Case Study 5Organic Agriculture in Guatemala:

A Study of Coffee Producer Associations in the Cuchumatanes Highlands

By Octavio DamianiConsultant, Office of Evaluation and Studies

Report prepared for the Office of Evaluation and Studiesof the International Fund for Agricultural Development

Rome, February 2002

Table of Contents

I. IntroductionII. An Overview of Organic Agriculture in Guatemala and the Cases

A. Organic Agriculture in GuatemalaB. The Cases

III. The Effects of Organic Production on FarmersA. Investments and Costs of ProductionB. Yields and Product Prices

IV. The Policy ContextA. Economic and Agricultural PoliciesB. Policies Dealing with Organic Agriculture

V. Organic Agriculture in Institutions of Research and ExtensionVI. The Role of NGOsVII. The Role of the Cuchumatanes ProjectVIII. Conclusions and Potential Lessons

A. ConclusionsB. Potential Lessons

References

Annex: List of Persons Interviewed

Map 1: Location of organic coffee production in the department of Huehuetenango in Guatemala

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Acronyms

ADIPCO Cocolá Production Development AssociationAgexpront Non-Traditional Product Exporters AssociationAltertec Technological AlternativesAnacafe National Coffee AssociationChojzunil Agricultural Cooperative ChojzunilICTA Institute of Agricultural Science and TechnologyMayacert Certificadora Maya de Productos EcológicosNGO Non-Governmental OrganizationQuixabaj San José Quixabaj Agricultural Cooperative

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I. INTRODUCTION

1. This report provides an overview of organic agriculture in Guatemala. It focuses on a set of cases involving associations of organic coffee producers in the Cuchumatanes highlands in the north-western region of the country. The paper analyses the problems farmers have faced during the shift to organic production, the types of support they have received in overcoming the problems and the influence of government policies, programmes and agencies, non-governmental organizations (NGOs) and producer associations.

2. The farmer associations included in the study are the Cocolá Production Development Association (ADIPCO), the San José Quixabaj Agricultural Cooperative (Quixabaj) and the Agricultural Cooperative Chojzunil (Chojzunil). The three associations comprise indigenous producers of Konjobal ethnic origin. They are located in remote municipalities (Santa Eulalia and San Pedro Soloma) of the department of Huehuetenango, one of the poorest in Guatemala and the one with the lowest potential for agriculture. About 96% of the rural population and 78% of the urban population in Huehuetenango live in poverty, compared to 86% and 57% in the country as a whole.1

The municipalities of Santa Eulalia and San Pedro Soloma are not only poor, but also receive little attention from government and private agencies, mainly because of the lack of access roads connecting them with urban centres in Huehuetenango.

3. The coffee producers of ADIPCO, Quixabaj and Chojzunil have traditionally applied technologies characterized by little or no use of chemical inputs. However, the farmers used to sell their coffee on the conventional market, typically negotiating individually with middlemen or with a farmer association, the Asociación Barillense (the Barillas Association), based in a the city of Barillas, the urban centre closest to the communities of Cocolá, Quixabaj and Chojzunil. In the mid-nineties, members of the three communities started to work with the Cuchumatanes Highlands Rural Development Project being implemented by the Ministry of Agriculture, Livestock and Food and funded jointly by IFAD, the Dutch Government and the Government of Guatemala. The project provided the farmers with training in organizational techniques and with technical assistance. Eventually, this led to the creation of the three associations, which are aimed at improving the marketing of coffee and at facilitating the shift to organic production.

4. By 2001, the three associations included a total of 370 farmers of Kanjobal ethnicity. The farmers were cultivating 322 ha of certified organic coffee and obtaining 6 230 quintals (277 t) of output. All the associations were still receiving technical assistance and training from the Cuchumatanes project, but they had started to pay for part of their own certification costs and had been able to organize a system to monitor the compliance of their members with organic standards of production.

5. This report is based on fieldwork carried out in Guatemala between 10 and 21 September 2001. During that time, interviews were conducted in Guatemala City with government officials, NGOs and researchers at universities and agricultural research institutions. The author was joined in these visits by Mario Castejón of FAO and the Regional Unit for Technical Assistance, who has provided useful insights into the information that was emerging through the interviews. In the department of Huehuetenango, interview were also conducted with leaders and members of the coffee producer associations, as well as with professionals who had been working with the Cuchumatanes project.

6. The paper is organized as follows. The second section provides an overview of organic agricultural production in Guatemala and describes the main features of the three organic coffee producer associations included in this study. The third section focuses on the effects of the adoption of organic technologies on the output and revenues of the producers in the three cases. The fourth section analyses the influence of government macroeconomic and agricultural policies and the specific actions the Government was directing at organic agriculture. The fifth section analyses the approach to organic agriculture adopted by research and extension institutions in Guatemala. The sixth section

1 See World Bank (1995).

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looks at the role of the private sector in the development of organic agriculture, paying particular attention to NGOs. The seventh section analyses the interventions that led to the successful production of organic coffee by the producers of ADIPCO, Quixabaj and Chojzunil and focuses on the actions of the Cuchumatanes project. The eighth and final section provides conclusions and examines potential lessons for future project design.

II. AN OVERVIEW OF ORGANIC AGRICULTURE IN GUATEMALA AND THE CASES

A. Organic Agriculture in Guatemala

7. The cultivation of organic crops in Guatemala started in the late eighties. As in other countries such as Costa Rica, El Salvador and Mexico, organic agriculture did not emerge in Guatemala as a result of government policies and programmes, but of initiatives of non-governmental organizations (NGOs). These NGOs had been working with indigenous communities since the mid-eighties. The NGOs were not focusing specifically on organic agriculture, but were helping farmers with their traditional crops (such as coffee, corn and cardamom) and with some new crops (such as sesame and vegetables) and promoting models of production based on the use of local resources and the application of the least possible amounts of purchased inputs. This was very important because it later meant that, when many groups of small farmers decided to shift to organic products, they had to introduce only marginal changes in the technology of production. The NGOs were also influential in the spread of effective methods of training and extension that later became common among governmental and other organizations working with groups of organic producers.

8. During the nineties, large farmers started to adopt organic crops, mainly in response to the potential in foreign markets. While some of the crops (mainly coffee and cardamom) were among Guatemala’s traditional exports, others were new and were part of a vibrant non-traditional agriculture for export that was emerging in Guatemala at that time. By early 2001, the estimated area under organic cultivation in Guatemala had reached about 9 000 ha, around 0.7 % of the country’s total cultivated area (approximately 1.3 million ha). The share of organic production was rather small relative to all crop production, ranging from a low of 0.5% of the area cultivated in snow peas to a high of 5.6% in sesame (see Table 1). The most important crops were coffee, at close to 4 900 ha (54% of the organic cultivated area), sesame at 2 750 ha (30.4%) and cardamom at 1 330 ha (14.7%) (see Table 2).2 Most of Guatemala’s organic output went for export, with the exception of organic fresh vegetables, which were sold mainly on the domestic market.

9. The estimated number of organic producers had reached about 5 000 by 2001.3 Most of these were small farmers who were concentrating on the production of coffee, cardamom and spices, while large farmers and firms (about 30) were focusing on the cultivation of sesame and organic vegetables, as well as other crops. The most important of these firms was Cauque Farms, located in Santa Maria Cauque. This company undertook a joint venture with a US firm to produce and export organic broccoli. Cauque Farms later cultivated about 40 different organic crops, but, more recently, has focused on two (lettuce and spinach).

