperatives of the Lambayeque Valley; (1) a paper and cardboard fac- tory; (2) a cattle feedlot. The first of these is still in the planning stage. (An ex-owner of a sugar complex in this valley stated to me that the project was already planned and financed at the time of the refcrm.) The second project was aborted when the coops could not agree where the feedlot was to be located (each coop wanted it) or how it should be financed or operated. Pucala' has installed a feedlot on its own. The military coordinator of SAFCAP in the area noted to me that there was a pronounced tendency for each of the coops to "pull in their own direction." Effective collaboration seems yet to-be achieved. The principal activities of the Central were outlined in Section I.D.4. ab.ove. To date it has restricted its operations to -the provision of services to its members, and has not become engaged in directly productive activities, such- as the operation of processing facilities. 2. Each member coop employs a professional staff which is responsible for handling technical aspects of production and administration. The CECOAAP employs 370 individuals, 260 of whom work in the Central's main office in Lima;.the others are stationed in the provinces, in such locations as the Central's field and factory research facilities in Trujillo and Casa Grande. (The Casa Grande experimental station was established years ago by the Gildemeister family.) While the reform did not result in an immediate ecodus of technical person- nel from the sugar industty, over time the number 6f tecnicos employed-in the sugar complexes has fallen, and now both the complexes and the-CECOAAP find them- selves inadequately staffed. A CECOAAP official stated to me in October 1973 that at that time one-third of the,"necessary" technical positions in the com- plexes were unoccupied. In Andahuasi, that coop's&representative to the CECOAAP stated that several positions within the CECOAAP were also unoccupied. Since sugar cane is a perennial and since routine field and factory operations can con- tinue without entirely adequate technical supervision; the relationship between the quality of technical sipervision in the complexes and the CECOAAP and1the performance of the coops and the industry as a whole is delayed and cumulative. Inadequate technological standards need not result in immediate declines in pro- ductivity and profits. The consequences are likely to reveal themselves in the following ways: (1) the lack of adequate investment and technological improve- ment over time; (2) the lack of dynamism and innovation during periods of crisis (natural or economic); (3) a gradual erosion of productive capacity, which, once lost, cannot be recouped in a short time. 27.14 One possible indicator of the adequacy,of management and technical supervi- sion is the pace of investment. Each of the sugar coops draws up an annual in- vestment plan. Progress in the implementation of programmed investment in 1972 is reflected in the following table, from a CECOAAP report: % Completion of Cooperatives Programmed Investment Laredo 81% Pucala' 67 Casa Grande 60 Tuman 50 Andahuasi 50 Cartavio 48, Paramonga - 47 San Jacinto- 46 Pomalca , 35 El Ingenic. 32 Cayalti 17 Chucarapi 15 Average for the 12 coops 51 Considering the two major categories of investment, directly productive and so- cial services, the percent completion was 52% and 51%, respectively. The CECOAAP document from which these figures are taken offers-no explanation for this poor investment performance. Management and problems-of technical supervision are, of course, only two of the many factors which can affect plan implementation. It is important to note that the poorest sugar coops, Ingenio, Cayalt', and Chucarapi, have the poorest investment performance. The CECOAAP stresses the importance of maintaining an adequate number of technicians in the members coops. The Central's Annual Production Operations Re- port for 1972 stated: In previous years we have emphasized the necessity of maintaining or recouping (according to each specific case) the technical cadres of this industry. ... In 1972 the yields and efficiency of certain cooperatives have fallen, and by coincidence these same cooperatives have,lost technical and administrative personnel in re- cent years. ...'Once again we insist that it is neces- sary to maintain or recoup the technical cadres of the sugar industry. 3. The CECOAAP pools funds derived from the sale of its members' sugar, and operates as a central bank for,the industry, lending funds to some coops and paying interest on the accounts of others. The total value of sales in 1972 was approximately 5,000 million soles. The total amount of interest paid by the Cen- tral to its members during the year was 51 million soles. The CECOAAP made 32 loans to its member coops for a total amount of 788 million soles (5% interest). In addition, the CECOAAP negotiated commercial bank loans for several coops in the amount of 150 million soles (14% interest). The CECOAAP has also negotiated dollar loans for its own and its members' foreign purchases. 27.16 DISTRIBUTED NET PROFITS:. MMERS OF CECOAAP, 1970-1972* Distributed Net Profits Distributed Net Profits (000 soles) Per Worker (soles) Cooperative 1970 :1971 1972 1970 1971 1972 TUMAN 23,533 24,662 38,618 10,855 11.375 17,813. CAYALTI 1,463 2,152 n.a. 643 946 n.a. POMALCA 25,500 14,697 32,222 7,376 4,251 9,321 PUCALA 34,330 28,818 16,704 11,575 9,716 5,632 CASA GRANDE 53,313 74,380 71,342, 11,850- 16,533 15,857 CARTAVIO 15,094 114,562 .13,777 4,402 4,274 4,o18 LAREDO 7,768 10,524 7,948 5,277 7,149 5,399 SAN JACINTO 2,542 7,143 6,605 2,478 6,962 6,438 PARAMONGA 10,349 17,198 11,704 5,693 9,460 6,438 EL INGENIO n.d. 1,051 19380 n.d. 7,199 9,452 ANDAHUASI n'.d.