THE COFFEE INDUSTRY 0F GUATEMALA:
A GEOGRAPHIC ANALYSIS

Thesis for the Degree of Ph. D.
MICHIGAN STATE UNIVERSITY
MICHAEL I. BIECHLER
1970

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ABSTRACT

THE COFFEE INDUSTRY OF GUATEMALA: A GEOGRAPHIC ANALYSIS

by Michael J. Biechler

Although coffee has constituted the principal export and the main-
stay of the Guatemalan econonw for almost a century, there exists
little geographic information on the coffee industry of that nation.
This study alleviates the paucity by (l) analyzing and mapping the
distribution of coffee production, commerce, and movement; (2) delimiting
regions amenable to research, analysis, and planning; and (3) examining
the historical and current role of coffee in the national economy.

The primary sources of information for the study were field
investigations and interviews, topographic maps and air photos, and
statistical data from the National Coffee Growers Association of
Guatemala. Published and unpublished sources were utilized where
possible, particularlywith regard to historical, institutional, and
macro-economic considerations,

Coffee was introduced to Guatemala about the middle of the eight—
eenth century by Jesuit missionaries. Commercial cultivation did not
occur before about 1800, however, and expanded very gradually at first.
After 1850, coffee culture spread more quickly from its center of
introduction and early growth in the vicinity of Antigua and Guatemala

City. Foreigners, particularly German immigrants, came to control much

Michael J. Biechler

of the coffee production and trade. This situation culminated in the
expropriation of German holdings during World War II. Market disrup-
tions, coznpetition from other nations, nationalization of German
holdings, and investor caution dampened the rate of growth in the post-
War years. Nevertheless, coffee remained the economic basis of the
nation, its importance virtually unabated until the 1960's. Despite
the recent decline in the relative importance of coffee, that commodity
continues to dominate the economy. Guatemala is the world's third
largest exporter of "milds" coffees and the eighth ranking supplier of
all coffees.

Guatemalan coffee is grown between elevations of 1,500 and 5,000
feet, in areas with mean annual temperatures of 60° to 70° F. and 70 to
150 inches of precipitation annually. Three major regions and a number
of subregions and outlying areas are identified on the basis of tempera-
ture, precipitation, soil, altitude, production, acreage, yields, farm
size, and percentage of total area in coffee. Climate is the principal
factor responsible for regional differences, while altitude is the most
important determinant of intra-regional variation. In order of
inportance, the major producing zones are the West, Central—East, and
Cabin Regions .

From the main producing regions coffee is transported by truck or
rail to four ports: Puerto Barrios, Matias de Galvez, San Jose, and
Champerico, listed in order of the volume of coffee consignments handled
annually. The major movement of coffee is from the West and Central-

Eastern Regions to the Atlantic ports, via Guatemala City and the

Michael J. Biechler

transoceanic highway—railway system. The choice of ports is determined
primarily on the basis of foreign destination, most Guatemalan coffee
going to the east coast of the United States and to Eur0pe. Ten
exporting firms ship some 80 percent of all coffee leaving Guatemala,
but smaller exporters and some producers also ship to foreign markets.

Major conclusions of this study are as follows:

(1) Coffee is the most recent in a series of export crOps which
have dominated the econonv of Guatemala since before the conquest.

(2) Over the past century coffee culture has contributed much to
the development of the nation, while also being responsible to a
significant degree for many economic and social ills.

(3) A rather static spatial distribution of coffee production has
been determined more by physical than by economic factors, although the
latter are increasing in relative importance.

(’4) Many aspects of coffee culture, especially climate and
altitude, vary considerably through space and accentuate the need for
regional as well as national level research and planning.

(5) Coffee growers tend to sell coffee in cherry form in producing
zones characterized by relatively good roads, small farms, and seasonal
water difficiencies. Even more evident is a trend toward the sale of
coffee in pergamino rather than oro. Thus, processing is increasingly
becoming a mandate of exporters, rather than producers who have tradi-
tionally processed their own coffee. . Furthermore, the coffee export

business appears to be gradually concentrating in fewer and larger firms.

Michael J. Biechler

(6) Although definitely a part of the private sector, the coffee
business is increasingly the focus of government attention. This trend
is not likely to abate in the near future.

(7) Despite a relative decline of coffee dominance in the national
economy, which is likely to continue, the rank of Guatemala among world

coffee exporters is not apt to change significantly within the fore-

seeable future.

THE COFFEE INDUSTRY OF GUATEMALA: A GEOGRAPHIC ANALYSIS

by

Michael J. Biechler

A THESIS

Submitted to
Michigan State university
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY
Department of Geography

1970

PREFACE

Considering the preponderance of coffee in the economy of many
developing nations, it is curious that more effort has not been devoted
to research on coffee at the national level. In 1965, for example, nine
countries of the world depended upon coffee for at least 50 percent of
their total export earnings, a greater number than relied upon any other
crop to such an extent.

Fbr the author, an interest in coffee as an agricultural commodity
is concomitant with a regional interest in Latin America. There are
eighteen Latin American member countries of the International Coffee
AGraement, any one of which has a coffee industry worthy of study. A
review of’the literature, however, suggests that Guatemala is the
country in which coffee is most important, as a percent of total exports
and.in contribution to world supply, relative to the extent of research
that has been conducted on a national scale.

The scope of the analysis is broad. No major aspect of the
industry is neglected, but certain features are emphasized while others
are alluded to only briefly. Hence, the fellowing chapters deal with
the entire coffee industry of Guatemala, but primarily with the
geographic and economic factors.

My indebtedness and appreciation for aiding this work extend to

m""113’13‘3’0133-9. of whom only a few can be mentioned here. Gratitude is

fblt Particularly to Dr. Clarence W. Minkel, friend, academic advisor

ii

and chairman of the guidance committee, for his unceasing help, advice,
and encouragement, and for the many hours Spent helping to prepare the
manuscript. The guidance and assistance of professors Robert N. Thomas,
Ian M. Matley and the late Paul Cross Morrison, all of Michigan State
University, are also thankfully acknowledged. Transportation and

living expenses during the one-year period of residence in Guatemala

were covered by a research grant from the Midwest Universities Consortium
for International Activities.

Within Guatemala many coffee growers, exporters, transporters,
laborers, and government employees contributed to the study. The
support and c00peration of the National Coffee Growers Association
(ANACAFE) was essential to all phases of the research, and special thanks
are due to a number of its employees. Sr. Eduardo Aguirre Munoz, head
of the Department of Inspectors and an authority on both Guatemala and
the coffee industry, provided transportation to many otherwise in-
accessible coffee areas, plus useful advice and information. Sr.
Frederico Fuentes Jirc’m, of the same department, contributed invaluable
first-hand data and explanations in the field. Ing. J. Francisco Menchfi
E0: head of the Department of Agricultural Affairs, provided office

Space, use of equipment, information and insight concerning benef1c108

 

Egg, the services of regional agents from his department, and other
8‘SSiBtance personally and from his staff. Sr. Jorge Arturo Garcia, head
of the Department of Statistics, also contributed valuable data and
advice. Sr. Aldo Cabello Stich, coffee taster and head of the Testing
Department, supplied information and opinions based upon a thorough
knowledge of the national and international coffee situation.

iii

The Instituto Geografico Nacional also merits Special acknowledge-
ment. My sincere thanks go to Ing. Manuel Angel Castillo Barajas,
Director of the IGN, who made available topographic and other maps, use
of a computor, and personal consultation. Sr. Luis A. Ferraté Felice
contributed a great deal of personal help with maps and air photographs
during various stages of the research.

To 11V parents, Laura and Joe, who over the years have given so
much and asked so little, I have a deep sense of gratitude which
cannot be adequately expressed. And, finally, I am especially aware and
appreciative of the patience, sacrifice, and constant encouragement of my

wife, Marilyn, and family throughout the course of the study.

MJB

iv

TABLE OF CONTENTS

PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . Viii

IJST OF FIGURES . . . . . . . . . . . . . . . . . . . . . . . . . xi
LIST OF MAPS . . . . . . . . . . . . . . . . ./. . . . . . . . . xii
CHAPTER
I. INTRODUCTION . . . . . . . . . . . . l
The Current World Coffee Situation 2
The Guatemalan Coffee Situation h
Objectives . . . . . . . . . . . . . . . . 7
Procedures . . . . . . . . . . . . . . . . . . . . . 7
Limitations of the Data . . . . . . . . . . . . . . . . 8

II. THE EVOLUTION OF A CUP 0F COFFEE . . . . . . . . . . . . ll

Cultivation . . . . . . . . . . . . . . . . . . . . . . 12
Processing . . . . . . . . . . . . . . . . . . . . . . lh
Storage and Transportation . . . . . . . . . . . . . . 17
Destination . . . . . . . . . . . . . . . . . . . . . 18
Roasting and Blending . . . . . . . . . . . . . . . . . 19
Distribution and Consumption . . . . . . . . . . . .

III. THE HISTORICAL DEVELOPMENT OF COFFEE IN GUATEMALA . . . . 21

The Introduction of Coffee . . . . . . . . . . . . . :3
Coffee Cultivation: 1800-1850 . . . . . . . . . . . . 2;
Rudiments of a Coffee Industry: 1850-1880 . . . . . .

Involvement by Extra-Nationals . . . . . . . . . . :3
Government Sponsorship . . . . . . . . . . . 3o
Predominance of Coffee in a Mono-Export Economy . . .

Areal Patterns of Production . . . . . . . . . . . . ii

The VOlme Of Exports 0 o o o o o o O O o

Thble of Contents (Continued)

CHAPTER Page
Era of German Influence: 1880-19AA . . . . . . . . . . 35
Increased Foreign Involvement . . . . . . . . . . . . 35

Government Attitude . . . . . . . . . . . . . . . . . A0

Coffee Production . . . . . . . . . . . . . . . . . . A2

The Movement of Coffee . . . . . . . . . . . . . A2

ExPort Volume and Foreign Markets . . . . . . . . . . A7

The Post4War Period: l9A5- 1960 . . . . . . . . . . . . A9

The Fincas Nacionales . . . . . . . . . A9

Coffee Production and Significance to the Economy . . 52

Internal Movement and Coffee Exports . . . . . . . . . 5A

IV. SOCIAL AND INSTITUTIONAL ASPECTS OF THE

COFFEE INDUSTRY . . . . . . . . . . . . . . . . . . . . 58
Social Aspects . . . . . . . . . . . . . 58
Effects upon the Indigenous Population . . . . . . . 59
Rural Labor . . . . . . . . . . . . . . . . . . . . . 61
Agrarian Reform . . . . . . . . . . . . . . . . . . . 69
Institutional Aspects . . . . . . . . . 76
Asociacion Nacional del Cafe (ANACAFE) . . . . . . . 78
The ANACAFE-FAO Diversification Project . . . . . . . 8A
The Ministry of Agriculture . . . . . . . . . . . . . 87
The Central American Common Market . . . . . . . . . 87
V. THE LOCATION OF COFFEE PRODUCTION . . . . . . . . . . . . 89
Physical Factors of Location . . . . . . . . . . . . . 89
Economic Factors of Location . . . . . . . . . . . 97
The Spatial Distribution of Production . . . . . . . . 100
Finca Size . . . . . . . . . . . . . . . . . . . . . 100
Spatial Variation of Finca Size . . . . . . . 112
Yields . . . . . . . . . . . . . . . . . . . . . . . 116
The Harvest Timetable . . . . . . . . . . . . . . . . 118
Statistical Analysis . . . . . . . . . . . . . . . . . 118
VI. THE COFFEE REGIONS OF GUATEMALA . . . . . . . . . . . . . 123
The Western Region . . . . . . . . . . . . 126
The Central-Eastern Region . - 139
The Cdban Region . 1 5
Subregions within the Major Regions I2;

Ontlying Areas . . . . . . . .

vi

Table of Contents (Continued)

GREENE?

VII. COFFEE COMMERCE WITHIN GUATEMALA . . . . .

From Producer to Exporter or Domestic Consumer . .
Problems of Coffee Commerce in Guatemala . . .
Credit and Finance . . . . . . . . . .1. .
The Export Quota System . . . .
Taxation . . . . . . . . . . . . . . . . .
Processing and Storage . . . . . . . .
The Central Problem of Internal Coffee Commerce

VIII. COFFEE TRANSPORT . . . . 4 . . . . . . . . . . . .

Principal Modes of Transportation . . . . . . .

From Finca to Beneficio Seco . . . . . . . . .

From Beneficio Seco to Seaport . . . . . . . . .
Historical Development . . . . . . . . . . . .
Geographic Movement . . . . . . . . . . . . . .

IX.COFFEEEXPORT..........r........

The Exporters . . . . . . . . . . . . . . .
Producer-Exporters . . . . . . . . . . . .
Coffee Exporting Firms . . . . . . . . . .
INCASA . . . . . . . . . . . . . . . . . .
ANACAFE . . . . . . . . . . . . . . . . .

Ports of Shipment . . . . . . . . . . . . .

Volume of Coffee Exports . . . . . . . .

Destinations of Coffee Exports . . . . . . .

X. GUNTEMALAN COFFEE IN THE NATIONAL AND WORLD
ECONOMIES O O O O O O O O O O O O O O O O 0 0

Coffee in the Guatemalan Economy . . . . .
Guatemala' 3 Role in the WOrld Coffee Economy .

XI. SUMMARY AND CONCLUSIONS . . . . . . . . . . . . .

Summary . . . . . .1. . . . . . . . . . . . . .
Conclusions . . . . . . . . . . . . . . . . . .

APPmDI CBS 0 I O O O O 0 O O O O O O O O O O O O O O O 0

BIBLIOGRAPHY o o o o o o o o e e o e e e e o e o o

Page

. 158
. 158

. 165
. 170
. 171
. 176

. 179
. 179

. 188
. 188
. 193

. 202

. 202
. 203
. 205
. 213
. 21A
. 215
. 220
. 22A

. 232

. 232
. 2A0

. 250

. 250
- 259

. 26A

. 271

LIST OF TABLES

TABLE

1. Guatemalan Coffee Exports by Nationality of Exporter,
1936/37 0 e e e e o o e e e e o e e o o e e e o o

2. Percent of Guatemalan Coffee Production Accounted for
by Leading Departments . . . . . . . . . . . . . .

3. Percent of Guatemalan Coffee Exports, by Volume, Handled

by Various Ports for Selected Years, 1893-1939 . .

A. Percent of Guatemalan Coffee Production, by Volume,
Accounted for by Each Department, 1915—1960

5. Position of Guatemala Among Latin American and World
Coffee Producers, 19AA/A5-l960/6l . . . . . . .

6. Coffee as a Percentage of Total Exports, by Value,
from Guatemala, 19’47—1967 e o e e o e e e e o e

7. Percentage of Guatemalan Coffee Exports, by Volume,
Handled by Various Ports . . . . . . . . . . . .

8. Position of Guatemala among Latin American and World
Coffee Exporters, 19A5-l959 . . . . . . . . . .

9. The United States and Germany as Markets for Guatemalan
COffee, l950"l960 e e e e e e e e e e o e e e e e e

10. Coffee Cooperatives of ANACAFE as of June, 1969

11. Coffee Production on Fincas Nacionales: l963/6A-l967/68
Five Year Average . . . . . . . . . . . . . . . . . .

12. Commercial Coffee Types in Guatemala According to
Mtitude O O O O O O C O C O O C O O I O O I I 0 Q

13. Area and Production of Coffee According to Farm Size .
1A1 The Guatemalan Coffee Harvest Timetable . . . .

15. Simple Correlations among Coffee Variables .

viii

Page

37

A3

A7

52

53

5A

55

56

57
72

76

95
109
119

120

.1-

aI/~

List of Tables (Continued)

TABLE

16.

17.

l8.

19.

20.
21.

22.

23.

2A.

25.

26.

27.

28.

29.

30.
31.

32.

Coffee Area and Production by Region in Guatemala,

1962/63-1966/67 Average . . . . . . . .

Coffee Area and Production by Department in Guatemala,
1962/63-1966/67 Average . . . . . . . . . . .

Number of Coffee Farms In Guatemala Producing at Least
Fifty Quintales Oro, by Elevation and Major Region .

Percent of Coffee Types by Department in Guatemala,

1962/63-1966/67 Average . . . . .7.

Coffee Varieties by Major Region in Guatemala

Simple Correlations among Coffee Variables:

I

Simple Correlations among Coffee Variables:

cent ral-East e a o o o o e o e o e o 0

\Simple Correlations among Coffee Variables:

COb‘n Region 0 e o e e o e o e e o e e e

The West

The

The

Guatemalan Export Coffee Moved by IRCA, 19h5-1963 .

Vblume of Coffee Exported by Producer-Exporters,

1963/6A-1967/68 . . . . . . . . . . .

Number of Names and Actual Firms by which Coffee

is EXported . . . . . . . . . . .

Coffee Exports in 1967/68, by Exporting Firms

”d by Nme s I I I I I I I I I I I I I I

Percentage of Total Coffee Exports by the Ten
Largest Exporting Firms in Guatemala, l963/6A-l967/68

Percentage of Guatemalan Coffee Export Volume by Ports

of Shipment, 1950—1967/68 . . . . .

Mbnthly Coffee EXports from Guatemala, l963/6A-l966/67 .

Destination of Guatemalan Coffee Exports, 1963/6A-1967/68

Destination of Guatemalan Coffee Exports, by Type,

1963/6A-1966/67 . . . . . . . . . .

ix

Page

126

127

129

130
132

135

1A3

152

190

20A

208

210

211

218
223

226

229

list of Tables (Continued)

TABLE

33.

3A.

350

36.

370

38.

39.

Guatemalan Coffee Exports, by Major Ports and by
Country of Destination, l963/6A-l966/67 . . .

Coffee Exports as a Percent of Total Guatemalan Exports,
by value, l9A7-1968 . . . . . . . . . . . . . . . .

Coffee Production in Guatemala Relative to the Gross
National Product and to Total Agricultural Output
(at 1958.Market Prices) . . . . . . . . . . . . .

Coffee Export Taxes as a Source of Government Revenue
in Guatemala . . . . . . . . . . . . . . . . . . . .

Guatemala as a Coffee Producer by Rank and Percent of
World Total, by Volume, 1929/30-1968/69 . . .

Guatemala as a Coffee Exporter by Rank and Percent of
world Total, by Volume, 1929—1968 . . . . . . . . .

Coffee Exports from "Other Milds" Countries . . . .

Page

230

23A

236

239

2A1

2A5
2A6

LIST OF FIGURES

FIGURE

Wet and Dry Methods of Processing Coffee . . .
Frequency Distribution of Coffee Farm Sizes in Guatemala
Commercial Movement of Coffee in Guatemala

Percent of Total Coffee Exports from Guatemalan
Ports, 1950-1967/68 o e o o e e e e o e e e e

Guatemalan Coffee Production and Exports . . . . . .

Mbnthly Volume of Coffee Exports, by Port of Shipment,
as a Percent of the Annual Total for East Port

Page
15
111

159

219

221

225

10.
ll.
12.
13.
1A.
15.
16.
17.
18.

19.

Guatemala: Location .

Guatemala: Political . . . . .

Southern Guatemala: Railroads: Historical Development

Southern Guatemala: Coffee Cooperatives .

Southern Guatemala: Coffee-Producing National Fincas

Southern Guatemala: Regional Agencies of ANACAFE

Southern Guatemala: Climate .

Southern Guatemala: Parent Materials of Coffee Soils

Southern Guatemala: Altitude of Coffee Fincas .

Southern Guatemala: Coffee Acreage .

Southern Guatemala: Minor Civil Divisions .

Southern Guatemala: Coffee Production .

Southern Guatemala: Coffee Fincas .

Southern Guatemala: Large Coffee Fincas .

Southern Guatemala: Small Coffee Fincas .

Southern Guatemala: Coffee Yields . . . .

Southern Guatemala: Coffee Regions and Outlying Areas -

Southern Guatemala: Beneficios Secos . . .

Southern Guatemala: The Movement of Green Coffee by
Rail to Puerto Barrios . . . . . . . . . . . . . . -

LIST OF MAPS

xii

Page

26
A5
7A
77
82
9o
92
9A
101
102
107
113
11A
115
117
12A

182

195

Lists of Maps (Continued)

MAP Page

20. Southern Guatemala: The Movement of Green Coffee by
RailtoChammrico 196

21. Southern Guatemala: The Movement of Green Coffee by Rail
to 8m] JOSE e o e e e e e e o o e e o o o o e o o o o e o o 197

xiii

 
 

’I

 

CHAPTER I
INTRODUCTION

Coffee is a unique commodity in the world economy. Although it is
surpassed in total value of production by a number of other crops, it
is the most traded agricultural commodity in the world and is second
only to petroleum among all commodities entering international trade.
Coffee is easily the single most important agricultural export of both
Latin America and Africa.

Virtually all coffee is produced in the tropics, but most of it is
consumed in mid-latitude countries. The average world production for
the three-year period 1965/66-1967/68 was 70,216,000 bags of sixty
kilograms each. The total exportable production for the same period
was 5A,2A0,000 bags.l Thus an average of 77 Percentgof all coffee
produced entered world trade in these years. The United States and
EurOpe account for approximately 90 percent of total imports.

Since its introduction to the Western Hemisphere some time prior
to 1725, coffee has increasingly participated in molding the political,
social, and economic structure of a number of Latin American nations.

The commodity continues to dominate the economies of these countries to

lExportable production is the total volume harvested, minus do-

mestic consumption. Foreign ggiculture Circular: Coffee, Washington,
D. C.: USDA-FAB (January, 19 9 . 2-3.

 

varying degrees, affording large coffee interests a powerful political
voice. In proportion to total export value (1963-67 five-year average),
coffee accounts for 67 percent in Colombia, 50 percent in El Salvador,
A8 percent in Brazil, A6 percent in Guatemala and Haiti, and A2 percent
in Costa Rica.2 On the same basis, the coffee bean comprises nearly 20
percent of all Latin American exports.

The social ramifications of the coffee trade are clearly signifi-
cant, if not well defined. More than 11 million Latin Americans earn a
livelihood from the cultivation, processing, transportation, and export

3

of coffee. The overall importance of coffee to these 11 millions and

the countries in which they live is well illustrated by Dr. Carlos Lleras
Restrepo, ex—president of Colombia:

We [Latin Americans] have increased our volume of coffee
exports by 12 percent since 195A but our foreign exchange
earnings from coffee have decreased by A2 percent. A
drop of one cent per pound in the price of coffee re-
presents a loss of $8.7 million to Colombia, $8 million
to Central America, and $2A million to Brazil. This is
the brutal fact. When people in this country [United
States] wonder about the attitudes and sentiments of
Latin Am.rica, it is necessary to recall these dramatic
figures.

The Current Werld Coffee Situation
The world coffee economy istraditionally described as a perpetual

cycle of boom and collapse. Prices rise in periods of short supply.

2Ibid., 8.
3E1 I_nrparcial (Guatemala), June 25, 1968, 1.

hCarlos Lleras Restrepo, A speech to the National Press Club
Partially quoted in Alliance for Progress Weekly Newletter, Vol. VII,
No. 25 (June 23, 1969T. 2.

Producers commonly over-respond to the higher prices, which results in
surpluses. In turn, the disequilibrium of excess supply triggers price
depression.

Expanding production, declining stocks, increased demand, and
high prices characterized the period 1950-55. Prices climbed to an all-
time peak in 195A. , World supplies have exceeded demand since 1955 and
prices have generally declined, except for brief upward trends in 196A
and 1965. ,

The 1965/66 world exportable production of coffee was large, over
66 million bags of sixty kilograms, while subsequent years have yielded
around 50 million bags ’or less. A relatively small crOp of approximately
A5 million bags (exportable production) is expected for 1968/69.5
However, stocks in producing countries equal to world consumption for one
year, plus a large inventory in the United States, will prevent the small
crop from effecting a general upswing in prices.

The International Coffee Agreement, renewed in 1968, will remain
operative until 1973. It will continue to stablilize prices by foster-
ing a demand-supply equilibrium through export quotas , promotion of
consumption, and programs of diversification. Although coffee acreage
has been reduced in many countries as a result of diversification
schemes, yields have increased through crop intensification, improved
fertilizers, insecticides, and other technological advances. Thus,
Supply persists in excess fof demand, and stocks mount except for

occasional reductions due to small creps. This situation has, however,

5Foreign Aggiculture Circular: I Coffee, (January, 1969), 2-3.

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been at least temporarily altered as a result of severe frosts in south—
ern Brazil during July, 1969.

WOrld coffee consumption, conversely, cannot be expected to expand
rapidly, due to (l) a relatively low income-elasticity of demand, (2) a
growing competition from substitute beverages, and (3) a downward trend
of per capita consumption within the united States. Significantly, the
negative trend in consumption is most pronounced among younger people.6

Another characteristic of the international coffee situation is
the relative growth in Africa's share of the market. The pr0portion of
total world production derived from the Western Hemisphere has conse-
quently declined from.90 percent in the late 1920‘s, to 82 percent in
1959, and 66 percent in 1968. The recent shift in production is largely
attributable to an increased demand for soluble coffees, for which
African rdbustas are found suitable. However, the beginnings of the
shift resulted from.valorization schemes in Brazil and an economic
depression, both in the 1930‘s, and were later abetted by European
colonial ties with Africa. Lower production costs for robustas and,

in some cases other African coffees, have also been a factor.

The Guatemalan Coffee Situation
'Coffee has been the major export of Guatemala for nearly a century
and it has, at times, comprised over 80 percent of the total value of
exPorts. A paucity of basic geographic information on the leading

industry exists, despite the obvious utility of such knowledge for

 

6Coffee Drinkinggin the United States, (New York: Pan American
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national and regional planning. A considerable amount of coffee research
actually has been conducted in Guatemala, but with a primary focus on
diseases, pests, and techniques of cultivation.

The impact of international-level coffee activities on the
Guatemalan peOple is profound and immediate, yet complex and ill—defined.
It is estimated that over 225,000 workers and their families, or a total
of one million Guatemalans are directly affected by changes in world
market conditions for coffee.7 This is one-fifth of the country's total
population. The number of people indirectly affected, such as producers
of the corn which is sold to coffee laborers, cannot be estimated with
any degree of accuracy.

In addition to providing employment to a major segment of the pop-
ulation, the coffee industry accounted for an average of A6 percent of
Guatemala's total exports, by value, during the five years 1963-67.

Only a few years earlier coffee occupied an even more dominant position.
In the five-year period l960-6A, for example, it registered 55 percent
of all exports.

Unfortunately, the profits“ from coffee have neither resolved the
problem of national economic development, nor have they significantly
improved the standard of living for the laborers. Coffee should play a
role in economic development commensurate with its position in the
econoun'. Yet, it can either contribute to, or interfere with, such

development . Enlightened legislation and prudent planning require

r.

7El roblema nacional del cafe, (Guatemala: Asociacion Nacional
del Cam is a very conservative estimate and
a‘P‘parently does not take into account the full extent of seasonal
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comprehensive and accurate data on this segment of the economy. Good
relations, astute diplomacy, and United States-Guatemalan c00peration
likewise demand a basic understanding of exigencies in the producing

country .

Objectives
The goals of this study are fivefold: (1) to accurately analyze
and map the distribution of coffee production, commerce, and flow; (2) to
identify regions amenable to individual and comparative analysis; ( 3) to
evaluate the role of coffee in Guatemala's past and present, as well as
prospects for the future; (A) to ascertain problems worthy of future
research; and (5) to provide data useful for national and regional

planning.

Procedures

An extensive bibliography on coffee and coffee producing countries
was developed during the two years prior to the initiation of field
research. Correspondence was also maintained and personal interviews
held with knowledgeable peOple in the United States. A preliminary trip
to Guatemala was made in March, 1967, to conduct a field test of antici-
pated research methods, to discover what information was available in
Guatemala, and to solicit the cooperation and assistance of appropriate
individuals and agencies. As a part of the Ph. D. program in Geography
at Michigan State University, the author also conducted a one-week field
study in Mexico ‘in January, 1968, on the coffee industry of that
country. The experience gained was invaluable in relation to subsequent

work in Guatemala.

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Research in Guatemala was begun in June, 1968. Interviews were
held with ANACAFE personnel and businessmen, and contacts previously
made were reestablished. A search for statistical and general data on
coffee was also conducted. A substantial volume of information, much of
it dated, was obtained from publications of the National Coffee Growers
Association, the Guatemalan Government, the United States Department of
Agriculture, the University of San Carlos (Guatemala), and the Pan
American Union.

Field investigation included travel to all major coffee zones of
the country, and interviews were held in Guatemala City with each of the
exporters who handle more than one percent of the nation's coffee
exports. All large beneficios secos, and many smaller ones, were
visited, and in each case the manager or owner was interviewed. An
attempt was made to obtain information on each beneficio seco in the
' country. Since time did not permit a personal visit to each, the assist-
ance of regional agents of ANACAFE was utilized in conducting some of
the interviews. Both large and small producers from the various coffee

areas were sought out for information and opinions.

Limitations of the Data
Developing nations typically lack detailed and organized statisti-
cal data, and Guatemala is not an exception. The National Coffee Growers
Association, however, has collected and maintained a wealth of coffee
statistics, particularly since 1960. Unfortunately, inadequate methods

of collection and accounting render much of the data unreliable. Each

 

 

 

 

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registered coffee grower is required to file an annual harvest report
with ANACAFE. These reports are IBM tabulated and form the basis for
almost all coffee statistics in Guatemala.

In many cases, growers do not have the information requested in
the harvest report and are indifferent toward cooperation in general.
In addition, there are other factors leading to inaccuracies in the
data. The reports serve as the basis for quotas issued to growers, and
over-reporting has been used to support arguments for quota increases.
Some producers fear that the reports may be used for tax purposes or for
implementation of the idle lands law. Coffee quality and prices, and
consequently the value of the farm itself, vary with altitude; the
kind, number, and age of trees; and other factors normally included in
the harvest report. Although the information is held in confidence by
the Association, fear of its disclosure is not entirely quelled.

There is little incentive for producers to render complete and
reliable data. No penalities exist, ‘32. £92123, for submitting erroneous
information. Moreover, no good method has been developed for checking
the accuracy of the data reported. ANACAFE's Department of Inspectors
investigates claims for higher quotas, but progress is slow and produc-
tion Imits too numerous and dispersed to be inspected regularly, given
the available resources.

Another possibility for error exists in the absense of precisely
delimited and accurately mapped municipio boundaries. Instances of
farmers reporting data in a municipio adjacent to that in which they are

actually located continue to occur. The boundaries are frequently

 

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without official status, owing to disputes, yet an accurate municipio
map is essential to the collection of data at that level.

A final category of likely errors exists as a result of conflicts
of interest. Some of the directors of ANACAFE are also producers of
coffee, as to a lesser extent are government officials. Such persons
obviously have reason to withhold pressure which should be brought to
bear on exporters, for example, because the exporters purchase their
coffee. Thus, these growers may not insist on the close examination of
data supplied by exporters. Likewise, as producers, they may hesitate
to initiate audits of their own businesses.

This statement on the limitations of data is not to suggest that
the statistical information reported is h0pelessly false, nor that
devious practices occur in a majority of cases. It is, however, evident
that caution must be exercised in the use of such data, and that the
statistics are better employed in a grouped or generalized form to

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CHAPTER II
THE EVOLUTION OF A CUP OF COFFEE

Coffee ranks among the most complicated of agricultural products
in terms of preparation for ultimate use. Moreover, cultivation and
processing techniques vary widely ,from country to country. Only a brief
outline of the various stages through which coffee passes, from nursery
to beverage, is presented here. A comprehensive examination of the
divers cultivation and processing methods pursued in the different
coffee producing areas of the world would warrant a multi-volume study.

An understanding of the various stages of coffee production is
facilitated by a consideration of three facts. First, the on-farm
segment of the industry is labor intensive. Labor may account for more
than 50 percent of a producer's operating costs. Thus, labor inputs
play an important part in the selection from among the various alterna-
tive cultivation and harvesting methods. Second, it is impossible to
improve the quality of the bean after it has been harvested. There is
no "curing" process. Consequently, the care and techniques employed
prior to processing determine the upper limits of crOp quality.
Finally, quality can be severely impaired by imprOper processing or
storage. In sum, all of the stages are critical to a high quality

product, which ultimately determines the price received.

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Cultivation

The coffee tree, more precisely a shrub, is adaptable to a rela-
tively wide range of physical conditions. It thrives best, however, in
areas of volcanic soil and a climate characterized by an extended warm,
wet season followed by a short, cool dry period. In Guatemala, these
Optimum conditions occur at elevations between 1,500 and 5,000 feet,
where most of the commercial coffee is, grown. The maximum limits are
from about 800 to slightly over 6,000 feet.

Field preparation for the planting of coffee is usually minimal.
If forested or previously tree-cropped, the land must first be cleared.
In some cases, trees may be left for shade, while in others they are
planted to assure adequate cover for the young coffee trees. Occasion-
ally, coffee will be sun-grown, but most Guatemalan coffee is shaded.
Grass cover and, depending upon the degree of slope, some undergrowth
may be left to counter erosion.

The merits of shade are widely contested, but it appears that
shaded coffee is (l) more tolerant of careless management, (2) less
subject to erosion and helps to maintain organic matter in the soil, and
(3) adaptable to a wider range of climatic cOnditions. 0n the other
hand, it does not respond as well to fertilizers, requires pruning of
the canopy to control shade density, and offers little advantage in
terms of quality. While greater yields are realized from sun-grown
coffee, shaded trees have a longer productive-life expectancy.

The seeds, or beans, of select trees may be planted directly in

the field, as is the custom in Brazil. More commonly, however, small

 

 

 

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carefully prepared nursery beds are thickly broadcast with the coffee
seeds. Following germination, at about the two-leaf stage, the hardiest
seedlings are placed in larger seed beds or individual containers.

After a height of from one to two feet is attained, they are again
transplanted or placed directly in the field.

Seedlings are field planted in rows from five to twelve feet
apart. Close spacing reduces yields per tree, but labor costs are like-
wise reduced because the need for weeding and pruning is diminished.
Without pruning, the trees grow so dense as to appear unmanaged.
running generally takes place during the dry season after the harvest,
when the opportunity cost of permanent farm labor is relatively low.
The application of artificial fertilizers is not common, but coffee
pulp,.mulch, and other natural fertilizers are used extensively. From
time to time, and in some regions more than others, a significant
increase in operating costs may be incurred in the combat of pests and
diseases. .Much research has been directed to the maintenance of
healthy coffee trees by the National Coffee Growers Association and the
Ministry of Agriculture.

The coffee tree develops into a mature producer in five to eight
years, the time requirement being greatest at the higher altitudes. It
nmy'remain in production from.fifteen to more than fifty years, depend-
ing upon the variety of(tree and the environmental conditions. Peak
production capacity is usually reached in twelve to fifteen years. The
coffee fruit is shaped like a cherry and changes color from green to a
dark red as it ripens, except for the yellow bourbon variety which

becomes yellow.

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The Guatemalan coffee harvest commences in late July or during
August in the lower zones and terminates in March or April at higher
elevations. The main harvest, however, is concentrated from October
through January. All harvesting is accomplished manually by permanent
farm employees and seasonal or migratory labor. Men, women, and
children take part, with payment usually on a task basis. Because the
coffee cherries, or berries, do not ripen simultaneously even on the
same branch, and because in Guatemala only the ripe fruit is picked,
several passes must be made over the same area. The number of pickings

is held to a minimum to reduce labor costs.

Processing

The processing of coffee involves a markedly complicated series
of techniques, due to the composition of the fruit and the ease in
which quality may be impaired. The coffee cherry usually contains two
small greenish- or bluish-grey beans. These oval-shaped beans lie with
their flat sides adjacent to each other, similar to the two halves of
a peanut. They are each covered by a thin membrane called the "silver-
skin," over which is found a tough hull or cover known as the
"parchment." The beans are surrounded by a thick, sticky substance,
"mcilage," and by the pulp and outer skin of the lcherry (Figure 1).
In order of processing, the outer skin and pulp, the mucilage, parch—
ment, and silverskin are removed.

Either of two processing methods may be used: dry or wet. The
dry method, comon to Brazil, is used by some small producers in

Guatemala but is unimportant commercially. In this method the cherry

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is sun dried and the beans liberated either mechanically or by a mortar
and pestle system (a small log in a barrel or similar container) employ—
ing manual power. The result is a decidely inferior product referred

to as "unwashed coffee."

The wet method, by comparison, is more compli-
cated but results in a superior quality coffee known as "washed coffee"
or "milds." In very general terms, Brazil produces unwashed coffees,
while other Western Hemisphere countries supply chiefly milds.

The wet method is divided into two stages, also known as wet and
dry. The machinery or mill used in the wet stage is called a beneficio
M, or wet mill, while that employed in the dry stage is the
beneficio _s_e_g:_g_, or dry mill. In the wet stage the pulp and skin are
removed mechanically with pulpers, which may be simple hand-driven con-
trivances used by small producers or large powered machines in modern
mills. Depulped coffee is placed in tanks for from twelve to twenty—
four hours to remove the mucilage by fermentation. The beans are then
washed and spread out to dry in the sun. Small producers who process
their own coffee often place it on low table-like platforms for drying,
while larger operators use extensive concrete floors, or patios. Mech-
anical dryers usually complete the drying. In times of unfavorable
weather or bumper crOps, the sun-drying stage may be foregone, despite
the fact that it is believed to yield a higher quality product. In any
event, the depulped coffee, with the mucilage removed, is known as
Parchment coffee or _c_a_f_§_ _e_r_1_ pergamino.

The remainder of the wet method of processing, the dry stage, is

completed in the beneficio seco and consists of eliminating the

 

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parchment by hulling and the silverskin by polishing. Both removals
are accomplished mechanically. As a continuation of the dry stage, the
beans are mechanically separated and sorted by size, then manually or
electronically screened for diseased or damaged beans. The coffee
beans, having passed through the beneficio seco, are ready for export

as "green coffee,‘ or cafe gr; oro.

Story and Transportation

Cherry coffee cannot be stored. In fact, to avoid fermentation
and resultant deterioration of the bean, the fruit is processed as soon
as possible after picking, almost always within twenty-four hours. Nor
does green coffee preserve well for longer periods. Therefore, the
beans are not normally processed into green coffee until two or three
weeks before actual exportation. Coffee is best stored for long
periods, several months or more, in parchment form.

Optimum storage conditions are found in zones where cool tempera-
tures and low humidity prevail. Ideally, temperatures and humidity
should be controlled. However, only since the International Coffee
Organization (I00) quota system necessitated the storage of coffee for
longer periods has an interest developed in improved storage in
Guatemala. Some large operators are now considering the installation
of dehumidifiers in warehouses, which would lengthen the storage period
to two years or more without serious loss of quality. Always, however,
molds develop and ultimately limit the time that coffee can be stored

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Human, animal, or mechanical means are employed to transport
coffee from the fields to farm headquarters, depending largely upon
terrain, road development, and scale of Operations. If the farm
includes a beneficio, it may be processed there. Not infrequently a
large farmer will process the coffee of smaller neighbors. Otherwise,
the coffee is sold in cherry and trucked to a beneficio designated by
the buyer. Assuming the coffee is processed into parchment on the farm,
it may be sold in this form‘ or further processed into café en oro.
Parchment, like café en oro, moves chiefly by truck or rail, but may be
transported by mule, for example, in remote areas. Cafe en oro is de—
livered to the ship F.O.B., the foreign buyer designating the port of

shipment, time of delivery, and shipping line.

Destination

The United States is easily the largest importer of coffee in the
world, taking approximately 50 percent of all coffee entering interna-
tional trade. In turn, coffee constitutes the largest single agricul-
tural import of the United States, accounting for 22 percent of such
imports in 1968. A prodigious variety of coffees is purchased from
some forty different countries, including Guatemala. Each kind of
coffee is classified by source or area of production, by grade, and by
quality. The principal coffee receiving ports, by volume, are New York,
New Orleans, Houston, and San Francisco. Most coffee entering the
United States is purchased by importer-jobbers or large roasters and
their agents. The coffee usually arrives in bags of sixty kilograms

(132 lbs.), and most U. S. Government or United Nations statistics are

 

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either converted to this measure or expressed in tonages. The Central
American countries, however, export in bags of seventy kilograms
(1515 lbs.). Unless specified to the contrary, the term bags as used in

the present study refer to units of sixty kilograms.

Roasting and Blending

Roasting to produce regular coffee is done in large revolving
cylinders, and it is at this stage that coffee first exhibits its
familiar brown color, flavor, and aroma. Both a weight loss and a
volume-gain occur during roasting. Immediate vacuum packing of roasted
beans, whole or ground, is essential to prevent the loss of flavor and
aroma. Coffee beans of several countries and/or regions are blended to
create a brand. Above all else, a brand must maintain a consistent
flavor and aroma. Blending is essential not only to acquire the desir-
ed qualities but also to compensate for variations in coffee supplies.
No two crops, even on the same farm, are identical in flavor and aroma.

In the preparation of soluble coffees, the beans are first
roasted, blended, and ground as in the case of regular coffees. A
beverage is then brewed and dehydrated, leaving the tiny crystals
common to instant coffees. Soluble coffee may be produced from import-
ed green coffee or imported directly in soluble form. In 1967, France
displaced Guatemala as the second largest supplier of imported instant
coffees to the United States. Brazil remains the leading supplier.

Freeze-drying, the latest improvement in soluble coffee, yields a
higher quality product. After years of experimentation, it has

achieved nation-wide distribution.

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Distribgtion and Consumption

Packaged coffee, usually ground but sometimes whole, is distri-
buted to restaurants, supermarkets, stores, and other retail outlets
throughout the United States. In the distribution, or wholesale-retail
process, coffee may change hands several times. Or, a large food chain
may function as importer, roaster, wholesaler, and retailer combined.
Coffee for household use tends increasingly to be purchased in large—
size vacuumrpacked cans, while eating places buy coffee in a variety of
forms. A very small percentage of restaurants still grind their own
coffee.

More than 75 percent of all coffee consumed in the United States
is served in the home. Most of the balance is used at "place of work"
and in eating establishments. Soluble coffee has increased in popular-
ity to the extent that more than 20 percent of all coffee now consumed
in the Uhited States is instant coffee. Currently, freeze-dried coffee
is making an impact on the market. The new product could eXpand the
soluble share of the market at the expense of regular coffee, or it may
Simply absorb a share of the other-solubles market. Less likely, it
may prompt a general increase in coffee consumption. In any event, the
development of freeze-dried coffee indicates that at the consumption end
of’the business, as at the production level, experimentation and
research continue. Another fact worth noting is that coffee processing

at all stages is becoming increasingly complicated by new techniques.

