The Continuing Need for Land Reform – Guatemala

Linked to our presentation of Rosalina Tuyuc Velásquez – Guatemala.

International Land Coalition – making the case for civil society: Guatemala (no publication date indicated).

The population of Guatemala is c. 11 million, of which approximately 58% is rural. Guatemala has severe poverty problems. Over 75% of the population is estimated to be below the poverty line, and about 58% of the population is deemed to be below the extreme poverty line. The Western Highlands are the poorest region of the country. More than 70% of the country’s poor are rural, whilst more than 90% of the indigenous population is classified as poor.

Guatemala signed a comprehensive Peace Accord on December 29, 1996. It is hoped that this will bring 36 years of civil conflict to a final close. The Peace Accord has created an unprecedented opportunity for institutional and policy reform. A wide consortium of stakeholders is working together to ensure sustainable peace and the meaningful poverty reduction.

The Accord contains several specifically land-related elements. These include commitments relating to the establishment of a cadastral-based land registry, the creation of a Land Fund and the development of land conflict resolution mechanisms. Their inclusion in the Accord underscores the importance of land issues in contemporary Guatemala.

The marriage of resolutely conservative forces in rural areas and prolonged civil conflict mean that Guatemala is perhaps the country least touched by land reform in the region. The one historic attempt to implement redistributive reforms was rapidly reversed. As a result, both income and land distributional inequities are very high. The most recent agricultural census (1979) suggested a Gini coefficient of land distribution of 0.858, meaning that 2.5% percent of Guatemala’s farmers controlled over 65% of agricultural land, enjoying an average farm size of over 200ha, while a mere 16% of agricultural land is cultivated by over 88% of the smallest farmers (with an average size of 1.7ha) – only pre-Reform Peru and Colombia had more concentrated patterns of land distribution.

Economy and Poverty

The adjusted real GDP per capita figure (PPP$) for 1994 of US$3 208 disguises the extent of extreme poverty in Guatemala. The figure is unable to reflect the high distributional inequities and the abject poverty faced by the majority of the country’s indigenous peoples. The agricultural sector generates 25% of GDP, 55% of foreign exchange and absorbs over 55% of total population. It is dualistic, consisting of a modern commercial sector producing primarily crops for export and a traditional sector producing basic grains. Average annual agricultural growth has been a fairly constant 2.7% since 1990, but has failed to match population growth rates (c.3% p.a.). Agricultural exports consist mainly of coffee, cotton, sugar and bananas. Non-traditional agricultural exports, including vegetables and flowers, are increasingly important, and account for about 12% of total foreign exchange earnings and approximately 22% of agricultural export earnings.

Land – The dismal history of Guatemalan land reform

Many commentators would argue that the explanation of Guatemala’s land reform failures lies in the arrival of the United Fruit Company (UFC) in 1901. Keen to attract foreign investment, successive governments sold the company land at very heavy discounts or granted 25 and 99 years leases for proverbially peppercorn rents. As a result, UFC’s rapidly acquired over 200 000 ha for banana plantations.

significant changes regarding government attitudes to the poor rural peasant. The growth of rural unions was actively encouraged and legislation was introduced to protect the rights of tenants and to encourage the expansion of rental markets. The election of Arbenz in 1951 resulted in a period of intense but brief reform beginning with the enactment of the Agrarian Reform Law (Decree 900) on 17 June 1952.

The declared objectives of Decree 900 were to 1) eliminate feudal estates 2) obliterate all forms of indentured servitude 3) provide land to the landless and land poor 4) distribute credit and technical assistance to smallholders.

The developmental goals of the reforms was to develop a capitalist economy among the peasants and in agriculture generally and to facilitate the investment of new capital in agriculture by means of the capitalist rental of nationalised land.

The reform involved the expropriation of idle land and its redistribution to the landless and land-poor. It was declared that all uncultivated land in private farms of more than 270ha would be expropriated. Idle land in estates of between 90 and 270 hectares would be expropriated only if less than two-thirds were under cultivation. Farms with fewer than 90ha were to remain untouched. The reforms were moderate in as much as they only affected uncultivated land and were directed exclusively at large farms.

The amount of land distributed to each beneficiary was contingent on the use of the land – if it was land that was normally cultivated, between 3.5 and 7ha were distributed; if uncultivated, between 10.5 and 17.5 ha were distributed.

The landless were also granted access to leased holdings on large public farms. Beneficiaries were granted lifetime usufruct with an annual rent of 3 percent of the harvested crop. These use rights were untransferable but there were no restrictions on sub-leasing arrangements.

Beneficiary repayments on land expropriated from private landowners was set at 5% of harvested crop a year, for a period of 25 years. Once again, the land was non-transferable, although lease arrangements were permitted. The landowners were compensated according to the value of land claimed for tax purposes in 1952.

Expropriation began on 5 January 1953 and ended on 16 June 1964. During this period, the government issued 1002 expropriation decrees affecting 603 615 ha. Lifetime usufruct was granted on a further 280 000ha. Estimates of the total number of beneficiaries range from 78 000 – 100 000. Over a tenth of the total population benefited from the reforms. Agricultural production was unaffected during the reform period because a) only idle land was expropriated b) the threat of expropriation prompted many landowners to cultivate formerly idle land.