Table 1: Estimated area of organic cultivation, 2001 (ha)*

Organic Area Total Area OrganicArea/Total AreaCoffee 4 887 269 000 1.8Cardamom 1 330 49 000 2.7Sesame 2 750 49 300 5.6Spices** 23 n/a –Broccoli 42 3 300 1.3Other, mainly snow peas and baby corn 20 3 900 0.5

2 The areas under organic crops have been estimated by the Non-Traditional Product Exporters Association (Agexpront).3 Estimates based on information provided by Certificadora Maya de Productos Ecológicos (Maya Certifiers of Ecological Products, Mayacert) and Agexpront.

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Total 9 052Source: Based on information provided by Agexpront and the Bank of Guatemala.* Including certified crops and areas in transition to certification. ** Including lemongrass and wild marjoram. For the ‘organic area’ column, an additional 145 indigenous farmers have certified areas spread over 45 000 ha of the Mayan Biosphere Reservation.

Table 2: Supply of main organic products, 2000 (t per year)

Coffee 3 595Cardamom 1 285Sesame 1 650Sugar 750Bananas 550Broccoli 450Spices 130Botanical plants and natural forest aromas (potpourri) 31Guicoy 29Dehydrated rose of Jamaica 35Ginger 13Medicinal plants 3Annatto 2.5Carrots 38 000 unitsOranges 400 000 unitsLettuce 1.0 million unitsSource: Based on estimates by Agexpront.

B. The Cases

10. This subsection offers a description of the three associations of coffee producers covered in this study. A summary of the main features of the associations is presented in Table 3.

1. ADIPCO

11. The Cocolá Production Development Association (ADIPCO) is located in the community of Cocolá in the municipality of Santa Eulalia in Huehuetenango (see Map 1). By 2001, ADIPCO had 166 members (21 of whom were women). The members were of Kanjobal ethnicity and were cultivating 153 ha of certified organic coffee, from which they obtained close to 3 200 quintals (equivalent to 72 t) of coffee. The members of ADIPCO had been part of the San José Quixabaj Agricultural Cooperative (Quixabaj) until 2000, when they decided to create their own association with the support of the Cuchumatanes project. With the support of that project, ADIPCO provided various services to its members, including the marketing of coffee, technical assistance, training and credit. ADIPCO obtained its first organic certification from BCS – a foreign certification agency associated with a certification agency in Guatemala, Certificadora Maya de Productos Ecológicos (Maya Certifiers of Ecological Products, Mayacert) – in 1999, after a transitional period of three years during which the Cuchumatanes project furnished it with technical assistance, training and funds to pay for the certification. The organic coffee was exported to European countries through Excagua, a private marketing firm based in Guatemala City that specialized in the exportation of coffee and that had links with the Cuchumatanes project.

2. Chojzunil

12. The Agricultural Cooperative Chojzunil (Chojzunil) is located in the community of Chojzunil in the municipality of Santa Eulalia in Huehuetenango. By 2001, it comprised 49 Kanjobal farmers who were cultivating 66 ha of certified organic coffee. The total coffee production reached 1 460 quintals (equivalent to 33 t), which was exported through Excagua. The farmers of Chojzunil had grown conventional coffee until 1996, when they decided to shift to organic production with the support of the Cuchumatanes project. The project provided technical assistance and training to individual

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farmers and to the cooperative, credit to the farmers and subsidies for the certification. The cooperative was able to certify its first organic areas in 1998.

Table 3: Main characteristics of the coffee producer associations

Area of Coverage Main Activities Number of Members

Organic Coffee (ha)

Output (quintals)*

First Certification

ADIPCO Municipality of Santa Eulalia, department of Huehuetenango

Marketing of organic coffee, technical assistance, training, credit administration

166 153 3 200 1999

Chojzunil Municipality of Santa Eulalia, department of Huehuetenango

Marketing of organic coffee, technical assistance, training, credit administration

49 66 1 460 1998

Quixabaj Municipalities of San Pedro Soloma and Santa Eulalia, department of Huehuetenango

Marketing of organic coffee, technical assistance, training, credit administration

155 103 1 570 1999

Source: Based on interviews with leaders of the farmer associations.* 1 quintal = approximately 45.5 kg.

3. Quixabaj

13. Quixabaj is located in the community of San José Quixabaj in the municipalities of San Pedro Soloma and Santa Eulalia in Huehuetenango. By 2001, it had 155 members, of Kanjobal origin, who were cultivating 103 ha of organic coffee and obtaining 1 570 quintals (equivalent to 35 t) of product. The cooperative was created in 1999 following organizational work carried out over two years by the Cuchumatanes project, which also provided technical assistance and training to the farmers and the cooperative, credit to the farmers and funds to cover part of the costs of certification for the cooperative.

III. THE EFFECTS OF ORGANIC PRODUCTION ON FARMERS

A. Investments and Costs of Production

14. Like in other cases, such as the organic coffee producers of ISMAM in Chiapas, Mexico, and the producers of organic cacao and bananas in Talamanca, Costa Rica, the shift to organic production was relatively easy for the farmers of ADIPCO, Quixabaj and Chojzunil because it required relatively little change in their technologies of production and few investments. The poor roads of the region in which ADIPCO, Quixabaj and Chojzunil were active and the conflict that had affected Guatemala for the last few decades had been barriers to the access of the farmers to government extension services and financial institutions. This meant that the farmers had little opportunity to adopt the new technologies based on the application of chemical inputs that were being promoted by the extension services and supported by government programmes in other regions of the country. In addition, because the farmers lacked collateral, they were obliged to apply labour-intensive technologies rather than the technologies based on the use of chemical inputs, most of which the farmers would have had to purchase. Thus, even though they sold their coffee on the conventional market, the farmers had been applying technologies similar to the ones used for organic production.

15. The most important innovations that the farmers of ADIPCO, Quixabaj and Chojzunil had to introduce when they decided to certify their coffee as organic included soil-conservation measures and new crop-management practices, especially the introduction of new species of shade trees. These practices involved relatively low investments. The most costly of the changes were mainly the investments in labour for the construction of terraces and other soil-conservation measures. In addition, the associations needed to make investments so that they could collectively process the coffee so as to produce a uniform product and meet organic standards. These investments were more significant, but they were substantially subsidized by the Cuchumatanes project.

B. Yields and Product Prices

16. The interviews with organic coffee producers in Guatemala showed that those who had used chemical inputs before shifting to organic production often experienced a substantial decrease in

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yields during the first few years after the shift. The main reason for this fall in yields was the higher incidence of pests and diseases that had previously been controlled with chemical inputs. In contrast, the farmers of ADIPCO, Quixabaj and Chojzunil did not experience a drop in their coffee yields because they had not used chemical inputs (though their yields had previously been lower than those of conventional farmers). In fact, these farmers witnessed an increase in their yields following the introduction of new organic measures, such as a better shade regulation, the application of organic fertilizers, a better manual control of pests and diseases and the implementation of soil-conservation measures. The information collected through the monitoring systems of the three associations shows that farmers increased their coffee yields between a minimum of 38% and a maximum of 67% in only five years. New organic coffee plantations were reaching yields that were more than twice the average yields of organic farmers five years earlier.

17. The costs that the farmers of ADIPCO, Quixabaj and Chojzunil encountered in the production of organic coffee were higher than their previous costs because they had to apply more labour to implement soil-conservation measures and to harvest the greater volumes due to the increase in yields. The construction of terraces represented about 10% of the total production costs, while the maintenance of these terraces over the following years accounted for about 13% of the production costs (see Tables 4 and 5).