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CHAPTER III
THE HISTORICAL DEVELOPMENT OF COFFEE IN GUATEMALA

Over-reliance upon a single export crop did not begin in Guatemala
with coffee. In fact, the origins of many social and economic ills
associated with coffee must be sought in earlier periods. Some problems
have persisted throughout both the early history and during the past
eighty years, when the crop has tended to dominate the Guatemalan
economy.

One of the leading pre-conquest exports from Guatemala was cacao.
Its production in early colonial times was taken over by the Spaniards,
in some cases, or simply collected as tribute by the encomegderos.1
The pre-conquest and early colonial market was present-day Mexico, and
in particular Mexico City. Only later did the European market emerge.
The demise of cacao as a major export crop was Spurred by diseases of
the tree, export taxes, colonial trade regulations, and competition from
northwestern South America during the early 1600's.

Indigo became preeminent among exports and served as the mainstay
of the economy in the later colonial period. Referring to indigo at

that time, and not to coffee in the present century, Jones lamented:

—.‘

1Holders of lands given in trust by the Spanish Crown. Included
law the right of tribute from the indigenous pOpulation.

21

22

"Unhappy the land which depended on a single crop in its foreign ex-
changes, and that a luxury article."2 Indigo exports decreased in the
closing years of the eighteenth century, due largely to foreign compe-
tition and wartime interference with shipping.

Another colonial dyestuff, cochineal, replaced indigo as
Guatemala's principal export. After experiencing a period of decline
near the end of the eighteenth century, the cochineal industry revived
and rose to account for more than 80 percent of all exports in the early
1850‘s.3 Like cacao and indigo, cochineal ceased to dominate the
economy after a period of ephemeral supremacy. The discovery of chemi-
cal.dyes in the 1850's, combined with insect plagues, resulted in a
frantic search for an export cr0p to replace cochineal.

The hunt for a new export commodity led ultimately to the develop-
ment of the coffee industry. But in the meantime cotton production was
stimulated by British and Guatemalan promotion, government subsidies,
and expanding European markets owing to the wane of cotton exports from
the United States during the Civil war. Guatemalan cotton exports
reached a peak in 1865, when they comprised 19 percent of the nation's
total exports by value.h Insects and post-war competition from the

Uhited States effected the quietus of cotton as a major export, but

2Chester Lloyd Jones, Guatemala, Past and Present (Minneapolis:
The University of Minnesota Press, 19A0), 200.

3Ralph Lee WOodward Jr., "Guatemalan Cotton and the American Civil
lung" lgper-American Economic Affairs, Vol. 18, No. 3 (Winter, 196A), 87.

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"the cotton market created by the American Civil War offered a valuable
transition crop for Guatemalan farmers during the years when cochineal

declined and coffee production exPanded."5

The Introduction of Coffee

The exact date and manner of the introduction of coffee culture
to Guatemala are unknown. There is, however, no exiguity of opinion and
controversy on the subject. A.few writers have conjectured, contrary
to generally accepted evidence, that coffee is indigenous to Guatemala
and southern Mexico. Likewise, a local dispute evolved from an error
in the Spanish translation of a book by Thomas Gage, in which coffee
was supposedly listed among the major crOps of the Alta Verapaz zone in
1672.6 The first recorded and reliable incidence of coffee in Guatemala
is a reference to its consumption at a banquet celebrating the comple-
tion of a cathedral in Antigua Guatemala, in 17h3.7 It is likely,
however, that the beans were imported.

Jesuit priests are usually credited.with the introduction of
coffee cultivation to Guatemala, as well as to several other countries.

It is known that they at least aided the pr0pagation of coffee, and,

 

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6See, e. g., J. A. Alvarado, "Desde cuando se cultiva café en
Guatemala'I," Revista Agricola, Vol. XIII, No. 6 (August, 1935), 371-75.

7Lucas del cielo de la I esia (Mexico: Imprenta Real de Su rior
e 0 ‘ " pe
Gobierno, l? 7 , 3S, cited by Manual Rubia Sanchez 1n Breve historia
del desarrolo del cultivo del cafe en Guatemala," Anales de la Sociedad

We e Historia, Vol. xxvn, Nos. I—h (March, 1953-December,
195 , 1 8T *

are

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since they were expelled in 1767, it is certain that the bean was grown
locally before that date. Father Jose Navarro, a Jesuit, wrote that
according to tradition the Guatemalan plant was transported from Yemen,
implying a direct journey. However, inasmuch as Jesuit monasteries in
Jamaica, Cuba, and Belice cultivated coffee by this time, it is more
reasonable to assume that the original Guatemalan tree was the descen—
dant of a plant from one of these colonies. . Some supporters of a later
date of introduction maintain that coffee was first brought to the
country via El Salvador and Puerto Rico.

Locations mentioned by reliable sources as being among the earli-
est sites of coffee cultivation within Guatemala include the Jesuit
lands and gardens near Antigua Guatemala; the holdings of Jesuits and
several individual proprietors in the vicinity of Ciudad Vieja; the
hacienda El Soyate in the Department of Jutiapa; the Hacienda de Parga
in Villa Canales; in Cuajiniquilapa, near Cuilapa, Santa Rosa; and the
convent patios in Santiago de los Caballeros, near Antigua Guatemala.
In all probability, the Antigua area was the first of these to witness
the planting of a coffee tree. Although any causal relationship seems
doubtful, it is interesting to note that the Republic's choicest coffee
beans still come from near Antigua.

Thus, it appears relatively certain that coffee was introduced to
Guatemala about the middle of the eighteenth century, by Jesuits who
cultivated it in or near Antigua Guatemala. The bean was not cultivated
on a commercial scale before 1800. Early plants served as items of
curiosity, or for ornamentation, and were probably restricted to Jesuit

gardens and the haciendas of a few interested individuals.

25

Coffee Cultivation: 1800-1850
The earthquake that destroyed Antigua Guatemala in 1773 resulted
in the movement of the capital to Guatemala City, and with it the culti-
vation of coffee. Around 1800 an attempt was made to grow coffee on an
expanded scale near the new capital. This venture may have been the

first "systematic cultivation of coffee,in the country."8

Some writers,
however, feel that the year 1835 more accurately marks the beginning of
commercial coffee production in Guatemala.9 In this year a decree
issued to promote coffee cultivation authorized an award of 200 pesos to
the first farmer to harvest 100 quintales of coffee, and 100 pesos each
to the second, third, and fourth to do 30.10 New plantings of cacao,
sugar, and coffee, were later exonerated from.the alcabala (a tax on
commercial transactions) and export duties for a period of ten years.11
These and other promotional efforts apparently had the desired effect,
since new coffee farms appeared in various sections of the country.
Most of the coffee was still cultivated in the central zone, however.

By 18h5, coffee was receiving a great deal of attention. Farmers

were urged to consider the situation in Costa Rica, where the industry

 

8 Manuel Rubio Sanchez, "Breve historia del desarrolo del cultivo
del cafe en Guatemala," Anales de la Sociedad de Geografia e Historia,
Vol. xvaI, Nos. I-h (March, l953—December 195A), 190.

gsee, e. g., Juan Antonio Alvarado, Tratado de caficultura practi-
£2_(Guatema1a: Tipografia Nacional, 1936), 539.

10 Manuel Pineda de Mbnt, Recopilaci6n de leys de Guatemala, Tomo
I (Guatemala: Imprenta La Paz en el Palacio, 1869), 7A5, cited in
Immio Sanchez, 193. One quintal equals approximately one hundredweight.

11Al. 23, Legado 15h2, Folio 215, Archive General del Gobierno,

cited in Rubio Sanchez, 191-

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27

had developed more rapidly and was already providing a major share of
that nation's exports. Reports and booklets designed to encourage im-
proved coffee cultivation techniques were made available. Prizes, tax
exemptions, and subsidies for coffee continued to be offered. The
Sociedad Economics de Amigos del Estado, which did much to promote
coffee culture, imported a processing machine from Costa Rica in 18h5.
At about the same time, the government created a committee with the sole
function of encouraging coffee production. Thus, while the export of
indigo waned, and cochineal was continually threatened by insects and
foreign competition, Guatemalan authorities issued urgent decrees, reso-
lutions, and regulations in the quest of substitute export crops.

Also characteristic of the period was the development of a domes-
tic market. Local coffee consumption expanded to include peOple of
modest income, whereas only the wealthier citizens had initially enjoyed
the beverage. Most likely, the growth in popularity was both a cause
and a result of extended cultivation. Since part of the demand for
coffee was met, at first, by imports from Cuba, its cost may have proved
prohibitive to lower income groups. On the other hand, the small local
market could not stimulate production much beyond the earliest attempts
at commercial plantings. It appears reasonably certain that, at least

until 1850, local demand exceeded domestic supply.
\

Rudiments of a Coffee Industry: 1850—1880
Despite impressive gains in the volume of exports, certain factors

nfilitated against the rapid development of the coffee industry. Even in

 

'u

I
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28

the early 1850's cochineal was an attractive agricultural pursuit.
Harvest volumes of the dyestuff plunged in 1850 and 1852, but a strong
fereign market persisted, inhibiting producers' switch to coffee. More-
over, a period of several years precedes the first coffee harvest after
planting, and long-term.credit was virtually nonexistent. Inadequate
transportation facilities and limited knowledge of cultivation, process-
ing, and marketing techniques also impeded development. Prior to 1880,
there were no railroads, no ports where ships could dock, and only the
rudiments of a road system. Coffee was transported by mule and by wagon
to coastal sites, loaded on rafts or barges, and lightered to ships
anchored in deep water. The strong surf of Guatemala's Pacific coast
claimed many a bag of coffee in the loading process.

The emerging coffee industry was characterized by features con-
veniently grouped into five categories: (1) involvement by extra-
nationals, (2) government sponsorship, (3) the establishment of coffee
as the leading commodity in a mono—export economy, (A) the genesis of
areal patterns of coffee cultivation still visible today, and (5) a

growing volume of exports.

Involvement_py Extra-nationals

Although involved since the beginning of coffee culture in
Guatemala, foreign entrepreneurs, particularly West Europeans and
Americans, were increasingly among the leading investors in coffee dur—
ing the period 1850-1880. In fact, it was largely "a small group of

foreign planters . . . aided by outside capital and agricultural acumen,

'v-

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29

who gave impetus to the Guatemalan coffee industry."l2 One author,
observing the importance of foreigners in the industry, hypothesized
that Guatemalans were not inclined to make investments other than in
commerce or cattle, perhaps owing to the many losses incurred as a
result of domestic turmoil.13 The instability of prices for other
export crops, combined with a scarcity of capital and a dearth of long-

term credit, were no doubt equally significant considerations.

Government_§ponsorship_

Encouragement to coffee growers by the government continued. In
1856, ten pulping machines were imported and distributed to the produc—
ing areas. To demonstrate the advantages of pulpers, the coffee of
small producers was processed gratis. Additional government investments
fer processing machinery were made in subsequent years.

Legal and economic incentives provided by the government and by
the Sociedad Econ6mica, were further expanded after the Liberal Revolu-
tion of 1871. Beneficios were established on a cooperative basis.
large areas of land distributed by the government stimulated production
on the south coast. President Justo Rufino Barrios (1873-85) exempted
newly planted coffee from.export taxes. Nurseries were also established

during his administration to distribute seedlings free of charge to

 

12Robert c. West and John P. Augelli, Middle America; Its Lands and
M31 (Finale-wood Cliffs: Prentice-Hall, 1966), 396. —--——-—--

l3Valentin Solorzano F., Evoluci6n econ6mica de Guatemala (2d ed.;
Seminario de Integracién Social Guatemalteca Publicacion 11; Guatemala:
Seminario de Integracién Social, 1963). 317-

30

small operators and other farmers in areas such as Antigua and Amatit-
lfin, which were left economically depressed following the collapse of
Guatemala's cochineal industry.

The newly created (1871) Ministerio de Fomento included the devel—
<ument of coffee production as one of its principal objectives. The
Secci6n de Estadistica, presently the Direccién General de Estadistica,
was established in 1879. Thus began the maintenance of regular, if not

1h

always accurate, coffee statistics.

EZedominggge of Coffee in a Mono-export Economy

The change to coffee was gradual, at first, but in the 1870's
coffee'became the bulwark of the national economy. "By 1880 coffee was
securely established in the Guatemalan economy, and Guatemala was well
on the way to becoming a mono—economy with coffee as the center of its

"15 In that year, coffee constituted 92 percent

16

commercial production.
of’the country's total exports by value.
The preemption of resources by the coffee industry severely
limited the production of some other crops. Cacao, for example, was de-
stroyed and coffee planted in its place on the coastal lands of Suchite-

péquez and ESCHiDtlfi-IT Wheat production virtually ceased due to

—___

lthid. , 315.

15Sanford A. Mbsk, "The Coffee Economy of Guatemala, 1850—1918:
Development and Signs of Instability," Inter-American Economic Affairs,
Vol. 9, No. 3 (Winter, 1955). 10.

16Ibid. , 12.

17Ru'bio Sanchez, 209-

31

competition with coffee for labor. Flour prices soared, and the impor-
tation of wheat from.the united States commenced.18 Thus, coffee
absorbed the capital, labor, land, and other resources that might other-
wise have been employed to diversify the rural economy. On the other

hand, coffee attracted foreign investment, which aided in the overall

deve10pment of the nation.

Areal Patterns of Production

Existing data do not permit a detailed assessment of the spatial
distribution of coffee production during the 1850-1880 period. It can
be inferred, however, that production diffused westward from an
AmatitlEn-Antigua-Guatemala City core area, where it was first intro—
duced. By the early 1860's coffee was relatively widely cultivated in
the core area and around Cohan, 801016, and Jutiapa. There was also an
elongated zone between Escuintla and Retalhuleu which, during the 1860's
and 1870's, expanded westward to include the departments of Quezalten-
ango and San Marcos.l Because of the general path of coffee prOpagation,
it can be assumed that the Department of Huehuetenango first witnessed
the cultivation of coffee toward the end of the period.

The manner in which coffee cultivation advanced westward is
elucidated by two historical sketches. They also demonstrate the

phenomenal profits made at this time and lend an appreciation of the

18Solorzano, 365 and Rubio Sanchez, 223.

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8"-

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32

dynamic role of coffee in the development of Guatemala. The first
account concerns the early development of the Costa Cuca area, northwest
of Retalhuleu, while the second describes the founding of the
coffee finca, Las.Mercedes.19
The famous Costa Cuca region was Opened to coffee production
during the 1860's. Legal title to most of the land, some 15,000
caballerias or 1,665,000 acres, belonged to the Indian community of San
Martin Chile Verde and could not legally be transferred. However, a
Sr. Robles managed to purchase 5,550 acres for 150 dollars, a transac-
tion recognized by the legal authorities. Two other men, observing
Robles' successful coffee plantings, later acquired 2,331 acres from
him for $500. Five years later, Robles sold an adjacent lot for about
$5h'per acre. The remainder of Robles' land was eventually transferred
to his children and converted into fincas, some of which produced great
fortunes. One such finca was that of General Manuel Lisandro Barillas,
a later president of Guatemala who had married into the Robles family.
The finca Mercedes is located between Quezaltenango and Retalhuleu,
about 20 miles from the village of San Martin. Goods were transported
from Quezaltenango to the finca by Indians, the roads being "scarcely
practicable" for mules. Coffee—processing machines, ordered for the
finca from England, arrived at Puerto San José and were taken seventy—
five miles to Guatemala City by ox-cart. From there the equipment was

carted another 120 miles to Quezaltenango and then carried on the backs

 

19W. W. Rasor and William Everall, "El café en Guatemala," Centro

América, Vol. IV, No. 1 (January, February, and March, 1912), 1h8-51.

33

of Indian laborers to the finca. Yet, the finca was located only
thirty«five miles from the coast! The transportation of this equip-
ment, parts of which weighed almost one ton, occupied over 200 men for
nearly two months. Because one piece was broken en route, and could not
easily be replaced, the first harvest was processed manually. The green
coffee was transported to Retalhuleu by mule, and then by ox-cart to
Champerico. The proprietors of the finca requested and obtained per—
mdssion from the government to open a road. All producers of the Costa
Cuca area were permitted to use the road, but some landowners along the
way caused additional expense and delay by refusing permission to cross
their property. The entire cost of the road was borne by the finca
Mercedes. In the 1870's, the original owners sold the farm to 8 Costa
Rican for $150,000, the largest amount paid for a single finca to that
date. Eighteen months later, the finca was resold for $200,000. "All
things considered," including the return from coffee harvested, an esti-
nmted profit of $275,000 was made in 1.5 years!

The production of coffee also began to expand rapidly in the
CObén region in the 1860's, and prospects for additional planting in
this zone were considered excellent. It was thought that the area

"could produce as much coffee as Costa Rica,’ and that it possessed the
advantage of relatively rapid and economical transportation to the
Atlantic, via the Rio Polochic and Lake Izabal. Other assets of the
Verapaz zone were that Cohan coffee soon became well-known in EurOpe,

the local plant appeared to be of a hardy nature, and a quick first

harvest, if desired, could be realized in the eastern part of the area

,.;:.

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along the Polochic.2O During this decade also, the first German owned

coffee fincas were developed in the Cohan area.

The Volume of Exports

Exports of coffee from Guatemala began before mid-century. The
earliest reference to such exports indicated that coffee valued at 3,000
pesos left the country in 1825.21 The volume of coffee was, of course,
nfinimal. Even in 1853 only four bags of coffee were eXported from

Puerto de Izabal and forty—six from Iztapa.22 Regular records of coffee

exports began with the crop year 185h/55, a fact which has apparently
led Rubio Sanchez, Alvarado, the Food and Agriculture Organization,23

and others to cite this year or the previous one as the date of the first
coffee exports.

The decade of 1860-69 was one of tremendous expansion for the inci-
pient coffee industry. Exports Jumped from 1,177 bags in the crop year
1859/60 to 100,587 in 1870/71. Coffee culture continued to distend in
the 1870's, as evidenced by exports which climbed to 222,132 bags in

1879/8o.2“

A

20Julio Rosignon, Porvenir de la Verapaz en la Repfiblica do

(humemala (Guatemala: Imprenta de la Luna, 1881), 15, cited in hubio
S chez, 205.

216. A. Thompson, Narrative of an Official Visit to Guatemztla from
Mexico (London: John Murray, 1829), 8385, cited in Jones, 203.

22Gaceta de Guatemala, June 23, 185h, 8-

23United Nations, Food and Agriculture Organization, The World's
Coffee, No. 9, Studies of the Principal Agricultural Products on the
Wbrld Market (Rome, 19h7), 13h.

 

2hSee Appendix B fer coffee exports 185h/55 to 1968/69.

35

Era of German Influence: 1880e19hh
Marked change was exhibited in major aspects of the coffee
industry during the period 1880—19hh. The transformation was particu-
larly evident in fOreign involvement, government attitude, production,
transportation, and exports. The factor which typifies this period,
however, is the influence exerted on the coffee industry by German
nationals. This influence permeated beyond the production and trade of

coffee into the general commerce of the nation.

Increased Foreign Involvement

Like many newly independent Latin American states, Guatemala en—
deavored to attract immigrant settlers by means of land concessions and
economic incentives. Numerous foreign nationals arrived individually
and in groups from about 1830 onward, enticed by a variety of coloniza-
tion schemes. By 1893, there were in Guatemala some 11,331 foreigners,
including 1,303 Americans, 532 Spaniards, h32 Italians, 399 Germans, 3A9
English, and 272 French.25 Although Germans were not the most numerous,

. . . they made their influence felt out of all prOportion
to their numbers. By 1900 Germans owned and Operated
nearly half of the general merchandise and importing firms
in Guatemala City, and more than two-thirds of the ones

in the Pacific highlands, and they controlled the pro—
duction, export, and marketing of coffee, which had be-
come Guatemala's leading export crop. German economic
penetration, however, was more spectacularly achieved

in the Alta Vera Paz, where by 1900 they complsgely
dominated the economic life of the department.

 

25Guillermo Néflez Falc6n, "German Contributions to the Economic
Development of the Alta Vera Paz of Guatemala, 1865-1900" (unpublished
Master's thesis, Department of History, Tulane University, 1961), 86.

26Ibid., v.

36

By 19lh nearly half of the coffee crOp was produced by foreigners,
and 170 German proprietors accounted for over one-third of the total.
The average size of foreign coffee plantations, moreover, exceeded the
average Guatemalan coffee holding by three times.27 In 1935 German
growers produced 6% percent of’the coffee crop and operated 25 percent
of the plantations.28 To a significant extent, coffee ceased to be a
national activity. Indeed, "about h8 percent of the large properties
of the country before the beginning of WOrld war II were owned by for-
eigners, mostly Germans, and from these prOperties came nearly two-
thirds of the total coffee production of Guatemala."29

Coffee trade became even less a national affair than production.
In 1896 German ships transported, to Germany, 63 percent of the total
coffee exports. The growers, in turn, imported their farm machinery
and equipment from.Germany.30 Table 1 illustrates the amount of

coffee exports handled by foreigners and the degree to which coffee

trade was a Guatemalan undertaking in 1936/37-

27Jones, 207.

28

Alfonso Rochac, Diccionario del cafe (Mexico: Oficina Panameri-
cana del Café, 196h), 268:

29Preston E. James, Latin America (hth ed. rev.; New York: The
Odyssey Press. 1969), 138.

3ON§fiez, 86.

37

TABLE 1

GUATEMALAN COFFEE EXPORTS BY NATIONALITY or EXPORTER, 1936/37

 

 

 

 

M
Nationality Percent
of_Exporter VOlumefilép, Total Exports
German 68h,009 68
American 156,8h9 16
Dutch 78,071 7
English hl,002 h
Guatemalan h0,372 4_ h
Nicaraguan 1,760
Swiss 765
Norwegian 600 r1
Spanish 316
Belgian 198
French . 170 J
Chinese 1
Total 1,909,622 100

 

l] Quintales of green coffee, all fractions deleted. One quintal
equals approximately one hundredweight.

Source: Revista Agricola (March, 1938), 18h.

The preponderant share of German investment in the Guatemalan
coffee industry did not evolve rapidly. Actually, Germans were at first
involved primarily with import firms and other businesses and only later
with coffee production. Minor German investments in coffee culture were
made in the 1850's and 1860's. The rate of investment increased during
the 1870's, but dwindled after a crisis in 1882 and 1883 when prices
Plummeted. By 1888 prices soared, fortunes were made, and large

amounts of German capital were invested in coffee.

Ill feelings, accusations, and German nationalism to the contrary,
German farmers did not conspire to "take-over" the Guatemalan coffee

industry. The reasons for German hegemony are quite clear, at least in

31Rasor and Everall, 1&6.

38

retrospect: (1) German nationals enjoyed a source of capital and credit
not available to Guatemalans. The remarkable expansion of German in—
dustry and commerce, linked with a concurrent demand for raw materials
and favorable investment opportunities, reinforced the availability of
German capital in Guatemala, as elsewhere. This access to credit per-
nfitted German farmers to outbid others for prime coffee lands. Viewed
differently, because a scarcity of capital existed in Guatemala, German

"sellers' market" for land and

businessmen traded capital in a veritable
coffee enterprises. (2) German capital, some of which was generated
from coffee production, was invested in other activities which aided
the farmers. For example, "By 1900 Germans in the Alta Vera Paz had
gained a monopoly over transportation facilities out of the department,"

as well as considerable control over international shipment of coffee.32

(3) Guatemalans lacked the commercial connections and marketing skills
of German producers and traders. Consequently, Guatemalan growers, when
able to secure credit, paid a higher rate of interest. Market crises,
therefore, weighed more heavily on native producers. Guatemalan fincas
were often forfeited to Germans through mortgage foreclosures in times
of economic depression or low coffee prices. (h) German science and
technology was employed to resolve problems of yields and disease.
Scientists, financed by commercial interests, were sometimes brought in

to render technical assistance to German growers. Moreover, the

k

3Q‘Naflez , 78 .

39

perseverence and ingenuity of German pioneer farmers prevailed here, as

in other parts of the New WOrld, where others sometimes failed or did

poorly.33

Foreign capital, skills, entrepreneurship, marketing connections,
and implements contributed much to the economic development of
Guatemala. German contributions to coffee farming were especially no-
table in Alta Verapaz, but were also significant in the Guatemala City,
Antigua, and Costa Cuca areas. German farmers experimented successfully
with quality and yields, production techniques such as pruning, new tree
varieties, the control and prevention of pests and diseases, artificial
fertilizers, and processing machines. German investment in roads, rail-
roads, cattle, and crOps other than coffee also helped to advance over-
all development.

It has been debated long and heatedly that Germans employed ex-
orbitant interest rates, mortgage foreclosures, and other commercial
levers afforded by their economic power to acquire land and business
holdings.3h These arguments contain some truth but are in any event
exaggerated and unlikely to be resolved. Guatemalan resentment was
abetted by the attitudes and activities of Germans living in Guatemala.

German families participated almost exlusively in German social

‘

. 33See, e. 3., Richard H. Shryock, "British Versus German Tradi—
tions in Colonial Agriculture," The Mississippi Valley Historical
Review, Vol. XXVI (1939). 39-5h-

31‘See, e. g., Mario Monteforte Toledo, "Bean of Contention," The
Inter-American, Vol. II (March, 191:3), 22-2h+-, and "Government Custo-
dianship of Coffee Plantations in Guatemala," Bulletin of the Pan
American Union, v01. 77, No. 9 (September, 19h3), _h88-92.

to

functions and clubs. German children attended the Colegio Aleman.
Business was conducted through German banking houses, and commercial,
political, and social attention was focused more upon Berlin than upon
Guatemala City.

Even as early as WOrld War I, the Guatemalan government assumed
temporary control of German prOperties. Therefore, when Nazi prOpaganda
reached Guatemala during world War II and was taken up by the local
German p0pulation, particularly the racial superiority aspects, it did
not take much pressure from the United States to effect the expropria-
tion of German properties. Between l9hl and l9h5, most German lands
were expropriated, apparently with the aid of blacklists supplied by
the Uhited States. Bank accounts were frozen and government personnel
placed in charge of German fincas. The Banco Central managed crop sales
and other commercial activities for the farms, while Germans thought to
be Nazi sympathizers were sent to the United States and Canada for

internment.

Government Attitude

Obviously, the attitude of the Guatemalan government toward for-
eign, especially German, immigration and settlement was significantly
modified during the period 1880-19hh. In 1897, President Justo Rufino
Barrios signed a far-reaching immigration law which attempted to regu—
late, encourage, and promote immigration. Agents were authorized to pay
the travel expenses of suitable immigrants, and public lands were made

available fOr settlement. But, by World war I, and increasingly after-

ward, the government became first disillusioned and then resentful of

hl

what it considered to be the foreign exploitation of Guatemalan
resources without benefit to the country.

A shift in governmental attitude with regard to coffee production,
pgghgg, is also Observed. Concern for the encouragement of coffee
culture gradually changed to a realization of over—dependence upon a
single-export commodity. As early as 1885 a decree was implemented to
promote the production of rubber, cacao, quinine, sarsaparilla, indigo,
cotton, henequen, wheat, and cattle, although it met with only limited
success. Several laws in the 1890's encouraging cotton production,
Specifically, also had little effect.

Low world coffee prices prompted a crisis in the Guatemalan indus—
try in 1897. Many producers could not meet financial obligations, having
Optimistically over-extended investments in previous years. The national
economy suffered, and attention fixed anxiously upon crop and export
diversification measures. "The re-appraisal of Guatemala's agriculture
which started with the coffee crisis of 1897 was not simply a develop—
ment of the moment, but remained as a continuing theme in subsequent
years."35 Farmers were exhorted to produce basic foodstuffs, for
example, because wheat, rice, beans, and corn were being imported.
Official interest in diversification has endured to the present time.
UnfOrtunately, during periods of high coffee prices or adequate markets

all sense of urgency for diversification tends to fade.

 

35Mo3k, 17.

h2

Coffee,production

Statistics on the production of coffee are neither available on a
yearly basis, nor without major discrepancies, for the period before
about 1930. Conflicting figures are reported, and data in many cases
exist for only parts of the country. Thus, national totals for some
years are deflated because data was not ferthcoming from all areas. A
general idea of the increasing production can, however, be gained from
export data.

The spatial distribution of coffee production during the period
1880—l9hh approaches present day patterns. The western departments of
Quezaltenango, San Marcos, and Suchitepéquez, for example, began to pro-
duce the greater portion of Guatemala's coffee. Already in l88h, the
departments ranked as follows: Quezaltenango, Suchitepéquez, Amatitlén,
San Marcos, Escuintla, and Alta Verapaz. Compared with the period 1850-
1880, production in the early 1900's had shifted westward, while relative
to the current situation the departments of Amatitlan, Sacatepéquez,
Chimaltenango, and Escuintla still accounted for a relatively large share
of national production. By the 1930's, as evidenced in Table 2, San
Marcos had become the leading coffee-producing department in Guatemala,

and present day distributional patterns were established.

TEE McVement of Coffee
The road system expanded during the period l880-19hh to accommo—
date existing coffee districts and, by providing access, encouraged the

development of new areas. Yet, the extension of roads was only of

h3

secondary importance. This period also witnessed the construction of
virtually the entire railroad system of Guatemala, revolutionizing

coffee transportation and altering internal movement decisively.

TABLE 2

PERCENT OF GUATEMALAN COFFEE PRODUCTION ACCOUNTED FOR
BY LEADING DEPARTMENTS

 

 

m

1930/31-

1933/3h- 19hS/h6- 196A/65-
Department 193h/35 l9hZZEB 1966/67
San Marcos 23.9 23.5 23.67
Quezaltenango 17.9 16.0 1h.7
Suchitepéquez 16.8 lh.l 13.0
Santa Rosa 7.3 9-5 9.7
Chimaltenango 6.5 6.7 8.2
Escuintla 6.2 6.0 6.1
Alta Verapaz 7.3 7.5 5.2
Amatitlan 1/ 2. 8 - _
Guatemala - h.0 5.0
Retalhuleu 2.5 h.5 3.9
Sacatepequez 2.5 2.2 2.2
Heuhuetenango - - 2.2
Solola 1.2 1.2 0.9

 

.l/ Amatitlén ceased to be a department in 1935. Four coffee-
producing municipios (Amatitlan, Villa Canales, Villa Nueva, and
Petapa) were incorporated into the Department of Guatemala, and two
(San Vicente Pacaya and Palin) into the Department of Escuintla.

Source: Calculated from data in world's Coffee (FAD, 19h7);
Revista Cafetalera de Guatemala Vols. IV a V (Jan.—Mar. & Apr.-Dec.,

Wears.

With great effort, German coffee growers of the Alta Verapaz con-
structed a road from Coban to Panz6s, on the Rio Polochic, where coffee
could be transported by water to the port of Livingston. The road was
completed in 1881. It was difficult to traverse but provided a welcome
improvement over the previous transport system, in which Indians carried

the coffee to Panzés. A.more desirable mode was sought. Capital from

a.-

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in.

 

I? .

hh

sources in Germany, and from.local Germans, provided the impetus for a
fitmurfiePanzés railroad project. A concession was obtained in 1895 but,
due to the coffee crisis of 1897, the line was completed only from
Panzés to PancaJché. Despite optimism, the line incurred a financial
loss during the first years of service. Later, the same German inter-
ests gained control of the Panzés—Livingston steamship line and, ulti—
nwmely, completed the monopoly by acquiring shipping lines to Europe.36
Both the establishment of the Pacific Coast ports and the early
rail deve10pment in southern Guatemala mirrored the westward progression
of coffee production from the Amatitlan-Antigua-Guatemala City area.
The port of San José was founded in 1852, Champerico in 1872, and 0c6s
at a still later date. Many of the railroad lines were built specifi-
cally to transport coffee.37 The first railroad outside of Alta Vera-
paz, the San Jose-Escuintla line, was extended to Guatemala City in
188%. In the same year, the Champerico-Mulula line was constructed to
move coffee from the San Felipe area. Four years later, the 0c6s-Técun
Uman line, which handled coffee from.San Marcos, was completed. By

1915, lines were extended from Escuintla to Mululé and Tecfin Uman, with

coffee providing a major share of the freight (Map 3).

36Néflez, 65-78.

37Information on the railroads obtained largely through personal
interview with Mr. J. C. Leslie, of the former International Railways of
Central America (IRCA).

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A dream.of coffee businessmen was realized in 1908, when the
interoceanic railroad was inaugurated.38 Despite the fact that Guate—
mala's coffee was marketed chiefly in EurOpe and eastern United States,
it had previously left the country from Pacific ports. The only signi-
ficant exception was coffee from the Coban area, which departed from
Livingston on the Atlantic side. Coffee loaded at Pacific ports usually
crossed the Isthmus of Panama, and some even made the long voyage around
South America. Thus, the interoceanic rail route reduced transport
costs, stimulated production, and altered the basic internal flow of
coffee in Guatemala.

Changes in the internal flow of coffee during the years l880—l9hh
are illustrated by the percent of total coffee exports handled by the
various ports (Table 3). Champerico gained in importance from 1912 to
1926, due probably to the destruction of the port of Oc6s by earthquake
in 1902 and the construction of a line in 1915 which linked Tecfin Uman
and Las Cruces, facilitating the shipment of San Marcos coffee to
Champerico. MOst significant, Puerto Barrios assumed dominance among
the ports shortly after completion of the interoceanic railway. A
slight trend in the 1930's from Atlantic to Pacific ports may have re-
flected an expanding market on the west Coast of the United States. Un-
fortunately, the lack of data for coffee exports by ports prevents a
more detailed analysis for the period. Averages of successive years,

fer example, are needed to "balance out" year-to-year regional

__¥

38The government built a line from Puerto Barrios to El Rancho in
1905, but was unable to complete it to Guatemala City. In return for
the Pnerto Barrios line and other concessions, Minor Keith constructed
the difficult E1 Rancho-Guatemala City segment.

 

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variations in volume resulting from weather, disease, pests, and the

natural yearly fluctuations in yields.

TABLE 3

PERCENT OF GUATEMALAN COFFEE EXPORTS, BY VOLUME, HANDLED BY
VARIOUS PORTS FOR SELECTED YEARS, 1893-1939 1/

Wren =1§93”' 1593 1912 1925/2? 1930 1922133 lam/35 1939:

 

 

Puerto Barrios -- 35 9 A3. A 6h. 5 58.6 55.2 51-7
Champerico 50.2 h7.9 21.7 35- 2 22.8 22.5 26.8 25.0
San José 28.3 29.7 18.h 13.8 h.3 9.7 10.7 19.1
Livingston 6.8 6.5 h.7 7.6 8.5 9.1 7.2 h.1
0c6s lh.l 16.0 19.3 -- -- -- —- --

 

1] The national export totals, in absolute terms are not in agree-
ment among the various sources. However, the percentages for the ports
add to approximately 100, with small deviations due to rounding numbers.

Source: Jones, 387; Alvarado, 555; Memoria de la Secretaria de
Hacienda y Crédito Pfiblico, 1896 (Guatemala: Tipografia Nacional,
13975. 97; and Secci6n de Estadistica de Aduanas, Guatemala, 189A (per-
sonal notes of Rubio Sanchez).

Egpgrt Volume andgForeign Markets

The Guatemalan coffee economy after 1880 became increasingly tied
to the world coffee economy, and the disadvantages of a single-export
cr0p were becoming apparent.

By the end of the First World War, coffee production in
Guatemala had gone through more than a half a century of
active expansion. Development had not been continuous,
for there had been over ten years of instability and
uncertainty in coffee markets following the coffee crisis
of 1897. But the memory of those years had faded under
the influence of the more benign market conditions pre-
vailing from 1909 to 1913, and the expansion of American
consumption of mild coffees had eased the pains of ad—
Justment to war-time conditions. Nevertheless, the
period of instability had generated sharp reactions,

and had given Guatemala a taste of what was to appear

nogv

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148

in a much more acute form in the dislocated interna-
tional economy of the inter—war period, and especially
during the depression decade of the thirties.39

Overall, the period 1880-l9hh was one of discontinuous, but
remarkable growth fer the Guatemalan coffee industry. The best avail-
able measures of this increase, export statistics, portray a rise from
1881/82 to l9hh/h5 of 259 percent.ho The growth in exports from 1881/82
to 1929/30 was even greater, 295 percent, but was subsequently reversed
as a result of the Great Depression.

Prior to WOrld War I, a large proportion of Guatemalan coffee was

hl This coffee came largely from

marketed, not surprisingly, in Germany.
German—owned fincas and from producers of other nationalities indebted
to German commercial interests. Much of the remaining Guatemalan coffee
was exported to other European countries. Europe continued to be the
primary destination of Guatemala's coffee until about 1920, when due

to constraints imposed by the war, 83 percent of the shipments entered
the United Statesfl‘2 After the War, the United States remained Guate-
mala's leading coffee market, taking 53 percent of the total coffee ex-
Ports during 1936—38, while Germany accounted for 23 percent in the same

h3

period. The balance of coffee exports entered other European markets

 

39Mosk, 20.

hoRevista Agricola de Guatemala, Vol. XVI, Nos. 9—10 (October-
November, 19397, 222-23.

thaflez, 86.
1‘2Jonea, 211.

. l‘3U'nited Nations Food and Agriculture Organization, The Werld
QEEISE-EEQEQEI, Commodity Bulletin Series, 33 (Rome 1961), 7.

h9

and Canada. Trade with Germany ceased during world War II, and not
until the 1960's did coffee exports to that nation attain pre-War

levels.

The Post—War Period: 1945:1960
By the standards set in earlier years, the period 19h5-60 was one

of mudh slower growth for the Guatemalan coffee industry. The effect
of World war II and the expropriation of German-owned fincas cannot be
calculated precisely, since the data are lacking, but the distribution
of production was relatively stable and similar to present patterns.
Internally, the most significant events included completion of the
Atlantic Highway and the construction of a port facility at Matias de
Galvez. Trucking now provided competition for the railroad, which had

for a period of more than thirty years dominated coffee tranSport.

The Fincas Nacionales

Having expropriated some 120 German-owned fincas, the Guatemalan
government found itself to be a major element in the coffee business
fbllowing World War II. It was, in fact, the nation's largest producer

of coffee in 19147}"

The farms became known as the Fincas Nacionales,
or National Farms.
Under government control, the output of the Fincas declined both

absolutely and relatively. Data to measure the decrease are not avail-

able, but it is noted that in the early 19h0's the Fincas accounted for

_..._..1

.th. C. Higbee, "The Agricultural Regions of Guatemala," The Geo-
W. Vol. 37, No. 2 (April, 19147), 19h. “r“—

50

about one-third of national production, while they provided only 22 per-

cent in 19h8/h9.h5 The belief that a drop in coffee production occurred
on the Fincas is supported by widespread criticisms of inefficient man-
agement and corruption. "It is charged that many of the administrators
have been political appointments, who know little about farming but are
interested mostly in quick personal gain."h6 It is said that on certain
of the large Fincas, coffee production has never surpassed one-half of
the output that was realized under private German management.

The Fincas Nacionales have been a political football since their
inception. Under the liberal regimes of Juan Jose Arevalo Bermejo
(19h5-51) and Jacobo Arbenz Guzman (1951-5h), workers on the Fincas were
issued parcels of the land in usufruct. On some farms COOperatives were
formed among the laborers. The move was socially and politically con-
gruous, but economically impractical, except in some cases in which
campesino incomes did rise significantly.)47 President Carlos Castillo

Armas (195h-57) reversed the liberal trend, liquidating the cooperatives

_

2‘SF'I‘anklin D. Parker, The Central American Republics (London:
Oxford University Press, 196A): 116; and the United Nations Economic and
Social Council, Economic Commission to Latin America, Legal and Economic
Qgpditions Affecting Foreign Investments in Selected Countries of Latin
America: Policies Affecting Foreign Investments in Guatemala (Monte-
video: Economic Commission to Latin America, March 29, 1950), 1k.

h6Nathan L. Whetten, Guatemala,_The land and The People (New
Haven: Yale University Press, 1961), 128.

hTJosé Luis Paredes Moreira, Reforma:ggraria, una experiencia en
Guatemala (Guatemala: University of San Carlos, 1963), 20.

 

-' ar—f

 

 

‘1‘

 

51

and placing the usufruct lands under state control once again. He then
legalized the rental and sale of the Fincas.

A policy apparently geared to eventual elimination of the National
Fincas has been followed in greater or lesser degree since 195h. Many
of the Fincas were transferred, honestly or perfidiously, to indi-
viduals.h8 subsequent governments sometimes reversed former transac-
tions, repossessing the finca or fincas in question. Thus, of the orig—
inal 120 there were only hh Fincas remaining in 1953, but by 1961 the
total was 7h.h9 In 1967 the number had dwindled to 2h. In some cases,
Fincas have been transferred to national banks in payment of government
debts. As late as 1968, five Fincas were scheduled to be transformed
into cooperatives, but the move was canceled several days before it was
to take effectoso The net result of these transactions and reversals
of policy is (l) a complicated and scantily recorded history of the
National Fincas, (2) inefficient management and uncertainty concerning
the future, (3) a difficult, tenuous existence for workers on the

Fincas, and (A) less than optium.production levels.

 

haClarence W. Minkel, "Programs of Agricultural Colonization and

Settlement in Central America," Revista Geografica, No. 66 (June, 1967)
21.

9

tharedes Moreira, 8% and 87.

50L8. Prensa Libre, October 10, 1968, h. It was subsequently re—
POrted that the five Fincas in the Cohan region were turned over to

"pgasant-farmers" on January 16, 1969. La Prensa Libre, January 17,
19 9.

 

52

Coffee Production and Significance to the Economy

The distribution of production by departments remained virtually
the same throughout the period 19h5-1960, and to the present time
(Table h). Perhaps the most significant change is represented by the
fact that the department of Alta Verapaz slipped from the fourth posi-
tion (7.5%) in the late l9h0's to fifth or sixth position in the 1950's,
and to sixth or seventh place in the 1960's. However, even this decline
represents so small a difference in actual percentage of total produc—

tion as to be of minor significance nationally.

TABLE h

PERCENT OF GUATEMALAN COFFEE PRODUCTION, BY VOLUME, ACCOUNTED
FOR BY EACH DEPARTMENT, 19h5-196O

 

 

3-Year Av.