- 5,150 2,831 n. d. 13,733 7,549 CHUCARAPI n.d. 4,316 2,160 n.d.' 9,362 4,685 *Distributed net profits are 75% of total net profits; see the following table for clarification of these concepts. n.d. No data. DISTRIBUTION OF GROSS PROFITS: MMBERS OF CECOAAP, 1970-1972 (in thousands of soles) 1970* 1971* 1972* Gross Profits 1,005,638 1,294,098 1,106,54o Taxes and Agrarian Debt 328,721 528,426 416,269 Cooperative Funds Reserves 90,931 99,635 70,955 Education 33,846 39,098 34,755 Social Prevention 86,998 142,433 69,509 Investment 184,142 158,223 172,074 Cooperative Development 33,846 35,679 48,46o Interest on Social Capital** 15,299 17,651 20,795 Net Profits 231,856 272,954 273,723 25% Capitalized (57,964) (68,300) (68,431) 75% Distributed (173,892) (204,653) (205,292) *Data for 1970 do not include El Ingenio, Andahuasi, or Chucarapi; data for 1972 do not include Cayalti. **"Social capital" is owned by the coops' members, and interest is paid to them before profits are distributed. Source: CECOAAP 27.15 4.-5. The Central's members are the 12 sugar complexes. The coops' members are workers. It is important to note that while all the sugar coopst members are workers, not all workers are members. Each coop employs a number of non-members, generally to perform tasks. that coop members do not wish to perform, such as cane cutting. The following table summarizes employment,and income data for Peru's 8 largest sugar cooperatives, with 93/ of total sugar production and 92% of the coops' members (both cash and perquisites are considered in the income esti- mates):. EMPLOYMENT AND PERCENTAGE DISTRIBUTION OF INCOME BETWEEN MEMBERS AND NON-MEMBERS: 8 PRINCIPAL DMBERS OF. CECOAAP, 1972 Coop Members Laborers Employees~ Non-Members Total CooDerative Persons Income Persons Income Persons Income Persons Income TUMAN 60.72 69.92 14.25 20.51 25.02 9.56 100 100 POMALCA 66.29 74.83 14.26 19.38 19.44 5.78 100 100 CART.AVIO 75.47 71.90 18.48 27.01 6.05 1.08 100 100 PARAMONGA 68.15 63.28 26.34 35.87 5.51 0.85 100 100 LAREDO 73.36 71.38 16.99 27.12 9.65 1.50 100 100 CAYALTI 68.28 68.22 14.80 26.41 16.92 5.37 100 100 PUCALA 74.79 74.00 12.47 21.54 12.74 4.46 100 100 CASA GRANDE 72.40 78.69 11.40 17.91 16.20 3.41 100 100 GENERAL 70.10 73.08 15.11 23.05 14.79 3.87 100 100 Source: Santiago Roca, La distribuci'n del ingreso en las cooperativas azucareras del Per-d, 1968-1972 (Lima: ESAN, 1973), p. 186. 27.17 F. Public Agencies, Higher Level Coops, and Other Institutions Dealing with the Group The Ministry, the Bank, and other public institutions have few dealings with the CECOAAP. Until mid-1973 the Central operated independently of the SAFCAP, but since that time has come under its jurisdiction. Central officials expressed a degree of contempt for the work of SINAMOS: Los de SINAMOS estgn en los nubes. No se va a poder cambiar la mentalidad de la gente tan rapido. Aqul estamos manejando una empresa con todos los problemas reales. La CECOAAP se preocupa por los problemas t'cnicos-administrativos; no entramos en lo social. II. OPERATIONAL ASPECTS A. Production Planning and Peasant Participation 1. As stated in Section I.D.2. above, after expropriation of the sugar com- plexes the government established a general Supervisory Committee and 12 Special Committees to provide interim administration for the sugar industry. With the formation of production coops, the state made the workers and technicians of each complex responsible for the management: of their own enterprises, With the forma- tion of the Central, the governing bodies of the Supervisory and Special Commit- tees.(the representatives.of the various banks and public agencies) ceased opera- tions, but the large staffs of these Committees (the ex-office employees of the ex-sugar corporations and newly hired personnel) continued at their same jobs, but now are employed by the CECOAAP. I have very little information on the operation of the Central's governing bodies (Councils and Committees). However, two general statements can be made: (1) The Central is not "run by the government." The Central is a second-level cooperative institution with governing bodies made up of representatives,of-af- filiated base-level cooperatives. The Central's operations are "controlled and supervised" by the SAFCAP, but neither this nor any other public agency deter- mines the policies of the Central. (2) Many of the Central's functions are either highly technical or bureaucratic in nature, and representatives of the member coops participate only marginally in the. planning and implementation of these. An interview with Andahuasi's representative to the Central's Administrative Council indicates that the principal function of the Council is to review propo- sals of the Central.'s technical staff and to control and supervise their activi- ties--functions generally ascribed to a Vigilance Council rather than to an Ad- ministrative Council. Of course the Administrative Council may reject plans and programs proposed by the Centralts technical staff, but in practice this is sel- dom done. Technicians of the Central are more highly paid and more experienced than are most technicians employed by the member coops. Interviews in Pomalca indi- cate that the technicians of the member coops are often jealous of the pay, job security, and power of the Central's staff members, and critical of their work. The Central's tecnicos are seen as members of the "jet set" who spend more time 27.18 in their plush offices and jetting .around the country (and around the world) than they do in work of direct benefit to the member coops. One technician inter- viewed stated that the Central's technical staff was completely out of touch with social and technical conditions in the member coops, and that their technical as- sistance