18. The sell of the coffee on the organic market allowed the three associations to receive more and to pay more to their members. In 2000, the members of ADIPCO, Quixabaj and Chojzunil received a price that was higher by 30% than the price received by small producers selling conventionally produced coffee in the town of Barillas. In 2001, the organic price reached GTQ 425 (USD 53.50) per quintal of coffee, 18% over the average price of GTQ 360 (USD 45.30) per quintal received by small conventional producers.

Table 4: Cost of organic coffee production using farm-prepared organic fertilizers (per ha)

Unit Quantity Cost per Unit* Total Cost*Shade regulation person-days 8.6 20 172Manual land cleaning person-days 34.3 20 686Pruning person-days 27.1 20 542Terrace maintenance person-days 45.7 20 914Manual disease control person-days 11.4 20 228Soil testing person-days 1.4 20 28Organic-fertilizer preparation quintals 23 10.0 230Maintenance of live barriers person-days 11.4 20 228Harvesting person-days 44 20 880On-farm processing quintals 16 55 880Certification** GTQ 544Total 5,332Source: Based on information provided by the Cuchumatanes Highlands Rural Development Project and World Neighbours.* In GTQ. GTQ 7.95 = USD 1. ** Farmers pay their associations for certification according to their output of coffee. The costs here have been calculated by dividing the number of quintals of coffee produced into the total cost charged to the associations by the certification agency in 2001.

Table 5: Cost of conventional coffee production using low-input technology (per ha)

Unit Quantity Cost per Unit* Total Cost*Shade regulation person-days 8.6 20 172Manual land cleaning person-days 34.3 20 686Pruning person-days 27.1 20 542Terrace maintenance person-days 45.7 20 914Manual disease control person-days 11.4 20 228Harvesting person-days 36.0 20 720On-farm processing quintals 13.0 55 715

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Total 6 856Source: Based on information provided by the Cuchumatanes Highlands Rural Development Project and World Neighbours.* In GTQ. GTQ 7.95 = USD 1.

IV. THE POLICY CONTEXT

A. Economic and Agricultural Policies

19. One of the most important factors in the policy context of Guatemala during the nineties was the signing of the Peace Accords in December 1996 after decades of armed conflict. These agreements included, among other items, initiatives in the areas of health, education, land reform, housing and the justice system. The initiatives were undertaken largely with the support of international donors. The conflict had affected mainly rural areas, especially in the north-western regions – where the three farmer associations covered in this study are located – and the central region. The Peace Accords led to more favourable conditions for agricultural production by facilitating product marketing, the access of farmers to public and private agencies and services and government investments in infrastructure. In the specific case of ADIPCO, Quixabaj and Chojzunil, the end of the conflict made possible the construction of a road connecting the communities of Cocolá and Chojzunil with the city of Barillas. The road was built in 2000 through the social investment fund, a programme implemented by the Government with the support of the World Bank. Before the construction of the road, the farmers in the three associations had to transport their coffee to the town of Barillas on animals, a trip that took one day and cost GTQ 30 (equivalent to USD 3.80) per quintal. The new road made the use of trucks instead of animals practical, thereby decreasing to GTQ 15 (equivalent to USD 1.90) and four hours the cost and time to transport coffee to Barillas.

20. In addition, the Government implemented important policy reforms during the nineties. The main economic reforms included state-sector reform, trade liberalization and financial-sector reform.

21. State-sector reform included the privatization of many services provided by government agencies, the restructuring of several government agencies (among them the Ministry of Agriculture, Livestock and Food) and a reduction in the number of employees.

22. Trade reforms were first undertaken in the mid eighties. The first reforms included the establishment of incentives for maquila exporters and non-traditional agricultural exporters and their domestic suppliers and income-tax exemptions that were related to these activities and were available for a period of ten years. The incentives included full exemption from import duties and the value-added tax on the raw materials, intermediate inputs and machinery and equipment used in the production or assembly of goods for export to countries which were not members of the Central American Common Market.4 While these actions represented a substantial step towards trade liberalization, the Government also imposed export taxes on selected products beginning in 1986.5

23. In the nineties, Guatemala promoted more rapid trade liberalization, including mainly tariff reductions and exchange-system liberalization. The Government reduced the maximum legal tariff

4 The Central American Common Market was created in 1960 to promote growth, industrialization and non-traditional exports. One of its most important aspects has been the application of a common external tariff on imports from third countries, while the products of member countries are exempted from tariffs and non-tariff barriers. The Central American Common Market includes Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. It originated in the Central American Economic Integration Programme established on 27 August 1952, when the ministers of the first four countries formed the Committee for Economic Cooperation of the Central American Isthmus. The basic instrument of the programme, which envisaged the creation of a Central American Common Market, was the General Treaty of Central American Economic Integration, which was signed by El Salvador, Guatemala, Honduras and Nicaragua on 13 December 1960 and became effective in June 1961 after deposit of the required instruments of ratification. Costa Rica acceded on 23 July 1962, and Panama became an observer in various mechanisms of the integration. See <www.imf.org/external/np/sec/decdo/sieca.htm>.5 See IMF (1998). The products subject to new export taxes included coffee (27%), sugar sent to the US (27%), cardamom (22%), bananas (16%) and non-traditional exports to Central American countries (4%).

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rate from 100% in 1987 to 19% in 1997, the average economy-wide tariff from 25% to 10%, and the dispersion of tariffs from 22% to 10%.6 In addition, the export taxes imposed in 1986 were removed. Meanwhile, the exchange system was urged toward liberalization when it became based on an interbank foreign-exchange market beginning in 1994.

24. Financial reforms included interest-rate liberalization, reductions in entry barriers and an expansion in the scope of banking operations. The supervisory framework for regulated financial institutions was also strengthened with the introduction of a large number of regulations on capital adequacy and the restructuring and strengthening of the office of the Superintendence of Banks.7 In addition, the National Bank for Agricultural Development was transformed into the Rural Development Bank.8 The National Bank for Agricultural Development had had a legal mandate to mobilize savings and deliver credit to small farmers. However, it had been ineffective since its creation in 1971 and shown low recovery rates, high operational costs and an inability to channel resources to small farmers.9 The Rural Development Bank was an institution with mixed (public and private) capital and was allowed to work as a second-tier institution. It eliminated subsidized interest rates and started to include non-agricultural activities on its agenda.

25. The Government also implemented important reforms in agriculture, including the following:

(a) Price controls (minimum prices and maximum consumer prices) on agriculture and food products were eliminated.

(b) Tariffs and non-tariff barriers were reduced. The average tariffs on agricultural goods were reduced from 21% in 1987 to 11% in 1996. In addition, import licenses for basic grains were replaced in 1992 by price bands with variable tariffs between 5% and 45%, which were then removed in 1995. Import licenses for several inputs, such as fertilizers, pesticides and herbicides, were also removed, as were export licenses for some agricultural products such as cardamom, livestock and oilseeds.

(c) The government agencies dealing with agriculture (specially the Ministry of Agriculture, Livestock and Food) were restructured. Most of the reforms were implemented at the end of the nineties as a result of Decree No. 114-97.10 They reforms included a reduction in the number of employees, the transfer of infrastructure and facilities – such as laboratories, warehouses, irrigation units, seed-production facilities and dairy-processing facilities – from the Ministry of Agriculture, Livestock and Food to farmer associations, NGOs and private firms, and a reformulation of the functions and of the organization of the services provided by the Ministry of Agriculture, Livestock and Food. The main changes in the organization of the ministry included the following:

(i) The provision of extension services was suspended, and the department that provided them, the Direction of Agricultural Services, was closed.