19h5/h6-
DBBartment l9hT/h8 1955/§§, 1956/57 1957158 cl9§8/§Q.l959/6O
San Marcos 23.5 22.h 23.5 23. 23.h 22.
Quezaltenango 16.0 lh.3 12.9 16. 1h. 15.
Suchitepéquez lh-9 15. l3. 13.
Santa Rosa
Chimaltenango
Guatemala
Escuintla
Alta Verapaz
Retalhuleu
Sacatepéquez
Sololé
Huehuetenango
Jutiapa
Zacapa
El Quiché
Baja Verapaz
Jalapa
Chiquimula - ---
El Progreso -—-
Izabal --_

Source: Revista Cafetalera de Guatemala, Vols. IV and V (Januam;:
March and April-December, 193872 18—28 and 19—3h respectively; and
§gletin Estadistico (ANACAFE), No. 2 (July, 1961), 9.

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53

Guatemala's total production of coffee increased from 891,667
bags in 19h5/h6 to 1,525,000 bags in 1960/61, an increase of 71 percent
(Appendix A). The country thus maintained a position of fourth or fifth
among Latin American and world coffee producers until about 1953/5h,
when African nations gained a larger share of world production
(Table 5). Among Latin American countries Guatemala continued to hold
fifth place, after Brazil, Colombia, El Salvador, and Mexico. Prior to

the mid-1930's, it had ranked fourth in Latin America.

TABLE 5

POSITION OF GUATEMALA AMONG LATIN AMERICAN AND WORLD
COFFEE PRODUCERS, 19hh/h5-1960/61

 

 

 

Position in Position Percent of Percent
Latin in Total Latin of
leer _4A7 America World,_ #__ America Total;World
191MB h h 11.3 3.?
1916/16 5 5 3.5 3.0
19h6/h7 h h 3.h 2.9
19h7/h8 A h 3.1 2.6
l9h8/h9 5 S 3.1 2.6
l9h9/50 5 5 3.0 2.6
1950/51 5 5 3.0 2.5
1951/52 h h 3.3 2.7
1952/53 5 5 2.9 2.h
1953/5h h 6 3.1 2.5
195h/55 5 6 3.h 2.7
1955/56 5 7 3.0 2.3
1956/57 5 7 3.9 2.9
1957/58 5 6 3.3 2.6
1958/59 5 8 2.9 2.3
1959/60 5 8 2.5 2.1
_l960/61 5 8 3.1 2.h

 

Source: The World Coffee Economy_(FAO), 1961, hS-6.

The role of coffee in the Guatemalan economy, as measured by the

percent of total exports, has gradually decreased since 1956 (Table 6).

.p.

 

5h

The downward trend is due largely to two factors: (1) coffee prices on
the world market, which peaked in l95h, have since generally declined,
and (2) diversification efforts have been partially successful. Other
crops, such as cotton and bananas, have constituted a greater share of
the total exports. Coffee averaged 78 percent of total exports for the

decade 1950-59, and 52 percent for the years 1960—67.

TABLE 6

COFFEE As A PERCENTAGE OF TOTAL EXPORTS, BY VALUE,
FROM GUATEMALA, 19h7—1967

 

 

 

 

 

Year Percent Year Percent
19h7 6112 1958'* 76.6
19h8 61.2 1959 78.7
19h9 71.5 1960 62.9
1950 78.0 1961 58.1
1951 76.8 1962 67.9
1952 81. 8 1963 119.5
1953 76. 7 19614 1:6. 5
195A 77.5 1965 A6.0
1955 , 76.5 1966 55. 5
1956 82.h 1967 31.2
1957 75.6

 

Source: l9h7-52, Banco de Guatemala; 1953—62, Annual Coffee Sta-
tistics, Vols. 17-28; and 1963—67, Foreign Agriculture Circular: Coffee

(January 1969), 8.
lfiternal Movement and Coffee Exports

Concerning the internal transport of coffee, the period l9h5—1960
could be entitled the "era of the railroad." Puerto Barrios became in—
creasingly the leading port for coffee shipments (Table 7). Almost all
COffee shipped from Puerto Barrios, three-fourths of the national total,
arrived there by rail. The Atlantic Highway, from Guatemala City to

Puerto Barrios, was completed in 1959 and thereafter facilitated a great

 

 

IF."

-‘.1

 

change in the movement of coffee. Matias de Galvcz, adjacent to Puerto
Barrios, was constructed as a government port in 1955 to provide compe—
tition with the railroad which, along with the port facilities at Puerto

Barrios, was owned by a private American company.

TABLE 7

PERCENTAGE OF GUATEMALAN COFFEE EXPORTS, BY VOLUME,
HANDLED BY VARIOUS PORTS

 

 

3—Year Av.
l9h6/h7- 3-Year Av. 3-Year Av.
Port 1918/ 1:9 1951-53 1955-57
Puerto Barrios 75.7 73-5 78.3
San José 12.7 16.0 15.1
Champerico 11.3 10.5 6.7

 

Source: Revista Cafetalera de Guatemala, Vols. 3, 5, and 6
(Sept.-Dec., 19h7, April-Dec., 19h8, and Aug.-Oct., 19h9), ha, 12, and
52-3, respectively; and Banco de Guatemala, unpublished data.

Another significant change in this period was the fact that San
José surpassed Champerico in the export of coffee (compare Tables 3 and
7). The reason for this has not been discerned. It may, however,
reflect the railroad company's ownership of the port facilities at San
José.

Coffee exports relative to earlier periods, increased steadily if
less spectacularly. In lth/hs, 855,018 bags of coffee left Guatemala.
By 1959/60, the peak year for the period, the volume of exports had
risen to 1,h85,536 bags, or about A2 percent (Appendix B). World coffee
prices reached all-time highs in 195h but declined in the later 1950's.

Consequently, the value of coffee exports was greater in 1956/57 and

1957/58 than in 1959/60.

56

During the period 19h5-1960, Guatemala's rank among Latin American
coffee exporting nations changed from fourth to fifth, and among world
exporters from fourth to ninth (Table 8). This decline was due chiefly
to increases by Mexico and several African nations in the 1950's. For
the period, Guatemala averaged 3.7 percent of Latin American coffee
exports and 2.9 percent of world coffee exports. It appears that Guate-
mala has been gaining an increased share of Latin American coffee

exports since the late fifties, but this depends largely upon the size

of the Brazilian crop in any given year.

TABLE 8

POSITION OF GUATEMALA AMONG LATIN AMERICAN AND
WORLD COFFEE EXPORTERS, 19h5—l959

 

 

Position in Position Percent of Percent
Latin in Total Latin of
Year America WOrld America Total World
19h5 h h 3.6 3.1
19h6 3 3 3.3 2.8
19h? h h 3.8 3.3
19h8 h 6 2.9 2.5
19b9 h S 3.1 2.7
1950 h 5 3.8 3.1
1951 5 7 3.3 2.7
1952 h 5 3.8 3.1
1953 5 6 3.3 2.7
l95h 5 6 3.9 3.0
1955 S 7 3.7 2.9
1956 5 8 3.7 2.7
1957 5 9 3.9 2.9
1958 5 8 h.6 3.3
1959 ii 9 h.h 3.3

 

Source: The WOrld Coffee Economy (FAO), 1961, 56.

After World War II, the United States continued to be Guatemala's

chief coffee market. Germany received very little Guatemalan coffee

before the mid—1950's, and other EurOpean countries and Canada comprised
the secondary markets. During the mid-1950's, however, Germany began to
import an increasing share of Guatemalan coffee, a trend which has con—

tinued into the 1960's (Table 9).

TABLE 9

THE UNITED STATES AND GERMANY AS MARKETS FOR
GUATEMALAN COFFEE 1950—1960

 

 

Year Percent to U. S. Percent to Germany
1950 91 ---
1951 92 —--
1952 87 l
1953 88 5
195A 79 6
1955 82 ___
1956 78 5
1957 77 11
1958 72 16
1959 68 It
1960 63 23

 

Source: Guatemala, Ministerio de Agricultura, Diagnéstico del
desarrollo econ6mico del sector agrfcola de Guatemala, 1950—1960, Guate—
mala, 19621

 

Germany has been the second most important market for Guatemalan
coffee since 1957 and by 1960 accounted for 23 percent of Guatemala‘s
coffee eXports. Reliance on the United States market had declined, but
almost two-thirds of Guatemala's coffee was still shipped to the United

States in 1960.

CHAPTER IV

SOCIAL AND INSTITUTIONAL ASPECTS OF THE COFFEE INDUSTRY

Certain social and institutional aspects of the coffee industry
have a direct relationship to the Guatemalan economy, and particularly
to the agricultural sector. Those considered here are largely of an
infrastructural nature. That the social aspects have developed over a
long period of time is of paramount importance for understanding and
dealing with related issues. On the institutional side, research and
policy-implementing agencies are vital to current overall development,
to the general health and growth of the coffee industry, and to the
maintenance by Guatemala of a competitive position among the world's

coffee-exporting nations.

Social Aspects

In Guatemala, the effects of more than one hundred years of coffee
culture upon the indigenous peoples, their agriculture, and land tenure
patterns are unequaled by any other form of commercial agriculture. In
large part, problems concerning rural labor and agrarian reform have
been brought about by coffee culture and are, in turn, reflected in the
present industry. Logically, the coffee industry, whether or not its
meMbers find the relationship palatable, must be involved in finding
solutions to both the social and economic ills that plague many rural
areas.

58

‘.

._

59

Effects upon the Indigenous Population

 

The establishment of coffee fincas in Guatemala led to a redis—
tribution of the Indian population and indirectly initiated seasonal
migrations. The acquisition of many Indian lands, combined with
increased population pressure on the remaining holdings, has actually
compelled some Indians to live on coffee fincas and others to migrate
seasonally to augment their inadequate income from agriculture. The
pressure of the Indian population upon the decreased land area is, of
course, the product of centuries of exploitation and is not due solely
to coffee. The production of coffee did, however, provide the incentive
for "Opening up" large areas such as the western piedmont, and coffee
farmers influenced the government to provide land and labor for coffee
plantings. Jones writes that in the late 1870's "the Liberals at times
ruthlessly drove them [Indians] from their holdings, thus making them
more dependent on such employment as planters and others might offer."1
Dessaint Observes that:

There may have been cacao and maize plots in the Pacific

Piedmont cultivated by pre-Columbian Highland Indians,

but there were surely fewer of them than modern coffee

fincas, and they were probably at higher altitudes.

Indians from the nearby Highlands were, soon after the

Conquest, forced into Piedmont haciendas, where they

remain today (whether they call themselves Ladinos or
Indians), as colonos.2

1Jones, 150.

2Alain Y. Dessaint, "Effects of the Hacienda and Plantation Systems
on Guatemala's Indians," América Indigena, Vol. 22, No. A (October,
1962), 337. Colonos are workers residing permanently on the fincas.

6O

Historically, coffee culture has been an important factor in the
integration of the Guatemalan Indian pOpulation into national economic
life. La Farge notes that:

This happy isolation was shattered in the last half of
the nineteenth century when the development of the coffee
fincas on the Pacific slopes of the Sierra Madre produced
a demand for labor which could be filled only by drawing
upon the pOpulation reservoirs of the highlands. First
by force, later by the elaborate system of debts known

as habilitacién, these reservoirs were tapped. The
Indians began to lose their economic independence, and
the profits of the habilitador's unpleasant trade drew
increasing numbers of Ladinos into their fastnesses.
Experiences on the coast and en route taught the natives
new tastes and desires; contacts with more SOphisticated
peOple weakened their faith in native ways and in all
religion. Through the finca system the Machine age began
to invade even this remote part of the highlands [Santa
Eulalia], despite the continuing barriers of mountains
and bad trails.3

 

Colono workers on coffee farms are in much closer contact with
Western concepts and, consequently, they have become "ladinoized" much
more readily than the seasonal migrant. In most cases, the colono is
definitely within the national economy, earning wages and buying tran-
sistor radios and other commodities. Less obvious is the relationship
between the national economy and the seasonal migrant from a highland
Indian village commonly described as being "isolated," or "outside of
national economic life." Village economies are, in fact appreciably
affected by the amount of money brought back by migratory workers from
employment on coffee and other types of fincas. Thus, it is not

unreasonable to expect that a policy decision by the International

 

 

3Oliver La Farge, Santa Eulalia,_the Religion of a CuChumatan
Indian Town (Chicago: The University of Chicago Press, l9h7), xii.

61

Coffee Council, in London, or a drop in the price of coffee on the New
York exchange, may eventually affect the economy of a highland village.

One main connection with the national economy is found in
the seasonal labor which Highland Indians perform in the
coffee fincas at lower elevations. This practice of
working outside the region during part of the year is
more typical of some communities than of others, but it
is common throughout the whole area. Although some
individuals and communities have other sources of income
outside the region, there is little doubt that work in
the coffee fincas is the principal means by which money
comes into the Highland region as a whole. This link
with the national economy, it should be observed, is
also a link with the international economy, since

most of the Guatemalan coffee is produced for export.h

Rural Labor

During and after the conquest of Guatemala, the Spaniards faced
three primary problems: control of the land, procurement of an adequate
food supply, and the realization of a profit from agriculture and mining.
Resolution of these problems was impeded primarily by the conqueror's
aversion for manual labor and, later, by a dwindling labor force. An

Old WOrld institution, the encomienga, was therefore introduced. Lands

 

were given in trust to individuals as rewards by the Crown, and included
was the right to exact tribute from the Indian population. In return,
Encomenderos were to provide religious training and adhere to specific
regulations regarding treatment of the Indians. The rules were easily
circumvented or ignored, however, and the ensuing relationship between

Spaniard and Indian was in many cases not unlike that of master and

slave.

 

Sanford A. Mosk, "Indigenous Economy in Latin America," Inter-
AEQrican Economic Affairs, Vol. 8, No. 3 (Winter, 195h), l9.

62

The encomienda was abolished by the Crown in 1720. But, by this
time the encomenderos held a grip on the land and Indians so strong as
to relegate the indigenous peoples to virtual serfdom. Despite royal
decrees to the contrary, the colonists gradually evolved a method of

coercion known as the mandamiento, by which the Indians, although paid,

 

were forced to work for certain periods of time for landholders. A
system of debt peonage thus developed whereby Indians were extended
payment for work owed to the landlord. It kept the Indian permanently
in debt, forcing him to labor, and provided land owners with a legal
means to recover what was owed to them.

Slavery was abolished in Guatemala in 182A, an act of near insig—
nificance to the Indian. A law prohibiting forced labor was enacted in
1837 but, since it did not apply to anyone in debt, labor coercion
continued. The mandamiento was abrogated about 189A. In reality, the
position of the Indian had changed little in three and one-half
centuries, since new methods of labor control had been devised to
supplant it. Debt peonage was common, but a more rigorous hold on labor
was desired by some. This was perhaps due to continuous labor shortages.
During the early 1900's the government grew concerned with the concur-
rent emigration of Indians to neighboring countries and the increased
demand for labor with the rapid expansion of the coffee industry.

Coffee interests acquired an important voice in politics, since taxes
On coffee exports constituted a rising percentage of government earnings.
Nevertheless, a series of laws were passed culminating in the abolition

of debt peonage in 193h.

A:
.

v.

 

63

To assure an adequate labor supply, especially that engaged by
coffee plantations, debt peonage was replaced by vagrancy laws. These
laws required that the rural Indian must work at least 150 days per
year and that he must carry a card to be checked by employers according
to the number of days worked. Failure to meet the labor requirement was
punishable by a minimum Jail term of one month. Needless to say, the
status of the rural Indian was not bettered; the method of enforcement
was merely changed.

After some h00 years of labor coercion, the Constitution of l9h5,
following the overthrow of President Ubico, brought about the termina-
tion of forced labor. Coffee interests, however, insisted that they
could not function without some control over labor. Although ostensibly
outlawed, a covert control of labor has persisted to the present day in
the guise of the colono system.

Under Presidents Arevalo (l9h5-51) and Arbenz (1951—5h), rural
labor unions developed rapidly. However, peasant illiteracy, values,
animosity, and distrust, in addition to the resistance of landed
interests, rendered effective union organization difficult. After
initial organization, moreover, many local unions were left in the hands
of inexperienced personnel. Union leaders concentrated first on govern—
ment-controlled fincas and on a few selected private farms. By 19h9
there were forty-six agricultural unions, with a combined membership of

from 10,000 to 12,000 workers.5 Yet, demands for higher wages often met

_

~———-

5Archer C. Bush, Organized Labor in Guatemala, l9hh-19A9 (Hamilton,
New York: Colgate university, 1959), A3.

 

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with failure, or only partial fulfillment, due largely to the resistance
of the finquero. More success was achieved through pressure on the
Congress to expr0priate portions of unused land for settlement and to
pass the Labor Code of l9h7. The Code limited the power of landowners
over the agricultural laborer and legalized unions on small fincas

which previously could not legally be unionized.

In 195% Carlos Castillo Armas led a revolt which overthrew the
Arbenz regime and the rural union leaders. He revoked the Agrarian
Law of 1952 and returned land expropriated under it to the former
owners. Labor suffered a severe setback, because nearly all union
leaders were suspected of communist leanings.

Whereas in l95h there were some 330 unions with a member-
ship of 107,000, a year later the number drOpped to 27
with a mere 27,000 members. Labor leaders -- those allowed
to operate —- clamored for the abolition of the NDCAC
[National Defense Committee Against Communism], classi-
fying it as a union-breaking device that served the
interests of the Uhited Fruit Company and the Associa—
tion of Guatemalan Agriculturalists. But their protests
fell on deaf ears. Finally, in May 1957 labor leaders
threatened to withdraw support from the government if it
persisted with its antilabor measures. It was undoubt—
edly pressure from the Regional Inter-American WOrkers
Organization that forced the dictator to comply. In
mid—1957 he accepted such measures as the minimum wage
law and the right of agricultural workers to form
unions.6

Political turmoil followed the assassination of Castillo Armas in 1957.
The recent history of rural unionism in Guatemala remains to be
analyzed, but it seems safe to assume that little significant progress

has'been made toward improving the life of the rural worker.

__~

6Mario Rodriguez, Central America (Englewood Cliffs, New Jersey:
Prentice-Hall, Inc., 1965), 28.

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WOrkers on coffee fincas today can be classified into two general
categories, the colono, or permanent worker, and the seasonal or migra-
tory laborer. The colono resides on the finca year-round, providing a
ndnimum labor supply. A small plot of land for subsistence crOps is
usually reserved for the colono. He is part of the finca and in
numerous instances, having been born on the same finca as his parents,
knows no other life. The migratory laborer, on the other hand, commonly
lives in highland Indian villages and resides on the finca only during
the coffee harvest. The off-season of highland Indian agriculture more
or less coincides with the coffee harvest, thus fitting into the
economic schemes of both the Indian laborer and the finca manager.

From September through November and part of December

each year, there is a brief intermission in the local

agricultural activities and at this time many Chimaltecos

begin their long eight day trek to the Pacific coast to

work as harvest hands on the large coffee plantations.7

The extended coffee harvest season gives the migratory laborer
flexibility in terms of his own agricultural pursuits and also provides
an opportunity to work for longer periods of time, often on more than
one finca. Housing for seasonal workers tends to be poorer than that
provided for colonos. Families, for example, may or may not be housed
in separate units. Sanitary conditions are frequently poor or non-
existent. The migrant, however, often receives a higher wage than the
colono because of the more urgent demand for labor at harvest time and

because the facilities provided to him are inferior to those of the

colono. Occasionally, migratory workers also secure plots of land for

7Charles wagley, "Economics of a Guatemalan Village," Memoirs of
The American Anthropological Association, Vol. N3, N0. 58 (l9hl), 30.

 

 

 

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66

private use on the promise that they will return for the harvest each
year. Such plots are not necessarily part of the finca prOper and may,
in fact, be located in the highlands where the finquero has obtained
them specifically for that purpose.

Despite the crucial importance of labor to the coffee producers,
and thus indirectly to the national economy, the subject is little
studied. In Guatemala, labor may account for 50 percent of a grower's
operating costs, and in 1959 it was reported that labor costs "generally

constitute over 70 percent of all current operating costs in Latin

American coffee growing."8 Wages, nevertheless, are extremely low. In
1967, for example, the wages of migratory workers on the Guatemalan
coffee farms examined by Schmid averaged seventy-five cents per day.9.
The apparent discrepancy of high labor costs and low wages is explained
by low labor productivity.

It is frequently suggested that labor productivity is low because
wages or real incomes are low, and vice versa. If so, how did the cycle
begin? Schmid states that historically "there was no need to pay high
wages, since non-economic forces [encomienda, mandamiento, vagrancy

laws, etc.] were used to persuade workers to engage in work on the

fincas. . . ." And, "even where economic forces did Operate, most

 

8Onno Van Teutem, "Coffee in Latin America: The Producers'
Problem," Economic Bulletin for Latin America, Vol, A, No. 1 (March,
1959 , 37.

9Lester Schmid, "The Productivity of Agricultural Labor in the
Eaport Crops of Guatemala: Its Relation to Wages and Living Condi-
tions," Inter-American Economic Affairs, Vol. 22, No. 2 (Autumn, 1968),
3 .

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67

employers believed that higher wages would tend to reduce the length of
time the Indians would work, since they could then pay their debts or
make necessary purchases with less work."10

The backward—bending supply curve for labor, if one actually
exists, can be countered by education and a ready supply of (and real
incentives to purchase) manufactured items and foods. Schmid cited one
finquero, for example, who provided items such as radios, cameras, and
flashlights at cost to laborers, thus encouraging them to work more

diligently through the desire to purchase these goods.11

Wages, will probably be increased only if accompanied by a rise in
general agricultural production, by increases in worker productivity,
and by the competition of alternate sources of employment. Minimum
wage laws are another means of raising wages, but to legislate and
effect such laws is not at present politically feasible. Real wages,
moreover, are not likely to increase significantly without gains in
labor productivity.

Labor productivity varies from farm to farm. Schmid found that it
took from 11 to 28.6 man-days to produce 100 pounds of coffee en oro in
Guatemala and, further, that yields per unit area varied directly with
the productivity of labor.12 Van Teutem, speaking of Colombia, likewise

reported a "close connection between yields and labor productivity."13

 

lOIbi

n:

., 35.

 

llIbid., A3.

 

12Ibid., 37.

13Van Teutem, 37.

68

He noted a differential of labor productivity 2.5 times as great for
high yielding farms as for low yielding farms and suggested that:

The magnitudes of these differences in productivity

between important sections of existing coffee plantings,

in a country of relatively homogeneous production

methods, show that the productivity structure of coffee

growing is more varied, andlfiay well be more flexible,

than 18 sometimes supposed.

Since the productivity of rural labor is vital to the coffee
industry, and to the economic develOpment of Guatemala, it constitutes a
topic in great need of investigation. Better food, improved housing,
and transportation are among factors held by Guatemalan farmers to be
useful in increasing labor PTOdUCtiVitY-ls For example, increased labor
productivity on coffee fincas will probably increase yields. Due to the
quota imposed upon each coffee farm, and idle land taxes, the increased
yields will release land for other crOps. Simultaneously, productivity
will with campaigns and legal incentives boost wages, thereby creating
a market for food and manufactured items. This new demand, in turn,
might stimulate agricultural production and help to improve productivity.
Increased agricultural productivity will spur farm incomes and, a la the
Lewis model, overall wages. Thus, acknowledging over-simplification
and untried assumptions, it appears likely that a stimulation of

productivity and wages on coffee fincas could have far—reaching benefits

for the economy in general.

”This. , 37.

15Schmid, 39-h0.

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69

Agrarian Reform

Except with regard to labor and to the National Fincas, the coffee
industry in Guatemala has not been greatly affected by agrarian reform.
In fact, little widespread or permanent change resulted from the
numerous reform laws enacted from 1825 onward. Since 1956, moreover,
agrarian reform has focused almost exclusively upon the colonization
of land acquired by the government, the formation of rural cooperatives,
and the erratic programs of the Fincas Nacionales.

Colonization projects, generally, are not located in the coffee
producing zones. In a few instances coffee trees were eradicated and
other crops substituted by squatters who subsequently became legal
settlers. Only small, commercially insignificant amounts of coffee are
grown in some of the so-called "zones of agricultural development."
Moreover, due to capital requirements, the length of time prior to
financial returns, relatively extensive land—use, and a national policy
of not planting new lands to coffee, production of the beverage crOp
does not lend itself to colonization projects.

There are about 200 active agricultural COOperatives in Guatemala.
The exact number fluctuates as new cooperatives are formed, others
become defunct, and still others lapse into inactivity. Most of the
cooperatives are encharged to the Departmento de COOperativas Agricolas
of the Ministry of Agriculture. About ten, however, are under the
Jurisdiction of the Instituto de Transformacién Agraria (INTA), and some
thirty-four in the Petén are under the Fomento y Desarrollo Econ6mico

del Petén (FYDEP) .

 

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Cooperatives for which coffee is the chief crOp are administered
by ANACAFE. The program of the Association has grown from three
cooperatives in 196% to thirty—three in 1969. One man, trained in
cooperative concept and function, is employed by ANACAFE to work
directly with these cooperatives. Other technicians are involved in
the dissemination of information, cultivation practices, pest and
disease prevention, and the planning and construction of small benefi-
cios hfimedos for individual c00peratives. The OOOperatives are designed
principally fer the sale of coffee, although the purchase of fertilizer
and the extension of credit are also important functions of some COOp-
eratives. The small coffee producer is in an unenviable position for
selling. Since the cherries must be processed soon after picking, the
small grower, having neither beneficio nor means of transport, must
sell quickly to a local buyer or transporter. Obviously, this allows
little Opportunity for bargaining. A COOperative can greatly improve
the situation by constructing a small beneficio hfimedo so that the
coffee can be processed and then stored or transported for a more
advantageous sale. The COOperative can also help by purchasing a truck
for the rapid transport of cherry coffee.

Each cooperative, rather than each producer, receives an annual
quota. Some coffee interests, in collusion with cooperative directors,
use the group quota as a political and/or economic device. Since indi-
vidual cooperative members do not receive individual quotas, they are
not registered with ANACAFE. This situation permits the COOperative

director to inflate falsely the number of members and amount of

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71

production, thereby obtaining a larger quota than the cooperative
members require. This enables the director to sell the "extra quota"
to coffee buyer-exporters, who use the quota to export what is other-
wise non-quota coffee purchased at relatively low prices. Another
prOblem is that a cOOperative director may "sell" the political votes
Of the members, and it is felt by some that these malpractices under-
mine faith in cooperatives. Those concerned are attempting to have
cooperative members registered and assigned quotas individually, while
still retaining the cooperative as a functional entity.

Coffee cooperatives, their locations, effective quotas, and bene-
ficio facilities are listed in Table 10. None of the coffee OOOpera-
tives have a beneficio seco, and one, in La Uni6n, Zacapa, prepares
coffee by the dry method and consequently markets unwashed coffee. Map
A shows the locations of coffee cooperatives administered by ANACAFE as
of June, 1969. It is evident from the map that coffee cooperatives are
found in all of the major coffee zones except Coban. A number of
National Fincas have been established as COOperatives, particularly in
the Cohan district. These, however, are not under the jurisdiction of
ANACAFE and, because of their uncertain future, are treated in this
study as National Fincas. Also apparent from Map A is the fact that
those cooperatives without beneficios hfimedos tend to be located in

the east, an aspect typical of this area.

72

  

 

  

 

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The National Fincas comprise all of the state-owned agricultural
holdings acquired to increase the production of Specific crOps, and
those later acquired by expropriation from German citizens during World
war II. These Fincas are the responsibility of the Instituto National
de Transformaci6n Agraria (INTA), whereas units transferred to indivi—
duals, banks, or institutions are apparently no longer considered
Fincas Nacionales even though sometimes referred to as such. Twenty-one
of the twenty-four Fincas produce coffee. For the five years 1963/6h-
1957/68, they produced an average of 57,512 quintales of coffee in
pergamino, or about 3.3 percent of the national total (Table 11). The
total area planted to coffee on the Fincas was 12,677 acres. The yields
of six Fincas compare favorably with the average 1966/67 yield of 5.2
quintales per acre (9/manzana) for all fincas registered with ANACAFE,
the latter representing over 90 percent of all coffee produced in Guate—
mala. In general, those Fincas producing the least coffee tend also to
have lower yields. Map 5 presents the locations of the National Fincas
which produce coffee.

Most of the National Fincas have beneficios hUmedos, while only
five, Chocola, Candelaria Xolhuitz, Las Mercedes, Morelia Santa Sofia,
and Chimax have beneficios secos. The Fincas with beneficios secos
usually process the coffee, if it is not sold in pergamino, of the
nearest National Fincas without such facilities. According to law,

coffee from the Fincas must be sold at public auction.

76

TABLE 11

COFFEE PRODUCTION ON FINCAS NACIONALES: 1963/6h-1967/68
FIVE YEAR AVERAGE

 

Production (a) Area (b)__Yield (c)

 

 

1. Chocola' 18,878 3,669 9.0
2. La Fortuna (Chocola Annex) 96 18 9-1
3. El Engafio (Chocola Annex) 37 12 5.3
A. Las Mercedes 9,h8h 1,655 9.9
5. Candelaria Xolhuitz 7,750 1,375 9.7
6. Pensamdento Palmira 5,922 1,359 7.5
7. MOrelia Santa Sofia h,9h7 1,hll 6.1
8. Campur 2,5h1 1,011 A.3
9. La Mbntafiita 1,5h0 263 10.1
10. El Eden Xolhuitz 1,h17 265 9.3
11. Las Camelias Xolhuitz 1,319 317 7-2
12. San Vicente 901 861 3.h
13. E1 Carmen Villa Seca 860 2A9 6.0
1A. Saxoc A62 159 5-0
15. La montaha hho 109 7.0
16. E1 Carmen Tajamulco 329 120 h.7
17. Chipiop 286 10h h.8
18. La Providencia 118 97 2-1
l9. Chuchupa 75 31 h.2
20. Candelaria Panén 61 33 3.2
21. Chimax 50 18 h.8
Totals 57,513 12,676 -—-

 

(a): in quintales pergamino (one quintal equals about one cwt.)
(b): in acres.

(C): (a)/(b).

Source: Instituto Nacional de Transformacién Agraria (INTA).

Institutional ASpectS
The National Coffee Growers Association, the ANACAFE-FAO Diversi-
fication Project, and the Ministry of Agriculture, through their many

sub-agencies and departments, function as mechanisms for research and

DOIicY implementation. To a significant degree these institutions also

Propose and formulate policy related to coffee. And, although not

77

 

 

 

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78

particularly important specifically to coffee at this time, the Central
American Common Market may eventually play a key role in coffee research
and strategy in the member countries. The destiny of the Guatemalan
coffee industry rests in large part with the continued success of these

institutions.

Asociacion Nacional del Café (ANACAFE)

 

The Oficina Central del Café, forerunner of ANACAFE, was created
in 1928. It was reorganized several times, and its status vis-a—vis the
Nfinistry of Agriculture fluctuated. During WOrld War II the Oficina
controlled and conducted the business of the expropriated fincas.
However, it proved less than satisfactory and in 1960 was absorbed by
the Oficina Contralora del Café, which submitted a proposal to the
National Congress for the creation of ANACAFE. By Decree 1397, ANACAFE
was established on November A, 1960.16

The varied and far-reaching functions of ANACAFE render knowledge
of that institution essential to an understanding of the Guatemalan
coffee industry. The Association has virtually exclusive gg_fggpg
control of the nation's greatest source of income. The primary objective
Of ANACAFE is to foster and protect that part of the national economy
concerned with coffee production and coffee producers. It is charged

with providing technical services for research, experimentation, demon-

stration, assistance, and promotion, and is also responsible to organize

—_

Memoria de las labores realizadasgpor 1a Directiva de la
,Aggciacién Nacional del Café (Guatemala: ANACAFE, May 1961), 5.

79

services of credit, testing, arbitration, registration, and statistics.
Exclusively, the Association is authorized to distribute quotas to
producers and to regulate exports. It also represents Guatemala
officially in international coffee affairs.

The Association is a non—profit corporate entity, supported by
membership fees and coffee export taxes. Membership is Open to all
coffee producers, who must register to obtain a quota. All buyers,
exporters, and roasters are obligated to register with ANACAFE, although
they are not members as such. Within the organization, primary authority
rests with a board of directors elected by the grower-members. Voting
is based upon production, rather than one—vote-per-member, larger
producers enjoying a greater number of votes. The board of directors
elects the president and vice president of the Association. The presi-
dent, along with the Ministers of Agriculture, Economy, Finance and
Public Credit, Foreign Affairs, and the President of the Monetary Commit-
tee, comprise the Coffee Policy Council. The Council is presided over
by the Minister of Agriculture for purposes of orientation, development,
and execution of domestic and foreign policy in matters pertaining to
coffee.

ANACAFE encourages the establishment of regional organizations,
with the result that each important coffee-producing region has such
an organization. The purpose of a regional group is to deal with local
Problems, improve roads, petition institutions or government agencies
fbr assistance, pool resources, disseminate information and organize

courses. The two largest regional organizations, each of which includes

80

smaller sub-regional groups, are La Asociaci6n de Caficultores del
Oriente de Guatemala (ACOGUA) and La Coordinadora de Asociaciones y
Regionales de Caficultores del Occidente de la Repfiblica (CARCOR). These
two organizations, particularly the former, exert considerable influence
on regional and national politics. In 1968, for example, the Interna-
tional Coffee Organization levied a coffee export tax of sixty cents per
bag to fern a fund for diversification projects and research. The
Guatemalan government indicated that the producers would pay this tax,
whereupon ACOGUA undertook a lengthy compaign, with full-page newspaper
ads, car bumper stickers, posters, and speeches, to have the burden of
this new tax borne by the government. The organization eventually won
its point. ACOGUA has greater resources at its disposal than other
regional groups, in part because its members include a large number of
wealthy coffee growers. However, it also appears to be more progressive,
better organized, and more capable of managing its interests. Within
ANACAFE the various regional groups form coalitions and power blocks,

for purposes of elections and policy decisions, with the result that
CARCOR and the Cobén and Huehuetenango groups are often pitted against
ACOGUA.

To perfOrm its many functions, ANACAFE is organized internally
into ten departments: Administration, Inspection, Accounting, Treasury,
Testing, Statistics, Publications, Agricultural Affairs, International
Affairs, and Economics. In 1968, the Department of Economics was
discontinued, perhaps permanently. A new department, under the prOposed

name of Crop Diversification, was created in 1969. The duties of most

adv

a

81

departments are obvious from the titles. The responsibilities of the
Departments of Agricultural Affairs and Inspection are not, however,
Mia evident, and their roles are pertinent to this study.

The Department of Agricultural Affairs is involved largely with
direct services to coffee growers. The cooperative program, for example,
is accommodated through this department. Meetings are held for purposes
of instruction, and short courses on agricultural topics are offered.
Technical assistance is provided for a wide range of items, including
advice on fertilization, improved seeds, grafting, processing, shade,
and cultivation, both independently and in collaboration with the
Ministry of Agriculture, the University of San Carlos, and other insti-
tutions and agencies. The formulation of annual pre—harvest estimates
is yet another task fulfilled by the department.

The services of the Department of Agricultural Affairs are accom-
plished by several persons working in the main office in Guatemala City,
but also playing a vital role are personnel of the regional offices.

The Department of Agricultural Affairs maintains ten regional offices,
each staffed with a trained agent and a secretary who maintain radio
communication with the central office in the capital. One trained agent
is stationed in the central office and is in charge of all small
producers, namely those producing less than fifty quintales oro per year.
Others are located in El Tumbador, Nuevo Progreso, Colomba, San Antonio
Suchitepéquez, Santa Lucia Cotzumlaguapa, Antigua, Barberena, Cobén,

and on the ANACAFE Finca Buena Vista, near Retalhuleu (Map 6). The

agency at Barberena has not been staffed in recent years, its duties

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83

being assumed by the agent in Antigua. In 1969, however, the agency at
Antigua'was closed and that agent moved to Guatemala City, where he
continues to handle both areas. The locations of the agencies were
chosen on the basis of three criteria: the number of fincas to be
served by each agent, the total production of these fincas, and the
distance from the agency site to the most distant farms served. In most
cases the distance is less than 12.5 miles. The agent in Cobén is
required to travel much farther, however, since the coffee fincas in

this area tend to be more dispersed.

The Department of Agricultural Affairs has worked closely with the
FAD-Diversification Project and has administered the Finca Buena Vista
since it was purchased by ANACAFE in 1967. The Finca, located in the
Municipio of San Sébastién, Retalhuleu, is used for research and experi-
mentation, particularly with regard to crop diversification. The newly
created Department of CrOp Diversification will likely assume responsi-
bility for collaboration with the Diversification Project and for admin-
istering the Finca Buena Vista.

The Department of Inspection is designed to conduct field investi—
gations concerning claims or questions of quotas, quality and quantity
0f production, stocks, etc. The inspectors are, in addition, responsible
for the registration of all coffee producers, a reSponsibility which has
occupied nearly all of the ten-man staff for several years. The larger
producers are registered, but an estimated 25,000 or more small producers
are proving difficult to register, although progress is being made. The

latter are chiefly Indians, living in remote areas and sometimes reached

8h

only by foot or horseback. The inspectors arrange central meeting
places with these small producers through local mayors, who inform the
farmers when and where to meet the Inspectors for registration. The
infbrmation gathered from the small producers must then be taken to
Guatemala City for tabulation and calculation of the quotas. Finally,
and again with a pre-arranged date and location, the inspectors return

to give the quotas to the small coffee growers.

The ANACAFE—FAO Diversification Projept

In 196k, ANACAFE and the Food and Agriculture Organization of the
United Nations undertook a joint effort known as the ANACAFE-FAO Diver-
sification Project. The Association, in this case, represents the
Guatemalan government because the FAO requires contracts and working
arrangements at the national government level. ANACAFE (not the govern-
ment), however, shares the Project's financing with the FAO. Originally
designed for four years, the Project has been extended for at least one
year, to December, 1969.

The objective of the Diversification Project is "to determine by
Beans of studies and investigations the areas where coffee is produced
under marginal conditions and to recommend and demonstrate substitute
craps for these areas."17 It was originally thought that:

Among the areas which should be considered for retirement

of coffee is the lower altitude coffee zone. The yields of

coffee are high in this area but the type of bean produced
is in surplus supply on the world market. In the other

lTSolicitud de Guatemala, al fondo especial de las Naciones Unidas

Ears la diversificacién de cultivos en las areas del pais en las gue

actualamente se cultiva café en condiciones economicamente mar inales
(Guatemala: ANACAFE, February, 1953;, l.

85

extreme, coffee at the higher elevations has excellent

quality, but the yield is so low that there is little

financial return to the producer. Both zones are

considered economically marginal.l
Subsequently, it was decided to give priority to the lower altitudes
where the problem of'marginal coffee production was thought to be more
critical. Initial research to define marginal areas, however, indicated
that coffee is not widely produced in such areas, in Guatemala. That is,
the physical environment of nearly all areas currently under coffee were
found to be suitable for profitable coffee production. Where production
is marginal, poor management is usually a much more important factor than
the physical environment. Nevertheless, the Project is, by definition,
geared toward diversification in areas originally thought to be marginal.
This fact accounts for the general location of pilot programs and the
choice of substitute crops or agricultural activity.

FAO-ANACAFE investigators have established five pilot studies. An
African oil palm pilot program is conducted in two l25-acre areas, one in
the Department of Retalhuleu and the other in the Rio Polochic Valley.

To date the program has developed well and demonstrates genuine potential.
A tea pilot study is well established on 500 acres near Cohan. It is
hoped that the tea can be sold to other countries of the Central American
Common Market. A citrus and trOpical fruit scheme covers 3,000 acres

near Coatepeque and is developing satisfactorily. A dairy program near

Retalhuleu is underway, albeit at a somewhat slower pace. Cheese, a

 

18"Request of the Government of Guatemala for Assistance in
Promoting CrOp Diversification in Marginal Coffee Areas," (ANACAFE:
c. 1962), l. (Mimeographed.)

'1!

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86

product consumed by Indians and ladinos alike, is being emphasized.
Finally, and progressing most slowly, is the beef livestock pilot
project located along the Pacific slopes between Coatepeque and
Escuintla.

In addition to, and sometimes in collaboration with, the Diversi-
fication Project, ANACAFE works with government agencies and individual
farmers in efforts to diversify production. Substitute crops include
rubber, vanilla, cardamom, pepper, yams, macadamia, and fruits.
Complaints of apathy are frequently leveled at coffee farmers. It is
said that since Guatemala has always been able to sell all of its coffee
at profitable prices, growers are difficult to convince of the need for

cr0p diversification. Excitement is generated when a coffee surplus

aPPears imminent, but fades quickly as stocks are depleted. Some Project

personnel argue that besides the concentrated efforts to demonstrate and
assist with alternative crops, or "pull factors", the encouragement of
"Push factors" is needed in the form of accumulating coffee stocks in
Guatemala. If this "theory" is well founded, and it seems to have merit,

the International Coffee Organization was actually at odds with itself

When it granted a higher basic export quota to Guatemala in 1968. Yet,

quotas for fincas and restrictions against planting new areas to coffee

have Prompted the more aggressive farmers to intensify production of

coffee on part of their property, while freeing the remaining workable

land for other crops. Progress toward a more diversified agriculture

and economy is evidenced by a declining percentage of total national

exports accounted for by coffee.

87

The Ministry of Agriculture

In addition to the experimentation and research conducted by
ANACAFE and pilot programs of the Diversification Project, the Ministry
of Agriculture maintains a research station at the Finca Chocola which
deals primarily with coffee. Chocola is one of the large Fincas Nacion-
ales administered by INTA and is located in the Municipio of San Pablo
Jocopilas, Suchitepéquez. The research station facilities are like a
small island on the Finca, consisting of several buildings, seed-beds,
plots for seedlings, trees, other crops and equipment. One of the
exciting pieces of research being conducted there is the grafting of
roots from the hardy robusta variety to the higher quality and preferred

bourbon species in an apparently successful effort to combat root

diseases.

The Central American Common Market

Coffee is not likely to play an important role vis-a-vis the

Central American Common Market (CACM). Along with cotton and sugar,

trade restrictions on coffee are likely to continue indefinitely.19 If

the CACM continues to develop, however, it is possible that the member

countries may decide to apply for group membership in the International
Coffee Agreement, as provided under Article 5. Among the requirements

for group membership, the countries must exhibit a "common or co-

ordinated commercial and economic policy in relation to coffee." This

19Roger D. Hansen, Central American Regional Integration and

Economic DeveloEment, National Planning Association: Studies in Devel-
Opment Pro ess, No. 1 (Washington, D. 0.: National Planning Associa-

tion. 196? , 25-6.