The strongest opposition to the reform process came from the United Fruit Company. At the time of the Decree, it was the country’s largest private landowner. Only 15% of its land however, was under cultivation (it is common practice in the banana business to leave large tracts of land idle, owing to demand fluctuations and potential pest damage). Of UFC’s 222 580ha, the agrarian reform expropriated 146 000 and offered just under US$1.2 million (the valuation on which the company had paid taxes). The company claimed that the value of the land was over US$16 million.

Neither President Arbenz nor his reforms remain active for very long. On 18 June, 1954 a mercenary force of less than 200 men, led by Carlos Amass, backed by US military forces invaded Guatemala and to wrest power from Arbenz. Within 9 days, Amass was flown to Guatemala City on a US Embassy plane to claim the presidency. The UFC had played an active role in encouraging US involvement, emphasising the threat posed to the US people by the supposed Guatemalan communists and their expropriatary zeal (Arbenz was not a member of the Communist Party).

Once installed in power, President Armass reversed the reforms quickly. Within a short period of time over 99% of all expropriated lands had been returned to their original owners. For the next 35 years, the government would act against the interests of peasants, and in particular, indigenous peoples, favouring the interests of large landowners and industrialists. Throughout the 1970s and 1980s peasants and indigenous groups were increasingly evicted from their lands to support the growth of commercial agriculture. The left-wing insurgency that had begun in 1962 became increasingly embittered and bloody. In response, the state directed ever-increasing amounts of expenditure at military investments and unleashed an ever-more brutal campaign against the insurgents and its supporters. The 1980s is described as the “lost decade”.

The 1990s brought a return to democracy and the lengthy negotiation of the peace process. After thirty years of proscription, the peace process has placed land reform back on the agenda.

The main aims of ongoing land reform programme is:

1) – increase access to land for landless and land-poor

2) – recognise territorial claims of indigenous peoples

3) – provide secure tenure guarantees to all smallholders

4) – title and register all unregistered lands (mainly smallholder farms)

6) – stimulate the rural land market in order to facilitate improved land holding distribution

7) – supported by National Land Fund, develop negotiated land reform approach

The landholdings of small producers are incredibly small, averaging less than 1ha (in 1979, the average size was a reported 0.46ha). Despite wide-ranging initiatives and reforms, large landowners remain reluctant to offer land in the market. Some accounts suggest that it is because they fear that these actions might catalyse renewed calls for widespread redistributive land reform or encourage land invasions (land invaders are always more likely to occupy land that they feel is unwanted). The reason may be far simpler. Power in Guatemala has remained intimately linked to large landholdings. In the absence of urgent need, many landowners are likely to value the psychological utility derived from ownership far more highly the short-term economic returns derived from land disposal. It may then, simply be because the large owners have neither the desire nor the preference to sell their land.

The public sector has not been completely inactive historically. Over the last 30 years, INTA (the National Institute of Agrarian Transformation) has created 852 settlements involving 118 663 beneficiaries. The reform sector settlements have been established with minimal infrastructure and productive investment in frequently marginal areas, and have therefore offered little opportunity for significant economic advance.

Current Programmes

Guatemala has attracted extensive international interest. The World Bank, IDB, EU, USAID, GTZ , Japan, France and Australia are actively engaged in Guatemala’s land reforms.

The main areas of activity are:

Registration – proceeding very slowly and seems to involve considerable transaction costs for poor beneficiaries – World Bank contributing US$35 million in support of land registration process and a separate US$25 million loan to El Petén. – USAID also involved in registration (with LTC)

FONATIERRA – a land fund created to support land purchase by small producers, supported by USAID (land grants), Japanese (US$408 000 to assist creation of fund) and World Bank . The final approval of the Land Fund law, establishing the institutions and defining norms, regulations and responsibilities has been delayed. It is anticipated that FONATIERRA will function according to the principles of Negotiated Land Reform, involving price bargaining between sets of willing buyers and willing sellers.

FORELAP- Fund for the Reintegration of Productive Labour – programme concerned with the reintegration of ex-combatants and managed by FONAPAZ

Ministry of Agriculture- IDB has supported reform process, involving fundamental restructuring (1990 – 10 000 employees / 1994 – 8 000 employees / 1998 – 1 700 employees)

Land Markets – research is being organised by FAO/WB/IFAD and local institutions to monitor evolution of rural land markets and establish monitoring database

Special Sectors: forestry and natural resources. A Forest Action Plan has been established by the Min. of Agriculture. The main objective concerns the demarcation of forest lands and the encouragement of sustainable forest resource management systems.

Land conflict resolution mechanisms. This remains an important issue, and is of particular relevance for the efficiency and long-term success of the land registration programme. Local registration processes are constrained by local disputes. At present, insufficient local conflict resolution institutions exist. There is a clear need for further work in this area.

Conclusion

Guatemala is embarking on a crucial state of history. For the first time a broad coalition has been forged and is working together in twin struggles for peace and poverty reduction.

The international community too has relished the challenges and hopes embodied in the Peace Accord. There is a risk of international overflow, leading to inevitable moral hazards, communication and coordination failures and even liquidity problems.

Crucial areas of urgent support and assistance remain. Issues such as land purchase, conflict resolution and the monitoring of NLR-type approaches will continue to be important.


Secure access to land helps reduce poverty

International Land Coalition, Via del Serafico 107, 00142 Rome/ Italy
Tel (+39) 065459 2445, Fax (+39) 06 504 3463, Email; Website.

Link: The World Factbook/Guatemala.

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