(ii) Several departments of the ministry were closed in 1998, including the Sectoral Unit of Agricultural Planning, the General Direction of Livestock Services, the Consultative and Administrative Coordination Unit for the Agricultural and Food Sector and the Human Resources Training Unit. Some of the functions and services of these departments were transferred to other departments of the ministry, which also started to contract out many of them in the private sector. For example, the implementation of phytosanitary services, such as pest-control campaigns (for instance

6 See IMF (1998). The average tariff between 1987 and 1996 fell from 26% to 10% on manufactured goods, from 21% to 11% on agriculture, from 36% to 18.5% on consumer goods, from 17.6% to 7.9% on intermediate goods and from 19% to 3% on capital goods.7 See World Bank (1999). Despite these measures, evaluations of Guatemala’s financial sector have stressed that deficiencies remained in the supervisory framework (IMF, 1998).8 Decree No. 57-97 approved in July 1997.9 See World Bank (1996).10 Decree No. 114-97 was approved on 12 December 1997. It established new functions for the Ministry of Agriculture, Livestock and Food.

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against the fruit fly in mango and melons) and the implementation of health controls on products derived from plants or animals, were transferred to the Non-Traditional Product Exporters Association (Agexpront), an association of exporters of non-traditional products created in 1982.

(iii) Other departments and institutions that were part of the ministry’s structure also experienced substantial changes. Among the most important besides the transformation of the National Bank for Agricultural Development into the Rural Development Bank was a new Forestry Law, which, among other changes, created a new decentralized agency, the National Forests Institute, to implement policies in the area of forestry.

(iv) The Government likewise initiated a reform in the agricultural research system by restructuring the Institute of Agricultural Science and Technology (ICTA) and establishing a competitive grant scheme based on new competitive research-financing mechanisms (the Agrocyt Fund and the National Science and Technology Fund).

26. The economic and agricultural policy environment was generally positive for export crops and favoured the emergence of a wide range of non-traditional export crops, including fresh vegetables (broccoli, snow peas and others) and fruits (mango and melons). The exchange liberalization led to the depreciation of the national currency and a price shift in favour of exports to countries not in the Central American Common Market, while liberalization measures such as the removal of import licenses for fertilizers and basic grains reduced costs and shifted relative prices in favour of non-traditional crops. Non-traditional exports were also favoured by the access to the US market. The US granted favourable access to its markets to Guatemala and several other Central American and Caribbean countries through the Caribbean Basin Initiative beginning in 1995.

27. While they created favourable conditions for non-traditional producers, the reform policies had some negative effects, mainly on small farmers. In particular, the restructuring of the Ministry of Agriculture, Livestock and Food reduced dramatically the access of small farmers to free services that had been provided by the public sector, especially extension services. In addition, the financial reforms had only a small effect on the non-traditional sector. The number of commercial banks expanded rapidly from 29 in 1993 to 35 in 1997, and the number of branches increased from 428 to 889.11 However, the outreach of the financial sector in rural areas remained quite limited because the branches remained concentrated in Guatemala City. A study of the rural financial sector found that only 3% of rural households borrowed from banks and that those households which used the financial services (credit and savings) of formal institutions were more well off in terms of income and assets. Most of the rural population who obtained credit relied on moneylenders and commercial creditors and had to pay interest rates that were much higher than those of formal financial institutions.12

28. Finally, some policies and government actions created indirect barriers to the development of organic agriculture because they often promoted the use of chemical inputs. For instance, some of the trade-liberalization policies, such as the elimination of import licenses for fertilizers, pesticides and herbicides and the reduction of tariffs on these inputs, made it easier and cheaper to import and use them. In addition, government agencies and programmes dealing with rural poverty frequently distributed inputs free in poor areas. For example, the Ministry of Agriculture, Livestock and Food recently distributed free seeds and fertilizers in the department of Chiquimula among poor rural communities affected by a drought. Government officials who were interviewed argued that they had been examining the possibility of distributing organic inputs among poor communities, but that they had not yet been able to identify appropriate suppliers of organic inputs. These actions have promoted the application of chemical inputs and made it more difficult to introduce organic methods.

B. Policies Dealing with Organic Agriculture

11 See World Bank (1999).12 See World Bank (1999), which also found that, while formal and semi-formal lenders charged 2.7-3.5% per month, moneylenders and commercial creditors charged 10.5% and 12.5%, respectively.

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29. No government agency or programme deals specifically with organic agriculture, and the Government has made little progress in developing legislation on organic production. The only specific government measure relating to organic agriculture is a ministerial agreement (No. 1173-99) approved by the Ministry of Agriculture, Livestock and Food on 9 December 1999, which resulted from discussions between the ministry and private-sector actors represented by Agexpront. The agreement created the National Ecological Agriculture Commission, a multidisciplinary entity that includes academics and representatives of the public and private sectors.13 The agreement also defined several commission functions in organic agriculture, the most important being the participation of the commission in the formulation of policies, support for education and training programmes, the collection of information and the drafting of regulations. The agreement also charged the unit of norms and regulations of the ministry with monitoring compliance with norms regulating the production, transport, packing, labeling, storage, marketing, control and certification of organic products.

30. While the steps laid out by the agreement and the creation of the National Ecological Agriculture Commission were important, the interviews showed that the agreement was not well known among government agencies dealing with agriculture, NGOs, or producers. In addition, though the commission met to elaborate operating rules, prepared a document to negotiate third-country status with the European Union and begun to draft regulations on the authorization of organic certification agencies to work in Guatemala, it had made little progress in influencing government policy. Moreover, the agreement and the commission had no part in the development of the producer associations included in this study or of organic agriculture in Guatemala generally.

V. ORGANIC AGRICULTURE IN INSTITUTIONS OF RESEARCH AND EXTENSION

31. Public-sector agricultural research and extension played only a marginal role in the emergence and development of organic agriculture in Guatemala. Although investments in agricultural research by public institutions accounted for about 40% of the total investments in agricultural research, budget cuts jeopardized the possibility of introducing new lines of research focused on alternative technologies. In addition, most research programmes were biased towards conventional agriculture, though a limited number of researchers were interested in low-input technologies and were carrying out studies on technologies that were useful to organic producers.

32. The most important public agricultural research institution in Guatemala has been ICTA, which was created in 1972 as a decentralized agency of the Ministry of Agriculture, Livestock and Food with its own legal status and functional autonomy. ICTA is governed by a board of directors consisting of the minister of agriculture (the chairman), the minister of finance, the general secretary of economic planning, the dean of the School of Agriculture of the public University of San Carlos and one representative of the private sector. The research work is focused on three areas, export products, food products and renewable natural resources, and there are 13 ICTA research centres distributed among various regions of Guatemala.14

33. ICTA was greatly affected by reforms implemented in 1997 that led to a redefinition of its objectives, structure and methodologies. Research carried out by ICTA became demand driven and focused on generating outcomes useful to farmer organizations rather than to individual firms or producers. The reforms also proposed that the organization establish alliances and joint ventures with other research institutions.

34. ICTA was also greatly affected by public budget cuts, which led to the implementation of a voluntary staff-retirement programme and a reduction in staff salaries. These measures resulted in a dramatic reduction in the number of professionals working at ICTA, from about 400 in the early

13 According to Article 3 of the agreement, the commission should include three members from the ministry, three members from Agexpront and the producer, exporter and marketing sectors and one member from university schools of agriculture.14 The research was being restructured at the end of 2001. One of the main changes would affect the ‘export products’ area, which was to focus on agro-processing.