88

constraint would seem to put such a move a long way off. A more likely
possibility, and perhaps the only one with regard to coffee in the CACM,
is the coordination of research, including international experiment
stations and cooperative investigations. Some discussion of the coordi-
nation of agricultural research has already taken place. This, too,

appears destined for the distant, rather than the immediate, future.

CHAPTER V
THE LOCATION OF COFFEE PRODUCTION

The location of coffee production in Guatemala is dependent upon a
number of environmental and economic factors. Although the coffee plant
can thrive under a wide range of climatic conditions, it cannot endure
extremes of temperature or drought. Other factors, such as soils, topo-
graphy, altitude, and tree variety also limit the areas suitable for
coffee production. Economic considerations further restrict the areas

of profitable cultivation, but to a lesser degree.

Physical Factors of Location

In Guatemala, coffee production occurs in areas receiving less
than 60 inches to over 200 inches of annual precipitation. A range from
70 to 150 inches, however, includes most producing districts. (Map 7).
Within these limits, annual distribution and type of precipitation are
more important than total amount. A well—defined dry season, for
example, is conducive to higher quality. Light rains or drizzle are
preferred to torrential downpours.

The other major climatic variable, temperature, is inversely
related to altitude. That is, temperatures decrease with increasing
elevation above sea level. Mbst Guatemalan coffee is grown between I

1,500 and 5,000 feet, with mean annual temperatures in the 60’s and 70's

89

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Fahrenheit and annual precipitation of from 70 to 150 inches. Coatepe-
que and Mazatenango, at 1,600 and 1,200 feet respectively, are located
near the lower limits of coffee production on the Pacific piedmont and
have average annual temperatures of about 79°F and annual precipitation
levels of about 120 inches. Cohan and Antigua, on the other hand, are
located at altitudes of about h,h00 and 5,000 feet, with mean annual
temperatures of around 65°F. Coban receives about 95 inches of precipi-
tation annually, while Antigua receives h5 inches.

A light, deep and fertile soil, with porous subsoil, is Optimal
for the coffee tree. This type of soil has develOped from the volcanic
material on the Pacific piedmont and is counted among the finest coffee
soils in the world. Map 8 shows the principal coffee producing areas in
Guatemala and the types of soil which characterize them. In general,
coffee production appears to be far less restricted in areal extent by
soil conditions than by factors related to climate.

Since coffee removes more nitrogen from the soil than any other
major trOpical crop, and more phosphoric acid and potash than most,
fertilizers should be considered essential. Relatively little commer-
cial fertilizer is used, however, on Guatemalan fincas. Humus and
Organic matter have been maintained chiefly through mulching. It is
said that many coffee farmers do not wish to invest more than the
minimum funds required to Operate, but there is evidence to suggest that
a.more important reason for not using more fertilizer is that its appli-
cation requires managerial skills which are in short supply. An

overdose or mis-application can seriously reduce yields.

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Topography, like soils, does not significantly restrict the
spatial distribution of coffee production, except in areas of extremely
rugged terrain. In fact, within an apprOpriate climatic range, terrain
that can support any other major commercial crop can usually be used for
coffee. The effects of topography are more apparent with regard to ease
in cultivation, harvesting, and transportation. Although pertinent data
do not exist, it appears that labor costs are greater in areas of rugged
terrain. Similarily, the threat of erosion is greater in steeply
810ping areas. Harvesting is not only more difficult on rugged t0po-
graphy, but the varying elevations may also produce a less uniform bean
size and quality. The harvest may be lengthened because of differential
ripening at dissimilar elevations, necessitating more passes by the
pickers.

Altitude is by far the most important characteristic of the natural
environment influencing coffee production (Map 9). As noted above,
temperatures, precipitation, and perhaps soils vary with altitude.

The combination of these variables is probably what makes altitude the
determining factor. In Guatemala, coffee is classified into eight
commercial categories, seven of which are based upon elevation

(Table 12). That is, commercial types are determined on the basis of
altitude rather than tree variety or other characteristics. One of
these, Maragogype, is a special, relatively unimportant variety of
coffee. The term "type" connotes a difference in quality, based
chiefly upon altitude according to the nomenclature in Table 12, while

"variety" signifies the genetic composition of the plant.

94

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TABLE 12

COMMERCIAL COFFEE TYPES IN GUATEMALA ACCORDING TO ALTITUDE

 

 

.1308: =f__ Elevation in Feet
Strictly Hard Bean over h,500
Hard Bean h,001-h, 500
Semi-Hard Bean 3,501—h,000
Extra Prime Washed 3,001-3,500
Prime washed 2,501—3,000
Extra Good Washed 2,001-2,500
Good washed below 2,000

__Mar_ egoavpe -—-

 

For the purpose of grading or classifying beans for commercial
transactions, current practice takes into account the shape, size, color,
unifbrmity, and condition of the beans. The shape of a bean depends
largely upon variety but seems to vary with location, perhaps reflecting
changes in soil or climate. Bean size also depends upon variety. But,
given the same variety, size increases with altitude and possibly with
the length and distinctiveness of the dry season. Size increases only to
about h,500 feet, above which "Strictly Hard Bean" coffee is produced,
and then decreases again. Other things being equal, the higher the
altitude, the better the quality. The color of the bean varies region-
ally, and with altitude, and can be radically altered in the beneficio.
Higher altitudes tend to produce a greenish-blue color, while lower
elevations yield a clearer green. Uniform size and quality in a given
lot of beans depend largely upon unifbrmity of altitude at the finca and
uniform processing, given the same variety. The condition of the beans,
of course, may also reflect disease or pest problems, soil deficiencies,

and any damage incurred in processing.

96

Samples of coffee to be traded are brewed and tasted by an experi-
enced coffee taster. First, the taster examines the roast. Under equal
conditions low-grown beans roast more rapidly. Next, the aroma of the
brew is sampled, the aroma of high-grown coffee being considered
superior. Then, the beverage is tasted. The "body," acidity, and
flavor also improve with increased elevation. As has been noted,
however, high quality coffee depends not only upon altitude, but also
upon soil, climate, management, maturity of the fruit when harvested,
length of time between picking and depulping, processing, disease,
variety, and storage conditions. Higher-grown coffees generally bring
a better price, although yields are usually smaller. Low-grown coffee,
conversely, is characterized by greater yields, lower quality, and lower
prices.

Only three of the many species included in the genus Coffea are
commercially significant: Coffea arabica, Coffea robusta or canephora,
and Coffea Liberica. The latter is least significant world-wide and is
unimportant in Guatemala. Robusta is produced almost exclusively in
Africa and Asia, and in Guatemala is grown only on a few low—altitude
fincas. The most widely grown species, arabica, accounts for the bulk
of the world's coffee and nearly all of Guatemalan production. Arabicas
are commercially divided into unwashed milds, such as are grown in
Brazil, Bolivia, Paraguay, and Ethiopia, and milds from other Latin
American countries and some African nations. The milds are of highest

GD31ity, commanding premium prices on the world market.

97

Coffee species are further divided into varieties. The two most
common in Guatemala are bourbon and "typica." Guatemalans usually refer

' even though typica is only one variety of

to typica as "arabica,'
arabica. The new leaves of "arabica" are bronze-tipped, while those of
bourbon are light green—tipped. The arabica produces a larger bean and,
therefore, is considered to be of a higher quality. Bourbon, on the
other hand, is a higher—yielding, more vigorous and disease resistant
variety, which appears to be gaining in popularity.

The characteristics of the bean are strongly influenced by variety.
For example, arabica yields a larger bean than bourbon, and fincas at
higher altitudes tend to grow arabica. Thus, the tendency for high-
grown coffee to produce larger beans is complimented by the variety of
tree (arabica) most commonly grown at higher altitudes. Small amounts
of maragogype are grown for a special market in Belgium and Germany.
The maragogype produces an extra large bean for which there is a good,

but limited.market. Several other varieties are also grown in Guatemala,

but on a relatively limited scale.

Economic Factors of Location
The patterns of spatial distribution of coffee in Guatemala are
relatively static. Most coffee farms were established many years ago,
and there are legal prohibitions against planting new areas to coffee.
Thus, land or the cost of land is but a minor factor in determining the
location of coffee production, except perhaps in one sense. Although

coffee is not widely grown on marginal land in Guatemala, an alternative

98

use of a given piece of land may at some time become more profitable.
This is particularly true near the capital, where coffee lands have been
put to urban or more intensive agricultural use. But this trend, to the
extent it exists, is progressing very slowly. Land taxes are not great.
Coffee remains a profitable crop, even when the land is farmed exten-
sively and poorly managed, allowing the owner to live and work in
Guatemala City. Neither transportation nor lack of markets appear
critical.

A change from coffee to an alternative crOp, in almost every case,
would necessitate more careful management and more intensive use of the
land, in addition to investment. Returns tg_thg_l§gg_would be increased
in many cases. But, if the coffee farmer augments his income by working
in Guatemala City, it appears probable that his total net income would
actually decline from a change to another crop, with his working time
devoted totally to farming. Since managerial skills are in extremely
short supply, the hiring of a competent manager to Operate the farm
might be impossible or unjustified economically. This impediment to
diversification can only be stated as an hypothesis, however, since more
research is required for documentation. One method of encouraging
diversification and the intensification of agriculture would be to
institute an effective land tax. Diversification, in turn, would affect
the spatial distribution of coffee production to a significant degree.

Labor, like the cost of land, does not appear to be a major loca-

tional factor fer the coffee industry, except perhaps in the Coban area.

99

Historically, labor has been cheap in the Verapaz zone relative to the
Pacific piedmont. Soil fertility and other physical factors do not
compare favorably with those of the western coffee areas, but cheap
labor and a specialized German market are reasons why Cohan farmers
continue to find coffee production profitable. If local costs were to
rise to the same level as in the western coffee areas, coffee might
become unprofitable. Guatemalan wages for rural labor are low, even as
compared with other coffee producing countries in Latin America. The
Guatemalan farmer, however, does not regard it in that manner. He sees
labor as representing 50 percent or more of his Operating costs,
combined.with low labor productivity.

Transportation, likewise, is only a minor factor in the location
of coffee production in Guatemala. In fact, coffee (in pergamino) is
prObably the most easily transported Of any major commercial crop. That
is a prime reason why, historically, it was selected by pioneer farmers
who required a marketable crop capable of withstanding, economically and
PhYBically, transportation to a distant market. Because of its trans-
portability and relatively extensive use of land, coffee can be expected
eventually to be "pushed" away from major cities by more intensive
activities. This movement is, however, barely discernible at present.

In summary, physical factors seem to exert a greater influence
Upon the spatial distribution of coffee production than do economic
factors. As the nation becomes increasingly developed, economic factors

Will inevitably increase in importance, and it appears likely that the

100

result will be a displacement of coffee production away from large

cities and, to a degree, from primary transportation routes as well.

The Spatial Distribution of Production

The spatial distribution of coffee production reflects the
occurrence of physical location factors, and, to a lesser degree,
economic factors. The resulting areal patterns include an elongated
zone located primarily on the Pacific slopes of the highlands, becoming
wider and less contiguous from west to east. A dispersed and physically
different zone focuses upon the city of Cobén, and there are outlying
and scattered producing areas in Huehuetenango, El Quiche, and the
eastern departments of the country. Map 10 illustrates the area under
coffee cultivation and the spatial patterns, except for small isolated
pockets of production in the departments of Chiquimula, Jutiapa, Jalapa,
and the area west of Lake Atitlan. The municipios, their approximate
boundaries subject to much litigation and disagreement, are shown in

Map 11. Coffee production, by municipio, is depicted in Map 12.

Finca Size

For purposes of this study size refers to the area planted to
coffee, not to the overall acreage of a finca, unless specified to the
contrary. In certain instances, size is determined by production levels.
ANACAFE defines a "small producer" as one that produces less than fifty

quintales of coffee in oro per year. A "large producer,"

conversely, is
one with annual output of fifty quintales or more. The terms, as

defined by ANACAFE, are so employed in this study.

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SOUTHERN GUATEMALA

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103

GUATEMALA

Guatemala

Santa Catarina Pinula
San José Pinula

San Jose del Golfo
Palencia

Chinautla

San Pedro Ayampuc
Mixco ,
San Pedro Sacatepequez
San Juan Sacatepequez
San Raymundo
Chuarrancho

Fraijanes

Amatitlan

Villa Nueva

Villa Canales

Petapa

EL PROGRESO

El Progreso

Morazan

San Agustin Acasaguastlan
San Crist6bal Acasaguastlan
El Jicaro

Sansare

Sanarate

San Antonio La Paz

SACATEPEQUEZ

Antigua Guatemala
Jocotenango

Pastores

Sumpango

Santo Domingo Xenacoj
Santiago Sacatepequez

San Bartolemé Milpas Altas
San Lucas Sacatepequez
Santa Lucia Milpas Altas
Magdalena Milpas Altas
Santa Maria de Jesus
Ciudad Vieja

San Miguel Duefias
Alotenango

San Antonio Aguas Calientes
Santa Catarina Barahona

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CHIMALTENANGO

Chimaltenango

San Jose Poaquil
San Martin Jilotepeque
Comalapa

Santa Apolonia
Tecpén Guatemala
Patzfin

Pochuta

Patzicia

Santa Cruz Balanyé
Acatenango
Yepocapa

San Andres Itzapa
Parramos

Zaragoza

El Tejar

ESCUINTLA

Escuintla
Santa Lucia Cotzumalguapa
La Democracia
Siquinala
Masagua
Tiquisate

La Gomera
Guanagazapa
San José
Iztapa

Palin

San Vicente Pacaya

SANTA ROSA

Cuilapa
Barberena

Santa Rosa °
Casillas de Lima
San Rafael
Oratorio
San Juan Tecuaco
Chl quimlflilla
Taxisco
Sant a Mari
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Since the national average yield for registered fincas is about
five or six quintales in pergamino, or from four to five quintales in
oro, per acre, it can be calculated that small producers generally have
less than ten acres in coffee. In reality, however, there are numerous
fincas with less than ten acres under coffee which produce well in
excess of fifty quintales. Unfortunately, the data do not include the

number of trees per unit area and, thus, the intensity of land use.
There are approximately 2,hh7 farms which produce over fifty

quintales oro, accounting for about 95 percent of total reported coffee

1

production. The remaining 5 percent is produced by some 25,000 to

30,000 small farmers. How much coffee is grown but not reported is
difficult to estimate, but it seems certain that the 2,hh7 fincas pro-
duce at least 90 percent of all coffee grown in Guatemala. Small
producers are currently being registered by ANACAFE and, although past

estimates of the number of these small growers were over 50,000, it is
now being discovered that the actual number is about half that antici-

pated. The pre-registration estimates were inflated, largely because

1This number pertains to registered fincas with a basic quota of
over fifty quintales oro for 1967/68, or that produced at least fifty
quintales oro in 1966/67 or 1965/66. In cases where a finca had a
basic quota of at least fifty quintales oro but had not reported its
coffee acreage for 1967/68, the most recent year reported was used to
obtain the acreage under coffee.

One hundred fOurteen of the fincas did not have quotas for
1967/68. This could result from annexation; transfers or sales; the
fbrmation of cOOperatives; the cessation of coffee production; transfer
through foreclosure to a bank, which receives a quota for all of its
holdings in a lump sum; or the selling of coffee without quota. Such
fincas were included by virture of their having reported harvests of
over fifty quintales oro in 1966/67 or 1965/66. Cooperatives are
included as individual fincas, with the coffee acreage of each equal
to the sum of that of its members.

 

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109

coffee buyers and exporters submitted lists containing many fictitious
producers' names when applying fer export quotas. Registration of all
producers will eliminate, or at least greatly reduce, the misappropria-
tion of quotas.

Assuming the existence of between 25,000 and 30,000 small
producers, the 2,hh7 "large" farms represent approximately 8 or 9 per
percent of the total number of producers. This means that less than 10
percent of the producers account for over 90 percent of the total
national coffee production. Of course, many small producers cultivate
only a few coffee trees, concentrating on subsistence-type food crOps
or, perhaps, commercial crops other than coffee.

The 2,hh7 fincas have a total of h99,032 acres in coffee, with a
mean of 20h acres and a standard deviation of 336 acres. The farms are
grouped into feur categories in Table 13, based upon size and standard

deviations about the mean.

TABLE 13

AREA AND PRODUCTION OF COFFEE ACCORDING TO FARM SIZE

_-~_—..— _ _

     

 

 

 

 

 

Acres in . 19" -7 Production in

Categggv Coffee in Coffee Total Quintales_jperg.) %
1 >1 + 10 >5ho 22h,311 h5.0 967,EE§ h1.9
2 xp-z + 10 eon-5&0 150.733 30.2 691.336 29.9
3 Isl/20--1 36-203 110,h95 21.2 552,h81 23.9
h <x~1120 (35*, 1 1 3 ‘gié 91.901 h.2
M 99 .012 294 24309 .161 295

 

Source: Calculated from.unpublished data from ANACAFE.

110

Figure 2 presents a graphic representation of the finca-size data
in Table 13. The distribution curve, not drawn to scale, demonstrates
a marked skew to the right, resulting from the existence of about 100
farms with over 865 acres (500 manzanas) in coffee, nineteen farms with
over 1,730 acres (1,000 manzanas) in coffee, and four farms with over
3,h60 acres (2,000 manzanas) of coffee. The left side of the curve is
steep and ends more abruptly, due to the fact that only fincas producing
fifty quintales oro or more are included. It is apparent, however, that
even without the production constraint of fifty quintales, the left side
of the curve would be relatively steep. It is notable that of the four
fincas reporting over 3,h60 acres of coffee, two are owned by the Banco
Nacional Agrario, one is a National Finca, and one is privately owned.
However, a single individual or a family may own several fincas with a
total area in excess of 3,500 acres. Because these are frequently held
under different names or companies, a more detailed land ownership
analysis is misleading.

0f the total area of registered farms h5 percent is accounted for
by fincas with more than 5h0 acres under coffee. A total of 75 percent
is held by growers with at least 20h acres in coffee. Furthermore, it
is certain that nearly all of the unregistered producers are in the "36-
203" and "less than 36" categories, especially the latter. These small
producers, of course, will not add greatly to the total of h99,032 acres
in coffee. Therefore, it can be assumed that when all producers are
taken into account, the concentration of land ownership will be even

more marked than is presently indicated.

111

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As evident in Table 13, the production of coffee in 1966/67
corresponds closely with the area under coffee vis-a-vis the categories
based on finca size. Although the fincas reporting coffee production
for 1966/67 are not identical with those upon which the categories are
based, the approximation is close and, if anything, is biased slightly
against the smaller categories. The close correlation of percent of
area and percent of production indicates that finca size does not

significantly correlate with yields per unit area.

Spatial Variation of Finca Size

The locations of all fincas producing fifty quintales or more
annually are shown in Map 13. Map 1h shows the distribution of fincas
with more than 5&0 acres in coffee, while Map 15 shows the fincas which
include less than 36 acres in coffee but yet produce at least fifty
quintales oro. In comparing the three maps, certain patterns are readily
apparent. Large farms predominate in the western piedmont area, while
smaller farms are more numerous in the Central-Eastern zone. Small
Operational units are found in all coffee-producing departments, but are
concentrated in San Marcos, Santa Rosa, Alta Verapaz, Solola, Chiquimula
and Suchitepéquez. These six departments accounted for 11,892 of the
18,656 small producers registered as of July, 1968. The area around
Antigua and a larger one south and southeast of Lake Amatitlén are
particularly conspicious in the predominance of small farms and the near-
absence of large farms. Large farms are found throughout the coffee-

producing areas of San Marcos, Quezaltenango, Retalhuleu, Suchitepéquez,

113

 

 

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116

Chimaltenango, and western Escuintla department. They are especially
concentrated in the nation’s three leading coffee producing municipios,

namely El Tumbador, Colomba, and Chicacao.

Yields

A large number of variables influence the coffee yields of any
given finca. It is commonly held that yields vary inversely with alti-
tude. Tree variety, the choice of which is influenced by altitude, also
exerts an influence. Topography is another factor, because steeper
slopes generally support fewer trees per unit area. Temperature,
precipitation, and soils, all of which relate to altitude but vary
regionally, are additional elements. Management, however, appears to be
the single most important factor affecting coffee yields. In summary:

Yields are considerably dependent on climate, altitude,

type of soil and the species and age distribution of

the coffee trees cultivated. But, to an increasing

extent, the differences in yield between the better

managed farms and the rest are the result of differences

in the amount of labor input, the use of fertilizers,
and the adoption of measures to control disease and pests.

2

The spatial distribution of coffee yields in Guatemala is illus~
trated in Map 16. Data for the municipios having the highest yields,
those with over seven quintales pergamino per acre, are somewhat mislead-
ing. It is known, for example, that the municipios of San Juan La
Laguna, in 801015 Department, and Santo Tomas La Union, in Suchitepéquez,
contain many small producers who sell to local finca owners. The latter

frequently report the coffee as part of their own production, but report

only their own acreage and thereby seriously inflate the numerical yield.

___1

2FAQ, The world Coffee Economy, 10.

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118

The same is probably true for many of the small, scattered outlying
areas in the highest yield category. The high yielding municipios in
San Marcos and Quezaltenango are probably more accurately shown, since
they are surrounded by municipios of the next highest yield category.
The Sacatepequez area is the most outstanding exception to the
commonly accepted notion that yields decrease with altitude. Farms in
the municipios of Sacatepequez shown in Map 16 as having average yields
of more than seven quintales, per acre, have average altitudes of more
than h,000 feet. Superior management, for which data are unavailable,
may explain the high yields of southern Sacatepéquez. Certainly, many
of the farms in the area appear to be more carefully managed and more
neatly kept. The singularly poor yields of the Cohan zone are tradi-

tional and due largely to relatively inferior soils for coffee.

The Harvest Timetable

Because temperature and precipitation are so closely related to
altitude, harvesting also varies with elevation. Table 1h indicates the
months in which coffee is harvested at various altitudes, according to
region. The harvest dates are approximations, with allowances necessary

for variations caused by intra—regional climatic conditions.

Statistical Analysis
A series of simple and multiple regression analyses were conducted
to aid in explanation Of the areal distribution of coffee production.
Data for eight variables were assembled on a muncipio basis. Yields
Variable (1), are defined for each municipio by dividing the 1962/63—

1956/67 production average, (2), by the average coffee acreage (3). The

119

TABLE 1h

THE GUATEMALAN COFFEE HARVEST TIMETABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U n
Region and Principal Harvest
Altitude (feet) Segson
Southwest (San Marcos, Quezaltenango, Retalhuleu, Suchitepequez)
1,000-2,000 July, Aug.- Sept., Oct.
2,000—3,000 Sept., Oct. - Nov., Dec.
3,000-h,000 Oct., Nov. - Dec., Jan.
h,OOO-5,000 Nov., Dec. - Jan., Feb.
East (Santa Rosa, Guatemala, Escuintla, Chimaltenango)
1,000—2,000 Sept., Oct. - Nov., Dec.
2,000-3,000 Oct., Nov. - Dec., Jan.
3,000—h,ooo Nov., Dec. - Jan., Feb.
h,OOO-5,000 Dec., Jan. - Feb., March
North (Coban)
1,000-2,000 Sept., Oct., Nov.
2,000-3,000 Oct., Nov., Dec.
3,000-14,000 Nov., Dec., Jan.
h,000-5,000 Dec., Jan., Feb.
Huehuetenango '
3,000-h,ooo Jan., Feb., March
h,000-5,000 Feb., March, April
Central (Guatemala, Sacatepequez, Chimaltenango, Solola)
Loco-5,000 Jan., Feb. _-_March, April

 

Source: ANACAFE.

120

five-year averages tend to smooth out annual variations in the size of
harvest. Farm size, (h), is equal to the five-year average of a given
municipio, divided by the number of fincas producing at least fifty
quintales oro annually. The altitude, (5), for each municipio is
calculated by dividing the sum of the mean altitudes of each coffee farm
by the total number of coffee farms in the municipio. Distance from
Guatemala City, (6), is measured in air miles to the center of the coffee
area in each municipio. The number of beneficios secos, (7), in opera-
tion in each municipio is tabulated. Finally, the percent of total

area in coffee, (8), is defined as the five-year average acreage under
coffee, divided by the total area of the municipio. Simple correlations

among the eight variables are shown in Table 15.

TABLE 15

SIMPLE CORRELATIONS AMONG COFFEE VARIABLES

 

 

, ___:===
Variables Simple Correlations
1. Yields 1.00
2. Production 0.21 1.00
3. Acreage 0.11 0.97 1.00
A. Av. Farm Size -0.19 0.39 0. A7 1.00
5. Altitude 0.29 -0. 20 -0.26 -0. 36 1.00
6. Distance -0.11 0.12 0.12 0.20 -0. 37 1. 00
7. Beneficios Secos 0. 07 0. Ah 0. Ah 0.17 -0. 0h -0. 01 1. 00
8. 1 Area in Coffee 0.17 0. 75 0. 76 0. 36 0. 21__0. 18 0.32 1.00

 

Variables: (1) (21 (31 (h) (51 (6) CI) (8)
Source: Calculated from.unpublished data from ANACAFE.

None of the variables correlate with yields to a significant
degree, and the explained variance of yields in a multiple regression
analysis including all of the variables is but 30 percent. Thus, the

hypothesis that management is the single most important determinant of

121

yields is perhaps indirectly supported. Unfortunately, management data
are not available. The importance of managerial skills is documented by
studies of other producing countries, however, as well as by a small
study carried out as a part of the FAO-ANACAFE Diversification Project
in Guatemala.3 As noted in Chapter IV, both Schmid and Van Teutem found
strong relationships between yields and labor productivity, which is
also related to management.

Production does correlate closely with acreage and with the percent
of land under coffee. Total acreage, alone explaining 9h percent of
production, is the more important of the two variables. The distribution
of the residuals of production, as eXplained by acreage, closely
resembles the map of coffee yields (Map 16). As expected coffee acreage
also correlates with the percent of land in coffee and with farm size,
the latter variables together explaining about 60 percent of production.
Considerable interdependence exists between total acreage and percent
of land in coffee, however, and farm size alone accounts for little of
the variation in production. In general, the largest-producing munici-
pios tend to be devoted primarily to coffee cultivation in terms of land
area and are also characterized by relatively high yields. The latter
relationship, however, does not show among the simple correlations in
Table 15 because of some municipios which produce relatively little
coffee but presumably have high yields. This is especially true of

certain areas outside of the three major regions, where small producers

h

3Informs anual del Departamento de Asuntos Agricolas, 1965—66
(Guatemala: ANACAFE , 1966) , ‘ 16 .

122

sell to larger growers who report the coffee as part of their harvest
but neglect to report the corresponding acreage.

Higher correlations, especially relative to altitude and farm
size, were anticipated. It appears, however, that the different coffee
regions tend to compensate for each other, resulting in low correlations
among the variables. In other words, the regions display sufficient
variation so that, even with the present data limitations, it is
apparent that certain of the same variables explain much more when
analyzed intra-regionally than when considered for the country as a
whole. In short, the relatively low correlations support the hypothesis
of this study that since significant regional variation exists, data
collection and analysis exclusively at the national level lead tc

conceptual errors and are not adequate for planning purposes.

CHAPTER VI
THE COFFEE REGIONS OF GUATEMALA

A general examination of coffee production in Guatemala reveals
the existence of two major regions: (I) an elongated, continuous zone
on the Pacific or southern lepes of the Central Highlands, and (2) a
smaller region, chiefly in the Department of Alta Verapaz, focusing upon
the city of Coban. Actually, the former consists of two quite different
segments, resulting in a total of three major coffee regions: The West,
the Central-Eastern Region, and the Cohan Region (Map 17). Subregions
are found within each of the major regions, and there are also a number
of "outlying areas" where coffee is grown.

As noted previously, the factors which distinguish these regions
tend to be more physical than economic in nature. Climate, for example,
appears to be the single most important criterion accounting for
regional differences. Especially important for delimiting the boundary
between the west and the Central-Eastern Region is a relatively well-
defflned dry season in the latter area. Farm size and altitude are also
important in defining this boundary. Other factors include soils, topo-
graphy, production, acreage under coffee, percent of land in coffee,
quality, variety, number of farms, yields, processing, and transpor-

tation.

123

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Among the problems encountered in a delimitation of regions is the
scarcity of reliable climatic data. Although temperature and precipi—
tation depend to a large extent upon altitude, the relationship of
climate and altitude vis-a-vis coffee is closer within each region than
for the country as a whole. A second obstacle, arising from the large
number of farm units, is less serious if consideration is limited to
farms producing at least fifty quintales oro annually. A third diffi-
culty concerns the level of generalization. Individual farm units are
too numerous, too unreliably reported in existing data, and too variable
in year to year crop size. Departments, on the other hand, are too
extensive as statistical units to provide sufficient detail for spatial
analysis and mapping. Municipios have the disadvantage of variable size
and shape, as well as indefinite boundaries. The municipio is used,
however, because (1) it is better than alternative units, (2) data are
available at that level, (3) data reported by individual farmers can be
averaged for each municipio, thereby reducing the seriousness of error
in reporting or annual fluctuations in crOp sizes, and (h) it is perhaps
the most reasonable unit fer future data collection and planning.

Only the department of Chimaltenango and Escuintla are shared by
two distinct regions. This exception involves two municipios adjacent
to the Western and Central—Eastern boundary. Some municipios, of rela~
tively minor importance, represent anomalies within the regions in which
they are located. However, the rectification of such irregularities
would engender non-contiguous regions, a result considered useful only

for more detailed consideration of a particular region.

126

The Western Region

The Western Region, the leading coffee zone in Guatemala, is
comprised of producing areas in San Marcos, Quezaltenango, Suchitepé-
quez, and Retalhuleu departments, plus the municipios of Pochuta in
Chimaltenango and Santa Lucia Cotzumalguapa in Escuintla. Reflecting
traditionally high yields relative to the other regions, the West
produces about 63 percent of the nation's coffee on 58 percent of the
total coffee acreage (Table 16.)1 The department of San Marcos alone
produces almost one-fourth of the annual harvest, while San Marcos,
Quezaltenango, and Suchitepéquez together account for over 50 percent

of Guatemala's annual coffee crop (Table 17).

TABLE 16

COFFEE AREA AND PRODUCTION BY REGION IN GUATEMALA,
1962/63-1966/67 AVERAGE

 

 

 

Area Production
Acres Under Percent of Quintales Percent of
Re 1 Coffee Total Pergamino Total
West 276,923 58 1,529,979 63
Central-East l2h,36l 26 6h3,07h 26

 

 

Cuban h 838 19 151,203 _6
Total 3 Re ions AH 122 9A 2.3241556 93
Total Guatemala £73,559 100 2,h29,108 100

Source: Calculated from unpublished data from ANACAFE.

 

Considerably more of the land in the West is devoted to coffee
culture than in the Central-Eastern Region. Of the total area in muni-

Cipios of the western Region, about 15 percent is in coffee, compared

 

1Data in the tables of this chapter are exclusive of small and
unregistered coffee producers, unless otherwise specified.

127

TABLE 17

COFFEE AREA AND PRODUCTION BY DEPARTMENT IN GUATEMALA,
1962/63-1966/67 AVERAGE

 

 

 

 

 

Area Production
Acres Under Percent of Quintales Percent of
Department Coffee Total Pergamino Total
San Marcos 95,259 20.1 582,36h 2h.0
Suchitepéquez 7h,709 15.7 3h1,903 lh.l
Quezaltenango 60,609 12.8 360,h06 lh.8
Santa Rosa h8,700 10.3 233,315 9.6
Alta Verapaz h0,626 8.6 135,307 5.6
Chimaltenango 33,8hl 7.1 203,861 8.h
Escuintla 33,035 7.0 1113.563 5.9
Retalhuleu 23,3hh h.9 108.735 h.5
Guatemala 17,77h 3.7 113,382 h.7
Huehuetenango 11,319 2.h h9,972 2.0
Sacatepequez 7,97h 1.7 56,125 2.3
Baas Verapaz 7,333 1.5 16.572 0.7
801015 6,038 1.3 29,399 1.2
Zacapa 6,299 1.3 18,179 0.7
El Quiché 3,h60 0.8 1h,683 , 0.6
Jutiapa 2,05h O.h 11,685 0.5
Izabal 903 0.2 3,077 0.1
Jalapa 609 0.1 3,805 0.2
E1 Progreso 561 0.1 2,6h2 0 1
Chiquimula 102 --— 133 ---
Totonicapén lj --- --- --- ---
*Fl Peténl/ -__ ___ ___ ___
Totals h7h,5h9 100.0 2,h29,108 100.0

 

1] Minimal production, not reported every year.

Source: Calculated from unpublished data from ANACAFE.

128

with 7 percent for the Central-Eastern Region and only h percent for
Cobfin. Maps of production reveal that the coffee area in the west is
also more concentrated than in the Central-Eastern zone.

In general, the west receives more precipitation and has higher
temperatures than the other two major regions. Annual temperatures and
rainfall, varying with altitude, range between 65° and 80°F., and 80 and
150 inches, respectively, The higher precipitation levels are due
largely to the region's position relative to the Pacific Ocean. The
higher temperatures characteristic of the west, on the other hand,
reflect the lower altitudes of western farms. The average altitude of
coffee farms in the West is 2,652 feet, compared with h,h56 feet in the
Central-Eastern Region and 3,1h0 feet in Coban (Table 18). The rela-
tively low average altitude of Western coffee fincas, in turn, is
largely a consequence of topography. The slope of the western Pacific
piedmont increases abruptly from the coastal plain to the highlands
beyond the coffee zone, rendering the total area between 3,000 and 5,000
feet considerably less than the area of land between these elevations in
the Central-East.

The type of coffee produced in the West is also related to the
generally lower elevations of the fincas. The West produces over 80
percent of the Good washed and Extra Good washed coffees, but only about
ho percent of the Hard Bean and 25 percent of the Strictly Hard Bean
coffees (Table 19). The higher temperatures and greater precipitation

in the West create, for the area as a whole, more severe problems with

129

TABLE 18

NUMBER OF COFFEE FARMS IN GUATEMALA PRODUCING AT LEAST FIFTY
QUINTALES 0R0, BY ELEVATION AND MAJOR REGION

 

 

 

 

Elevation We: Central-East Cobsan Total
<1,000 l7 1 1 l9
l,000~l.999 387 28 20 A35
2,000-2.999 369 82 52 503
3,000—3.999 229 172 57 Ass
h,000-5,000 116 327 3h 1:77

>5 .000 111 307 2 350
Totals 1,159 917 166 2,2712 31

 

;/ An additional 205 farms are located in outlying areas.
Source: Calculated from unpublished data from ANACAFE.

disease and pests than in the Central-Eastern Region. Also reflecting
the lower altitudes is the tendency fOr banana trees to be used for
coffee shade in the West to a greater extent than in the other major
zones.

Mere important than higher annual temperatures and amounts of
precipitation in differentiating regions is the existence or absence of
a'well-defined dry season. Although both the west and the Central-
Eastern regions transcend several climatic zones, the annual distri-
bution of rainfall clearly distinguishes between them. With minor
exceptions, the West does not have a well-defined dry season, whereas
the Central-Eastern zone does. The significance of the dry period is
that it affects the quality of the coffee bean in at least three ways:
(1) the dry season in the Central—Eastern Region occurs during the
ripening period, thus affording the coffee cherry more sunshine, (2) the
more pronounced dry season in the Central-East facilitates sun-drying,

and (3) coffee can generally be left on the tree longer in the

 

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131

Central-Eastern zone, since heavy rains are less likely to knock the
ripe cherries from the tree. Moreover, much of the coffee of the
Western Region is picked at the height of the rainy season. The dry
season, of cOurse, affects the entire growing cycle of the coffee tree
and may influence quality in ways not yet determined. The coffee
blossom appears in January and February in Colomba, Quezaltenango, for
example, and not until two or three months later in the Central-Eastern
zone at the same elevations.

ReinfOrcing the tendency for higher altitude coffees to be higher
in quality is the tree variety. Mest fincas in Guatemala produce
arabica (typica), bourbon, or both, although a few other varieties are
grown on a relatively small scale. Arabica, usually grown at higher
elevations, is generally considered of better quality because of its
larger bean size. Thus, arabica is preferred by growers in the Central-
Eastern zone, while bourbon tends to predominate in the west (Table 20).
However, a greater number of farms grow both arabica and bourbon, than
grow either one or the other exclusively.

The coffee of the western Region is not only grown at generally
lower elevations, giving it a lower quality than that of the Central-
Eastern Region, but its quality is also somewhat diminished by the
variety which predominates and by the annual distribution of precipita-
tion. A frequently quoted "rule of thumb" is that coffee from the
Central-Eastern zone is about "500 feet better" than that from the west.

That is, at a given altitude, Central-Eastern coffee is equal in quality

to that grown 500 feet higher in the West. Coffee from the western

 

132

Region, however, is of low quality only with reference to that grown in
the Central—Eastern Region, and.many exceptions exist regarding even
this generalization. When compared on a global scale, coffees from the

western Region in Guatemala enjoy a high rank in quality.

TABLE 20

COFFEE VARIETIES BY MAJOR REGION IN GUATEMALA l!

 

 

 

 

T W .5
Egpiety west CentralyEast Cohan
Arabica
Quintales pergamino: 171,985 287,9A2 33,973
Percent of total arabica: 31 52 6
Arabica as a percent of the
region's total coffee: 1A 35 32
Bourbon
Quintales pergamino 290,560 76 ,971 7 ,95A
Percent of total bourbon: 77 20 2
Bourbon as a percent of the
region's total coffee: 23 9 8
Arabica-Bourbon
Quintales pergamino: 807,818 A56 ,8A0 62 ,892
Percent of total arabica-bourbon: 59 33 5
ArabicapBourbon as a percent of
the region's total coffee: 63 55 60

 

1/ Estimated from 1966/67 data from ANACAFE.

The Western Region has a greater number and larger average size of
coffee farms than does the Central-Eastern Region. Some 2,2A2 of the
2,Ah7 coffee fincas producing at least fifty quintales oro, or about
92 percent, are located within the three major regions. Of these 1,159,
or 52 percent, are found in the western zone where most are concentrated
at elevations between 1,000 and 3,000 feet. The average farm size in
the west is 239 acres, compared with 136 acres in the Central-East and

288 in the Cobfin Region. This relationship of coffee finca size between

133

the major regions is about the same as that for all types of farms
reported in the 196A census. Thus, the spatial distribution of farm
size does not appear unique to coffee, but follows a general tendency
fer larger farms to be located at lower elevations and at greater
distances from Guatemala City.

Yields per unit area likewise display spatial variation. The west
enjoys the highest yields, with an overall average of 5.5 quintales
pergamino per acre, while the Central-Eastern Region is second, with 5.2
quintales. Cohan averages only 3.2 quintales per acre, and the national
average is A.1. It is surprising that the yields of the generally lower-
grown coffees of the Western Region are not higher relative to those of
the Central-Eastern zone. The explanation may lie in the existence of
a negative correlation between yields and farm size. That is, the
factor of lower altitudes in the western zone may be partially offset
by the smaller size of farms in the Central-Eastern Region. It also
appears that certain low-yielding areas, and perhaps the larger number
of producers, reduces the West's overall average.

Regional differences are also evident with regard to processing
and transportation. In the West, relatively little coffee is sold in
cherry, since more fincas have beneficios hfimedos. These, in turn, are
accounted for largely by the year-round water supply and greater
average farm size. A reliable system of transportation is essential for
the selling of coffee in cherry, since the fruit must be processed soon
after picking. Yet, in this area of rugged topography, torrential rains
make road maintenance expensive and difficult, with roads sometimes

being washed out entirely.

13A

An even more obvious difference between the Western and Central—
Eastern regions is in the number Of beneficios secos relative to total
coffee production. Of the sixty-six beneficios secos in the west, all
but eight are located on fincas. In contrast, almost half of the bene-
ficios secos in the Central-Eastern Region are large urban-based, commer-
cial mills. The relatively large number of Western fincas with bene-
ficios secos reflects a greater number of large farms and a tendency to
sell coffee in pergamino or oro. Since a finca is unlikely to have a
beneficio seco without also having a beneficio hfimedo, the seasonal
shortage of water and the smaller size of the farms in the Central-
Eastern Region encourage the sale of coffee in cherry and discourage the
existence of beneficios secos on fincas.

Statistical computations of data at the municipio level aid in
delimiting regional boundaries, while the residuals from the regression
analyses help to fecus upon anomalies within the regions. The latter,
in turn, help to identify subregions or factors in need of further
study. The boundary established between the two major coffee regions is
Optimal, in that it minimizes anomalies between adjacent areas of the
west and Central-Eastern regions. Two adjoining municipios along this
regional boundary, however, do not fit securely in either region. The
municipio Santo Tomas La UniOn, Suchitepéquez, falls within the western
Region. But, since it is comprised mostly of very small Indian
producers,‘using relatively poor growing and processing techniques, it
is immediately identified as an anomaly in the regression analysis and

distorts the regional results accordingly. The same is true of the

135

municipio San Juan La Laguna, Solola, except that the latter is part
Of the Central-Eastern Region. Therefore, these two municipios are
excluded from.the statistical analyses, increasing the correlations of
the variables for the respective regions.

Most of the simple correlations of the variables examined at the
national level are remarkably higher when computed for individual
regions. Table 21 shows the correlations of these variables for the
west. The relationship between the volume of production and yields per
unit area, for example, is .A7. This compares with only .21 for the
Republic as a whole, indicating a stronger tendency for municipios with

greater production to have higher yields, and vice versa.

TABLE 21

SIMPLE CORRELATIONS AMONG COFFEE VARIABLES: THE WEST

 

 

 

Variables Simple Correlations

1. Yields 1.00

2. Production 0.A7 1.00

3. Acreage 0.36 0.98 1.00

A. Av. Farm Size 0.17 0.A8 0.52 1.00

5. Altitude 0.22 0.09 0.05 -0.0h 1.00

6. Distance y 0.38 0.0A -0.03 -0.3A 0.28 1.00

7. Beneficios Secos 0.20 0.6A 0.63 0.18 0.06 0.1A 1.00

8. jArea in Coffee 0.37 0.72 0.73 0.A6 0.06 0.07 0.A3l.00
Variables: (17' (,) (3) 1(5), (5) (61. (7) (8)

 

1/ From Guatemala City.
Source: Calculated from unpublished data from ANACAFE.