was of little direct use. Two specifid cases were cited: (1) In one instance the technician in question had argued that it may be unwise to mechanize cane cutting in the Lambayeque Valley in the near future because of the employ- ment problem which would result. A technician from the CECOAAP retorted that to delay mechanizing cutting operations would be to oppose progress, and that since most cane cutters were not coop members the social consequences were irrelevant. (2) The same technician proposed a modification in refining processes which would improve factory efficiency. His suggestion was brushed aside by a factory expert from the CECOAAP; later the technician's new process was patented in England and purchased by a large sugar corporation. The tecnico's conclusion: The professionals of the CECOAAP cannot take suggestions from us because then how could they justify their high salaries? Instead they prefer to take the advice of foreigners. For an idea to get from Chiclayo to Lima it must pass by way of London! 2. In the CECOAAP, more than, in any other reform enterprise visited, a com- plex division of labor exists within the planning and operational structures. The CECOAAP's organization was discussed.in Section I.D.4. above. It should be noted that most operations are carried out by the CECOAAP's technical and office staff, and not by representatives of the member coops. 3. The CECOAAP has a Public Relations Department which publishes a monthly newspaper which is distributed among the members of the 12 affiliated sugar coops. In addition, the PR Depar -,nt publishes pamphlets which explain to the population of its member coops the objectives, functions, organization, plans, and programs of the Central. Each coop has four representatives in the Central's Delegates' Assembly, and one on the Administrative Council. After each meeting of the Central's Councils and Assembly these delegates report to the Councils and Assemblies of their re- spective cooperatives. Each year CECOAAP representatives travel to each member cooperative to ex- plain technical aspects of-the coops' budgets and balance sheets before the Dele- gates' Assembly, and suggest modifications in each coop's plans and operations. C. Accounting and Information Systems 1. Each sugar cooperative keeps detailed accounts on purchases, invento- ries, employment, production, sales, and revenues. Periodically copies of these accounts are sent to the CECOAAP, where year-end accounting. documents are drawn up. The Central has established an IBM system for processing the accounting data of member coops, and sells its services to numerous non-sugar cooperatives. The Central is now considering the installation of IBM services in Chiclayo and Tru- jillo. (Since prior to the reform,TaIn [near Chiclayo] and Casa Grande [near Trujillo] have operated IBM data processing centers.) 27.19 2. Generally the Vigilance Council of each sugar coop contracts the ser- vices of an independent firm to audit its coop's books. An agency within SINAMOS also audits the accounts of each coop. The CECOAAP has a specialized comptrol- lership unit to provide internal auditing of its own operations. 3. The CECOAAP distributes annual reports on its operations and plans to member coops, but these do not reach the hands of individual members. The month- ly newspaper and occasional pamphlets are distributed to the members of affili- ated coops. However, technical details on operations, administration, finances, and plans are not included in these. Andahuasi's representative to the CECOAAP's Administrative Council complained that the balance sheets sent by the Central to the individual coops were not sufficiently detailed to allow adequate revision and comprehension by the coops' Council members. Thus, it seems that the indi- vidual members of the sugar coops have very limited sources of information on the activities of the Central. D. Income Distribution. See Section I.E.5. above. F. Continuing Role of the Union One of the principal planks in APRA's traditional political platform was Agrarian Reform, but the sugar unions never pressed for the implementation of re- form in their estates. The reason is clear; by eliminating the patr6n, either by land redistribution or by the formation of a production cooperative, agrarian re- form would weaken support for the labor unions and the APRA party. Initially the government hoped to break the unions and keep Apristas out of the new sugar coops' governing bodies by declaring that union and political lead- ers could not be candidates in cooperative elections for a period of time equal to the time these persons had held political or union office. The government also restricted worker participation in the coops' management in accordance with each coop's outstanding agrarian debt--the larger the unpaid debt the fewer workers were elected to the coop's Delegates' Assembly and the more workers were appointed by the government. Both these restrictions on worker participation in coop management were ill- advised. Workers resented the government's attempt to control their coopera- tives, and the unions seemed justified in their claim to be the only legitimate representative of the workers. In early 1972, after serious worker disturbances in several sugar coops, the government modified the coops' election laws to allow traditional union leaders to participate in elections and guarantee fully demo- cratic election of all Delegates to the coops' Assemblies. Workers with union background and known political affiliation have been elected to cooperative bodies, but in most cases they have not had a significant impact on the policies of their coops. The unions seem to have lost worker support since the implemen- tation of the new electoral reforms.