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nineties to only about 70 by 2001. Unfortunately, many of the most qualified researchers were among those who left the institution. Only two researchers with doctoral degrees remained. In addition, ICTA has quite limited resources, which cover few research costs other than wages and salaries. All these problems and constraints made the introduction of new research subjects difficult, including organic agriculture. When the field work for this study was being conducted, ICTA was not carrying out any research project on organic agriculture. A few research projects were following the ‘integrated-pest-management’ approach, and a few others were working on specific technologies, such as the use of organic manure rather than chemical fertilizers for some crops, that could be applicable to either organic or conventional models of production. However, none of these projects was focusing directly on organic agriculture.

35. Other actors that have carried out agricultural research in Guatemala are universities, private research centres, consulting firms, NGOs and private food companies. Among them, the most important in coffee production – and thus potentially relevant for the farmer associations included in this study – has been the National Coffee Association (Anacafe), the association of coffee producers in Guatemala, which supports its members through research, technical assistance, training and the collection of statistics. The association was created in 1960 and has been funded through a 1% tax on coffee exports. By 2001, Anacafe had about 80 professionals, of which ten were involved in research and 70 in the provision of technical assistance. The research is carried out in four areas: (a) vegetal protection, which deals with the pests and diseases affecting coffee, specially Broca (Hypothenemus hampei); (b) soils, fertilization and crop management; (c) the environment, which deals mainly with the development of environmentally friendly technologies for coffee processing and (d) the development of new varieties. Field tests are carried out in three experimental stations located in the departments of Alta Verapaz, Santa Rosa and Retalhuleu and in the fields of selected farmers all over the country. Each area of research is managed by one coordinator and three field researchers.

36. Anacafe’s research programmes are designed by the researchers, who are said to take into account the demands of producers in an informal way, though there is no specific formalized method to include farmers in the design. According to the interviews carried out with researchers at Anacafe, the demand by producers for research on organic technologies had not been significant. However, farmers had been increasingly demanding low-input, low-cost technologies, especially for crop fertilization and the control of pests and diseases. This explains the fact that, although the institution did not have a specific research line or programme on organic coffee, it changed the guiding principle of research in the mid-nineties from increasing productivity to decreasing costs, in the process boosting its attention to the development of organic-type technologies. As a result, Anacafe began working on individual technologies that are useful for organic producers, such as the use of compost and bocashi as alternatives to chemical fertilizers, the control of Broca through the manual collection of the damaged fruits and the control of certain parasites through natural predators or the less expensive inputs permitted by organic production standards.

37. In addition, Anacafe has also participated in Agexpront’s Commission of Ecological Products since its creation, and it has carried out other actions to support member farmers who are relying on organic technologies. In each of its regional offices, the association has trained two extension workers in organic technologies of coffee production, sending them to follow courses and attend workshops in both Guatemala and neighbouring countries (Costa Rica and Nicaragua). As a result, Anacafe has a total of 16 extension workers – two in each of its eight regional offices – trained in organic coffee production and thus able to provide technical assistance to organic farmers. The association has also contracted Mayacert – the Guatemalan certification agency – to provide workshops on the requirements and challenges of organic certification. Finally, Anacafe has produced and published a manual on organic coffee that details the basics of organic production.

VI. THE ROLE OF NGOS

38. The number of NGOs working in rural Guatemala increased dramatically during the nineties, partly as a result of the peace agreements and of government and international programmes that were

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supporting productive activities. With some exceptions, most NGOs were working with a small number of clients and were concentrating on the provision of training, technical assistance and subsidized credit. In addition, since the late eighties, several had been helping farmers sell their products in the fair trade market and establish contacts with foreign buyers.

39. Although no NGOs were working directly with ADIPCO, Quixabaj, or Chojzunil, some played a significant part in the emergence of organic agriculture in Guatemala and had an important influence on the approaches of other institutions that did work successfully with the three associations. The most influential NGOs were Alternativas Tecnológicas (Technological Alternatives, Altertec) and World Neighbours.

40. Altertec had been working intensively with indigenous communities since 1988, receiving the support of several international donors, including the Inter-American Foundation, the Oxford Committee for Famine Relief, Miserior, the Kellogg Foundation and Plan International. Altertec focused on strengthening grass-roots organizations, training leaders and farmers and giving technical assistance to groups of farmers. By 2001, Altertec was providing technical assistance and training to 43 farmer associations, of which seven were in the process of obtaining organic certification. The technical assistance focused on agricultural production, organization and managerial skills, while the training for farmers, professionals and practitioners focused on alternative models of production.

41. The training among farmers responded to a well-organized programme that was based on the principle of ‘learning by doing’. The programme included 18 topics that were covered over a period of three years, after which a successful participant received a diploma. Most of the courses were provided in the native indigenous dialects of the participants. Farmers had to attend theoretical and practical training sessions during three days, after which they returned to their farms and had to apply what they had learned. Two months later, they had to attended additional training sessions over three more days. Successful participants obtained a ‘promoter’s’ diploma. The organization estimates that it trained about 90 practitioners and 6 000 leaders between 1990 and 1995, of which 30% were women.

42. Altertec was also very active in the dissemination of organic technologies, usually through projects carried out jointly with recognized research institutions that focused on the validation of technologies from other places and their adaptation for the environmental conditions of Guatemala. In fact, Altertec worked with several US and Latin American universities, including the University of Virginia, the University of Georgia, the University of Utah, the Universidad del Valle and the University of Zamorano, on a research project to validate organic technologies. It also signed a five-year agreement with the Universidad de San Carlos in Guatemala to investigate and provide training in organic methods of production, a project in which the University of California at Berkeley also took part. As a result of these research projects and Altertec’s own experience with indigenous producers, the organization prepared close to 30 manuals on organic production for various crops, including coffee, broccoli, snow peas and fresh vegetables, which were used mainly by extension workers.

43. Another important action that Altertec carried out was its direct participation in the creation of Mayacert, the first Guatemalan certification agency of organic products. Until the early nineties, organic producers in Guatemala had to depend on foreign certification agencies. These agencies did not have offices in Guatemala, so they had to send inspectors from other countries and thus pay the high travel costs and professional fees. This made the certification process expensive for new organic producers. Altertec was working with many groups of farmers that were able to obtain organic certification. When the organization contacted certification agencies, it found their services – for which Altertec would have to pay – too expensive. This led to discussions among Altertec’s members about the possibility of searching for alternative solutions. As a result, the organization decided to support the creation of an independent certification agency based in Guatemala, which could apply the international standards of the foreign certification agencies, but at a lower cost. Some members of Altertec left the organization and founded Mayacert in 1993. Mayacert was initially heavily subsidized by Altertec, but later became well known and thus able to generate substantial revenues of

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its own. By 2001, Mayacert had certified approximately 80% of the organic producers in Guatemala, and it had signed contracts with several foreign agencies to provide organic certification in their names, while Mayacert took responsibility for carrying out the field inspections.

44. Finally, Altertec played an active role in promoting collective action among associations of organic producers in order to influence policy-making. Thus, Altertec promoted the creation of the National Association of Organic Producers, a second-tier organization based in Baja Verapaz that included farmer associations with close to 17 000 members in total, though only a few of them had organic certification. In addition, Altertec was a member of Agexpront and participated actively in that association’s subcommission of ecological products since its creation and thereby influencing the discussions on policy issues.