Although distance from Guatemala City is not particularly meaning-
ful for intrapregional analysis, it is retained here because the correla-
tion between distance and yields (.38) indicates a slight tendency for
Yields to increase westward, a topic worthy of further investigation.

Distance also correlates negatively (-.3A) with average farm size,

136

suggesting that farm size decreases toward the west. However, the
number of large farms increases westward within this zone. The total
number of producers also increases westward, explaining the decrease in
average finca size.

The high correlation between acreage and production suggests that
on a municipio basis yields do not vary substantially. Since manage-
ment appears to be the chief determining factor, the indication is that
managerial skills are distributed fairly evenly or, more likely, that in
generalizing to the municipio level the precision necessary to show
distributions in yields within the region is lost. Nevertheless, it is
important that one variable, acreage, explains 95 percent of the
variation in productiOn. Together, the eight variables explain 52
percent of the variation in yields for the west. However, production,
the single most important variable, explains but 22 percent of the
yields in this region.

Average farm size for the Western Region also correlates more
closely with production (.A8), acreage (.52), and percent of land in
coffee (.A6) at the regional level than at the national level. Thus,
mmnicipios with larger average farm sizes tend to produce more coffee,
have a greater total area, and.have a high percent of land in coffee.
On the other hand, average farm.size in the west, unlike that of the
Central-Eastern zone, displays virtually no relationship to yields. The
high correlation between municipios with large average farm size and
high levels of both production and acreage is related to the high
correlation between beneficios secos and production and acreage, since

larger farms are more likely to have dry mills.

137

Unlike the situation in the Central-Eastern and Cobén regions,
altitude does not correlate to a high degree with any other variable in
the Western zone. In fact, the correlations between altitude and the
other variables are higher when computed at the national level, the only
important exception to the proclivity for intra-regional correlations to
exceed those calculated at the national level. In the West, for example,
the correlation between average farm size and altitude is -.Oh, while
fer the entire country the correSponding figure is -.36 This condition,
uncommon to the other two major regions and to the nation as a whole, is
largely attributable to greater local relief. In the West, individual
farms, and municipios to an even greater extent, are characterized by a
relatively large range in elevation. Therefore, average altitude is
less meaningful than in other areas and, consequently, the respective
correlation coefficients are lower.

Due to the rugged topography of the West, farms and municipios
have a greater tendency to be elongated in shape and situated parallel
to the 310pe of the disected piedmont. This relationship to the topo-
Sraphy reinforces the tendency for individual municipios and farms to
have greater ranges in elevation. Thus, larger farms in the west tend
to have a more extended harvest season than those in the Central-Eastern
Region. The degree to which the relatively prolonged season affects
total labor costs has not been examined, but such information is perti-
nent to planning and worthy of further analysis. Different plans,
techniques, substitute crops, and other aspects of diversification

schemes should be employed here than are used in other areas. Extended

138

harvests might also indicate a need for different types of credit
programs. Other implications might become apparent with further
research.

As part of the preliminary investigations fer the ANACAFE-FAO
Diversification Project, a study was conducted of eighty farms located
at elevations between 866 and 5,h78 feet in the departments of Retalhuleu
and Quezaltenango.2 The results, some of which concur with findings of
the present study, and some of which concern topics only indirectly
related are summarized as follows: (1) yields per acre are virtually
unrelated to altitude, (2) a high correlation (.69) exists between
yield per acre and total production, (3) farms with high yields per acre
tend to be located near main highways, and vice versa, and, (h) appar-
ently no relationship exists between the number of workers employed per
acre and the yield per acre. It was concluded that management is the
Single most important factor in explaining per acre yields. Conclu-
sions (l) and (2) agree with the findings of this study for the Western
ReSion only and are contrary for the Central-Eastern zone; (3) and (h)
are not directly related to this study.

The Western Region is more diverse than the other two major
regions, having greater local relief, number of farms, and production.
Correlations and explained variances could undoubtedly be increased by

eliminating several municipios which tend to have high and low residuals

 

2"Esfuerzos de diversificacion agricola, programa de la Asociaci6n
Nacional del Café," from a statement by the Guatemalan government to the
ICC to Justify a requested increase in the basic export quota assigned
to Guatemala (Guatemala: ANACAFE, 1965), ll—lh. (Mimeographed.)

139

in the analysis. However, because these municipios do not form meaning-
ful spatial patterns, and since their anomalous situations cannot at
this Juncture be resolved, their removal is not justified. Also, it is
a distinct possibility that the anomalies are attributable to errors in

the data.

The CentralrEastern Region

The Central—Eastern Coffee Region is comprised of the producing
areas of the departments of Guatemala, Sacatepéquez, Santa Rosa, Solola,
Escuintla (except the municipio of Santa Lucia Cotzumalguapa), and
Chimaltenango (except the municipio of Pochuta). This region is second
to the west in importance, with 26 percent of the total national coffee
acreage and 26 percent of the total production. Santa Rosa and Chi-
maltenango are the leading departments of the region in volume of
production and coffee acreage, fellowed by Escuintla, Guatemala, Sacate-
pequez, and Solola. Seven percent of all land in the producing munici-
pios of the region is planted to coffee, compared with 15 percent for
the West and h percent for Cohan. In the Central-Eastern Region, the
coffee areas are more scattered than in the West.

In general, the Central-Eastern zone receives less precipitation
and is cooler than the west. Annual temperatures and rainfall generally
range from 60° to 70°F., and from 55 to 100 inches, respectively. A
different position in relation to the Pacific Ocean and higher elevations
of the coffee fincas account for lower precipitation and temperatures.
The average altitude of coffee farms is h,h56 feet, compared with 2,652

feet in the West.

1ho

The higher elevations and a relatively well-defined dry season
account fer the overall higher quality of coffee produced in this zone.
In contrast with the West, the coffee fincas are concentrated at alti-
tudes between 3,000 and 5,000 feet. The Central-East produces 33
percent of the Semi-Hard Bean, h6 percent of the Hard Bean, and 60
percent of the Strictly Hard Bean coffees. On the other hand, this zone
accounts for only 12 percent of the Good Washed, 16 percent of the Extra
Good washed, and 17 percent of the Prime washed coffees. Virtually all
coffee of the three latter types within this region is produced in the
departments of Chimaltenango, Escuintla, and Santa Rosa. Another factor
contributing to the higher overall quality of coffee from this region
is the variety of coffee which predominates, namely arabica. Arabica
makes up a greater proportion of the region‘s coffee, 35 percent, than
in either of the other major producing regions.

The Central-Eastern Region, with 917 farms, or hl percent of the
total for the three regions, contains fewer farms than the West but more
than Cobén. The Central-East has the smallest average farm size, 136
acres, compared.with 239 acres fer the West and 288 for Coban. The
larger farms are found in the departments of Santa Rosa and
Chimaltenango, toward the periphery of the region, corresponding with the
general tendency for larger farms of all types to be found at lower
elevations and at greater distances from the capital.

Due to the higher altitudes and the varieties of coffee grown,

yields per unit area are smaller here than in the West. The difference,

 

 

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however, is not great: 5.2 quintales pergamino per acre, compared with
5.5 quintales per acre in the west. The reason for the slight differ—
ence, even though higher altitude coffees usually are poorer producers,
is perhaps one of definition. The figures here are in terms of
"production per unit area," which indicates nothing about the number of
trees per unit area. Although yields pggptggg_are lower in the Central-
Eastern Region because of altitude and variety, terrain and other factors
encourage the planting of more trees per acre and, hence, a relatively
high yield 1e}; age;

, The higher quality coffee, smaller farms and lower yields per tree
of the Central-Eastern Region suggest several hypotheses which have
implications for planning and diversification programs. Farms of the
Central—East are, in general, better managed and more intensively
farmed. The fincas are smaller, probably more often owner-managed, and
more intensively cultivated because of locations nearer Guatemala City,
Where land values tend to be higher. Proximity to Guatemala City also
permits owners residing there to visit their fincas more frequently. A
higher quality product, combined with higher wages and lower yields per
tree, also encourages more intensive land use and better management.
Because the farms are smaller and more intensively utilized, diversifi-
cation schemes will be more difficult to implement. It is unlikely that
the farmers in this region will be able to intensify production on part
of their land, thereby maintaining production levels, while freeing land
for other creps to the extent that this can be done in the West. More—

over, since economic returns to the land from coffee are probably greater

1&2

in the Central-Eastern zone, alternative crops will not show as much
potential increase in profits as in the West. Assuming that the world
market remains unchanged for quality high-altitude coffees, these
farmers will continue to face less competition from other coffees of the
world than will coffee farmers of the west.

Given more uniform elevations in the Central-Eastern Region, the
coffee ripens more uniformly and creates a relatively greater demand
for labor at a given time. Since emphasis in this region is upon
quality, the urgency of the harvest is increased. Therefore, although
labor costs per unit area are lower than in the west, the wages paid are
actually higher. wages, moreover, tend.to be higher closer to Guatemala
City. Cooler temperatures and lower precipitation render diseases and
pests easier to control. Given these relationships of more intensive
land.use, greater returns to the land, and a narrower margin of profit,
the Central-East is relatively "advanced" economically in coffee culture.

Only about fourteen fincas in the Central-Eastern zone have
beneficios secos currently in operation, compared with fifty-eight in the
west. The Central-East, however, contains sixteen commercial, urban-
based beneficios secos, whereas the West has only eight. Of the
commercial beneficios secos in the Central-East, eleven are located in
Guatemala City, four at Amatitlén, and one in Antigua. Those in
Guatemala City and Amatitlan, served by the interoceanic highway and
railway, and located near the commercial center of the nation, process
coffee from.all parts of the Republic. San Lazaro, the beneficio in

Antigua, is one of the most modern in Central America. It is both

 

 

 

{lll'lllllll‘I-l.

lh3

hfimedo and seco and is particularly important as a depository for cherry
coffee from the Central-Eastern Region. In fact, the company which owns
the facility is the largest buyer of cherry coffee in the country.
Statistical computations of data at the municipio level for the
Central-Eastern Region are, like those fer the other regions, higher
than the correlations <xf the same variables at the national level.
Furthermore, several of the correlation coefficients are higher than
those for the western Region, suggesting greater uniformity in the
Central-Eastern zone. The correlations of variables for the Central-

East are shown in Table 22.

TABLE 22
SIMPLE CORRELATIONS AMONG COFFEE VARIABLES: THE CENTRAL-EAST

 

 

M
variables Simple Correlations
1. Yields 1.00
2. Production 0.1h 1.00
3.. Acreage 0.02 0.98 1.00
h. Av. Farm Size -0.30 0.58 0.67 1.00
5. Altitude 0.38 —0.29 -0.36 —0.uh 1.00
6. Distance 1/ —0.39 0.01 0.05 0.10 -0.26 1.00

Beneficios Secos 0.21 -0.01 -0.0h -0.0h 0.13 ~0.0h 1.00

2 Area in Coffee 0.15 0. 76 0.]h 0.h1 —0.l9 -0.07 0.02 1.00
Variables (l) (2) (310 _(h) (57* (611 (7) (Blw

l] From Guatemala City.

Source: Calculated from unpublished data from ANACAFE.

Yields in the Central-Eastern Region correlate most strongly with
altitude (.38) and average farm size (-.30), and only slightly with
production, acreage in coffee, and percent of land in coffee. This
relationship is in contrast with the west. The negative correlation of
Fields and distance from Guatemala City is merely the antithesis of the

correlation between altitude and yields, since the coffee areas of this

lhh

region at greater distances from.the capital are also at lower eleva-
tions. Thus, contrary to the commonly accepted idea that fincas at
lower altitudes are characterized by greater yields per acre, the better
yields in this region are found on smaller farms, at higher elevations,
and closer to the capital. unlike the west, the greater producing areas
are not the highest yielding areas. The municipios with the highest
yields are found in the department of Sacatepequez. Relatively good
yields are common to the southern part of Guatemala department, and to
several municipios scattered throughout the region. Thus, available
statistics support the hypothesis that coffee farms in the Central-
Eastern Region are generally better managed, are more intensively
utilized, and have higher yields per acre.

Another significant comparison with the western zone is the high
correlation between average farm size and production. Large farms,
although not realizing the best yields, account for a relatively large
share of the production. Farm size also bears a negative relationship
(-.hh) to altitude, again indicating the tendency for larger farms in
the Central-Eastern Region to be located at lower elevations. Thus,
for the nation as a whole, it appears that coffee production units can
be regarded as existing along a continuum. At one pole are large farms
with greater production, lower yields, more extensive land utilization,
and lower altitude coffees. At the Opposite pole are small, higher
yielding, more intensively used farm units producing higher quality
coffees. It would seem.useful to classify these farm units and identify

the areas occupied by the various types of farms, since the farmers in

lbs

one group will very likely react differently to diversification

projects, for example, than those in other categories.

The Cohan Region

Although located entirely within two departments, Alta Verapaz and
BaJa Verapaz, the Cohan Region consists of several relatively dispersed
and non-contiguous areas of coffee production. It accounts for about
6 percent of the nation's production, on 10 percent of the total acreage
under coffee. Alta verapaz is by far the more important coffee producer
of the two departments, with production in BaJa Verapaz limited chiefly
to the northeastern part of the department. Only some h percent of the
total area of the producing municipios is planted to coffee, reflecting
the dispersed nature of the production patterns. The percent of area
in coffee is significantly reduced by several relatively large munici-
pios in which only a small fraction of the area is devoted to coffee
culture.

Annual precipitation and temperatures for the Cobén zone range
from about 75 to 125 inches and 55° to 80°F., respectively. Although
not apparent from the precipitation and temperature ranges, the Cohan
district exhibits the greatest degree of'climatic uniqueness of the
three maJor regions. Dozier observes that:

Peculiar climatic conditions constitute the outstanding

factor of the physical environment is the C6ban area

and.make of it a unique anomaly in the economic geography

of the Guatemalan highlands. This uniqueness is expressed

in: (1) its abundant and relatively well-distributed

rainfall, with only a short, less-wet season in March;

(2) its high humidity, manifested in lowahanging fogs

and.mists; and (3) its relatively mild temperature,
despite its h,180 ft. elevation. . . . The reasons for

 

 

 

II II I'll I ' I‘ll ‘Il

1h6

the unusual climate of this highland zone lie in the

fact that warm, moisture-laden winds from the Caribbean
have an open passage through Lake Izabal and up the
Gabare River into the cup-like Coban basin, where they
are lifted orographically by the surrounding mountains.

It is a gradual lifting, as the winds drift in from.the
east, resulting in much cloudiness and reduced insolation,
fog, and slow, drizzling rain. The higher temperatures
(and slighter diurnal range) are due both to the marine
effect and to cloud cover.3

The average altitude of the coffee fincas in the Cohan Region is
3,1h0 feet, or about midway between the corresponding figures for the
west, 2,652 feet, and the Central-Eastern Region, h,h56 feet. 0f the
166 coffee farms producing at least 50 quintales oro, 109 are between
2,000 and h,000 feet, and 3h between h,000 and 5,000 feet. With the
wide range in elevation, the Cbbén Region accounts for some, albeit
small amounts, of each major type of coffee produced in Guatemala.
Reflecting generally intermediate altitudes relative to the other
regions, it produces a greater percentage of the national total of
Extra Prime Washed than of any other type. This region also produces
almost 10 percent of the Semi-Hard Bean coffee, but only about 3 percent
of the Good washed and Extra Good washed, and h percent of the Strictly
Hard Bean coffees. The year-round precipitation, high humidity and

large number of cloudy days result in the production of coffees with a

 

3C. L. Dozier, Indigenous Tropical Aggiculture in Central America,
Publication 59h, National Academy of Sciences-—National Research Council
(Washington, D. 0.: National Research Council, 1958), 6h.

I ll. Iii-I! II I: llllllillulll‘

 

 

 

1h?

unique flavor often referred to as "Cobans." These coffees are
preferred on the German market, to which much of the region's coffee is

shipped.h

The variety of coffee which predominates in this region is also
related to coffee quality. Farms here tend to produce arabica, or
arabica and bourbon. Only a few produce bourbon exclusively, which
with respect to variety makes Cohan similar to the Central-East.
However, two somewhat different subregions are included. The Polochic
Valley tends to be more like the Western Region in coffee variety and
quality, while the higher area to the west tends to be more like the
Central-Eastern zone. The lack of a dry season and the high year-
round humidity foster greater problems of pests and diseases of the
coffee tree than are found in either of the other regions.

0f the three major producing regions, C6ban has the smallest
number of coffee fincas (166) producing at least fifty quintales oro.
This number of 7.h percent of all coffee farms within the three regions
and 6.8 percent of all coffee fincas in the Republic. The average farm
size is 288 acres, compared with 136 acres in the Central-Eastern Region
and 239 acres in the west.

Historically, coffee yields in the Cohan Region have been notori-
ously low, only 3.2 quintales pergamino per acre. This is well below

the national average of 5.2 quintales per acre for all registered

-_

hCoffee is a beverage for which one acquires a taste, as Opposed
to having a natural desire for it. Therefbre, the preference for a
Particular kind of coffee is also acquired. Since the Germans first
exploited the Cohan Region and exported the coffee to Germany, this kind
of coffee came to be preferred on the German market.

 

 

 

Ill lill I'll" I II III!" [II .

1&8

fincas in 1966/67. The relatively low yields of Gaban were observed

as early as the 1870's: "The yield on the Pacific slope reaches three
pounds per tree, and in specially favored spots as high as five pounds,
while on the Atlantic side, in the Vera Paz, or Coban district, only

one pound is obtained."5 The poor yields of the region are attributable
largely to the relatively poor soil. The west has the deepest and
richest accumulation of volcanic soils, followed by the Central-East.
The soils of Cdban have develOped primarily from limestone and serpen-
tine. Not only do the poorer soils contribute to lower yields per tree,
but their stoniness and low fertility also result in fewer coffee trees
per acre. Thus Cohan, even more than the west, is characterized.by
extensive use of the land. Parts of the Polochic Valley, however, do
have exceptionally good soils for coffee production.

Soils of the Coban Region are suited to other forms of agriculture
and thus do not present the major obstacle to crop diversification.
Rather, the chief impediment to diversification is isolation and the
lack of infrastructure in the region. Because of its physical and
economic transportability, coffee has few competitors as a commercial
crOp in the Coban zone. Accessibility once constituted an asset of this
district, the coffee moving by mule and Indian carriers, and later by
rail, to the Rio Polochic and thence to the Atlantic via Lake Izabal

and the Rio Dulce. Construction of the interoceanic railway and highway

 

SFrancis B. Thurber, Coffee: From Plgptation to Cup,ga Brief

Histo of Coffee Production and Consum tion (Haw York: American—Grocer
Publishing Association, 1889), 152-

 

 

 

'il.lIllll Illiln‘ulllul

1h9

systems, however, have left Coban by far the most isolated of the three
regions, and thus the one in which agricultural diversification appears
least promising.

Compensating in part for isolation and high transportation costs
is a relatively cheap and plentiful supply of labor. The following
statement, written in l9h7, remains appropriate today:

From two to three times as many man-days of labor
are required to place a hundred pounds of green coffee
beans at a transportation center as in that more favored
region [the west], where the man-day average is 12 to 18
per hundred pounds. Much of the increased cost is due
to the lack of highways, which obliges plantation owners
or finqueros to transport their crops by pack mule over
long distances. Because good soils are limited and are
generally found in isolated swales, the coffee groves
on a single plantation are sometimes widely separated.
Overhead expenditures also exceed those of the Pacific
coast; consequently, if it were not for the lower daily
wages of the local plantation laborers, which amount to
about ten cents for a normal daily task, the growers
could not afford to remain in business. I once asked
a prominent local businessman why he thought so highly
of a region that to me appeared generally submarginal
for commercial agriculture. 'Not the soil but rather
the low wages of our laborers are the wealth of the
Cobén,’ he replied. rWithout them we could not exist.‘
This region contributes between 6 and 9 percent of
Guatemala's annual coffee production.6

Undoubtedly, the relatively cheap and abundant labor supply is one
of the resources of the region. When the barriers of isolation are
broken, wages will probably rise with competing demands for labor.
Although delayed, diversification may then occur more rapidly than in

other coffee areas.

6E. C. Higbee, "The Agricultural Regions of Guatemala," The Geogga.
hical Review, Vol, xxxvn, No. 2 (April, 19W). 190. Schmid in
iiProductivity of Agricultural Labor in the Export Cr0ps of Guatemala,"
Enter-American Economic Affairs, Vol. 22, No. 2 (Autumn, 1963). 36,
confirms the number of man-hours required to produce one quintal of
coffee.

 

 

'1'- Il. ‘l .| I lullllnllllll

150

Isolation and German colonization have also affected the process-
ing and transportation of coffee of the Cobén Region. Dozier notes

that:

The coffee zone of CObén is not a contiguous area
as is the case on the Pacific slope. As in the coffee
zones of Honduras, the topography is rugged and presents
many different degrees of local exposure to moisture. As
a result, the fincas are widely scatterd, and separated
by unused forest land or pasture land. Cohan is the
nucleus of the zone, serving as a market and distri-
buting center for the fincas and the numerous Indian
villages in the area, but does not itself have exten-
sive coffee production in its immediate environs, nor
does it have the numerous coffee beneficios one finds
in the Pacific slope towns. A zone of large, formerly
German-owned, coffee fincas, most processing is done
on the plantations themselves, while native small growers,
as usual, sell their coffee in the cherry. Besides being
a market and distributing center, Cohan was formerly the
residence of many large coffee-growers.

The region has twenty-five beneficios secos, all but three of them
located on fincas. The number of mills, far out of prOportion to the
region‘s production, is related to isolation, poor roads, large farms,
and an adequate water supply fer beneficios hfimedos. The West has only
sixty-six beneficios secos and the Central-Eastern Region but thirty
beneficios secos, despite the fact that they account for 63 percent and
26 percent of Guatemala's production, respectively, while Cohan accounts
for only 6 percent.

The Cohan Region is unique in yet another respect. It has the

largest number of National Fincas, twenty-seven, if those of all types

are included.8 If only those producing coffee and under INTA

 

7Dozier, 6S.

8INTA, unpublished data for 1967.

lll. ll.l I I'll

 

 

l Ill.ty‘ll.l I All.

 

151

administration are considered, the west contains a greater number. But,
the expropriation of German-owned fincas and the erratic policies
followed with regard to their administration have affected the Cohan

Region to a much greater degree than any other. According to Dozier:

Having been the region of greatest German settlement
and interests, Cohan consequently has a large number of
'fincas nacionales' -- some of the largest and formerly
most productive coffee plantations. The effects of
inefficient management and labor, with consequent lowered
production, are manifested clearly in the Cobén of today.
While the Germans were there, it was a thriving town, a
center of commercial activity. Today it is relatively dead
-- 'given back to the Indians' -- so to speak, for its
economy, like that of many another Guatemalan highland
town, revolves mainly around local Indian exchange rather
than reflecting large-scale coffee interests. The
merchandizing and consumer market formerly provided by
German residents is no more, and extreme conservatism
is the predominent note.

The correlation coefficients of the variables for the Cohan Region
present interesting comparisons with the other major regions, although
the small number of‘municipios (eleven) within it makes inter-regional
comparisons somewhat less meaningful. Nevertheless, available statis-
tics do demonstrate the uniqueness of the zone. The variable of
"distance from Guatemala City" is deleted from Table 23 because it is
meaningless within the region.

The relationship of yields to the other variables resembles that
in the west in that they correlate more closely with production (.h9)
and acreage (.h2), than with other variables. But, as with the Central-

Eastern Region, a somewhat higher correlation is evident between yields

__k

9Dozier, 65.

152

and altitude (.33). That yields correlate positively with produc-

tion and acreage, but not with percent of land in coffee is probably

due in part to the relatively large size of some of the municipios.
Thus, as in the west, the municipios of greater production and coffee
acreage tend to have the highest yields. Unlike the West, and more like

the Central-East Region, higher average altitudes show a tendency toward

higher yields.

TABLE 23

SIMPLE CORRELATIONS AMONG COFFEE VARIABLES: THE COBAN REGION

 

 

 

1 _:===
Variables _§§gple Correlations
1. Yields 1.00
2. Production O.h9 1.00
3. Acreage 0.h2 0.98 1.00
h. Av. Farm.Size -0.03 0.h9 0.56 1.00
5. Altitude 0.33 -0.17 -O.l9 -0.7h 1.00
T. Beneficios Secos 0.22 0.61 0.66 0.h3 -0.16 1.00
8. _1 Area in Coffee 0.25 0.63 0.63g. 0.36 -0.15 0.32_ 1.00

 

Variables: 5) £2) (31 (U (5i TD (83
Source: Calculated from unpublished data from ANACAFE.

A fairly strong relationship exists between average farm size and
altitude. To a greater degree than in either of the other regions, those
nmnicipios with greater average farm size are at lower elevations. In
fact, altitude alone explains 55 Percent of average farm size. Produc-
tion and acreage, combined with altitude, increase the eXplained
variance of average farm size to 82 percent. As with the West, the data
display virtually no relationship between yields and average farm size.

As elsewhere, the relationship between acreage and production is

strong (.98). In explaining acreage, production alone results in an r2

153

value of .97, while average farm size, the next most important variable,
merely increases the explained variance to .98. Reflecting the tendency
fer beneficios secos to be located on fincas, as in the West, but unlike
the Central-East, the correlations between beneficios secos and produc-
tion and acreage are relatively high (.61 and .66, respectively). The
results of the statistical analyses tend to support the basic generali-
zations and observations concerning the COban Region and its relation-

ship to the other coffee-producing regions.

subregions within the Major Regions

Altitude is perhaps the most significant criterion for identifying
subregions within the three principal coffee producing districts of
Guatemala. Altitude influences variety and, especially, quality and
prices. It is also a universal factor, readily identifiable from cr0p
reports, topographic maps, and other sources of information.

Each of the three major coffee regions can be divided readily into
two subregions, based primarily upon altitude. In each case, one of
the two subregions represents what might be termed the "core". That part
of the western Region below h,000 feet, for example, produces over three-
fourths of the nation's Good washed, Extra Good washed, and Prime washed
coffees, and well over half of the Semi-Hard Bean and Hard Bean coffees.
This subregion, moreover, includes 86 percent of the West's coffee farms.
The subregion of high-grown western coffees is not incorporated into the
Central—Eastern Region primarily because of climatic differences,

although depending upon one's objectives such incorporation might be

 

15h

considered. Inclusion of the Western coffee areas with elevations over
h,000 feet as part of the Central-Eastern Region, however, would render
the latter non-contiguous.

The Central—Eastern Region is even more obviously divided into
two subregions: the Central and the East. With the possible exception
of one or two municipios, the Central subregion consists of the depart-
ments of Chimaltenango, Guatemala, Sacatepequez, and 801016, and the
East consists of Escuintla and Santa Rosa. Such a division coincides
with farm size, the Central subregion being nearly devoid of large
farms.

The two major subregions of Cobén include a higher, dispersed
western subregion and a lower, more concentrated area in the Polochic
Valley. Not only altitude, but climate and soils suggest such a
division. Moreover, coffee experts in Guatemala recognize coffee from
the two sources as distinctly different in quality and flavor, with the
term "Cdbans" referring only to those coffees grown in the western
subregion.

Smaller subregions within the major coffee zones are also evident.
One is a rather small area west and southwest of Lake Atitlan, consis-
ting primarily of two municipios, San Juan La Laguna, in 801016, and
Santa Tomas La Uni6n, in Suchitepéquez. Both municipios have especially
high yields per acre, at least statistically. The subregion, however,
is characterized by small producers selling to larger growers, who report
the production but not acreage and thus falsely inflate the data on
Yields. The subregion is an Indian area which is isolated and tradition-

al in many respects including coffee growing and processing methods.

155

For many years the Indians were exploited by buyers who, taking advantage
of the monopsony situation resulting from the remoteness of the area,

paid prices well below the going rate. Now ANACAFE has three coopera-
tives within the general area which have, or are constructing, beneficios
hfimedos. Plans are also underway to exert pressure for higher local
prices by purchasing coffee at or slightly above market prices without
regard to profit. Another subregion is an area around Antigua charac-
terized.by old, welldmanaged farms of small size producing quality coffee.

" a special "Fancy Hard Bean"

The subregion is famous for "Antiguas,
coffee of superior quality. The Antigua subregion is likewise an area
of high yields per acre. This area.may be a prime example of high yields,

better management, and more intensive farming.

Outlying_A;eas

Those districts of coffee production located outside of the major
regions are identified by the name of the department in which they are
feund. The most important of these is Huehuetenango. This district
consists of three separate areas: One in the northeastern part of the
department, focusing on the town of Barillas; one in the southwestern
part of the department; and another, the largest, in the west—central
part. Farms tend to be of small or medium.size, with only one farm
exceeding ShO acres. Yields per acre are average to good, except near
Barillas where yields appear to be very poor. Huehuetenango accounts
fer about 2 percent of the nation's acreage under coffee and approxi-

mately the same percent of total production. Average altitude is high,

 

156

h,663 feet, and reflects the type of coffee produced. There is more
Strictly Hard Bean than any other type. Although many of the larger
farms have beneficios hfimedos, apparently none have beneficios secos.
The area is frequently considered to be one which produces quality
coffee but in which poor processing techniques are employed. Neverthe-
less, in some recent years fincas in Huehuetenango have won the annual
coffee contest sponsored by ANACAFE. Huehuetenango has six coopera-
tives and more cooperative members than any other department in
Guatemala. All but one of the cOOperatives, including the cooperative
with the largest membership in the Republic, are located in the west—
central part of the department.

The department of E1 Quiche also has several areas of coffee pro-
duction, which are generally similar to the western Cohan subregion.
Higbee, in fact, includes the coffee area around Barillas, Huehueten-
ango, the outlying district of El Quiche, and the western subregion of
Coban in a single agricultural region entitled "Cohan and Zona Reina
Hills and Valleys."10 Relatively low yields, extensive land use,
dispersed and isolated areas of production, small farms and a few very
large holdings, and altitudes above h,000 feet typify the Quiché area.
Some of the farms in this outlying area and in the western subregion of
Cohan are among the most isolated coffee fincas in Guatemala.

Another outlying area is eastern Zacapa, in the municipios of La
Uhién and Gualan and extending into the municipio of Los Amates, Izabal.

Four farms in the area exceed 5&0 acres under coffee, and several others

loHigbee, 189.

157

are of intermediate size. The area accounts for about 1 percent of the
nation's production and coffee acreage and produces several types of
coffee. A unique feature of this area is that, due to a relatively dry
climate, much of the coffee is processed by the dry method and marketed
domestically as unwashed coffee.

Numerous very small areas of coffee production are scattered
throughout the departments of Chiquimula, E1 Progreso, Jalapa, and
Jutiapa. These widely dispersed enclaves of coffee production are
comprised chiefly of small producers. Many that produce more than fifty
quintales oro are not yet registered with ANACAFE, and many others
produce only smaller amounts of coffee. 0f the registered producers,
the most important are in the municipios of Mataquescuintla, Jalapa, and

Atescatempa and Moyuta, Jutiapa.

CHAPTER VII
COFFEE COMMERCE WITHIN GUATEMALA

The internal coffee trade includes all of the intricate commercial
transactions between coffee production and export or domestic consump-
tion. These transactions comprise a facet of the coffee industry as
important as production or exportation p§£;§3_and are equally in need
(of research and understanding by planners and policy makers. Considera—
tion of these diverse business dealings and relationships constitute,
moreover, an essential prelude to an examination of the geographic

movement of coffee within Guatemala.

From Producer to Egpprter or Domestic Consumer

Commercial coffee producers may be classified into five groups:
(1) producer-exporters, (2) producers who sell primarily to one exporter,
(3) producers who sell to more than one exporter and to domestic roasters,
(h) small producers who sell primarily for export and, (5) small
producers who sell primarily to the domestic market. Figure 3 is a
schematic diagram of the commercial "paths" of coffee beginning with the
five categories of producers. It should be noted that these categories
are not, in reality, well-defined. The actual situation is a continuum.
Moreover, discussion is here limited to commercial producers, those who
sell at least part of their crap. Most producers retain some beans for
personal use.

158

159

 

 

COMMERCIAL MOVEMENT OF COFFEE
IN GUATEMALA

PIOWCII-

 

 

 

FOREIGN MARKETS

 

Figure 3

 

160

Producers who export their own crop conduct the least complicated
domestic commercial transactions, because they do not deal with local
buyers. Since these are usually large farmers, often with more than one
finca, they tend to produce several types of coffee. Frequently they
export the higher quality coffees, while selling those of poorer grades
domestically. They may roast part of their coffee crop, not only for
personal use but also for package or bulk sale to local shOps or directly
to consumers. They also may purchase coffee from small local producers,
friends, or others for either export or domestic sale. The degree to
which these local sales, roastings, or purchases occur may vary consid_
erably from year to year depending upon the quality and quantity of the
harvest and upon market conditions. Thus, the category includes those
producers who export primarily their own coffee, but excludes those who
are primarily exporters and merely produce some of their own coffee.

Producers who sell almost exclusively to one exporter often enjoy
certain credit or other financial arrangements with a large exporting
firm by virtue of family or friendship ties, or simply a long-standing
business relationship. Such producers are usually fairly large and
dependable suppliers of good quality coffee. They may sell some coffee
to other exporters and some to domestic roasters. In years of large
crops and promising market conditions they may even export some of their
coffee. Producers in this group may purchase coffee from.smaller
neighbors as well. In most years, however, they sell primarily their

own coffee to a single exporter.

161

Some producers sell to several exporters and/or domestic roasters.
Producers in this group frequently seek the best market and are not
bound to any one exporter. Considerable variation in procedure exists
not only among growers, but for the same grower from year to year.

Producers of less than fifty quintales of coffee in oro may sell
either primarily for export or for the domestic market. The quality
often determines whether coffee is consumed locally or enters interna-
tional trade, and a grower may not realize the same quality every year
because of the effects of pests, diseases, and natural production cycles.
Small growers are never able to export their product directly but must
sell to larger producers, exporters, or firms supplying the domestic
market. COOperatives of small producers tend to sell directly to one or
more exporters or to domestic roasters. None export coffee directly.
Coffee from the Fincas Nacionales must, by law, be sold at public auction
to exporters or local roasters.

In the main, then, producers sell to other producers, exporters or
domestic roasters, any of whom may resell the coffee prior to eXport or
domestic consumption. The sale of coffee by one grower to another is
direct and is usually to a nearby farmer. Selling to exporters begets
a greater number of alternatives. In the past, for example, and to a
minor extent yet today, certain individuals earned a livelihood by
purchasing coffee from remotely located smaller growers and selling to
exporters. These middlemen were previously required to register with
ANACAFE as "Class B Buyers," Class A being those who exported coffee and

did not resell it locally. The registration of such buyers, of whom

162

there are now few, is no longer required. Large exporters often maintain
agencies at various locations to act as receiving stations or at least

as offices where contracts are concluded. Occasionally the agencies are
coffee producers which receive the coffee of the respective finca and
process and/or store it under contract with the exporter. Other
exporters own farms which are used as agencies or have beneficios and/or
warehouses, where coffee is received, at various locations. Some
exporters send agents into the countryside to contract smaller producers
fbr the coming crop. Although most coffee is contracted for prior to the
actual harvest, some producers prefer to present samples of their coffee
at the offices of the exporters and request a price quotation for a spot
sale. These producers, actively seeking the best price, do not sell to
the same exporter every year.

Another type of immediate market for the producer is the domestic
roaster. Roasters are found in all parts of the country, but particu-
larly in Guatemala City, where more than sixty local brands of coffee
could be found in February, 1969. The larger roasters, frequently owned
by coffee exporters, are of course relatively stable. Owners of smaller
roasters apparently enter and leave the market with ease, Judging from
the widely fluctuating number of such businesses and brand names.
Exporter-roasters generally export higher quality coffees and roast those
of lower quality for domestic sale, after grinding and packaging. In
such cases, the coffee destined for the local market is purchased through
the same channels as the coffee for export. Other roasters, concerned

solely with the domestic market, transact for coffee in similar fashion

163

except on a smaller scale, more often purchasing only lower grades of
coffee. Many fincas roast and grind coffee for personal consumption as
well as for sale in bulk to local merchants or even directly to
consumers. Bulk coffee, usually of low quality, and sometimes with
non—coffee additives such as ground maize or tortilla flour, can be
purchased in the almost ubiquitous small shops or "tiendas" for as little
as five cents per pound. The better local coffees, however, are sold in
cellophane packages. The INCASA firm in Guatemala City purchases coffee
from all parts of the country, roasts it, and manufacturers soluble
coffee, but only about 5 percent of it is marketed domestically.

ANACAFE purchases relatively small amounts of coffee from.small
producers and either roasts it for the local market, resells it, or
exports it. There are plans to expand this program, which exists
primarily to exert an upward pressure on prices paid to small producers.
In the past, the Association has rented processing facilities, but the
possibility of constructing or purchasing such facilities remains open.
ANACAFE's finca, Buena Vista, includes a small beneficio hfimedo. The
Association also has its own roaster and retail outlet for packaged
coffee on a small scale.

The Banco Agrario Nacional also purchases coffee from small
producers and processes it on its fincas. Some of these farms were
acquired through foreclosure, and others (Fincas Nacionales) were given
to the Bank in payment of government debts. Like the coffee from
National Fincas under INTA, that from these farms must be sold at
public auction. Purchases of coffee by the Bank are likewise an attempt

to encourage higher prices to small growers.

16h

Problems of Coffee Commerce in Guatemala

 

Four features of the internal coffee trade warrant special
attention, not only because of their critical commercial roles, but also
because in one way or another they represent serious problems to the
industry: credit and finance, export quotas, taxation, and processing
and storage. These are interrelated among themselves and with other
phases of the industry. In many respects, they illustrate the most
obvious needs for reform and are areas in which changes may be imple-

mented to benefit the entire industry.

Credit and Finance
Agricultural credit in Guatemala, as in most developing countries,
is difficult to procure. There is no comprehensive law or national
program for agricultural financing. Nevertheless, since most of the
banks are commercial, financing is somewhat more available for export
crops than for other types of agricultural commodities. Long-term loans
for diversification can usually be obtained only through government banks.
One method in which coffee growers obtain credit is by means of
a "crop-loan." Under the crop-loan arrangement, the exporter legally
assumes the responsibility of fig§t_paying the bank and then the grower
at the time the coffee is purchased. Fincas may also be mortgaged to
obtain credit in times of crises, but this hardly answers the need for

such short-term financing as might be needed to harvest a cr0p. Mortgage

165

foreclosures, moreover, are usually undesirable from the bank's point of
view, because the arrangement may involve operating a farm until such
time as it can be sold.

Farmers are sometimes financed by exporters, who demand interest
rates of about 12 percent. Banks, on the other hand usually get between
8 and 10 percent interest. An exporter financing a producer, usually on
the anticipated crop, in time, naturally secures a kind of g§_§§g§2.
control over him. In many cases the exporter is financed from the
United States or Europe. Thus, he is not completely free to sell to
whom.he pleases, but is financially committed to the crediting firm.

The latter is usually an importer, who may in turn be financed by
another source. The result is a series of commitments involving greater
or lesser degrees of control, which implies that foreign capitalists
exert considerable indirect influence on the local coffee industry even
down to the finca level. Another result is that coffee, even before

it is harvested, is often already "owned" by a firm or company abroad.
These financial entanglements are disliked by many Guatemalans who view
such activities as "economic colonialism." The danger of such financial
arrangements is obvious: the economic health of fOreign financiers

is paramount to the local industry. Unfortunately, without domestic
sources of credit, there appears to be no reasonable alternative to

foreign financing.

The Export Quota System
As a member of the International Coffee Agreement, Guatemala is

assigned a basic export quota and also an annual export quota. the

166

latter is the basic quota adjusted to the current world supply and
dbmand situation. Guatemala's 1968/69 basic quota was 1,800,000 bags (of
60 kilos), while its annual quota was 1,538,021 bags. The annual quota
is divided into three-month periods, and adjustments are also made on a
quarterly basis.1
The annual quota assigned to Guatemala is distributed among the
individual coffee fincas. As at the international level, the size of the
quota is dependent upon past production. Each finca was originally
assigned a basic quota according to its best crop in the three—year

period 1961-6h. Attempts are under way, however, to improve the accuracy
of quota distribution through field investigations and particularly
through checks on requests for increased quotas. Since adjustments are
made in the size of Guatemala's quota, modifications must likewise be
made in the annual quotas of individual fincas. The basic quota remains
the same, however, unless reason is found to adjust it on the basis of
an unfair original allotment. It is significant that the quota is
assigned to the finca, rather than to the owner, and remains with the
finca if ownership is transferred. If a finca'a quota is not filled for
several years, it may be reduced. This condition leads to the purchase
of coffee from smaller non-quota neighbors, or from neighbors whose
production exceeds their quota, and resale as if it were produced on the

finca. Also, a good profit can be realized from buying non-quota coffee

 

1For a detailed eXplanation of the international quota system see
WOrld Coffee Information Center, International Coffee Agreement, 1968
(New York: Pan American Coffee Bureau, 1938); or Annual_Coffee Statis-
tics.‘ 1968, No. 32 (New York: Pan American Coffee Bureau, 196§7. 5-12.

167

and selling it with quota. Since new coffee plantings are prohibited
by law, requests for quotas fOr new or expanded fincas pgr_§g_do not
constitute a problem.

In 1962, when the quota system was implemented, many coffee fincas
in Guatemala were unregistered. The restriction of quotas to registered
farms, however, accelerated the process of registration. Currently, most
of the large fincas are registered, but the arduous task of registering
small producers continues. The small growers have'been particularly
difficult to register not only because of inaccessibility and apathy,
but because some producers and exporters who normally purchased coffee
from these people spread false rumors about the registration. They tell
the Indians, fOr example, that ANACAFE is taking a census of coffee
trees in a plan to uproot some trees and to place a heavy tax on the
others, that the registration will lead to a land tax, that plans are
being made to force everyone to sell their coffee to the government at
the lowest of prices, or that the registration is a cleverly devised
method of conscription into the armed forces.

Why are rumors spread as an attempt to defeat the registration of
small coffee growers? The reason is simply that "quota coffee," or
coffee which can be included under a quota, is worth more money as an
export to "traditional markets." That is, as members of the Agreement,
the United States and many European countries cannot import non-quota
coffee. Non-quota coffee can, however, be exported to "new markets" or
countries that are not members of the Agreement, such as Japan. The

non-quota,markets are Open to competition from all producing countries,

168

and therefore the export price of non-quota coffee is lower than that
sold under quota. Without the registration of small producers, ANACAFE
was forced to rely upon lists of small producers submitted by exporters,
giving the quota directly to the exporter. Under this system.the
exporter could and, often did, falsely inflate the lists of producer
names to Obtain larger quotas. The exporter could then realize abnor-
mally high profits by selling coffee at quota prices which was purchased
at non-quota prices. The inflated lists also resulted in high estimates
of the total number of small producers. Most estimates were between
h0,000 and 50,000. Registration has led to revised estimates of 25,000
to 30,000 and.will eliminate the opportunity for exporters to take
advantage of the system in this manner. In fact, the small grower may
gain an advantage. He may be able to sell the quota without the coffee,
fer example, if his crop fails or if he finds a market for non-quota
coffee. However, this would not as seriously threaten the system as in
the case of the exporter.

The quota, issued to the producer, accompanies the coffee when
it is sold. The exporter must present the quota to obtain permission to
exPort the coffee to a member country of the Agreement. Although the
quota is not restricted to coffee from the finca to which it is assigned,
it can only be used during the quarter fer which it is intended. This
means that although an exporter may buy all of a grower's coffee at one
time, he may only export it according to the percentage allotted for

each quarter. Thus, fer example, if an exporter received an order for

1,000 bags of coffee, he might actually have to purchase h,000 bags so as

169

to have sufficient quota to ship the 1,000 bags in one lot, or in one
quarter. The quarter allocation of quota for a given finca is not
usually 25—25-25—25, but perhaps 30-30-20-20 or 35-35-15-15. Moreover,
the exporter must have the necessary types of coffee to fill a partic—
ular order. In summary, the quota system and, especially the four-
quarter aspect of it, has substantially complicated the coffee export
business.

In addition to complicating the export phase of the industry, the
quota system.has placed a more severe financial burden upon the producer.
As usual, the small producer encounters the greatest difficulty. Since
the exporter theoretically cannot ship all of a particular finca's coffee
in one quarter, the farmer is often paid in quarterly installments,
despite the fact that he may "sell" his coffee in one transaction. If
the farmer has a crop-loan, the bank will probably get a large portion
of the first quarterly payment. Frequently this leaves the farmer short
of capital with which to complete the harvest or to do other essential
work on the finca. Thus, he may be forced to negotiate another loan, if
possible, to "tide him.over." On this loan he must, of course, pay
interest. The amount of interest represents a reduction of his profits
as calculated prior to the quota system. A credit cycle has thus been
initiated which will be difficult for the small farmer to elude and
which makes him increasingly susceptible to the vagaries of the financial

system,

170

Taxation

Since exports and imports are from an administrative point of view
more easily taxed than domestic transactions, Guatemalan coffee farmers
tend to bear a disproportionately large share of the total tax burden.
Moreover, since duties on coffee other than export taxes are not gradu-
ated in proportion to income or production, small producers feel the tax
burden most keenly. Like other agriculturalists, the coffee farmer pays
an income tax, a property tax, and special assessment taxes. All, how—
ever, are at relatively low rates. The exporter pays an income tax, an
export tax, a tax to ANACAFE, a municipio tax, and an ad valorun
government tax. The exporter passes all of these taxes, except the
income tax, on to the producer in the form of lower prices. Thus, the
producer actually pays the export tax, calculated §d_x§;gzym on the
domestic price; a tax of twenty-five cents per quintal oro to ANACAFE;
fifteen cents per quintal oro to the municipio; and a 1.5 percent
§Q_Valorum.tax to the government.

The export tax, computed on the basis of the price of coffee
Quoted in the sale contract with the exporter, is collected.when the
contract is presented for registration to ANACAFE. For producers who
eXport directly the tax is calculated from the F.O.B. price, but the
final rate is similar. The twenty-five cent tax per quintal oro is
Paid directly to ANACAFE by the exporter. Prior to extending authori-
zation to ship the coffee, ANACAFE requires verification of the payment
of these taxes. The 1.5 percent 2Q valorum tax, however, is paid

directly to the government, with the purchase of stamps required on the

171

bill of sale. If a producer exports his own coffee, there is no internal
sale and the payment of this tax is thus avoided.

The exporter also pays the municipio tax of fifteen cents per
quintal oro to the Instituto de Fomento Municipal (INFOM). The muni-
cipio in which the coffee was produced is then credited for the amount of

the tax received by INFOM.

Processing and Storag§_

Somewhere between production and exportation the coffee is
processed. The location of processing varies regionally and with farm
size. In general, large producers tend to sell in pergamino or oro,
smaller growers in cherry. Producers who export their coffee, of course,
process it to oro, usually on the finca. But, within limits, size does
not seem to be as important a factor in determining whether or not a
finca will have a beneficio hfimedo as does accessibility. To sell
coffee in cherry requires dependable tranSportation facilities. The
weight-loss from cherry to pergamino varies according to altitude, but
250 quintales of cherry coffee will usually equal between fifty and
sixty quintales in pergamino. Thus, the 5:1 weight-loss ratio will ulti-
mately limit the distance that cherry coffee can be economically trans-
ported. However, in Guatemala, the need to process the cherries soon
after harvesting seems to be more of a limiting factor than weight loss.
Wfith improved transportation, one would therefore expect fewer beneficios
hflmedos and more sales in cherry. Such a trend does appear to be in
evidence, especially in the Central-Eastern Region. In El Salvador,

where better roads, shorter distances, and a less rugged topography are

172

found, much more of the coffee is sold in cherry. From a standpoint of
quality for Guatemala as a whole, the sale of coffee in cherry is advan-
tageous, because fewer, more modern beneficios would yield a more uniform
and higher-quality product. Coffee could, in addition, be more easily
inspected by ANACAFE or the government. Changes in processing to per-
gamino between the producer and exporter have not, however, been
altered in recent years as much as in processing from pergamino to oro.

Two facts are of outstanding commercial importance regarding the
beneficio seco stage of processing: (1) the weight-loss ratio of
converting pergamino to oro is not nearly as significant relative to
transportation costs as is that from cherry to pergamino. The pergamino
to oro ratio, although varying with altitude, is about 125 lbs. of
pergamino to 100 lbs. of coffee in oro. Thus, 250 quintales cherry =
50 to 60 quintales pergamino = AS to 50 quintales oro. (2) coffee can
be stored for longer periods of time without loss of quality in perga-
mino form than in oro. Hence, whether the producer or the exporter
processes the coffee is not so much influenced by transportation costs
as by storage.

Prior to the quota system, many large and medium-sized fincas
processed coffee to oro. In fact, in past decades farmers displayed a
greater tendency to export their own coffee. The four-quarter quota
system, however, has brought about the need for stocks. Since an
exporter must purchase enough coffee to Obtain sufficient quota for large
shipments, he.must be able to store the remainder for shipment in subse-
quent quarters. The exporter therefbre prefers, and often insists upon,

buying the coffee in pergamino. The added complications and greater

173

capital requirements brought about by the four-quarter quota system have
tended not only to reduce the number of farmers exporting their own
coffee, but also the total number of exporters. The exporter has like-
wise been encouraged to mill the coffee, since he purchases and stores it
in pergamino. Another reason why exporters prefer to purchase in perga-
mino is that this permits them to make the necessary blends and mixes
during the milling stage. Otherwise the coffee must be removed from the
bags and mixed, thus increasing handling costs. Moreover, the more
processing an exporter does, both in degree and amount, the more he can
be assured of high and uniform quality.

The tendency for coffee to be processed to oro by the exporter is
stronger in some regions than in others. Many farmers, although selling
their best coffees in pergamino, continue to mill lower grades for the
domestic market. Others insist upon processing the coffee to oro before
selling it to the exporter. Some farmers mill the coffee because the
beneficio seco facilities already exist on the finca from past decades
when such equipment was necessary or economically advantageous. Hence,
if available without investment, or at only minor costs of repair and
upkeep, the farmer feels he can make a greater profit by using the
machinery and selling in oro. But, the use of outemoded equipment in
some cases impairs quality and may result in a lower price. Thus, there
appears to be a definite trend for the exporter to perform the final
milling operations, which wanes in years of particularly large crOps
and/or favorable market conditions. This trend can be influenced by
domestic tax policy, such as the possibility of avoiding the 1.5 percent

tax by direct exportation; transportation; the availability of capital;

17h

and foreign market conditions. Another trend, less obvious, is toward
less processing of cherry coffee by the producer, particularly as trans-
portation conditions improve.

It is difficult to obtain data on internal prices paid for coffee
because: (1) prices vary from week to week; (2) prices vary with regard
to type, quality, and particular foreign market; (3) exporters are
reluctant to disclose prices for fear of aiding competitors; (h) growers
are usually aware of the fluctuating prices of only their particular
type and grade; and (5) since the topic is so controversial, data are
necessary from a variety of sources to be regarded as entirely depend-
able. Average prices are available from ANACAFE and the Banco de
Guatemala. Such figures, however, are theoretical, Obtained by conver-
sion from average F.O.B. prices by means of standard conversion ratios
based upon cherry-pergamino-oro weight loss relationships. In reality,
prices may not be equal to the results of this method of computation,
particularly with regard to the less well-informed smaller producers.
Therefore, a precise evaluation of the economic advantages of processing
coffee, as opposed to selling it unprocessed or partially processed, is
virtually impossible. The following example, however, clearly illus-
trates at least the general price-cost relationships of the domestic
coffee trade. The prices and costs are hypothetical, but reasonable,
for the year 1967/68. All costs and prices are expressed in dollars per

quintal.

175

Symbols: Pc = the price of cherry coffee
Pp = the price of pergamino coffee
P0 = the price of green coffee

P = the F.O.B. price of coffee

Ch = beneficio hfimedo costs
C8 = beneficio seco costs
T = transportation costs
D = duties and taxes

S = storage costs

B = cost Of empty bags

H port handling costs
Conversion Rates: h.6 = the conversion rate for pergamino

1.235 = the conversion rate for oro

Formulae: P = P (h.6) + c
p c h
= o +
PC PP(1 235) c8
Pfob = PC + T + D + S + B + H
Example:
$ 5.00 .. ..... ....Pc (varies $3.00 to $6.00)
xh.6 ...........Conversion rate (varies from h.25 for
$23.00 high grown to 5.25 for low grown coffee)
+§2.§0 ...........C (varies approx. $2.25 to $3.00)
h
25050 oeeoeoooeooP
xl.23 ...........Cghversion rate (varies from 1.2 for high
31. 9 grown to 1.3 for very low grown coffee)
+ .6 ...........C (varies from $.67 to $.75 as a rough
32.1 ... estimate and does not include hand-sorting)
:COCCOCOOP
$10.00 ...........A8cording to data from the Banco de Guatemala,

5‘]

...........Pfob the average price in 1966 for coffee
in oro was $31.69 and for F.0.B. was
$hl.02. Therefore, $10.00 is the
rough estimate for T+D+S+B+H, and is
added to PO'

176

The hypothetical nature of the above example must be emphasized.
Prices and costs vary considerably, both regionally and through time.
For example, wages of laborers working in a beneficio seco, including
women who frequently hand-sort the beans after final processing, tend
to decrease away from Guatemala City. Hand sorting is probably cheapest
on fincas, where the wives of colonos are employed for that purpose.
Two large exporting firms in the capital have found it economical to
install expensive electronic sorting equipment, while others are hand—
sorting only the higher quality coffees. It should be further noted
that none of the estimated costs include such considerations as the
initial investment of the beneficios, equipment, and warehouses, since

on most fincas these were amortized long ago.

The Central Problem of Internal Coffee Commerce

The prOblem.which concerns everyone in the coffee business, in
one way or another, is the distribution of financial returns from coffee
exports. International market prices are Of greatest concern, but
Guatemala can do little to affect world prices for coffee beyond partic-
ipation in the Internation Coffee Agreement. But, the internal division
of coffee profits among producers, laborers, transporters, exporters, and
the government can be, and to a certain extent is, controlled by domestic
policy. The crux of the prOblem lies between the two groups receiving
the greatest share of the returns from coffee exports: producers and
exPorters.

Producers frequently point out that they pay disprOportionately

high taxes and that exporters receive an excessively large share of the

177

total income from coffee. Exporters, conversely, argue that the compli—
cations Of the four-quarter quota system have resulted in higher costs
and greater capital outlays. The Agreement has, in effect made profits
more secure, while lessening the chances of speculative profits. Mean-
while, the export business has become more complicated, and greater
financial reserves are necessary. In short, the argument cannot be
resolved without detailed price and cost data. In all probability, the
answers lie somewhere between the two positions. Large growers and
large exporters appear to be doing well financially. The smaller
producers, and to some extent the smaller exporters, seem proportion-
ately less affluent.

Large exporters are in a position to "pass on" low market prices
to producers during periods of depression and to expand their profits
during periods of higher prices by simply not "passing on" a proportion-
ate share of world price increases. The exporters, however, claim that
competition forces them to pay the best possible prices to producers and
that, therefore, the prices paid to the growers fluctuate in direct
relationship with prices on the world.market. Again, the truth probably
lies somewhere between the two poles.

The quota system, in a sense, isolated Guatemalan producers from
the world market and creates a situation potentially dangerous to the
producers, particularly the small ones. To date, Guatemala has always
been able to sell all of its coffee, either by quota or to "new markets"
(nonemember countries). In some years carryover stocks have existed,
but long-term surpluses have not accumulated. .Moreover, the Agreement

includes a system of waivers which can be used to ease difficult surplus

178

situations within countries experiencing problems. If for some reason
Guatemala should be unable to sell all of its coffee, however, the
domestic price will be reduced through local surplus. The Agreement
will have the effect of keeping world prices relatively stable. Thus,
the domestic market may be isolated from the world market, with
producers suffering low prices and exporters enjoying abnormally high
profits. Guatemalan producers could easily double total production
without increasing the acreage under coffee, but competition is becoming

' Already the recipient of a substantial

keener in the "new markets.’
quota increase, plus the FAO-ANACAFE Diversification Project, Guatemala
may not be able to obtain further quota augmentations. MOreover, the
"isolated market" situation may already exist to some degree, particu-
larly in years Of large harvests and for lower quality coffees.
Solution of the problems of internal coffee commerce would not
only help to alleviate specific difficulties, but could also stimulate
overall economic development. It is well known that when the coffee
business is healthy, Guatemala prospers. Logically, then, the industry
should be stimulated, improved, and encouraged to generate capital for
development purposes. Some of the most pressing needs are adequate
credit, managerial skills, improved transportation, a progressive tax
structure, increased labor productivity and higher wages, a closer
regulation of the internal coffee trade, and improved coffee quality in
conjunction with higher prices for small producers. Such ideas, of

course, are neither new nor easily implemented, but the potential social

and economic rewards appear to more than warrant the investment.

CHAPTER VIII

COFFEE TRANSPORT

Coffee is transported from virtually every producing area to each
of the seaports, by a variety of routes, resulting in a crisscross
pattern of internal flow. The complexities of the movement, geograph-
ically, arise in large part from the intricate and variable nature of
the commercial transactions and buyer-seller relationships. Environ-
mental and historical factors also help to account for the volume and

direction of flow from producing areas to the ports of shipment.

Principal Modes of Transportation

The mode of intra-finca coffee transport depends upon the size of
the finca, local topography, and management. On a small farm the
pickers usually carry the cherries to the beneficio or finca head-
quarters, where the fruit is weighed and inspected. 0n larger fincas,
workers may deposit the cherries at the nearest of several weighing
stations, from.which the coffee is transferred by truck, tractor, or
animal power to the beneficio. Various innovations for intra-finca
transport have been develOped by progressive farmers. On at least one
farm.where the roads have been eroded to eight or ten feet below the
normal ground level, pickers deposit the cherries into hoppers
constructed over the roads and trucks are driven under the hoppers to
receive the coffee fruit.

179

18o

Conveyance of the beans in pergamino or oro to a beneficio seco,
exporter's receiving warehouse, or directly to a port of shipment is
usually by truck or rail. For short hauls, a tractor and wagon may be
used. When a finca is not served by a road or trail suitable for mechan-
ical transportation, the beans may be transported by mule, horse, or
human labor, although the latter means is rarely employed today. Larger
coffee fincas at considerable distances from roads are chiefly in the
departments of El Quiche and Alta Verapaz. Small growers without access
to roads are found throughout the producing areas and must generally
transport the coffee themselves or on the backs of animals.

The final phase of internal movement, the transportation of coffee
from the exporter's warehouse or mill to the port of shipment is
accomplished by rail or truck except for that which moves by barge
from El Estor. Many exporters have since the late 1950's turned from
rail to truck for transporting the coffee to port. Reasons for the
change include labor strikes and the general uncertainty of railroad
transport. Those exporters who continue to ship by rail feel that
truckers are less reliable than the railroad. Relatively few exporters
mention the comparative costs of the two modes. None of the exporters
operate trucks for the purpose of hauling coffee to the ports, those
Who use trucks relying upon various trucking firms. A few exporters
own trucks which are used to transfer coffee on short hauls from ware-
house to mill, or receiving point to mill, and these may also be used
in an emergency to transport coffee to a port. The general concensus

of the exporters, supported by shipping data, indicates a trend toward

181

the increasing use of trucks to transfer coffee to the ports. National-
ization of IRCA and subsequent policy may either reverse or strengthen
this trend. The government now faces the dilemma of maintaining peace
among the railroad workers, which would probably be difficult without
the revenue from coffee transport, while satisfying the truckers who
have earned an important part of their livelihood by hauling coffee to
Matias de Galvez exclusively. After many years of railroad dominance

of coffee transport to the ports, trucking appeared after the mid-1950's
to be making inroads into this business. With the 1969 nationalization
of the railroad, the future of the rail and trucking interests vis-a-vis
coffee transport depends upon government policy, which to date has not
been clearly formulated. This uncertainty concerns only the mode of
transportation, however, since the highway and railway follow virtually
the same routes, and the direction of coffee movement to the various

ports is dictated chiefly by foreign markets.

From.Finca to Beneficio Seco

After the finca, the beneficio seco is the next major location at
which coffee is handled prior to export. Cherry coffee is not trans-
ported great distances, with exceptions in the Central-Eastern Region,
and therefOre beneficios hfimedos are less important in relation to the
movement of coffee. The same is generally true of warehouses, since
they are usually found on fincas, adjacent to beneficios secos, and in
the ports. Thus, beneficios secos, of which there are currently about
125 operating in Guatemala, are the intermediate sites of importance.

The locations of these mills are shown in Map 18.

182 .

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183

The beneficios secos are conveniently divided into two groups:
on—farm.and commercial urban4based mills. The on-farm'beneficios are
often used only to process the lower classes of coffee, while the better
grades are likely to be sold in pergamino ferm. Some of the large
farms, however, do process and export their own coffee. Fincas with
milling facilities are also owned by exporters, who sometimes use the
mills to process coffee purchased in the local area. Some exporters
feel that it is economical to operate such fincas with beneficios secos
strategically located to minimize transport costs, thereby taking
advantage of the pergamino-to—oro weight reduction prior to long hauls.
On-farm or rural labor, moreover, is less expensive than that in urban
processing centers. Conversely, other exporters prefer to bring all or
most of their coffee to Guatemala City or another urban site to be
stored and milled. Such centralization facilitates the mixing of
different coffees to make an exporter's "blend" and also reduces admin—
istrative costs. Hence, coffee processed in a beneficio seco located
on a farm generally travels less distance prior to dry-stage processing
than that processed in the usually larger, urban-based commercial mills.

The distribution of on—farm beneficios secos is related primarily
to production and acreage under coffee. The average coffee area on
farms producing at least fifty quintales oro is 20h acres. Fincas with
operating beneficios secos, however, have an average of 860 acres under
coffee, and fincas with beneficios secos but which do not purchase

coffee have a corresponding acreage of 979.

18h

Conditions at the time of construction of the on-farm'beneficios
secos, and the effects of topography upon transportation, have also
influenced the location of the beneficios. MOst of the on-farm mills
are relatively Old, having been constructed during periods when farmers
were more apt to export their own coffee and when transportation facili-
ties ranged from poor to non-existent. Many of these mills are now used
only because they exist and "may as well be used." Although construc-
tion dates for all of the on-farm beneficios secos could not be
discerned, almost 70 percent of those for which the dates are known were
built prior to WOrld war II. Some fincas have had milling facilities
fer more than one hundred years. Conversely, of the eleven commercial
beneficios located in Guatemala City, only two predate WOrld War II,
and six have been built since 1960. Of the thirteen commercial mills
in other urban centers, four were constructed between 1910 and 1938,
four between l9h0 and 1960, and two since 1960. The founding dates of
the other three are unknown. A long-term.trend toward fewer and larger
exporters, with fewer farmers exporting directly, has been augmented by
the International Coffee Agreement. This tendency, and the development
of railroad and highway transportation to the Atlantic has led to
Guatemala City's having the largest concentration of beneficios secos
in the country. It is estimated that over ho percent of Guatemala's
export coffee is milled in the capital city. Not only is Guatemala
City located on the sole rail and highway route between the main
producing areas and the Atlantic ports, but it also offers advantages

of commercial facilities, communications, and residential amenities

185

for the exporters. Other important commercial milling centers are
Amatitlén, Coatepeque, Retalhuleu, and Mazatenango.

In summary, the locations of currently operating on-farm bene-
ficios secos are explained chiefly on the basis of finca size, owner-
ship by exporters, and historical factors. Many fincas have facilities
which are unused, or underused, but which were at one time economical.
Improved tranSportation and the changing nature of the coffee business
have rendered these beneficios economically marginal or Obsolete. The
locations of commercial mills, on the other hand, are related primarily
to accessibility, most being on the coastal or inter-oceanic highway
or railway. The beneficio in Antigua, although not astride either Of
the two major routes, is served by good roads. The Antigua, Amatitlan,
and Guatemala City sites also have climatic advantages for the storage
of coffee, but this factor is incidental to transportation. The Cohan
Region is not traversed by the main highway-railway system, but the
commercial beneficio sites there also stem largely from regional acces-
sibility or transportation advantages. The commercial mills in COban
and San Crist6bal Verapaz are integrated and receive both cherry and
pergamino coffee. Yet, these mills are located only on the periphery
of the coffee producing area.

The movement of coffee resulting through transfers from one
grower to another and from producers to on-farm'beneficios secos
Operated by exporters usually represent short hauls. This is true for
most of the coffee grown by small producers as well. Thus, other than

the transfer of coffee from.the exporter's mill to one of the seaports,

186

only one major haul is normally involved: the movement from a finca to
the commercial, urban-based mill. Producers who export their own coffee,
of course, create an exception. As previously noted, exporters tend to
purchase the coffee in pergamino from growers and mill it in their own
beneficios secos. Coffee is sometimes stored on the producer's farm,
however, and processed to oro by the producer at such time as the
exporter decides to prepare it for transfer to a port of shipment. A
major exception is the transportation of cherry coffee to an exporter's
beneficio hfimedo, particularly in the Central-Eastern Region and, to a
lesser extent, in the Cohan Region.

A greater proportion of the coffee produced in the Central-East is
processed from pergamino to oro in commercial, urban-based mills because
the fincas, generally lacking beneficios hfimedos, tend not to have
beneficios secos. Much of the cherry coffee of the region is processed
in beneficios hfimedos located in Antigua, Amatitlan, and Barberena,
where it arrives by truck. This coffee, processed to pergamino at
Antigua and Amatitlan, is also processed.to oro at the same sites. In
the case of Antigua the beneficio is integrated, while in Amatitlan the
hfimedo and seco facilities are separate but in close proximity. The
coffee from.the beneficio hfimedo in Barberena, on the~other hand, tends
to move to Concepci6n, near Escuintla, by truck. From Concepcién the
coffee fbrmerly traveled by rail chiefly to Puerto Barrios, but in

recent years it has been transported mainly by truck to Matias de

Galvez.

187

Guatemala City, with eleven, has the largest concentration of
commercial, urbanAbased‘beneficios secos in the Republic, followed by
Amatitlan, Coatepeque, and Mazatenango with three each, Cohan with two,
and Antigua, Pajapita, Retalhuleu, San Crist6bal Verapaz, and Villa
Canales with one each. Because of the location and commercial impor-
tance of the capital, the mills there are supplied from all of the
producing areas of the country. The three dry mills, and one beneficio
hfimedo, in Amatitlan are also supplied from all parts of the country but
tend to draw proportionately less from the Coban Region and scattered
areas in the eastern departments than do the mills in Guatemala City.
The same is true of the integrated wet and dry beneficio in Antigua.

The owners of the Antigua facility, Beneficio San Lazaro, are the
largest buyers Of cherry coffee in Guatemala and this plant is the
major receiving point of coffee sold in cherry form in the Central-East.
San Lazaro is the largest and most modern integrated beneficio in
Guatemala and perhaps in Central America. In addition to cherry coffee
from the Central-Eastern Region, coffee in pergamino form is received
from all parts of the country.

The remaining processing centers, COban, Coatepeque, Mazatenango,
Pajapita, Retalhuleu, San Crist6bal Verapaz, and Villa Canales are
supplied primarily from adjacent producing areas. Those located on the
Pacific coastal highway serve many scattered producers, but draw partic-
ularly from the areas up—slope from their sites. Coatepeque, for

example, is supplied primarily by coffee grown in the departments of

188

San Marcos and Quezaltenango. Moreover, virtually all of the coffee
from.the department of San Marcos passes through Coatepeque, by truck
or rail, whether it is milled there or not. The mill at Villa Canales
processes coffee from various parts of the Republic, while those of
Cohan and San Crist6bal Verapaz receive no coffee from other major

regions.

From Beneficio Seco to Seaport
The transportation of coffee in oro to the seaports generally

represents the second major haul of coffee for export, the first being
from finca to commercial urban-based beneficios secos. Since this is
the final internal movement of coffee, and because pertinent port
statistics and railroad data are available, this phase of coffee trans-
port is amenable to more detailed analysis. Likewise, major changes in
transportation infrastructure have occurred, and these are better

recorded than is the case in other phases of coffee movement.

Historical Development

The completion of the inter-oceanic railroad, in 1908, marked the
beginning of a new era in the internal transport of coffee in Guatemala.
Previously, coffee moved by various routes to the Pacific coast from
the Western and Central-Eastern regions, and to the Atlantic from the
Cohan area via the Polochic River and Lake Izabal. After 1908, coffee
was increasingly transported from west to east across the Republic by
rail. Table 3, page h7, illustrates the expansion of Puerto Barrios

as a coffee port following completion of the inter-oceanic rail line.

189

By 1930, the entire railway system of Guatemala, except the
Pancajché-PanzOs line, came under single ownership as the International
Railways of Central America (IRCA). The history of IRCA has been
stormy. Labor strikes, financial difficulties, and legal entanglements
confronted the company throughout its existence. An economic survey
mission of the International Bank for Reconstruction and Development
noted, in 1951, that IRCA was one of the largest employers in the
Republic, with 5,900 "regular employees," and that the railroad union
was the most "powerful organized labor group" in Guatemala.1 .A foreign-
owned monOpoly, IRCA became the tool of political office seekers and the
serious concern of many Guatemalans.2 Since IRCA owned the port facili-
ties at Puerto Barrios, the nearby port of Matias de Galvez was
constructed by the government in 1955 to provide an alternative outlet.

In 1957, the Atlantic Highway was completed from Guatemala City
to Puerto Barrios and Matias de Galvez. Called by some "the Route of
Liberation," the highway was built in part to provide competition for
IRCA, which had been charging "admittedly high" transportation fees.

The railroad began to experience competition from trucking in the late

 

1International Bank for Reconstruction and Development, 222.
Economic Development of Guatemala, report of a mission sponsored by the
IBRD in collaboration with the government of Guatemala (Baltimore: The
John HOpkins Press, 1951), 170.

2See, 3.5., Rene Arturo Orellana G. and Julio Lorenzo A. ,
"Pronunciamiento del Colegio de Economistas, Contadores Pfiblicos y
Auditores de Guatemala, sobre la construcci6n del ramal ferroviario
entre Puerto Barrios y Matias de Galvez," Economia, Vol. I, No. 3 (June-
December, 1962), 53—55; and Rafael Piedra—Santa Arandi, "La construccién
de ferrocarriles en Guatemala.y los prOblemas financieros de la IRCA,"
Economia, Vol. 6-7, NO. 15 (January-March, 1968), we.

190

1950's and was forced to reduce its rates. Table 2A illustrates the
number of 70 kilo (15h lb.) bags hauled by rail from 19h5 to 1963 and
the corresponding revenue received. From 1950 to 1957, between 70 and
80 percent of Guatemala's coffee export volume left the country through
Puerto Barrios. By 1962, the volume shipped via Puerto Barrios had
fallen to 63 percent, while that accounted for by Matias de Gélvez
increased to 2h percent. With the help of tax concessions and other
government incentives, Matias de Galvez in the 1960's gradually eclipsed
Puerto Barrios in volume of imports. The new port also gained an
increasing share of total exports, as well as for coffee, and a trend
toward eventual dominance or at least parity of the Atlantic trade

appeared to have been established.

TABLE 2h

GUATEMALAN EXPORT COFFEE MOVED BY IRCA, l9h5-l963

 

 

70 Kilo Rail Revenue Average Revenue
Year _filfih 1b.),Bagg; from Coffee Per Bag
1955 703.330 $ 618.320 $0.879
19h6 762,7h5 637,788 0.836
19h? 7&0,753 657.257 0.887
19h8 678,110 656,809 0.969
19h9 758,9h6 859.590 1.132
1950 788,593 882,976 1.119
1951 730,515 8h8,763 1.162
1952 833,7hh 1,063,668 1.276
1953 789,5ho 1,010,382 1.280
195k 688,888 8h8,308 1.231
1955 860,060 1,152,211 1.3h0
1956 823,322 1,1h9,3h3 1.396
1957 1,028,636 1,259,390 1.328
1958 1,021,116 1,268,810 1.2h3
1959 1,178,397 1,272,928 1.080
1960 1,005,600 922,98h 0.918
1961 1,0h0,579 86h.752 0.831
1962 1,303,1h3 999.133 0.767
_l963 1.087.553)- 19h31905 0.868

 

Division.

International Railways of Central America, Guatemala

191

In 1969, the Guatemalan government expropriated the holdings of
IRCA. Prior to expropriation a great deal of controversy existed over
whether or not the government should permit IRCA to construct a rail
link to Matias de Galvez. Trucking companies and anti—IRCA interests
were strongly opposed, arguing that such a link would benefit a foreign-
owned company at the expense of domestic interests. Since expropriap
tion, plans have gone ahead to connect Matias de Galvez with the railway
system. Hence the future of the two ports relative to each other will
prObably be altered, the government-vs.—IRCA conflict having ceased.
Also relevant to the movement of coffee within Guatemala is the future
of a segment of the former IRCA system in El Salvador and the portion
of coffee from.that country which has been transported through Guate—
mala, via Zacapa and Puerto Barrios, on IRCA lines.

The movement of coffee to the Pacific ports of Champerico and
San José has not changed greatly since the 1950‘s. However, during the
period l963/6h-1966/67, these ports each accounted for about 7 percent
of all coffee exports, whereas in the 1950's Champerico accounted for
slightly over 7 percent and San José handled about 15 percent. The
decrease of about 8 percent in the volume of coffee shipped through the
two Pacific ports is relatively minor, perhaps reflecting some shift in
foreign markets.

Coffee from the Cohan Region has traditionally moved to the
Atlantic via the Polochic Valley, Since the late nineteenth century

this coffee has been transported.by animals or vehicles to Pancajché,

192

from.there to Panzés by rail, and from Panzés to Livingston by barge on
the Rio Polochic, Lake Izabal, El Golfete, and the Rio Dulce. The
Verapaz Railroad, which owned the barge service was

originally built by private interests, under a charter

to "Lyman and Gordon" signed in 188k for the purpose of

hauling coffee out of this area. By agreements made in

l9hl and l9hh it became government owned and Operated.

During the last ten years [c. 1953-63] it has hauled

a.maximum of 5,000 tons annually of which about 3,000
tons was seasonal coffee.3

The railroad ceased operations in 1963, whereas the barge line continues
to function. Since completion of the all-weather road from Panzés to
El Estor, however, the water transport operations have been transferred
to the lake port at El Estor, which receives cargo from the upper area
by truck. The volume of coffee, which is the principal commodity
handled by the barge line, has remained relatively stable, but with
some tendency to decrease. It is estimated that perhaps one-fourth of
the coffee from the Cobén Region is transported by truck to El Estor
and thence via Livingston by barge. In recent times the coffee has
been taken by barge to Matias de Galvez or Puerto Barrios, since
Livingston is not a deep water port and goods transferred to ships
directly from.there must be lightered. Improvement of the highway
between El Rancho and Coban seems to have encouraged.the trucking of

coffee to the former site, from.which it continues by truck to Matias

 

3Transportation Consultants, Inc. gggtggl_gmggig§nulr§g§portgtion
Study 126hAl26fi, a report prepared for the Central American Bank for
Economic Integration (washington, D. C.: T.S.C. Consortium, 1965). I,
271.

193

de Galvez or by rail to Puerto Barrios. Small amounts of Cdban coffee
also occasionally move to the Pacific ports, via El Rancho, by rail or

truck.

Geoggaphic Movement

Data available for internal coffee transport are limited to green
coffee moved by rail to seaports for shipment. The railroad data
indicate only at what point coffee is loaded and at which port it is
deposited. Thus, for example, the amount of coffee transported by rail
during a given year from Guatemala City to Puerto Barrios may be known,
but the origins of that coffee prior to its deposit in the capital
cannot be discerned from.the data. Furthermore, it is not known whether
the coffee came to Guatemala City in pergamino or green form, but since
there are no beneficios humedos in the capital it is certain that it
did not arrive there in cherry ferm.

Valid and reasonably precise interpretations can be drawn from
the railroad data on green coffee for export, assuming that the
increased.movement of green coffee by truck since the mid-1950's has
not significantly altered the direction or volume of flow. The valid-
ity of this assumption is supported.by two circumstances. First, the
percent of the total national production of coffee accounted for by
each department has changed only slightly since Werld War II, indicating
that areal production patterns have remained'basically the same.
Second, the percent of coffee exported through the various ports has

eXperienced relatively little change since the 1950's, with the

19h

exception of Matias de Galvez. Whereas this port did not begin to
handle significant amounts of coffee until the late 1950's, it accounted
for almost 30 percent of the total exports in 1963/6h—1966/67. Of
the 30 percent gained, only about 7 percent was due to a decrease in the
amount of coffee going to San José. The remaining 23 percent is
accounted for by a decrease in the volume of coffee exported through
Puerto Barrios. Thus, since Matias de Galvez is located adjacent to
Puerto Barrios, the influence of the trucking industry has not greatly
altered the internal movement of coffee except fbr the mode by which it
is carried. It follows that the railroad data are representative of
the direction and quantity of the total flow of green coffee for eXport.

It can be further assumed that exporters attempt to minimize
transportation costs by shipping their coffee the shortest possible
distances and avoiding back-hauling whenever possible. The flow
patterns of green coffee, therefore, in a general way approximate the
internal movement of pergamino and, to a lesser degree, cherry coffee
as well. It must be emphasized, however, that since exporters have
specific foreign markets to satisfy, they must purchase certain types
of coffee and meet certain demands which in some years require the
buying of coffee from different and more distant areas than in other
years. Naturally, this results in a complicated and varying pattern
of internal movement of which only the general flows are identified in
this study.

The movement of green coffee to Puerto Barrios-Matias de Galvez,

Champerico, and San Jose is illustrated in Maps 19, 20, and 21. The

 

195

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198

two Atlantic ports, Puerto Barrios and Matias de Galvez, accounted for
about 85 percent of the nation's total coffee export volume during the
period 1963/6h-1966/67. A yearly average of 663,193 bags of 70 kilos
(15h lbs.) was transported to Puerto Barrios by rail during the same
period. Approximately 90 percent of all coffee shipped via Puerto
Barrios arrived there by rail. Of the amount brought to the port by
rail, about 37 percent was shipped directly from the departments of San
Marcos and Quezaltenango, the stations at Pajapita (10%), Coatepeque
(19%), and Retalhuleu (7%) being of primary importance. Another 25
percent entered the flow pattern in the Mazatenango and Escuintla area,
the important coffee stations being Mazatenango (3%), San Antonio
Suchitepéquez (1%), Nahualate (2%), Patulul (11%), Santa Lucia Cotzumal-
guapa (h%), and Escuintla, including Concepci6n (10%). The station at
Amatitlan accounts for 11 percent, with the nearby stations at Moran
and E1 Zapote contributing another 1 percent. Thus, approximately 7h
percent of the coffee transported to Puerto Barrios by rail is shipped
directly from points south and west of Guatemala City. Some 2h percent
is shipped from the capital, and only 2 percent originates at stations
east of Guatemala City, chiefly at El Rancho from the Cohan Region and
Gualan from'the outlying district in eastern Zacapa and adjoining area
of Izabal.

The stations from which large amounts of coffee are transported by
rail directly to Puerto Barrios are located in towns which have rela—
tively sizable concentrations of beneficios secos, such as Guatemala

City, Coatepeque, and Amatitlan. But, there are several important

199

stations in urban centers which do not have beneficios secos, such as
Nahualate, PaJapita, Patulul, and Santa Lucia Cotzumalguapa. Of these,
PaJapita has one small beneficio seco, and the other towns have none.
Therefore, all of the coffee which is loaded at these stations has been
processed to oro in on—farm beneficios secos in the general area served
by the station. Unfortunately for the present analysis, the converse
is not true. It cannot be assumed that the coffee from the urban
centers with mills has necessarily been processed in those mills,

- although surely a significant prOportion must be. The owners of these
mills are reluctant to furnish data regarding the amount of coffee
processed in their facilities, fearing that such information might aid
competitiors and possibly lead to increased taxation.

The railroad data (Appendix C) indicate substantial changes in
the average amounts of coffee transported from certain stations for
1951/52-1959/60 and 1961/62-1966/67. Because the basic patterns of
movement have not changed greatly, the relative importance of the
various stations can be assumed to be due to changes in mode of ship-
ment. As noted above, the mode depends chiefly upon the predilections
of the exporters, which, in turn, have been undergoing changes due to
advances by the trucking industry and recent government policy vis-a-vis
the railroad and the Atlantic ports.

The Central-Eastern Region is somewhat anomalous in terms of the
production, commerce, and movement of coffee but fits into the general
flow patterns illustrated in Maps 19, 20, and 21. Green coffee from
this area tends to move by truck from the beneficios secos in Antigua,

Amatitlan, Concepci6n, and Guatemala City to Matias de Galvez, perhaps

200

to a greater degree than is true of coffee from other areas. The major
buyer-exporters of cherry coffee in this region now ship most of their
coffee to port by truck, chiefly to Matias de Galvez. Because the
coffee is of relatively high quality and therefbre likely destined

for the European market, it tends to go to Atlantic ports. Because

it is transported by truck, it goes primarily to Matias de Gélvez
rather than Puerto Barrios. However, this tendency may be disrupted or
altered by future government policy regarding the railroad.

The Pacific ports of Champerico and San José present interesting
contrasts with Puerto Barrios. During the period 1963/6h-1966/67,
approximately 1% percent of Guatemala's coffee exports went through
these two ports, almost equally divided at about 7 percent each. An
annual average of about 68,618 70-kilo bags arrived at Champerico by
rail during the same period, representing 75 percent of the total coffee
exported from that port. At San José, the average number of'bags
arriving by rail was 52,085, amounting to about 57 percent of the total
coffee shipments from the port.

Maps 20 and 21, illustrating the internal flow patterns of green
coffee exported through Champerico and San José, demonstrate the exis-
tence of a definite supply area fer each of the two ports, in contrast
With the flow pattern for Puerto Barrios. Of the coffee shipped through
Champerico, for example, about h5 percent comes directly from the
station at Coatepeque, 23 percent from Pajapita, 9 percent from
Retalhuleu, and 8 percent from.Mazatenango. Only about 6 percent of

all coffee arriving at Champerico by rail is shipped directly from

201

stations east of San Antonio Suchitepéquez. The coffee tranSported by
rail to San José, on the other hand, comes primarily from Guatemala
City (h7%), Amatitlan (22%), Escuintla and Concepcién (7%), and Patulul
(5%). Only 10 percent of the coffee entering San José by rail origi-
nates west of Rio Bravo. Neither Pacific port receives much coffee
from stations east of Guatemala City. However, coffee destined for
Pacific shipment from the Coban Region and other areas east of the
capital is more likely to be exported through San José than Champerico.
Coffee milled and/or stored in Guatemala City, regardless of where it

is grown, is also more likely to be shipped through San José.

A final consideration in the movement of coffee within Guatemala
is the time factor. Cherry coffee moves according to the harvest
season, which varies regionally and by altitude. Since coffee is not
normally processed to oro and transferred to the port of shipment until
shortly before the actual date of export, the volume of exports by
month for each port can be used to estimate peak periods in the movement
of green coffee within the country. Prior to the Agreement and the
four-quarter export quota system, almost all Guatemalan coffee was
exported between October and May. Now, although December through
April remains the peak period, coffee is exported year-round. Data on
coffee exports from each port by month of shipment indicate relatively
little variation among the ports, when monthly shipments are expressed

as a percentage of the annual total for each port.

CHAPTER IX

COFFEE EXPORT

Traditionally, the export of coffee from Guatemala has been
handled by private interests, with a minimum of government control or
interference other than taxation. The history of government involve-
ment has been much shorter and less intensive with regard to exports,
for example, than with attempts to stimulate and improve coffee
production. Membership in the International Coffee Agreement has,
however, impelled the Guatemalan government to assume a more active
interest in coffee exportation. The establishment of instruments of
control affecting the export of coffee has led some exporters to
complain of "increased socialization or nationalization" of the
industry. The quota system, financing, and taxation have, no doubt,
complicated the coffee export business. Nevertheless, coffee export,
like the entire industry, remains basically private and free of govern-
ment interference, especially relative to conditions in several other

leading coffee-exporting nations.