45. World Neighbours worked in Guatemala between the early sixties and the beginning of the eighties, then left the country during the eighties and most of the nineties and only returned in 1998. However, it had been tremendously influential in the way many government and private agencies in Guatemala and other countries in Central America provided extension services to small farmers. Partly motivated by the difficulty of finding professionals who could provide extension services to indigenous communities in their own dialects, World Neighbours applied a model for the provision of extension services that was based on intensively trained farmers rather than on professionals. The organization selected community leaders and trained them in production issues and participatory techniques and then used them to provide extension services based on meetings with groups of farmers in their own communities and individual visits among group members. This model of extension was so successful that it was soon adopted by Guatemala’s Ministry of Agriculture, Livestock and Food and later became common in government extension agencies and NGOs in other Central American countries. A similar methodology was applied successfully by the Cuchumatanes project – which played the main role in the development of ADIPCO, Quixabaj and Chojzunil – in the provision of extension and training to farmers.

46. Finally, the Catholic Church has also been important in the development of organic agriculture both directly and through support for a number of NGOs (such as World Neighbours) working with indigenous communities. Like Altertec and other NGOs, the Church promoted models of production based on the use by these communities of their own resources, along with soil-conservation measures, but with the least possible amounts of purchased inputs. It also emphasized collective action through the strengthening of farmer associations and the promotion of collective labour in the farm fields.

VII. THE ROLE OF THE CUCHUMATANES PROJECT

47. Although it was not designed to include any specific steps to promote organic agriculture, the Cuchumatanes Highlands Rural Development Project had a substantial role in the development of the three associations of organic producers analysed in this study. The project was implemented by the Ministry of Agriculture, Livestock and Food between 1994 and 2000. It benefited 9 000 families in nine municipalities in the department of Huehuetenango. The families had an average yearly income below USD 1 600 and an average farm size of less than 3.5 ha. The total projected cost was USD 20.8 million, of which USD 7.5 million (36.1%) were provided by IFAD, USD 6 million (28.8%) by the Dutch Government, USD 3.2 million (15.4%) by the Government of Guatemala and USD 4.1 million (19.7%) by other sources.

48. The Cuchumatanes project provided extension, training, support for farmer organizations, credit and assistance in road construction. It structured its activities into the following components: (a) social organization and training; (b) marketing; (c) extension and validation; (d) credit; (e) irrigation; (f) soil conservation; (g) soil protection; (h) gender and (i) rural roads. Most of the 9 000 beneficiary families received technical assistance and training in organizational issues; about 4  000 families received credit for production and marketing, and close to 2 000 women received technical assistance and funding to implement various income-generating activities channeled through a programme involving community financial institutions.

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49. The actions implemented under the first three components were the most important for the three coffee associations in this study:

50. (a) The social organization and training component promoted the creation of farmer associations that would be focused on the marketing of the agricultural products of their members. In all three associations, the coffee producers used to produce and sell their output individually. Government agencies had promoted the creation of farmer associations all over Guatemala in the sixties. However, the Government itself became distrustful of grass-roots organizations during the armed conflict of the seventies and eighties because it considered them to be allied with the guerrilla movement. For this reason, farmers were often afraid of creating organizations during that period because they feared reprisal. The peace agreements of the beginning of nineties opened up once more opportunities for NGOs and government agencies to work in rural areas and to promote cooperatives and other types of farmer associations.

51. The Cuchumatanes project started to organize workshops and training sessions in the communities of Cocolá, Quixabaj and Chojzunil in the mid-nineties. These events were aimed at creating an awareness among farmers about the importance of collective action to improve the production and marketing of coffee. In addition, the component supported the creation of farmer associations by helping them design their statutes and obtain legal status, and it trained members in the management skills relevant to associations, such as the application of accounting methods and the organization of meetings and assemblies for decision-making. The project paid the salaries of the accountants who were working for each of the newly created associations and helped the associations manage their accounts and train their leaders. The creation of the three associations was thus a result of the promotion and training work of the social organization and training component.

52. (b) The marketing component was a key in the identification of organic production as a viable alternative for the three coffee producer associations. This component adopted an effective approach that was rather uncommon in the rural development projects of IFAD and other institutions. Instead of emphasizing the collection of information about markets and prices, it focused on making contacts with agro-processing and export-marketing firms that could purchase the output of the project beneficiaries. The director of the marketing component had had experience in the marketing of agricultural products and concentrated on interviews with managers of agro-processing and agro-exporting firms. Several of these contacts led to visits by firm managers to groups of farmers who were being assisted by the project and to agreements that created joint ventures among the project, the farmer groups and the firms. For example, an agreement with an agro-processing firm based in Guatemala City that exported snow peas led to the introduction of the crop in Huehuetenango. The processing firm had been signing contracts with small farmers in other regions, but had never worked in the Cuchumatanes highlands. The marketing component was able to convince the firm to work in the region. The firm provided seeds to farmers and technical assistance to the project in the production of snow peas, and it made a commitment to purchase the output from the farmers, while the Cuchumatanes project provided technical assistance to the farmers.

53. In the specific case of organic coffee, while the social organization and training component was promoting the creation of ADIPCO, Quixabaj and Chojzunil, the marketing component made contacts with Agexpront, an association of exporters of non-traditional products that was very influential in policy-making in Guatemala. Agexpront structured its activities around commissions and subcommissions, each of which included representatives of the main exporting firms in Guatemala. One of the main subcommissions dealt with fruits and vegetables. Each subcommission drafted a yearly programme and usually met every week to carry out activities and to discuss policy issues and emerging problems. In 1991, Agexpront created a subcommission of ecological products, which included producers of coffee and other crops such as fresh vegetables and cardamom. The Cuchumatanes project was on the subcommission, where it represented the three farmer groups. By 2001, the subcommission on ecological products comprised 34 producers, including the Cuchumatanes project. As a result of these contacts, the three associations started to participate

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actively in meetings of the subcommission and in workshops and training sessions organized by it, although the Cuchumatanes project and not the farmer associations themselves were formally members. While a direct representation of the farmer groups would have been more appropriate at this point, the Cuchumatanes project and the groups argued that the membership costs were now significantly lower and that the farmer associations could still send their representatives to the meetings of the subcommission.

54. Through the contacts with Agexpront, the farmer associations were able to learn about the growing international demand for organic products and about the basic requirements and the costs of organic certification. In addition, the participation in Agexpront helped them establish contacts with certification agencies and firms that were exporting organic products. In particular, the project established links with Excagua, a firm based in Guatemala City that exported conventional and organic coffee to European countries. Several medium-size and larger coffee producers had started to produce organic coffee in the late eighties, exporting it through Excagua. It was also possible to establish links with Mayacert, a certification agency of organic products which had agreements with recognized foreign certification agencies and was the such agency based in Guatemala. Mayacert sent one of its technicians to the Cuchumatanes region to visit farmers and evaluate the possibilities for obtaining organic certification. The first visit of Mayacert’s inspectors had positive results. The farmers in the three associations had previously produce and sold coffee on the conventional market, but they had a history of not employing chemical inputs. Thus, obtaining organic certification would not be extremely difficult. As a result, with the support of the Cuchumatanes project, the farmers decided to initiate the process of certification.