The Exporters
A century of coffee exportation from Guatemala has witnessed not
only a tremendous increase in volume, but also an increased degree of
complexity and specialization. At one time, export was largely by
\

growers who shipped their coffee under individual finca names, some of

202

203

which became well—known "brands" in foreign markets. Today, coffee is
shipped primarily by export firms, although some large planters continue
to export their own coffee. In addition to producer—exporters and
exporting firms, coffee is sold to foreign markets by the Industria de
Café, S. A. (INCASA) and by ANACAFE, the latter accounting for only
small shipments. Each of these four, the producer-exporters, exporting
firms, INCASA, and ANACAFE, has peculiar characteristics and occupies

a distinct position in the export sector of the Guatemalan coffee

industry.

Producer-Exporters

Producer-exporters are coffee farmers who export part or all of
their own crop and who may also purchase coffee from other, usually
nearby and smaller, farmers. Inasmuch as some export firms also operate
coffee fincas, the distinction between the two groups is not always
clear. However, producer-exporters as a rule do not maintain export
offices in Guatemala City, except perhaps in their residences, nor do
they normally own and operate commercial, urban-based beneficios secos.
In no case does the volume or value of coffee purchases exceed that of
their own coffee production. In short, the producer-exporter is primar—
ily a grower, usually Operating an on-farm beneficio seco to process the
coffee to oro.

The number of producer-exporters varies from year to year, with a
tendency to increase in years of bumper crops or particularly good

market conditions. The long—term trend, however, is toward fewer

20h

producer—exporters. During the years from 1963/6h to 1967/68, there
were approximately 25, 18, 16, 11, and 16 producer-exporters, respec-
tively. The exact number of producer-exporters in 1936/37 and in 1997/
AB has not been determined, but the total number of exporters was 152
and 51, respectively.1 (The number of exporters during the years from
1963/6h to 1967/68 was h8, hl, 39, 30, and 35, respectively. Judging
from the relatively small amounts of coffee shipped by many of the
exporters in 1936/37 and l9h7/h8, and statements from a number of
coffee businessmen, it seems likely that much Of the decrease in the
total number of exporters is due to a diminishing number of producer-
exporters. During the period l963/6h-l967/68, producer-eXporters

accounted for only 3.5 percent of all coffee exports (Table 25).

TABLE 25

VOLUME 0F COFFEE EXPORTED BY PRODUCER—EXPORTERS, 1963/6h-1967/68

 

Year: l963/6h 1969165 _1965166 _1966/67 ,1967/68 Average
Quintales Oro 91,29h 50,869 69.7h8 38,555 120,h32 7h.800
Percent of

Total Coffee h.8 3.0 1.2 2.h 6.0 3.5

.EEPQEfiS

Source: Calculated from unpublished data from ANACAFE.

 

Since the Agreement, producer-exporters are able to ship only a
fraction of their crop each quarter and must therefore store the

remainder. Moreover, several small consignments are less economical and

 

lRevista Agpicola, vol. xv, NO. 3 (March, 1938), 177-85; and
Revista Cafetalera de Guatemala, Vol. V, Nos. hl-h9 (April-December,
1958), 11. The more recent figures in this chapter are from unpublished

data from ANACAFE.

205

less convenient for both the exporter and the importer than are single
large shipments. Some importers in the United States will no longer
accept partial shipments or deal in small orders. Thus, many if not
most of the producer-exporters work with relatively small shipments of
good quality coffee and export largely to Europe. Whether selling on
the European market or elsewhere, such exporters generally have well-
established relationships with certain importers. Some producer-
exporters maintain permanent business ties, but export only in years of
large harvests or high prices. The quota system, however, has not only
limited the size of shipments by these exporters, but has also tended
to smooth out the international price curves for coffee and to avoid
the high and low price extremes characteristic of international coffee
trade prior to the Agreement in 1962. Furthermore, the European coffee
market is apparently becoming more like that Of the United States.
Buyers are less interested in high quality and more concerned with
quality control and an even, dependable supply, greater consumer con-
venience, plus higher trading volumes. Thus, both the Agreement and
international market trends suggest that producer-exporters, and
perhaps small exporting firms as well, will continue to diminish in

number and importance.

Coffee Epcort ing Fixing

Although coffee exporting firms may also Operate fincas, they

 

exist primarily to export. Approximately half of the twenty coffee

exporting firms in 1968 operated coffee farms. The firms often do not

206

actually own the fincas, however. Instead, many of these prOperties
are held by the men or families that comprise the firm. In one such
case, two partners individually Own seven coffee fincas, although the
firm.itself possesses none. This example, however, represents the
maximum number of fincas owned by the members of any one firm. 1f the
holdings of close relatives were included, the number of fincas
"attached" to a firm would probably be greater in some cases.
Important facilities normally owned by exporting firms, or indi-
vidually by its members, include Offices, beneficios, warehouses,
roasters and retail outlets. All of the twenty export firms maintain
Offices in the business district Of Guatemala City. Slightly over half
operate beneficios hfimedos, most of which are located on farms. Several
of the larger firms which purchase substantial amounts of coffee in
cherry Operate non-farm beneficios hfimedos, but these are frequertly
located near the firms' beneficios secos. Only four Of the firms own
no beneficios secos and hence either lease processing facilities or
purchase green coffee ready for export. Most of the twenty—seven
commercial, urban-based beneficios secos in Guatemala are owned by
exporting firms. or the eleven in Guatemala City, seven are the
property of exporting firms, while the remainder are relatively small
mills rented to exporters or used to process coffee for the domestic
market. Four of the exporting firms Operate coffee roasting plants,
and another plans to construct one in the near future. One firm has
roasting facilities in Amatitlan, while the others are located in the

capital. The fOur firms with roasters have retail outlets in Guatemala

207

City, but for each the domestic sale of roasted coffee is secondary to
the export of green coffee.

In addition to unique operational features among the various
firms, there exists a considerable diversity of business structure.
Meet of the firms export only coffee, but four export other agricultural
commodities as well. For at least one firm, coffee is not the principal
agricultural export item. Several firms began as other types of busi—
nesses and have expanded to include the exportation of coffee. Some
have switched to coffee exlusively. One firm combines a sizable whole-
sale business with coffee export, while one Of the largest exporters
Of coffee is also involved in import trade.

The founding dates or the dates when firms began to export coffee
are variable and indicate that the "mortality rate" for coffee exporters
is rather high. Of the exporters (including producer-exporters)
Operating in 19h7/h8, only about 35 percent are exporting coffee today.
The corresponding figure fOr 1936/37 exporters is only about 20 per
percent.2 The Oldest coffee exporting firm currently in Operation was
founded in 1881 and has no competitors for the claim.to longevity. The
remaining firms have been established since 1935, except for one founded
"prior to 1930." Nine of the twenty firms have been in business only
since 1950, and four have been established since 1960.

Determination of the relative importance Of the various coffee
exporting firms is complicated by (1) annual variations in the total

number of firms, (2) annual variations in the percentage of the total

L

2Revi8ta moon (March. 1938). 179-83; and Revista Caf_etalera .31.,
We (April-December, 19h8), 11. m

208

coffee exports accounted for by each firm, and (3) the practice by some
exporters of shipping coffee under names other than those of their Own
firms. Table 26 indicates the number of actual coffee exporting firms
from 1963/6h to 1967/68 and the total number of names under which
coffee was exported. The latter is commonly confused with the number of
exporting firms. The names under which coffee is exported exceed the
actual number Of firms for several reasons. One, firms occasionally
export coffee under the name of one or more members of the firm. Two,
firms have in two instances merged and the partners continue to export
under their respective names for marketing purposes. One of the

largest coffee exporting firms in Guatemala, for example, is composed

of two fermer firms, and the coffee which is shipped to Europe goes
under the name Of one of the former firms, while that sent to the United
States is marketed under the name of the other. Three, at least one
firm.has an exclusive contract with a German importer, and therefore
when that firm desires to sell coffee to some other German buyer it does

so under a different name.

TABLE 26

NUMBER OF NAMES AND ACTUAL FIRMS BY WHICH COFFEE IS EXPORTED

 

k

 

 

 

 

Number of Actual Percent shipped
._ Year Firms Number of Names by Actual Firms
196376B 21 2h 93.8 “‘
l96h/65 21 26 95.8
1965/66 21 26 9h.8
1966/67 20 2h 95.h
_1967/68 20 22 95.7
Average 21 2h 95.1

 

 

Source: Calculated from.unpublished data from ANACAFE.

209

Eighteen exporters, each of which accounts for at least 1 percent
of Guatemala's coffee exports, together handle over 98 percent of the
total. The number shipping at least 1 percent of all coffee exports has
been relatively stable during the period 1963/6h-1967/68, being 17, 17,
16, 17, and 18, respectively. These shippers included one producer-
exporter and INCASA. Export data for the eighteen largest exporters,
and data pertaining to the names under which coffee was exported, are
presented in Table 27.

Not only has the number of exporting firms varied little during
the period l963/6h—1967/68, but the percentage of the total coffee
exports accounted for by each exporter has also been relatively
constant. Sixteen exporting firms, INCASA, and one producer-exporter,
all of which individually handle at least 1 percent of the total volume
of Guatemala's coffee exports, together accounted for about 98 percent
of the exports. In 1967/68, ten Of the firms marketed at least 5
percent of the total coffee exports, but only one firm eXported more
than 10 percent of the total.

The ten largest exporters, each handling over 100,000 quintales
oro annually, accounted for approximately 77 percent of the nation's
total coffee exports during the period 1963/6h-1967/68. The relative
Position of the ten firms, in terms of volume shipped during this five-
Year period, varied considerably. Table 28 lists these firms according

to the average percentage of coffee shipped during the period.

210

TABLE 27

COFFEE EXPORTS IN 1967/68, BY EXPORTING FIRMS AND BY NAMES l/

 

Expggting Firms Names Under Which Coffee Was Exported 2/

 

 

 

Quintales Percent of Exporting Quintales Percent of

Oro Total Firm. Oro Total

1 230.215 11.5 A (2) 195.063 9.7
2 195,063 9.7 B (3) 188,0h1 9.u
3 188,0h1 9.h c (h). 162,256 8.1
h 162,256 8.1 D (5) 1h7,671 7.3
5 1&7,671 7.3 E (6) 139,09h 6.9
6 139,09h 6.9 F (7) 131,886 6.6
7 131,886 6.6 G (8) 129,8h0 6.5
8 129,8h0 6.5 H (1) 121,7h2 6.1
9 106,396 5.3 I (1) 108,h73 5.A
10 102,757 5.1 J (9) 106,396 5.3
11 90,100 h.5 K (10) 101,707 5.1
12 88,805 h.h L (11) 90,100 h.)
13 77,882 3.9 M (12) 88,655 h.u
1h ' 67.889 3.h N (1h) 67,889 3.u
15 35,802 1.8 0 (13) uh,15h 2.2
16 33.321 1.7 P (15) 35,802 1.8
17 2h,3h9 1.2 Q (13) 33,728 1.7
18 21,912 1.1 R (16) 33.321 1.7
s (17) 2h,3h9 1.2

T (18) 21,912 1.1

Totals 1,972,079 98.17_ 1,973,279 .98.2

 

1/ For firms handling at least 1 percent of total coffee exports.
Number TB is a producer-exporter, the largest in Guatemala; the remain-
der are exporting firms, including number 16, INCASA. Four exporting
firms are excluded, since they individually account fOr less than 1

percent of the total coffee exports.

2/ Coffee exported under the names designated herein as "H" and
"I" is actually shipped by a single firm designated as "l" on the left
side of the table. Thus, although the statistics normally show two
"exporters" handling 6.1 and 5.h percent of the total, they are in fact
only one firm.accounting fOr 11.5 percent—-the largest in Guatemala.
Likewise, "O" and "Q" are firm "13" on the left, thus reduc1ng to
eighteen the total number exporters handling at least 1 percent of the
nation's coffee exports. Other variations between the left and rlght
sides of the table result from smaller amounts of coffee shipped under

different names being added to the firm's total.

211

TABLE 28

PERCENTAGE OF TOTAL COFFEE EXPORTS BY THE TEN LARGEST EXPORTING
FIRMS IN GUATEMALA, 1963/6h—1967/68

 

 

1963F196W1965f1966/ 1967/ Change: 1963/61». 1963/61.-

 

 

 

‘Egporter 6h 65 66 67 68 1967/68 1967/68 Average
1 111.1 111.9 9.9 11.0 9.7 —h.h 11.9
2 9.7 12.h 9.9 10.6 11.5 +1.8 10.8
3 10.5 9.5 8.9 7.8 6.5 -l+.0 8.6
1+ 9.1+ 10.7 7.6 7.7 6.9 —2.5 8.5
5 3.5 6.3 8.h 9.8 9.h +5.9 7.5
6 6.3 7.6 7.11 7.6 8.1 +1.8 7.h
7 7.0 5.5 9.1 7.1 7.3 +0.3 7.2
8 14.7 5.2 7.5 9.9 6.6 +1.9 6.8
9 5.8 3.7 1+.8 14.5 5.1 -0.7 h.8
10 1.9 2.8 11.5 5.2 5.3 +3.h 3.9

Totals 72.9 78.6 78.0 81.2 76F +3.5 77.1:

Source: Calculated from unpublished data from ANACAFE.

For the five years l963/6h-l967/68, there appears to be a slight
inverse relationship between total coffee exports and the aggregate
percentage accounted for by the ten largest exporters. Thus, when
total coffee exports are down, as in 196h/65 and 1966/67, the ten
largest exporters account for a larger percentage of the total coffee
exports, and vice versa. The tendency is barely discernible, however,
and data fer a greater time span are needed to verify the relationship,
if indeed one exists. On the other hand, the relationship is consistent
with the fact that more producers tend to export a greater volume of
coffee during years of bumper crops and favorable market conditions.

Time series data are insufficient to accurately access the
concentration of the coffee export business in detail. During 1936/37-

1937/38, the ten largest exporters handled only about 60 percent of the

212

nation's total coffee exports, while by 19h6/h7-l9h7/h8, they shipped
about 8% percent.3 The average volume accounted for by the ten largest
exporting firms during the period l963/6h—l967/68 was 77.h percent of
the total, a decrease Of17 percent. unfortunately, data could nOt be
found for the 1950's. It seems likely, however, that a long-term trend
toward an increasing concentration Of coffee exports by a relatively
few large firms was interrupted by the unfavorable market conditions
of the later 1950's. Although the data at hand are inconclusive, other
salient factors support the hypothesis. A need for additional capital
to maintain a coffee exporting business under conditions of the Agree-
ment, as well as the domestic complications and international coffee
trade trends noted above, encourage the growth of large coffee exporting
firms and the demise of small concerns. The producer's ability to avoid
the 1.5 percent ad_valorum tax on domestic transactions by exporting
his own coffee, however, is a factor which encourages producer-exporters
and thus a greater total number of exporters. Direct exportation also
eliminates the middle man, saving the exporter's profits fOr the
producer. On the whole, the circumstances which favor the concentration
or consolidation of the coffee export business in the hands of a smaller
number Of firms appear likely to prevail.

It is noteworthy that four of the five exporting firms registering
the greatest growth during the years l963/6h-l967/68 are also those
Which purchase the largest amounts Of coffee in cherry form. These

four, moreover, are among the very largest coffee exporters in

___

3Ibid.

213

Guatemala. Thus,.available data would appear to be consistent with the
earlier suggestion that the purchase of coffee in cherry form is
gradually increasing and is likely to continue to do so. Secondarily,
the data support the notion that the coffee export trade is gradually

becoming more concentrated in a relatively small number of firms.

INCASA
. The Industria de Café, S.A. (INCASA) is a privately owned company,

with 51 percent of its capital originating in the united States and
the remaining h9 percent in Guatemala. INCASA exports only soluble
coffee and is the sole producer and exporter of soluble coffee in
Guatemala.h The company, which commenced operations in 1958, is
located on the Atlantic Highway immediately outside of Guatemala City.
INCASA instant coffee is marketed throughout Guatemala and has only a
small number of imported brands as competitors for the domestic market.
Yet, about 95 percent of the firm's coffee is sold to foreign buyers.
Most INCASA coffee for export arrives at Matias de Gélvez by truck, for
shipment to New Jersey. This coffee is shipped in 60 pound plastic
bags, placed in cardboard cartons, and is packed in Jars in the United
States. A relatively small amount of the instant product is shipped
directly in Jars to the west coast of the United States, as well as to
various other countries.

Due to quota restrictions, the INCASA plant currently operates

well below its capacity for producing instant coffee. However, through

 

. 1‘Throughout this study, the exports of INCASA are expressed as
Qulntales oro. The conversion ration from oro to soluble is 3:1.

21h

business agreements with several food companies, INCASA has expanded
and diversified to include a substantial number of food lines. Only
about 65 percent of its total 1968 business involved coffee, and this
figure apparently will be further reduced. INCASA exported an average
equivalent of 32,h70 quintales oro during 1963/6h-l967/68, accounting
for 1.6 percent of the nation's total coffee exports during that period
Employing approximately 300 people, the INCASA plant is one of
the most modern and well-equipped food manufacturing facilities in
Guatemala. The company has one beneficio seco, but since the dust
created by its operation damages the other food products, it is no
longer used. Coffee is therefbre purchased primarily in oro. The
lesser quantities purchased in pergamino, are processed in beneficios
secos leased fOr this purpose. As is generally true of all companies
producing soluble coffee, INCASA purchases chiefly lower grades of
coffee. The roasters and other facilities for manufacturing instant
coffee are located inside the plant but do not interfere with the

processing of other products.

ANACAFE

The National Coffee Growers Association (ANACAFE) possesses one
finca, Buena Vista, in the Municipio of San Sebastian, Retalhuleu,
which has a small beneficio hfimedo. However, ANACAFE usually leases
beneficios to process the small amounts of coffee that it purchases.
The Association also Operates a small roaster in Guatemala City and

maintains a retail outlet for its roasted and ground product, which is

215

among the best quality coffee entering the domestic market. Coffee is
bought and sold strictly to encourage local dealers to increase the
prices paid to small producers, and to invite improvements in the
quality of the locally marketed product. The latter, it is felt, will
stimulate domestic consumption of higher quality coffees.

Purely as an exporter, ANACAFE is of little consequence. The
Association exported no coffee in 1966/67 or 1967/68. For the three
previous years, the amounts shipped totaled 160, 12, and h2 quintales
oro, respectively. These consignments represented less than one-half
of 1 percent of Guatemala's total coffee exports in each of these years.
Other occasional exporters of a public nature are the University of San
Carlos, through its ownership of two former National Fincas, and the

Eastern Coffee Growers Association (ACOGUA).

Ports of Shipment

The history of Guatemalan seaports, vis-a—vis relative volumes of
coffee exports, is divided into two periods. Prior to the completion of
the interoceanic railroad in 1908, coffee from the Western and Central-
Eastern regions was exported through Pacific ports, while that from
Cohan left the country via the Atlantic port of Livingston. Foreign
destination had virtually no effect upon the choice of port from which a
given consignment was shipped. Since Puerto Barrios was rendered
accessible by virtue of the interoceanic railroad, however, fbreign
markets have played a key role in determining from which ports, Atlantic

or Pacific, coffee embarks.

216

The choice of Atlantic or Pacific ports is less influenced by
transportation costs pg£_§g_than by the amount of time the coffee must
remain aboard ship. The cost of transporting coffee from a Pacific port
to Eur0pe via the Panama Canal approximates that of transporting it from
the Western Region to one of the Atlantic ports by truck or rail and
thence to Europe. The difference in delivery time between these two
general routes, however, is substantial. Vessels which call on Champer-
ico or San José normally make numerous stops prior to arrival at a
United States east coast or EurOpean destination. Ships leaving Matias
de Galvez or Puerto Barrios, on the other hand, are more frequent and
tend to proceed directly to the United States east coast, to Europe,
or to Europe after one or two calls at United States ports. Transport
time is a crucial factor not only because of business schedules, but
also because it often affects bean quality. However, this consideration
may be offset by importer preferences toward certain shipping lines,
such as the lines of their respective countries.

Whether Pacific-bound coffee exits via Champerico or San José is
decided to a large extent by the relative proximity of the exPorter's
storage and processing facilities. The choice between the Atlantic
ports of Matias de Galvez and Puerto Barrios, on the other hand, is
based primarily upon the mode of internal transportation an exporter
elects to use. Both sets of choices are likely to be altered in the
near future, however. Plans for the construction of a deep-water
facility at Champerico are under consideration and, if implemented, will

probably lead to that port's dominance of Pacific-bound coffee exoorts.

217

Government nationalization of the railroad, and the subsequent construc-
tibn of a railroad line to Matias de Gélvez, may likewise modify the
relative positions of the two Atlantic ports regarding the export of
coffee.

An examination of the relative importance of the various seaports,
concerning the volume of coffee exports, reveals a gradually increasing
prominence of the Atlantic ports since 1908. In the 1890's, for
example, only about 7 percent of Guatemala's coffee exports left the
country from.an Atlantic port. The remainder was shipped through the
Pacific ports of Champerico, San José, and Océs. The volume of coffee
exports accounted for by Puerto Barrios and Livingston increased from
about hO percent in 1912 to 56 percent in 1939. By the late l9hO's,
Puerto Barrios was the port for approximately 75 percent of all coffee
exports. Table 29 illustrates the growth of the Atlantic ports since
1950, when their rate of increase in shipments began to diminish.
Guatemala's chief coffee markets have always been, and will undoubtedly
continue to be, the eastern United States and Europe. Hence, dominance
of the coffee traffic by Matias de Gélvez and Puerto Barrios seems
assured for the foreseeable future. Improved techniques in the storage
Of coffee aboard ship would be especially beneficial to the Pacific
ports.

A second trend, the increase of coffee shipments from Matias de
Galvez at the expense of Puerto Barrios, has a less certain future.
Figure h illustrates the volume of coffee handled by the various ports

from 1950 to 1967/68. Although Matias de Galvez has been gaining in

218

the Atlantic coffee trade at a remarkable rate, much will depend upon
the outcome of the truck-versus-railroad competition. Matias de Gélvez
may expand its share even further, since it is now served by both truck

and rail, and because it offers improved storage and handling facilities

built by the Guatemalan government.

TABLE 29

PERCENTAGE OF GUATEMALAN COFFEE EXPORT VOLUME BY
PORTS OF SHIPMENT, 1950—1967/68 1]

 

 

Puerto Matias de Total Total

Year Barrios Galvez San José Champerico Atlantic Pacific
1950 73.1 --— 15.0 11.9 73.1 26.9
1951 69.0 --- 18.5 12.5 69.0 31.0
1952 76.3 -—- 1h.9 8.8 76.3 23.7
1953 75.2 -—- 1h.5 10.2 75.2 2h,7
195k 71.8 —-- 18.5 9.6 71.8 28.1
1955 73.5 —-- 2h.0 2.5 73.5 26.5
1956 83.1 --- 10.h 6.5 83.1 16.9
1957 78.2 ——— 10.8 11.0 78.2 21.8
1958 n.a. n.a. n.a. n.a n.a. n.a.
1959 n.a. n.a. n.a. n.a. n.a. n.a.
1960/61 71.2 13.1 6.h 9.3 8h.3 15.7
1961/62 63.5 2h.7 5.h 6.h 88.2 11.8
1962/63 60.6 25.3 5.0 9.1 85.9 1h,1
1963/6h 58.6 29.6 6.h h.7 88.2 11.1
196h/65 63.1 22.8 7.6 6.5 85.9 1h.1
1965/66 58.3 27.3 7.8 6.5 85.6 1h.3
1966/67 hh.2 38.h 8.2 9.2 82.6 17.h
_1967/68 20.0 6h.8 10.h h.6 8h.8 15.0

 

;/ Data for 1958, 1959, and most of 1960 are not available.

Source: 1950-1957, Banco de Guatemala; 1960/61-1967/68,
calculated from unpublished data from ANACAFE.

It should be noted that small amounts of coffee also leave Guate-
mala through three other ports. La Aurora, the Guatemala City airport,

is the most important of the three, yet accounts for less than 1 percent

219

 

 

of Total Coffee Exports

Percent

99-

93>

87'

75'

69

63

57-

51

45

39

33

27

21

PERCENT OF TOTAL COFFEE
EXPORTS FROM GUATEMALAN
PORTS, l950-l967/68

 

"I
/

T fifi—‘I

r l I r I

Y ‘1

r

15

r

 

 

—-——-pp

961/62 -

u-Ppo-a—a—

Source of data: ANACAFE.

Figure ’4

‘C-"-~ San Jose'
’/ \\‘
I s
I

Matias do
Gdlvez

Puerto
Barrios

 

Champerico

p-—

 

220

of total coffee exports. Nearly all of the coffee leaving the country
via La Aurora is INCASA soluble. In 1958/59, the first year of INCASA
operations, all of the instant coffee exports were shipped by air. This
percentage gradually declined, however, and in recent years most of the
soluble coffee has been exported through Matias de Galvez. Neither of
the other ports, Pedro de Alvarado and Mechor de Mencos, witness the
export of coffee on a regular basis. At least the available statistics
do not include data for these border cities, except for 1967/68 when a

small amount of soluble coffee was exported through each of the two.

Volume of Coffee Exports

Generally, the volume of Guatemalan coffee exports mirrors the
production of that commodity, substantiating the claim that Guatemala
has experienced only minor and temporary surpluses of coffee. Such
dissimilarities as exist between coffee production and export data prior
to the late 1950's, as shown in Figure 5, may be attributed largely to
inaccuracies in production statistics. It is possible, however, that
coffee exports actually exceeded production around l9h3, since coffee
from.El Salavador and Honduras was purchased by Guatemalans and shipped
to the Uhited States by rail during WOrld War II.5 The pre-Agreement
practice of marketing coffee grown in Honduras as Guatemalan or Salva-

doran has, at least ostensibly, ceased since prohibited by the Interna-

tional Coffee Organization in 1962.

5IRCA data indicate that 5,hh1, 113,257. and 7h,02h bags.of 73
kilos (15h lbs.) were exported from Guatemala V18 Tecfin Uman in 19 l,

19h2, and 19h3, respectively.

1111111 lllllnllljlllll

GUATEMALAN COFFEE PRODUCTION AND
EXPORTS

221

“...

oc:::
some:

....)

C.:.O::.O... . . . . ..
O...”

4...-coo.

09/65“

'° . “In“
.0?
c 0‘“ "I
O '-
5 w
3 .0 0"
.0 0. S'I'O“
O
b
L

omtu

SCI'CCI

“I686!

mm:

OU606I

“I?!“

Oll6 0“

mm:

”’66.!

£6IVCI|

06/6.“

SUV.“

Exports

«(out

fl/vtot

lliijlilliljnijliinnI111111111linnnliilnlnnlnlnnnll:1:111111]11111111111111].

01/69“

 

llll_j._l_LllenjlIILJ+111L1111LL111111L11AJJJII

:sssaasssssss=2:22~°'~

“sq: zc: 1° *6“: coats 1° mun

Figure 5

Source: Production, Appendix A (FAO and USDA); Exports, Appgndag B.

222

The relatively wide margin between production and exports in
the mid-195038 reflects the world coffee crisis of that period. Other-
'wise, discounting annual and biannual fluctuations due to the natural
cyclical production pattern of the coffee tree and the vagaries of
weather and disease, the volume of both production and exports in
Guatemala grew at a relatively steady pace until the middle and late
1950's respectively. The great increase in production at this time,
common to most coffee-producing nations, reflected rapidly rising world
coffee prices. Trees planted in the various countries in anticipation
of great profits during the years of rising prices matured to full
production in the mid-1950's. Thus, world coffee prices peaked in
195k, then fell drastically due to over-supply as many countries
experienced coffee surpluses.

The other significant dissimilarity between production and exports
occurred in 196h/65. The decline of production was caused in large

' a serious threat

part by a severe attack of the "coffee-leaf miner,’
to coffee trees throughout much of Guatemala. In 196A/65, however,
coffee exports declined more than did production, which follows the
principle that exports tend to fall more markedly than production in
years of poor harvest. The decline of'both production and export was
reversed by the record crop of the following year. This bumper crOp

resulted in a surplus of h89,7h6 bags of 60 kilos (132 lbs.). by far the

largest carry-over since the Agreement and one which apparently aided

223

Guatemala in its petition to the International Coffee Organization for

a higher basic export quota.6
The volume of coffee exports is unevenly distributed throughout
the year. The monthly exports increase from October through December,
peak from.January through April, and decline during the remainder of the
crop-year (Table 30). The effects of the export quota system are
evident in two ways. First, as noted previously, the quota system
causes coffee to be exported from Guatemala year-round, whereas prior
to the Agreement almost all coffee was shipped between October and May.
Second, the first month of each quarter, namely October, January, April,

and particularly July, reflect relatively heavy volumes of coffee export

 

 

 

 

 

 

traffic.
TABLE 30
MONTHLY COFFEE EXPORTS FROM GUATEMALA, 1963/6h—1966/67

Month . 1966/67 1965/66 196A/65, 196316H‘ Average
Octdber 1(61’ 9.7% * 2.5% h.0% h.5%
November 10.3 7.6 9.0 8.1 8.8
December 13.2 6.3 8.9 10.5 9-7
January 13.8 12.h 12.3 11.9 12.6
February 1h.5 11.8 19.5 8.5 13.6
March 8.8 13.9 16.8 11.3 12.6
April 17.h 11.3 10.5 12.9 13.0
May 5.2 9.6 5.6 10.5 7.7
June 0.1 7.5 1.0 7.2 3.9
July 13.8 5.h 12.6 7.7 9.9
August 0.9 2.5 1.2 5.2 2.5
September 0.5 2.0 0.1 2.2 1.2
Totals 100.0 100.0 100.0 100.0 100.0

 

Source: Calculated from unpublished data from ANACAFE.

 

6h 6E1 problems nacional del café (Guatemala: ANACAFE, April 1967),

22h

Although three of the principal ports of shipment display no major
variations from the annual pattern of coffee exports, a fourth does
(Figure 6). Champerico is the exception, in that a greater percentage
of the annual exports from that port tend to be shipped in the first
half of the crop year. This tendency reflects the fact that most of the
coffee exported via Champerico comes from San Marcos and Quezaltenango,
where the fruit matures earlier than in other parts of the country.

During the first half of the crop year coffee exports from Puerto
Barrios are greater than those of Matias de Galvez, while in the second
half the reverse is true. As a port of shipment for Atlantic-bound
coffee, Matias de Galvez has been increasing in importance at the expense
of Puerto Barrios. And, cognizant of the relatively strong emphasis
upon quality in the European market, exporters prefer to use the
improved facilities of Matias de Galvez for the high altitude choice
coffees exported primarily to Europe. Such coffees, maturing later,
tend to be shipped in the latter half of the crop year. Importers
maintain that coffee shipped via Matias de Galvez arrives in better
condition than that from Puerto Barrios, probably in part'because the
warehouses at Puerto Barrios are more exposed to the humid sea breezes

than are those of Matias de Galvez.

Destinations of Coffee Exports
The united States and Germany together take approximately three—

fourths of Guatemala's coffee exports (Table 31). The United States

has been the principal market for Guatemalan coffee since Werld war I,

225

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226

TABLE 31

DESTINATION 0F GUATEMALAN COFFEE EXPORTS, 1963/6h-1967/68

       

Country 12 19 j 12-5/ 191/ ' Average
United States 62.21 61.77 52.1% 56. 117.9f 56.2%
Germany 17.h 22.0 15.9 19.5
Netherlands . .
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Guatemalan coffee. See Appendix D for amounts of coffee shipped to
the various countries.

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227

while Germany has resumed its traditional position as a major buyer only
since the late 1950's. During the years 1950 to 1956 the Netherlands,
Sweden, Belgium and Luxembourg, and Canada usually surpassed Germany as
markets for Guatemalan coffee. 7 Germany accounted for about A percent
of the world's coffee imports from 1951 to 1955, and 7 percent from.l956
to 1960. During the same periods that country took about 3 percent and
1h percent of Guatemala's coffee exports, respectively. Thus, Germany's
coffee imports from Guatemala increased almost twice as rapidly as its

total coffee imports during the 1950's.8

This trend continued into the
1960's, albeit more slowly. In 1967 and 1968, Germany took 19 percent
of Guatemala's coffee exports, while receiving only about 9 percent of
total world coffee imports. The united States, on the other hand, shows
a relative decline in importance as a market for Guatemalan coffee. Not
only has the European market for coffee been expanding more rapidly than
that of the united States, but Guatemala has been striving to lessen its
dependence upon the United States as a trading partner.

Other than the United States and Germany, the percentage of
Guatemalan coffee exports taken by any one country is small. The
European nations excluding Germany, together receive approximately 17
percent of Guatemala's coffee exports and about 37 percent if Germany is

included. The Netherlands, Finland, and Belgium each took an average

Of more than 2 percent during the period l963/6h-1967/68. The new

L

7The united Nations Food and Agriculture Organization, The WOrld
Coffee Econgpy, Commodity Bulletin Series, 33 (Rome, 1961), 67.

8Ibid. , 51.

228

market countries, to which non-quota coffee may be sold, naturally tend
to receive more of Guatemala's coffee during years of bumper harvests.

The markets for Guatemalan coffees differ not only in volume, but
also according to type. The united States imports some 92 percent of
Guatemala's "Good washed" and "Extra Good washed" coffees, but only h.S
percent of the "Strictly Hard Bean" and virtually none of the
"Maragogype" coffees (Table 32). Germany, on the other hand, is the
major destination of "Strictly Hard Bean" coffee, while Belgium takes
the greatest proportion of the "Maragogype" type. The higher grown
coffees are sold to a relatively greater extent on the Eur0pean market,
whereas the lower grown types are purchased primarily by united States
importers. This generalization is not unique to Guatemala but is
representative of the pattern of world coffee trade in general.

The distribution of Guatemalan coffee exports by port of shipment
supports the conclusion that Guatemalan coffee tends to move to the
ports nearest the foreign market destination. Puerto Barrios ships
coffee to the greatest number of foreign markets, followed by Matias de
Galvez, San José, and Champerico (Table 33). The destinations of coffee
exported via Puerto Barrios and Matias de Galvez are similar, as might
be expected, since the two ports are virtually identically located
relative to foreign markets. It is also noteworthy that the United
States imports a higher percentage of Guatemala's Pacific-bound coffee,
relative to the Atlantic, although it receives a greater total volume
from the Atlantic ports. This situation is due to the Atlantic ports

handling most of the coffee destined for EurOpe, thereby lessening the

229

 

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230

relative importance of Atlantic-bound coffee destined for the United
States. More coffee fer the Canadian market, on the other hand, is
exported through Pacific ports than from those on the Atlantic.
Virtually all of the coffee destined for Japan and other Asian markets,

is shipped through San Jose and Champerico.

TABLE 33

GUATEMALAN COFFEE EXPORTS, BY MAJOR PORTS AND COUNTRY
OF DESTINATION, 1963/6h-1966/67

 

 

 

Barrios G ves San José Cham erico
United States $8.81 52.3 63.6% 78.h%
Germany 20.5 30.0 1.1 ---
Netherlands 7.2 5.3 —-- ---
Belgium 2.h 3.2 --- --—
South Africa 1] 2.0 --- —-- 1.7
Jordan 1.7 2.1 --- ---
Switzerland 1.2 --- --- ---
Finland.§/ 1.0 1.7 15.0 3.0
Spain 1.0 --- --- ---
Sweden --- --- 5 6 7.6
Japan --- --- 9.8 h.1
Canada --- --- 2.6 ,3.6
Norway -—- --- l.h ---
Others h.2 ,fiph 0.9 1.6
Totals 100.0 100.0 100.0 100.0

 

 

l/ the figure 1.7 for Champerico is misleading in that coffee was
actually shipped from that port to South Africa during only one of the
years under consideration.

2/ The figure 15.0 for San Jesé is not representative, since an
unusually large amount of coffee was shipped to Finland from that port
in 1966/67. The average for the other three years is 5.8 percent.

Source: Calculated from unpublished data from ANACAFE.

The single consistent exception to the general pattern of coffee

movement from Guatemala, and minor in the total scheme, is the coffee

destined for Scandinavian countries. Much, and in some years most, of

231

the coffee sold to Denmark, Norway, Sweden, and Finland is exported
through Champerico and San José. This exception is explained by the
proclivity of Scandinavian importers to use national shipping lines,

which do not always call at the Atlantic ports of Guatemala.

CHAPTER X
GUATEMALAN COFFEE IN THE NATIONAL AND WORLD ECONOMIES

For almost a century, the historical, political and economic fabric
of Guatemalan life has been closely tied to the production and export of
coffee. Spurred by the demise of cacao, indigo, cochineal, and cotton
exports, and abetted by its inherent assets of transportability and
marketability, coffee assumed preeminence among Guatemalan exports as
early as the 1870's. The one hundred years since then have witnessed a
change of government policy from ardent encouragement and financial
support for expanding coffee acreage, to the prohibition of planting new
lands to coffee. But, although modern government planning emphasizes
agricultural and export diversification, coffee continues to play a
leading, if diminishing, role in the Guatemalan economy. Guatemalan
coffee, of course, is not nearly as significant a factor in world
coffee trade as it is in the national economy. Nevertheless, Guatemala
occupies a relatively important position among the coffee producing
nations of Latin America and the world. No country vies with Brazil or

Colombia in the production of coffee, but among the nations of secondary

importance Guatemala compares favorablY-

Coffee in the Guatemalan Economy
Although its general importance is obvious, the real significance

of coffee in the Guatemalan economy is not easily reckoned. No single

232

233

measure can accurately assess the role of so vital an industry. The
importance of a commodity is traditionally measured.by the proportion
of total exports which it comprises, yet the relative importance Of an
item.among a country's exports is, at best, a general indicator to be
interpreted with caution and in conjunction with other information.
Since the midrl950's, the value of coffee exports as a percent of
total Guatemalan export value has declined (Table 3%). The average
percentage accounted for by coffee in the 1950's was 77, whereas the
corresponding figure for the period 1960-1968 is 51. This relative
decrease is partially due to lower world coffee prices since l95h. More
recently, however, Guatemala has achieved some diversification of
exports. Cotton, the most outstanding example, rose from about h
percent of the total export value in the 1950's to 19 percent in 1966.1
Sales of manufactured goods to Central American Common Market countries
have also increased.2 MOst notable is the fact that the decline in the
proportion of total exports accounted for by coffee occurred during a
concurrent rise in the absolute value of coffee exports. The average
value of coffee exports from 1950 to 1959 was approximately $73,000,000,

while that fer 1960-1966 was $79,000,OOO.3

 

lKlaus W. Berg, "Guatemala's Coffee Economy, Its Coffee Surplus
Prdblem.and Diversification Possibilities," final report of the Agricul-
tural production economist for the UNDP-FAO-ANACAFE Diversification
Project in Guatemala (unpublished), May, 1968, 28.

2InterbAmerican DevelOpment Bank, Socio-Economic Pro ress in Latin
America, Social Progress Trust Fund: Eighth Annual Report, 1963
(washington, D. C.: IDB, 1969). 181.

3Berg, 27.

23h

TABLE 3h

COFFEE EXPORTS AS A PERCENT OF TOTAL GUATEMALAN EXPORTS,
BY VALUE, l9h7-l968

 

 

Percent of Comparative Percent of Comparative
Year rts Rankulég_ Year Exports Rank 11
19h? 81.2 n a 1958 75.5 2
19h8 61.2 n.a. 1959 7h.8 2
19h9 71.5 n.a. 1960 69.8 2
1950 78.0 n.a. 1961 62.8 2
1951 76.8 n.a. 1962 62.h 3
1952 81.8 n.a. 1963 h9.5 h
1953 76-7 3 l96h h5.7 6
l95h 77.5 h 1965 A9.“ h
1955 76.5 3 1966 55.5 2
1956 79.0 1 1967 30.5 6
1257 ,1§.6 3 1968 33.0 _5

 

;/ Rank among Latin American countries according to the percent of
total exports accounted fer by coffee.

Source: 19h7-l959, Solicitud de Guatemala, a1 fondo especial de
las Naciones Uhidas_para 1a diversificaciSn de cultivos en cgggicignes
economicamente marginalg§_(Guatemala: ANACAFE, 1963, 17, and Annual
Coffee Statistigg, VOls. 17-23 (New York: Pan American Coffee Bureau,
1953-59); 1960:1968, USDA, Foreign_Agriculture Circular: Coffee,
Washington, D. C.: USDA-FAB (February, 1965 and January, 19707, 7 and
9, respectively. '

The value of coffee as a percentage of total export value appears
to be diminishing more rapidly in Guatemala than in other Latin American
producing nations. Table 3h illustrates this trend, which was inter-
rupted in 1965, and particularly in 1966, when only Colombia exceeded
Guatemala in the relative importance of coffee among total exports. The
Guatemalan coffee harvests of these two years were large and world
prices had been somewhat strengthened by small Brazilian crOps beginning

in l96h. The four Latin American nations in which coffee ranked higher

than in Guatemala as a percentage of total export value in 1968 were

235

Colombia (67.7%), El Salvador (h2.7x), Brazil (hl.7%), and Haiti
(38.95). In that year coffee also constituted a greater proportion of
total exports in fOur African countries: Uganda (Sh.6$). EthiOpia

(51.hx), Angola (h8.81), and the Ivory Coast (3h.2%).“

Reflecting the absolute increase in the value of coffee exports,
the contribution of coffee to the Guatemalan Gross National Product has
remained fairly constant despite the decline of coffee exports relative
to total exports. Coffee comprised an average of 7.8 percent of the
GNP in 1950-1959 and 8.1 percent in the period 1960-1966 (Table 35).
The prOportion of the GNP accounted fOr by agriculture has also been
stable, around 30 percent, as has the percent of agricultural output
accounted for by coffee. Total agricultural output increased from
approximately $225 million in 1950 to $h07 million in 1966, or by 81
percent (at 1958 market prices). During the same period, the value of
coffee production increased from approximately $58 million to $105
million, or also by 81 percent. It should be added, however, that:

Agricultural output declined by almost 1 percent between

1966 and 1967 because of reductions in the production of

exportable coffee and cotton, which together represent

almost half of the total. These crops declined by 20

percent and 13 percent, respectively, because of adverse

climatic factors and unfavorable developments in interna-

tional markets.S

Although it accounts for over one—feurth of the total value of

agricultural production, and despite its relatively extensive use of the

hUSDA, Foreign Agriculture Circular: Coffee, (January, 1970), 9.

5IDB, Socio-Economic Progress in Latin America, 180.