55. (c) Like the marketing component, the extension component of the Cuchumatanes project also adopted an original approach. The approach was original in two ways:

(i) Government extension services and rural development projects frequently focus on increasing the output and productivity of crops and animal-raising. They assume that there are no market constraints and that the output increases will thus be automatically reflected in higher farmer incomes. In contrast, the extension component of the Cuchumatanes project worked closely with the marketing component and used market information to try to determine which crops would be a viable alternative. It used the information and the agreements that emerged from its contacts with agro-processing and marketing firms to identify priorities in the crops and the technologies to be promoted. The technical assistance it provided to ADIPCO, Quixabaj and Chojzunil focused on organic coffee because of the contacts established by the marketing component with Agexpront, Excagua and Mayacert. The project paid the salary of one technician specialized in organic coffee, and it organized an extension service to provide appropriate assistance to the farmers.

(ii) Extension services are usually carried out by technicians who have professional or technical training. In contrast, the Cuchumatanes project provided technical assistance directly to the farmers – not only to the organic coffee producers, but to all the project beneficiaries – based on the methodology that had been introduced by World Neighbours, that is, reliance on intensively trained farmers rather than on professionals. The farmers were selected by their own communities according to criteria established through the project, which included their capacity and background as good farmers, their leadership abilities and their capacity to convince others to adopt innovations, a creative attitude and their commitment to the responsibilities they would assume. Once the farmers had been selected, they went through intensive training and then started providing technical assistance to the members of their communities.

56. In addition to the provision of technical assistance in the technologies of organic coffee production to the individual members of ADIPCO, Quixabaj and Chojzunil, the extension component helped the three associations – jointly with the social organization and training component – to organize internal systems to monitor the compliance of their members with the organic standards of production. The organization of a monitoring system was one of the requirements the certification agencies imposed before they would agree to provide organic certification to the farmer associations.

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The monitoring system had to involve unscheduled inspections at least twice a year among all the organic producer to make sure that they were complying with the organic standards. These inspections were separate from the ones carried out by the certification agencies once a year, and they were carried out by a team that usually included the full-time technician supported by the Cuchumatanes project, the trained farmer responsible for the provision of technical assistance to the farmers being visited and one association leader. In addition, the monitoring system had to maintain detailed information on every farmer, including the location of the farm and the area cultivated with coffee or other organic crops, the technologies applied for the coffee and the other crops, the yields, the total production of all crops and any other relevant production information. The monitoring system also collected information about every action that the project or other government or private agencies carried out among the farmers, such as training sessions, workshops, visits by the extension services, inspections and the provision of credit. The project paid the salary of the extension worker who organized the system and supervised the collection of information about all members.

57. (d) The training component of the project was also very important because it was responsible for training the farmers who acted as extension workers. The training among these farmers was based on a programme that included three phases, each focusing on separate issues. After successfully completing the programme, the participants – who had to attend courses and carry out activities in their communities – obtained degrees as ‘promoters’, ‘credit managers’, or ‘extensionist peasants’. Under the supervision of a project technician (usually an agronomist), these farmers then took on specific responsibilities in the implementation of the project. The whole training programme took about four years, as a farmer had to work for two years as a ‘promoter’ in order to be able to graduate as a ‘credit manager’ and then had to work for two additional years as a ‘credit manager’ to be able to graduate as an ‘extensionist peasant’.

58. The main characteristics and requirements of the three phases were as follows (see Table 6):

(i) A first phase in which the participants were community leaders who had been selected by the communities. This phase was based mainly on training on the job.

(ii) A second phase in which the ‘promoters’ had to attend courses on 17 topics, which focused on agricultural production and on techniques of extension, communication and participation (see Table 7). Participants who successfully passed the course evaluations and had at least two years of experience as ‘promoters’ received a diploma as ‘credit managers’ and began working for the project as preparers of credit applications for beneficiaries.

(iii) A third phase in which the ‘credit managers’ took additional courses and graduated as ‘extensionist peasants’. The programme had four specializations: organic coffee, conventional coffee, vegetable production and ovine-potato-carrot production systems. Each specialization had general and specific courses (see Table 8).

59. A total of 98 farmers graduated from the training courses organized by the project. All of them obtained the ‘credit manager’ diploma, and 25 of them went on to obtain the ‘extensionist peasant’ diploma (see Table 9). Each credit manager worked with an average of 45 farmers in one community, while the extensionist peasants provided technical assistance to an average of 150 farmers distributed over three communities. An extensionist peasant received from the project a monthly salary equivalent to USD 165. For example, a team comprised of two credit managers who were about to graduate as extensionist peasants took care of 300 farmers in five communities and were supervised in this by two agronomists, one a specialist in agricultural production, and the other in animal production.

60. Finally, the Cuchumatanes project heavily subsidized the cost of certification, paying for part of the costs charged to the three associations by the certification agency. This was important because during the first three years – a period commonly known as the ‘transition’ to organic production – the associations faced higher costs not only because of certification, but also because of the organization

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of the internal monitoring system, without yet receiving the premium organic prices for their products. The Cuchumatanes project agreed with the associations on a rising schedule of contributions by the farmers to cover the cost of certification, which went from 0% in the first two years to an expected 100% in 2002.

Table 6: Phases and the minimum requirements in the training of peasant leaders

Phases Diploma Candidate’s RequirementsI promoter community leader selected by his/her communityII credit manager two yeas of performing as a promoter successful completion of formal trainingIII extensionist peasant two years of performing as a credit manager successful completion of formal trainingSource: Cuchumatanes Highlands Rural Development Project.

Table 7: Contents of the training courses for credit managers

Courses on Livestock Production Courses on Agricultural Production Courses on Socio-Economic IssuesAnimal anatomy soil and water conservation participation techniquesSheep production organic agriculture basic documents for farmer associationsPoultry integrated pest management extension and rural communicationPork production horticultureHorse production basic grains

coffee productionmath applications for use in creditlegal issues applied to creditcredit administration and supervision

Source: Cuchumatanes Highlands Rural Development Project.

Table 8: Contents of the training courses for extensionist peasants

General Courses Specializations and CoursesPotato-Carrot and Sheep Production

Vegetables Conventional Coffee Organic Coffee

Extension methodologies agroforestry systems vegetables for export conventional coffee management

organic coffee management

Adaptive experimentation reproductive management, sheep livestock

integrated pest management

harvest and post-harvest activities in conventional coffee

management of harvest and post-harvest activities

Experimentation methods and design

artificial insemination of sheep

safe use and management of pesticides

marketing of conventional coffee

marketing of organic coffee

Plant anatomy and physiology animal nutrition and forages

management of irrigation systems

agroforestry systems in coffee

certification of organic coffee

Sustainable use of natural resources and environmental conservation

production of potato seeds

formulation of agricultural projects

formulation of agricultural projects

agroforestry systems in organic coffee

Entrepreneurial development creation of agricultural enterprises

formulation of agricultural projects

Marketing of agricultural output safe use of pesticides

Production systems formulation of agricultural projects

Types of social organization

Source: Cuchumatanes Highlands Rural Development Project.

Table 9: Number of graduates as credit managers and extensionist peasants, 1997-2000

Degree 1997 1998 1999* 2000 TotalCredit managers 19 35 25 19 98Extensionist peasants – – – 25 25Total 19 35 25 44 123Source: Cuchumatanes Highlands Rural Development Project.* The number of trained farmers is not equal to the number of graduates.

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VIII. CONCLUSIONS AND POTENTIAL LESSONS

A. Conclusions

61. Organic production in Guatemala expanded substantially during the nineties, reaching about 9 000 ha by 2001. However, the relative share of organic agriculture was still low, only about 0.7% of the total cultivated area, with the lows of 0.5% in snow peas and 0.7% in sesame. The most important organic crops were coffee (54% of the organic area), sesame (30.4%) and cardamom (14.7%), and most of the organic production was for export. Small farmers were the main actors in organic agriculture, though medium-size and large farmers have increasingly been taking up organic production.

62. As in other cases that are part of this study, government policies, laws and institutions targeting specifically the organic sector did not have a significant role in the emergence of organic agriculture in general or of organic coffee in particular. NGOs played the most influential part in the emergence of organic agriculture in Guatemala by promoting alternative models of production among indigenous farmers based on the use of local resources rather than on the purchase of external inputs. However, the three coffee producer associations analysed in this study took advantage of the Cuchumatanes Highlands Rural Development Project, a project funded by IFAD and the Dutch Government and implemented by the Ministry of Agriculture, Livestock and Food. This project was essential in helping the farmers in the three associations to improve their coffee plantations and their processing infrastructure, to meet the organic-certification requirements for their crops and to find new markets for their coffee.

63. The organic production of coffee by the three producer associations has had a positive impact on the incomes of small farmers. The shift to organic production does not require any significant on-farm investments, as the previously dominant production system was characterized by the application of labour-intensive technologies, and the farmers were not applying chemical inputs. The most important change required by organic production was the introduction of soil-conservation measures, which led to a rise in the demand for labour. In addition, the associations had to promote the collective processing of coffee and carry out the corresponding investments, which were subsidized by the Cuchumatanes project. Organic farmers received higher prices by selling through an exporting firm contacted by the Cuchumatanes project.

64. The organic models of production have been linked to positive effects on the environment, though this statement is based on qualitative evidence, as no measurements have been obtained to support it precisely. Most coffee producers in the three associations were using environmentally friendly technologies even before they certified their plantations as organic. They cultivated the coffee under the shade of native trees and employed little or no amounts of chemical inputs. Organic production has led to the introduction of further improvements by members of ADIPCO, Quixabaj and Chojzunil, among them the application of soil-conservation measures, thus improving the conservation of soils.

65. The Cuchumatanes project was the most important actor in the development of organic coffee among farmers in Cocolá, Quixabaj and Chojzunil. The various components of the project made possible the creation of the three farmer associations, identified the good prospects of entering the organic coffee market and established links with exporting associations and firms and with organic certification agencies. In addition, the project helped the farmer associations organize monitoring systems to ensure that their members complied with the organic standards of production, provided extension services and subsidized the cost of certification.

66. Finally, the three producer associations were significant for several reasons:

(a) They made it possible to take advantage of economies of scale in the collective marketing of coffee by reaching volumes that were interesting for exporting firms. They thereby improved their capacity to negotiate better prices.

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(b) They were able to channel services (mainly extension and training) from the Cuchumatanes project to their members and to create some basis for continuing the provision of these services in a sustainable way, that is, without the support of the project.

(c) They were able to organize a monitoring system to supervise the compliance of their members with organic standards of production.

B. Potential Lessons

67. The experience of the three coffee producer associations in Huehuetenango and the effective action of the Cuchumatanes project have generated some useful lessons for future projects. Several of these lessons have already been identified in the other cases that are part of this study.

68. (a) Organic production may be an attractive alternative for small farmers if they do not need to introduce substantial changes in their technologies of production. This happens when the production systems of the farmers are characterized by labour-intensive technologies rather than the use of chemical inputs, a situation that is common among small farmers elsewhere. In this event, the transition is likely to require a relatively short time and little investment, and yields are not likely to fall, as happens among organic farmers who were previously using chemical inputs.

69. (b) Farmer associations are essential for the shift of small farmers to organic agriculture for several reasons: (i) to take advantage of economies of scale in the marketing of output and the organic certification of the output; (ii) to design and implement a permanent monitoring system that ensures all members comply with the organic standards of production and that generates satisfactory information for the certification agencies and (iii) to promote new technologies that improve organic methods of production by raising yields and quality. The system may also serve other purposes for the marketing of output, such as the appraisal of the size of future harvests in advance.

70. (c) Some of the costs of the shift by small farmers to organic production need to be significantly subsidized, at least during the transitional period before certification. During this period (an average three years), farmers are facing new costs, but are still not receiving the premium price for their products, so they can become easily discouraged. The main costs that should be subsidized heavily include the following:

(i) inspections and organic certification;

(ii) the organization of a monitoring system, which requires training, technical assistance and some equipment (ideally a computer and software);

(iii) training and technical assistance in organizational matters, which should focus on strengthening collective action within the farmer associations and on creating a consciousness among the members of the crucial importance of complying with the organic standards of production;

(iv) technical assistance and training in organic technologies and

(v) investment costs, basically labour costs for the implementation of soil-conservation measures.

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References

IMF (International Monetary Fund) (1998), “Guatemala, Recent Economic Developments: Supplementary Information”. IMF Staff Country Reports, No. 98/72. Washington, DC: IMF.

World Bank (1995), “Guatemala: An Assessment of Poverty”, Report No. 12313-GU. Washington, DC: World Bank.

World Bank (1996), “Guatemala: Building Peace with Rapid and Equitable Growth”. Country Economic Memorandum, Report No. 15352-GU. Washington, DC: World Bank.

World Bank (1999), “Guatemala: Rural Financial Markets”. Washington, DC: World Bank.

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Annex: List of persons interviewed

1. Professionals and officials at government agencies, NGOs and farmer associations

Carlos Más, executive director, Cuchumatanes projectJulio De La Rosa, administrator, Cuchumatanes projectLeonel Chang, credit component, Chuchumatanes projectFelipe Hernández Gómez, marketing expert, Cuchumatanes projectRamón Díaz, chief, training component, Cuchumatanes projectJuan Antonio Mendoza, agricultural technician, Cuchumatanes projectEstuardo Ramírez, forestry technician, Cuchumatanes projectJosé Angel Rivas, accountant, Cuchumatanes projectMario Amézquita, vice-minister, Ministry of Agriculture, Livestock and FoodByron Contreras, general coordinator, Policy and Strategic Information Unit, Ministry of Agriculture, Livestock and FoodEduardo Calderón, executive, Agricultural Commission, AgexprontRicardo Santa Cruz, S&A Consultores en Desarrollo EmpresarialEduardo García, Faculty of Agricultural Sciences, Rafael Landívar UniversityNoe Rivera, general manager, MayacertBrigitte Cerfontaine, certification coordinator, MayacertMaría Beatriz Villeda de García, national technical unit, Regional Unit for Technical Assistance, Office in GuatemalaOscar Castañeda Samayoa, director for Guatemala, World NeighboursRafael Solórzano, executive director, AltertecGuillermo Sánchez, director, Productos Estabilizados Sociedad AnónimaRonald Estrada, Agrícola El SolLuis Calderón, manager, export products area, ICTAHumberto Carranza Bazini, assistant researcher, ICTAFernando Soliz, researcher, ICTAMaría Pacheco de Samayoa, consultant in organic agriculture, associate in Cauque FarmsEdgar López, Research Directorate, National Coffee Association

2. Farmers

Francisco de Francisco Juan, producer, manager, ADIPCOFrancisco Marcos, producer and president, ADIPCODaniel Mateo Diego, producer and vice-president, ADIPCOCristóbal Pedro Cristóbal, producer and secretary, ADIPCOEmilio Pedro Miguel, producer, extensionist peasant, ADIPCOEliseo Lorenzo Diego, producer, extensionist peasant, ADIPCOMiguel Angel Figueroa, president, executive council, Asocuch

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Map 1. Location of organic coffee production in the department of Huehuetenango in Guatemala

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