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237

land, coffee culture occupies only a small fraction of the total acreage
in Guatemala. It is estimated that about 592,800 acres are planted to
coffee, representing some 2.2 percent of the total area and 8.9 percent

of‘the total agricultural land.6

Coffee production is a major source of employment in Guatemala.
In 1960, the Banco de Guatemala estimated that 226,357 workers were
employed in the production of coffee, of which 7h,h90 were colonos,
lh?,725 seasonal migrants, and h,lh2 coffee finca employees not directly
involved in coffee production.7 The total represents an increase of
2h percent since the 1950 census. This estimate, however, is perhaps
conservative, apparently being based upon infbrmation exclusively from
registered fincas and not taking into account 25,000 to 30,000 small
growers who realize a considerable portion of their cash income from the
sale of coffee. Thus, a.minimum.estimate of 250,000 workers and small
farmers, earning a major portion of their cash income directly from the
production of coffee, would seem more realistic. Considering the fami-

lies of these workers and small producers, it seems reasonable to assume

 

This estimate of total coffee acreage, quoted in various publi-
cations in Guatemala (235,000 or 2ho,ooo hectares are the figures
usually given), appears to be somewhat high, perhaps by some 30,000
acres. It should be noted, however, that an acre, a.manzana, or a
hectare "of coffee" are not rigorously defined terms and are open to
considerable latitude in interpretation, particularly in areas of'small
producers and inter-croPping.

7Guatemala: infbrmacién sobre los diversos aspectos de la
econamia cafetera, an unpublished report of a mission from the Interna-
tional Coffee Organization (February, 1967), 29.

238

that the total number of Guatemalans directly dependent upon coffee
production for a livelihood may approximate one million, or about one-
fifth of the total population.

There are no estimates of the numbers of people who earn a living
from the processing, transportation, storage or financing of coffee,
nor are data available for the number of peOple affected indirectly by
the incomes and wages generated from coffee. It is certainly safe to
conclude, however, that the livelihood of at least one-third of all
Guatemalans is affected by the health of the domestic and international
coffee trade.

As a source of government revenue, coffee appears to be gradually
waning. Receipts from.coffee exports have declined both absolutely and
relative to total revenues (Table 36). The general reduction in the
level of government revenue accruing from coffee reflects changes in
Guatemala's coffee tax structure, which were apparently made for the
purpose of maintaining a competitive position among producing nations.
In 1962, the base fer computing the export tax on coffee was shifted
from.New York market prices to prices quoted in local contracts, and in
1967 the export tax on coffee destined for new markets was eliminated.
These tax modifications raised producer incomes, while an income tax
introduced in 1963 had little effect on coffee growers since they are
permitted to deduct export taxes from income taxes. Also, farmers with
annual incomes under $15,000 are exempted from.the income tax. Thus,
coffee taxes pg£;§g, aside from.export taxation, are not a significant

source of federal revenue. Part of the decline in revenue from coffee

239

export relative to total government receipts may also stem from coffee's
diminishing proportion of the value of total exports. Yet, while
accounting fbr an average of only h6.5 percent of the value of all
exports in the three-year period 1965-1967, coffee comprised over 90

percent of the taxes from all exports during these years.8

TABLE 36

COFFEE EXPORT TAXES AS,A SOURCE OF GOVERNMENT REVENUE IN GUATEMALA.;/

 

 

Government Coffee ExPort Tax
Total Receipts as a Percent of
Government From Coffee Total Government

Year Receipts Exports Receipts
1951752 $'57,h00,000 3 8,500,000 1h.8’
1952/53 61,500,000 10,500,000 17.1
1953/5h 63,600,000 10,500,000 16.5
195h/55 68,700,000 1h,500,000 21.1
1955/56 7h,200,000 13,700,000 18.5
1956/57 8h,800,000 15,200,000 17.9
1957/58 82,300,000 11,500,000 13.9
1958/59 81,600,000 10,300,000 12.6
1959/60 78,500,000 9,600,000 12.2
1960/61 77,300,000 8,200,000 10.6
1961/62 76,300,000 8,800,000 11.5
1962/63 7h,000,000 6,100,000 8.2
1963/6h 88,600,000 5,800,000 6.5

1965 109,100,000 8,100,000 7.h

1966 108,100,000 8,100,000 7.5

1967 112,600,000 5.700.900 35.1

 

l] Exclusive of donations, loans, and other extraordinary receipts.

Source: Berg, 23, and Boletin Estadistico, Banco de Guatemala
(April, May, and June, 1968), h8.

The level of capital investment generated from coffee production

in Guatemala has been neither measured nor estimated. It is apparent,

 

8Calculated from.data in the Boletin Estadistico, Banco de Guate-
mala (April, May, and June, 1968), 50.

2140

however, that it is low, both relatively and absolutely. An average of
only 11.2 percent of the GNP was invested in agriculture during the
years 1960-1966. And, in 1966, the amount invested in agriculture was
equal to only h.h percent of the total value of agricultural produc-
tion.9 It is known, moreover, that Guatemalan coffee farmers invest
little in machinery or fertilizers, that the land on coffee fincas in
most cases was amortized many years ago, and that large expanses of new
lands are not being planted to coffee. Some capital from.coffee has
Obviously been invested in commercial, urban-based beneficios secos

and roasting facilities in recent years. Investments of coffee—
generated capital in the non—agricultural sectors are not estimated, but

are believed to be minor.

Guatemala's Role in the world Coffee Econqu
The proportion of the total volume of world coffee production

accounted for by Guatemala has remained remarkably constant for at least
forty years (Table 37). Guatemala produced an average of 2.61 percent
of the world's coffee during the period 1929/30-1968/69, and an average
of 2.68 percent in 1960/61-1968/69. Since 1930, the preportion of the
world's coffee produced by Guatemala has varied within a range of only
1.6 percent, from.a high of 3.7 percent in l9hh/h5 to a low of 2.1
percent in 1959/60. Nor do these proportions of world production differ
greatly from those of earlier decades. Guatemala produced approximately

3.h percent of the world's coffee between 1885 and 1910.10

 

9Berg, 2h and 25.

1°Ca1cu1ated from data in Mosk, 12.

2hl

TABLE 37

GUATEMALA.AS A COFFEE PRODUCER BY RANK AND PERCENT OF WORLD
TOTAL, BY VOLUME, 1929/30-1968/69

 

 

 

 

 

Rank Among Producers Percent ofiggduction
Latin Central Latin Central
Year world America America werld America America
1929730 7 2 1.7 1. 29.2
1930/31 6 5 2 2.6 2.9 28.5
1931/32 5 h 1 2.3 2.5 38.h
1932/33 6 5 2 2.5 2.9 32.7
1933/3h h 3 1 2.3 2.5 36.h
193h/35 6 5 2 2.7 3.1 3h.7
1935/36 6 5 2 2.6 3.0 35.7
1936/37 7 6 2 2.3 2.6 3h.9
1937/38 7 6 2 2.h 2.7 3h.5
1938/39 6 5 2 2.3 2.6 33.3
1939/h0 7 6 2 2.5 2.9 33.0
19h0/h1 5 5 2 2.7 3.0 31.6
19h1/h2 5 5 2 2.7 3.1 3h.0
19h2/h3 5 5 2 3.0 3.5 32.9
19h3/hh 5 5 2 3.2 3.7 36.h
19hh/h5 h h 2 3.7 h.3 36.h
19h5/h6 5 5 2 3.0 3.5 36.3
19h6/h7 h h 2 2.9 3.h 37.5
19h7/h8 h h 1 2.6 3.1 36.0
19h8/h9 5 5 2 2.6 3.1 29.8
19h9/50 5 5 2 2.6 3.0 32.5
1950/51 5 5 2 2.5 3.0 30.h
1951/52 h h 1 2.7 3.3 35.5
1952/53 5 5 2 2.h 2.9 28.9
1953/5h 6 h 1 2.6 3.2 3h.2
l95h/55 6 5 2 2.7 3.h 29.9
1955/56 7 5 2 2.3 3.0 32.6
1956/57 7 5 2 2.9 3.9 30.7
1957/58 6 5 2 2.6 3.3 32.3
1958/59 8 5 2 2.3 2.9 30.3
1959/60 8 5 2 2.1 2.5 32.7
1960/61 8 5 2 2.h 3.1 30.1
1961/62 9 5 2 2.3 3.0 29.9
1962/63 8 h 1 2.8 h.0 3h.5
1963/6h 9 5 2 2.5 3.6 31.2
196h/65 10 5 2 3.2 5.3 29.1
1965/66 8 h 1 2.5 3.h 35.2
1966/67 10 5 2 2.8 h.1 29.5
1967/68 9 5 2 . 2.7 h.1 27.9
1968/69_ 19» 5 2 2.9 h.6 29.7

 

Source: Calculated from data in FAQ, world Coffee Economy, 1961,

h5-6; UN, UNCTAD Commodit Surve , 1966, 90; and Forei iculture
Circular: Coffee, USDAPEAS (Feb., 1966; Jan., 1966; and Jan., 1970;, 2.

 

2&2

Guatemala's share of Latin American coffee production has
gradually increased since 1930, primarily because of a decline in the
relative volume of Brazilian production. During 1960/61-1968/69, an
average of 3.9 percent of all coffee grown in Latin America was produced
in Guatemala. Meanwhile, the proportion of Central American coffee
produced by Guatemala has remained stable, comprising an average of 32.7
percent during the period 1929/30-1968/69, and 30.8 percent during
1960/61-1968/69. In all probability, Guatemala will continue to account
for a relatively constant share of world and Central American coffee
production, while its proportion of Latin American coffee production
gradually increases.

The rank-position of Guatemala among the coffee producing nations
of the world has been declining, particularly since about 1953. Its
rank among Latin American and Central American producers, on the other
hand, has remained relatively stable. The diminishing rank among world
producers is explained.by the rapidly increasing production of several
African nations. Guatemala has thus been displaced as the fifth largest
producer in the world since the early 1950's. These relationships
between Guatemala and other coffee producing nations of the world
reflect a relative shift in coffee production from Latin America to
Africa, which has become increasingly apparent since the mid-1950's.
Latin America accounted for an average of 91 percent of world production
during the period 1929/30-1933/3h; 85 percent during l9h5/h6-l9h9/50;

78 percent during 1955/56-1959/60; 71 percent during 1960/61-196h/65;

2&3

and only 65 percent during l96h/65-l968/69.ll The relative growth in
African production resulted largely from.Brazilian valorization schemes,
encouragement from.European colonial powers, and the increasing popu-
larity of soluble coffees for which the robusta coffees of Africa are
suitable.

Prior to Werld war II, Guatemala usually ranked sixth or seventh
among world coffee producers, after Brazil, Colombia, Indonesia, El
Salvador, venezuela, and sometimes Mexico. The war eliminated
Indonesia as a maJor coffee producer, however, and Guatemala subse-
quently occupied a fairly consistent fifth position among both world
and western Hemisphere producers during the l9h0's and early 1950's.
During this period, Venezuela gradually faded to lesser importance as a
producer, while Mexico slowly increased in rank, and Guatemala occasion-
ally out-produced either or both El Salvador and.Mexico to assume third
or fourth place. But in the 1950's, the Ivory Coast, Angola, and Uganda
began to preempt the fifth, sixth, and seventh positions, and in the
1960's Indonesia and Ethiopia also displaced Guatemala in some years.

Since Guatemala has consistently accounted for about 2.6 percent
of world coffee production, it is obvious that its decreasing rank among
world producers has not meant an actual decline as a world supplier of
coffee. Rather, the relative increase in African production has come
chiefly at the expense of Brazil, thereby affecting the rank of Guate-
mala, but not the percent of world production accounted for by that

country.

 

11Calculated from data in USDA, Foreign Agriculture Circular:
Coffee (various issues), and from data in FAQ, The World Coffee Economy,
55-6.

2M4

As an exporter of coffee, Guatemala follows much the same general
pattern relative to other exporting nations as in the case of production
(Table 38). Guatemala's share of Central American coffee exports is
almost identical with that of production. During 1960-1968 Guatemala
accounted for 30.5 percent of the coffee exports from Central America.
However, relative to the rest of the world and to Latin America, Guate—
mala tends to account for a slightly greater percent of the total volume
of exports than of the total produetion, perhaps reflecting a relatively
low level of domestic consumption and/or unreported production. During
the years 1960-1968, Guatemala accounted for an average of 3.1 percent
of world coffee exports and h.6 percent of Latin American coffee exports,
by volume. This production-export relationship is particularly in
contrast with that of Mexico, a country which ranked ahead of Guatemala
in production in each year 196h/65-l968/69, but which ranked after
Guatemala in export volume in three of the five years. Prior to the
early 1950's, Guatemala tended to rank higher as an exporter than as a
producer, while the reverse has been true since that time, again
reflecting the tendency fOr two or three nations (often Mexico,
Indonesia, and/or Ethiopia) to out-produce but not out—export Guatemala.
Indicative of the quality of coffee exported from Guatemala, however, is
the higher rank of that country in terms of the gglgg_of coffee eXports.

The average rank of Guatemala in value of coffee exports was fifth in

1960-1966, while the corresponding rank in volume was seventh.

2h5

TABLE 38

GUATEMALA AS A COFFEE EXPORTER BY RANK AND PERCENT
OF WORLD TOTAL, BY VOLUME, 1929-1968

 

 

 

 

Rank Amrqng Exporters Percent of Morts

Lat in Central Latin Central
Year World America America World America America
1929 6’ 5 2 3.1 3.h 35.1
1930 5 h 2 3.7 h.1 36.h
1931 6 5 2 2.2 2.h 27.6
1932 5 h 1 3.h h.0 h1.3
1933 7 6 2 2.2 2.5 26.1
193k 5 h 2 3.2 3.7 36.1
1935 6 5 2 2.5 2.9 30.1
1936 5 h 1 3.1 3.6 37.2
1937 5 h 2 3.1 3.7 29.5
1938 5 h 2 2.7 3.1 3h.2
1939 5 h 2 2.5 2.9 31.5
19h0 h h 2 3.0 3.h 31.1
19h1 h h 1 3.h h.o 36.1
19h2 3 3 1 5.1 6.0 38.7
19h3 h h 2 3.7 1.2 3h.5
19th A h 2 3.3 3.7 3h.6
19h5 h h 2 3.1 3.6 35.2
19h6 3 3 1 2.8 3.3 38.5
19h7 h h 2 3.3 3.8 37.0
19h8 6 h 2 2.5 2.9 32.3
19h9 5 h 2 2.7 3.1 3h.5
1950 5 h 2 3.1 3.8 32.7
1951 7 5 2 2.7 3.3 31.9
1952 5 h 2 3.1 3.8 3h.h
1953 6 5 2 2.7 3.3 31.h
195k 6 5 2 3.0 3.9 33.0
1955 7 5 2 2.9 3.7 30.7
1956 8 5 2 2.7 , 3.7 35.0
1957 9 5 2 2.9 3.9 29.9
1958 8 5 2 3.3 h.6 30.7
1959 7 3 1 3.3 h.h 3h.5
1960 9 5 2 3.1 h.h 31.9
1961 8 5 2 3.1 h.h 33.0
1962 8 5 2 3.0 h.3 29.6
1963 7 h 2 3.3 h.8 33.3
196k 8 5 2 2.7 h.2 27.6
1965 8 h 2 3.5 5.7 32.1
1966 6 3 1 3.6 5.7 35.5
1967 7 h 2 2.7 h.2 25.8
1968(Pre.) 8 5 2 2-7 3.9 25-

 

Source: Calculated from data in World Coffee Econoq 1961, 55-6;

UNCTAD COmodit Surve , 1966, 92—3; and Forei riculture Circular:
Coffee, (June, 1963; July, 1966; and July, 1969;, 9, 7, 11, respectively.

2A6

The importance of Guatemala as a supplier of coffee is perhaps

most accurately measured by the country's export position relative to

other nations exporting the same kind of coffee. The International

Coffee Organization classifies the coffee-producing nations of the

world into four categories: (1) Colombian Milds, (2) Other Milds,

(3) Non-Washed Arabicas, and (1:) Robustas.

Guatemala is in the category

"Other Milds," shown in Table 39.12 "Other Milds" countries accounted

fer 57 percent of the exports of all milds coffees, and 36 percent of

total world coffee exports of all kinds during the five years 1963-1967.

TABLE 39

COFFEE EXPORTS FROM "OTHER MILDS" COUNTRIES

 

 

 

 

 

1963-1967' 1*or Total 1955-1959 1 of Total

Country, Ayergge ll 1263-1967 Average_;1 1255-1252
El Salvador 1.757 17. 1,279 17.0
Guatemala 1,538 15.7 1,133 15.1
Mexico 1,37h 13.9 1,331 17.8
Costa Rica 916 9.3 566 7.6
Ecuador 675 6.8 h37 5.8
Peru 6H6 6.5 207 2.8
India A60 h.7 179 2.h
Dominican Republic hh6 h.5 hOO 5.8
Nicaragua R15 h.2 337 h.5
Haiti 365 3.7 h12 5.5
Honduras 36h 3.7 193 2.6
Venezuela 326 3.3 h87 6-5
Othersgf 585 5.9 523 7.0
Totals 49,867 590.0 7,h8h 2199.0

 

1] 1,000's of bags of 60 kilos (132 lbs.).

lar:

2] Includes Burundi, Cuba, Jamaica, Panama, and Rwanda.

Source: Calculated from data in USDA, Foreigp Aggiculture Circu-
Coffee (July, 1966 and July, 1969), 7 and 11, respectively.

 

12The first category consists of Colombia, Kenya, and Tanzania;

the second of the countries listed in Table 39; the third of Brazil,
Ethiopia, Paraguay, and Bolivia; and the fourth of the remaining
African producers, plus Indonesia and Trinidad and Tabago.

2h?

Guatemala is the second.most important exporter of "Other Milds,"
after El Salvador, accounting for approximately 16 percent of the
exports from.this group of countries. In exports of all milds coffees,
Guatemala is third, after Colombia and El Salvador, accounting for about
9 percent during 1963-1967. Thus, Guatemalan coffees exert a greater
influence upon international coffee prices and trade than is apparent
from a general consideration of that country among the various producing
nations without regard for the kind of coffee exported. Coffee eXport
quotas fer "Other Milds" countries, fOr example, are adjusted quarterly
on the basis of the movements of the average price of three coffees:
Guatemala Prime washed, El Salvador Central Standard, and Mexico Prime
Washed.

Guatemala's role in the coffee world is reflected in the partici-
pation by that country in international coffee organizations. Guatemala
has been an active member of the Pan American Coffee Bureau since 1937,
the fbunding date. The Bureau's members consist of thezmajor coffee-
producing nations of Latin America, and its principal objective is to
promote coffee consumption, particularly in the united States. Member
countries were active in the establishment of several regional and
international agreements regarded as precursors of the International
Coffee Agreement of 1962.

Along with the other Central American states and Mexico, Guatemala
became a charter member of the Federacién Cafetalera Centro America y

Mexico (REDECAME) in 19h5. The first general assembly of FEDECAME

21:8

convened in Guatemala City.in l9h6. The Federation admitted to member-
ship Cuba, the Dominican Republic and Haiti in April, 19h8, and Ecuador,
Peru and venezuela in October of the same year. The name was then
changed to Federacién Cafetalera de América, but the initials remained
the same. Excepting Colombia, the major milds producers of the western
Hemisphere were represented. The exclusion of Colombia was by design,
to give the smaller milds producers a stronger international voice in
coffee matters.13 The organization was dissolved in 1968, however,
principally because its functions were in large part duplicated.by
those of the International Coffee Organization.

As a member of the International Coffee Agreement, Guatemala has
a basic export quota of 1.8 million bags of 60 kilos (132 lbs.), the
seventh largest quota as of 1968. With thirty-two votes, the same
number as Mexico, Guatemala is also seventh in voting power among the
nations designated as net exporters. Six importing countries, however,
also have more than thirty-two votes, making Guatemala thirteenth in
overall voting strength within the Agreement. Two importing nations,
Canada and the United Kingdom, have the same number of votes as Guate-
mala. Thus, the thirteenth position is actually shared by Guatemala,
Mexico, Canada, and the Uhited Kingdom. Sixty-six nations comprise the
voting membership (1968), of which forty-two are net exporters and
twenty-four are net importers. Briefly summarized, the primary Objec-

tive of the International Coffee Agreement is to achieve long-term

 

13Agustin Ferreiro, "FEDECAME: origin y significado," Revista
EE£EE§;252, VOl. 1, No. 6 (February, 1962), 35-6 + 38.

2’49

equilibrium between world supply and demand for coffee, thereby main-
taining international prices at levels acceptable to both exporting and

importing nations, and avoiding exaggerated price rises and depressions.

CHAPTER XI
SUMMARY AND CONCLUSIONS

In retrospect, the findings of this study have supported some
basic assumptions and shown others to be incorrect. The research has
underlined the value of regional investigation and planning. Major
regional divisions previously contemplated were found to exist in fact,
but were in need of precise delimitation. The anticipated sources of
data and the means of obtaining information had been well—conceived.
Conversely, the uncomprehended diversity of the Guatemalan coffee
industry invalidated a number of preconceptions. Beneficios do not
serve readily definable supply areas, exporters do not purchase from
limited zones or exclusive districts, and coffee does not move primarily
to the nearest port of shipment. In brief, the overall complexity of
the industry comprises that aspect of the findings least anticipated on

the basis of preliminary investigation.

Summggy
Coffee is exceeded in value of production by a number of the
world's mador commercial crops, but ranks second only to petroleum
among all commodities in international trade. In Guatemala coffee has
dominated exports for almost a century, accounting at times for over 80

Percent of the total export value.

250

251

The cultivation and processing of coffee are among the most
complicated and varied procedures of any agricultural products. The
various phases of cultivation and preparation for export are particu—
larly important in Guatemala, an exporter of high quality "milds"
coffees. Most Guatemalan coffee is grown under shade, at elevations
between 1,500 and 5,000 feet. The beans are hand-picked, beginning in,
August at lower elevations and terminating in April at higher altitudes.
Processing consists of the removal of the outer skin, pulp, mucilage,
parchment and silverskin, in addition to drying and grading. The beans
are usually stored in pergamino form and processed to green coffee
shortly befOre export. While most of the Guatemalan crop is exported,
numerous roasters and grinders exist to serve the domestic market.

Coffee was first cultivated in Guatemala about the middle of the
eighteenth century, probably by Jesuit missionaries in the vicinity of
Antigua. Its early use was not commercial, but ornamental. Initial
coffee culture on a commercial scale occurred near Guatemala City
around 1800, spreading to its present areal distribution from the early
Antigua-Amatitlan-Guatemala City core area. Dependence upon a single
export commodity prevailed long befbre the emergence of coffee as the
mainstay of the national economy. Early coffee farming actually filled
a void left by the failure of its predecessors, such as indigo and
cochineal, and was therefore encouraged by the government and other
interestedorganizations.

The incipient coffee industry, from 1850 onward, was characterized

by a markedly inadequate transportation infrastructure, involvement by

252

extra—nationals, government sponsorship, and a growth rate gradual at
first but increasingly rapid after about 1870. The tempo of growth
was evident in both the areal dispersion of coffee acreage and in the
expanding volume of exports, the latter commencing on a regular basis
during the 1850's.~

The period from.l880 to l9hh is described as the era of German
influence. Foreign settlers were attracted in large numbers after 1830,
and, although not the most numerous, German immigrants came to control
over half of the importing and exporting firms in Guatemala by 1900.
Gradually, capital generated by these businesses and by a vigorous
German economy was invested in the local coffee industry. By 191A,
nearly 50 percent of Guatemala's coffee was produced by foreign
nationals, with some 170 German proprietors accounting fer more than
one-third of the total number. Coffee trade, thus, became subject in
large part to German and other foreign hegemony. In the wake of
several decades of encouraged.immigration, the Guatemalan government and
peOple grew increasingly disillusioned with fOreign and particularly
German "exploitation." During World War II, following years of resent-
ment, Guatemala expropriated the German holdings, prompted apparently
by a reaction against an influx of pro-nazi propaganda and sentiment as
well as proding from.the Uhited States.

The rapidly expanding coffee industry of the period 1880-19hh,
festered considerable internal development. Roads and railroads were
built in response to the need for coffee transport, nearly all of the

rail system being constructed between 188% and WOrld war I. Numerous

253

disadvantages also developed. By 1880, coffee dominated the national
economy, rendering the country highly susceptible to the vagaries of the
international market. Realization of this vulnerability led to inter—
mittant attempts by the government to stimulate the production of
alternative export crops.

A much slower rate of growth characterized the Guatemalan coffee
industry during the post-war years, owing in part to nationalization
of German holdings, disruption of trading patterns by the war, and
a more cautious outlook for the future of coffee farming. With
possession of the former German holdings, the Guatemalan government
became the nation's largest coffee producer. Declining output, poli-
tical machinations, and policy vacillation beset the National Fincas
from their inception. The United States took a greater proportion of
Guatemala's coffee exports after the war, with sales to Germany rela—
tively unimportant until the late 1950's. World coffee events, partic-
ularly the fluctuating supply-demand disequilibrium and attempts to
rectify the situation through an international coffee pact, exerted a
great influence on the Guatemalan industry and thus on national develOp-
ment as well.

The spread of coffee culture in Guatemala profoundly affected the
geographic distribution and way of life of the Indian peoples, Some
were impelled to live and work on coffee fincas, while others were
obliged to migrate seasonally to labor in the coffee harvests. Coercion

was both direct by means of labor and vagrancy laws and indirect through

25h

population pressure on a diminishing resource base. Inasmuch as coffee
has been the predominent commercial crop in Guatemala during the past
century, the history of rural labor and_agrarian reform is closely tied
to it. Labor constitutes one of the maJor traditional inputs and
prOblems of the Guatemalan coffee industry. Productivity is markedly
low, with labor accounting for 50 percent or more of a typical finca's
operating costs despite minimal wages.

Agrarian reform has in recent years been concerned.almost exclu-
sively with rural cooperatives, the National Fincas, and colonization in
non-coffee areas. 0f some two hundred agricultural cOOperatives in
Guatemala, about thirty-three are primarily coffee cooperatives admin-
istered by ANACAFE. Several National Fincas have been converted to
cooperatives, but erratic policies fer these farms have caused some to
revert to state farms after abortive attempts at coOperatives. A
number of National Fincas have been turned over to banks and individuals
in payment of debts incurred by the government and the status of such
holdings remains uncertain and vacillating. Hence, only the twenty-four
fincas administered by INTA are here considered as Fincas Nacionales,
of which twenty-one produce coffee.

The Asociacién Nacional del Café, established in 1960, is the most
important institution directly concerned with the Guatemalan coffee
industry. Supported by membership fees and taxes, this non—profit
corporate entity provides services of research, technical assistance,
promotion, testing, arbitration, registration, and data.maintenance.

ANACAFE also distributes quotas, regulates exports, and represents the

255

country in international matters pertaining to coffee. The central
offices of ANACAFE are in the capital, while regional offices are
nmdntained in the major producing zones. In recent years ANACAFE, in
collaboration with the united Nations Fbod and.Agriculture Organization,
has been involved with the FAO-ANACAFE Diversification Project. The
goal of the project is to encourage the production of substitute crops,
particularly in areas considered "marginal" for coffee. To date, pilot
programs have been established for oil palm, tea, fruit, dairying,
and.beef cattle.

The location of coffee production in Guatemala is dependent upon
a number of environmental and economic factors. Mbst coffee is produced
in areas with average annual temperatures between 60° and 70° F., alti—
tudes from 1,500 to 5,000 feet, and average annual precipitation from
70 to 150 inches. A light, deep, fertile soil with a porous subsoil
is optimal for the coffee tree, and this type of soil has developed from
volcanic material on the Pacific piedmont.

The patterns of spatial distribution of coffee production in
Guatemala appear to be relatively static. Land and labor, the two most
important inputs, do not appear to affect spatial distribution to a
significant degree. Mbst coffee fincas were established.many years ago,
and the planting of new areas to coffee is legally prohibited. Diversi-
fication, or a change from coffee to an alternative crop, in almost
every case requires more investment of capital, more careful management,

and.more intensive use of the land. Thus, although returns to the land

256

may be increased through diversification, total net income may actually
decline. This is especially true if the proprietor must discontinue
off-farm.employment or hire a competent manager for the finca. Simi-
larly, neither labor nor transportation appear to significantly affect
patterns of spatial distribution.

Three major regions, several subregions, and a number of outlying
areas can be identified on the basis of temperature, precipitation,
soil, production, acreage, yields, farm size, altitude, and percentage
of total area planted to coffee. The western Region, accounts for 58
percent of the total acreage devoted to coffee and 63 percent of total
production. Second in importance, the Central-Eastern Region includes
26 percent of the total area under coffee and 26 percent of total
production. The Cdbén Region has 10 percent of the coffee acreage and
6 percent of production.

In general, the West is characterized by more rainfall, higher
temperatures, deeper volcanic soils, lower altitudes for coffee, greater
production, higher yields, larger farms and a higher percentage of
total area planted to coffee. The Central-East, in contrast, has less
precipitation, a more well-defined dry season, higher average altitudes
and cooler temperatures, smaller farms, and a higher quality coffee.
Third, and quite different from the other major regions, the Cohan zone
is well—known for its light but steady year-round precipitation, rela-
tively poor soils, lower labor costs, production of coffee with a

distinct flavor which is preferred in Germany, and low yields.

257

Coffee moves from producer to port of shipment in a variety of
ways. Some large fincas process their own coffee and transport it
directly to the port of shipment. These fincas, possessing private
beneficios may buy and/or process coffee from.amaller producers in
their locale. More typically, a grower sells to a large exporter who
receives the coffee at his beneficio, processes it, and transports it
by truck or rail to the port of shipment. Ten large exporting firms
ship nearly 80 percent of the total coffee exports. Most of the
country's coffee, although produced in southwestern and south-central
Guatemala, is exported through Puerto Barrios and Matias de Gélvez on
the Atlantic coast. The major flows of coffee are (l) from.the western
and Central-Eastern Regions via Guatemala City to Matias de Galvez and
Puerto Barrios; (2) from the West and Central-Eastern Regions to
Guatemala City and then Champerico or San José, or to these Pacific
ports from a large finca or an urban-based processing mill along the
south coastal highway; (3) from.the Cobén area to El Rancho and thence
to Puerto Barrios or Matias de Gélvez; and (h) from the Cobén zone
to Livingston via the Rio Polochic and Lake Izabal, and thence to
Puerto Barrios or Matias de Galvez. At least some coffee, however,
moves from every major producing area to every port.

Guatemala exported an average of l,5h3,716 bags of 60 kilos
(132’ lbs.) during the period 1963/6h—1967/68, of which some 85 percent
moved through Puerto Barrios and Matias de Gélvez. Nearly all of the
remainder was shipped via San José or Champerico. The pivotal factor in

determining the port from which a given lot of coffee is to be shipped is

258

the fereign destination. Since the principal markets for Guatemalan
coffee are eastern united States and.west Europe, most coffee is shipped
through the Atlantic ports of Puerto Barrios and Matias de Galvez.

The role of coffee in the Guatemalan economy defies precise
measurement although several acceptable indicators are available. As
a result of export diversification and lower prices, the value of total
Guatemalan exports accounted for by coffee declined from.77 percent in
the 1950's to an average of 51 percent during the period 1960-1968. In
some recent years coffee has comprised less than ho percent of the
total export value. Moreover, as a percent of total exports, coffee
appears to be declining at a faster rate than in other Latin American
nations. The contribution of coffee to the Guatemalan Gross National
Product has remained relatively constant, reflecting an absolute
increase in the value of coffee exports. Coffee comprised 7.8 percent
of the GNP during 1950-1959, and 8.1 percent during 1960-1966. The
percent of agricultural output accounted for by coffee is also stable
at about 26 percent. Despite the importance of coffee in the national
economy, the acreage devoted to its cultivation occupies only about 2
percent of the total national area and 9 percent of the agricultural
land. Coffee, although still the major base for export taxes contributes
a declining share of government revenue. On the average, it accounted
for about 7 percent of government receipts during 1963-1967.

Guatemala produced, on the average, 2.7 percent of world produc-

tion and 3.1 percent of world exports during the 1960's. In the same

259

period, it accounted for nearly h percent of the production and h.6
percent of the exports of coffee from Latin America. As a producer,
Guatemala in 1968/69 ranked tenth in the world, fifth in Latin America,
and second in Central America. Its respective rank for coffee exports
in 1968 was eighth, fifth, and second. Among suppliers of "milds"
coffees Guatemala ranks third, after Colombia and El Salvador, exporting

about 9 percent of the world total in 1963-1967.

Conclusions

Lacking a sizable domestic market, Guatemalan commercial agricul-
ture has featured the predominance of a single export crop. Coffee was
an early choice because of its marketability and transportability.
Hypothetically, the non-existence of coffee would merely have resulted
in the adoption of the next most advantageous crop. Given the limited
local market and industrial development, it is highly probable, perhaps
inevitable, that the Guatemalan economy would come to depend upon a
small number of export crops. The fact that a single agricultural
commodity came to so completely dominate the economy reflects the
remarkable advantages of producing and marketing coffee relative to
other commercial crops.

Coffee has contributed much to the develOpment of Guatemala. Many,
if not most, of the rail lines were constructed primarily to haul coffee.
Farmers built and maintained roads while developing lands not previously
exploited commercially. As the backbone of the economy, coffee has

even contributed.much to the nation's urban development. Coffee farming

260

has likewise been in large part responsible for the locational and
cultural displacement of the indigenous population. The effect of
coffee farming upon the native pe0ple of Guatemala is commonly under-
estimated. Coffee farmers have, in general, inhibited agrarian reform
and rural unionization. Thus, the preponderance of the coffee industry,
now and during the past century, has rendered it responsible for much
of Guatemala's economic and social progress as well as the ills which
retard such development.

The spatial distribution of coffee production in Guatemala is
determined by physical factors to a far greater extent than purely
economic considerations. Historically, roads and railroads were
constructed to serve the coffee areas, as opposed to coffee being grown
along pre-established routes of transportation. As Guatemala develops
economically, however, certain competitive land uses will appear near
the larger cities and along major transportation arteries, in some cases
displacing coffee cultivation. Total coffee acreage is likely to
decrease as a result of agricultural diversification, with production
intensified on the remaining coffee land. Thus, it can be expected
that economic factors will have an increasing effect upon the spatial
distribution of coffee production and that the strength of this influ-
ence will probably increase with economic development.

Diversification of coffee land will not occur uniformly throughout
the zones of coffee production. Since the size of holdings, type of

coffee produced, management, intensity of land use, labor costs,

261

transportation facilities, and environmental conditions vary spatially,
it can be assumed that diversification will likewise demonstrate areal
differences. Government policies and plans are almost certain to have
different effects in the various regions, indicating the need for
regional as well as national planning.

Climate appears to be the single most important determinant in the
regional variation in coffee production. Intra-regionally, however,
altitude is more significant. Elevation influences the variety, yields,
farm size, processing and other aspects of the industry, as well as
virtually dictating quality.

There is a tendency for coffee to be sold in cherry form in zones
of good roads, less rugged terrain, small farms, and seasonal water
difficiencies. Overall quality and.product unifbrmity is enhanced by
the processing of coffee in fewer large beneficios, rather than in
numerous smaller on-farm facilities. Improvements in transportation
are likely to reinfOrce this trend. It seems likely that crop diversi-
fication may also spur the sale of cherry coffee, since a greater range
of crops is likely to demand an increased number of man hours and over-
head. This, in turn, might encourage specialization in agricultural
production, leaving processing to others.

A trend also exists for producers to sell in pergamino form,
rather than processing the coffee to oro befOre either selling it or
exporting directly. This inclination has been fostered by the export
quota system.and by the predilection of exporters to purchase coffee in

pergamino form. Given this condition and the ever increasing

262

complications of international market connections and financing, the
trend will in all probability continue. It is probable that the coffee
export business will likewise become increasingly concentrated in a
small number of large firms, which may also accelerate the tendency
for coffee to be sold in cherry.

It appears likely that the government will become increasingly
involved in the coffee business. The National Fincas may eventually be
eliminated as such, but government policy in general is likely to be
geared toward the alleviation of economic and social problems which
confront the industry. Attempts to make the coffee industry a strong
force for national development seem probable. In fact, increased
government "intervention" or attention appears almost certain.

The internal movement or geographic flow of coffee is unlikely to
change in the near future. The construction of a deep-water port at
Champerico will not greatly affect the movement of coffee unless the
markets fer Guatemalan coffee change radically. Innovations in coffee
storage aboard ship, plus faster and.more direct ocean transport, are
likely to have a greater effect upon patterns of internal movement than
are non-governmental factors within the country. The predominant future
mode of internal transport is not yet evident and may eventually be
either rail or truck, depending to a significant degree upon government
policy.

Although assured of a major role fer many years, the relative

importance of coffee in the Guatemalan economy is decreasing, Mereover,

263

the crop appears to be diminishing more rapidly as a proportion of the
total value of exports in Guatemala than elsewhere in Latin America.
No tendency for coffee to increase in importance is displayed by the
indicators fer which data are available, including (1) percent of
total exports, (2) proportion of GNP, (3) percent of agricultural
output, (A) proportion of total and agricultural land, and (5) source
of government revenue. Employment is an apparent exception. More
people earn a living from coffee today than in 1950. However, the
proportion of the total population engaged in activities related
directly to coffee has declined.

By virtue of the International Coffee Agreement export quota
system, Guatemala's position among world coffee suppliers is not likely
to change very much.' Nevertheless, should that nation fail to remain
competitive, a gradual erosion of its markets may occur. Less certain,
is the future relative position of Guatemala as a supplier of the
expanding traditional markets and "new markets." In summary, the
position of Guatemala among world coffee producers and exporters is
unlikely to be altered significantly, except perhaps gradually and in

the long run.

APPENDICES

APPENDIX A

GUATEMALAN COFFEE PRODUCTION, 1929/30-1968/69

 

 

 

B388.91_60_Kilos_1132_lhsl)

W

1930/31 ggg’ggg-i/
1931/32 916,667
1932/33 7,8’333
1933/3h ’
968,333
193h/35 8h0 000
1935/37 963 333
1937/38 9&1’667
1938/39 896,667
1939/ho 873,333
l9hO/hl 831,667
l9hl/h2 830,000
l9h2/h3 863:333
l9h3/hh 985,000
19hh/h5 998,333
19h5/h6 891,667
19h6/h7 928,333
l9h7/h8 8h5,000
19h8/h9 9h5,000
l9h9/50 926,667
1950/51 903,333
1951/52 1,050,000
1952/53 971,667
1953/5h 1,1h0,000 1/ 1.0h6.667
lQSh/SS 1,080,000 —’ 1,088,333
1955/56 1,117,000 1,108,333
1956/57 1,250,000 1,226,667
1957/58 1,350,000 1,350,000
1958/59 1,39h,000 1.333.333
1959/60 1,7h6,000 1,600,000
1960/61 1,6h5,000 1,500,000 2] 1.525.000
1961/62 1,676,000 1,675,000
1952/63 1,962,000 1,900,000 l.h89.930 3/
1963/6h 1,7h0,000 1,790,000 1,360,501
196h/65 1,753,000 1,630,000 1.h37.59h
1965/66 2,101,000 2,050,000 1,795,112
1966/67 1,670,000 l.h16.287
1967/68 1,850,000
.1968/69 1.7ho.000

 

Source: 1/ World Coffee and Tea, Vol. 7, No. 2 (April, 1967), h3;
.2/ USDA, Fore; iculture Circular: Coffee, various issues, 1960—
1970. .3/ FAQ, The WOrld Coffee Economy, 19 1, h6—7; g] ANACAFE,
unpublished data for registered fincas only. Note: These figures are
approximate, having been converted to a common unit from a variety of
other units, which in themselves, are estimates.

26h

EXPORTS OF COFFEE FROM GUATEMALA, 1858/55-1967/68

APPENDIX B

 

 

Crop Bags of Cr0p Bags of Crop Bags of
° Y ' Year 602Kilos__.

1 5 55 72 1892/93 858,778 1930/31 601,619
1855/56 n.a. 1893/98 837.578 1931/32 758.959
1856/57 n.a. 1898/95 530.228 1932/33 586,962
1857/58 n.a. 1895/96 898.895 1933/38 806,583
1858/59 358 1896/97 578,883 1938/35 678,581
1859/60 1.177 1897/98 557,916 1935/36 881,109
1860/61 8,225 1898/99 566,601 1936/37 781,871
1861/62 9,128 1899/00 897.100 1937/38 721,317
1862/63 15,320 1900/01 518,828 1938/39 790,099
1863/68 12,315 1901/02 593,816 1939/80 787,612
1868/65 16,956 1902/O3 883,832 1980/81 706,008
1865/66 28,593 1903/08 896,580 1981/82 720,582
1866/67 26,569 1908/05 621,628 1982/83 938,675
1867/68 57.539 1905/06 528,713 1983/88 831,088
1868/69 58,692 1906/07 691,527 1988/85 855.018
1869/70 86,808 1907/08 836,783 1985/86 822,123
1870/71 100,595 1908/09 675,912 1986/87 878,907
1871/72 107.716 1909/10 509.887 1987/88 788,371
1872/73 115,387 1910/11 593,837 1988/89 917,893
1873/78 123,880 1911/12 558,309 1989/50 900,275
1878/75 125,810 1912/13 671,923 1950/51 872,778
1875/76 159,006 1913/18 637.378 1951/52 996.568
1876/77 160,972 1918/15 598,689 1952/53 989.050
1877/78 160.507 1915/16 670.599 1953/58 950.980
1878/79 193,211 1916/17 692,999 1958/55 890,389
1879/80 222,150 1917/18 599,931 1955/56 899.h33
1880/81 199,618 1918/19 687,885 1956/57 1.03l.h28
1881/82 239.807 1919/20 720,312 1957/58 1,250,088
1882/83 309,793 ‘ 1920/21 770,698 1958/59 1,288,612
1883/88 288,667 1921/22 717,112 1959/6o 1.885.536
1888/85 398,909 1922/23 733,508 1960/61 1.275.983
1885/86 806,181 1923/28 680.802 1951/62 1.5h2.989
1886/87 366,765 1928/25 782,618 1962/63 1.761.933
1887/88 280,905 1925/26 718.958 1963/6h 1,523,861
1888/89 823,897 1926/27 873,951 1968/65 1.313.807
1389/90 339,925 1927/28 735,807 1965/66 2.058.358
1890/91 802,112 1928/29 731.920 1966/67 1,266,732
1891/92 376,928 1929/30 985.163 1967/6841215032h

 

 

 

Sources: 1858/55-1929/30, Revista icola de Guatemala, Vol. XVI,
Nos. 9-10 (October-November, 19395, 222—23; 1930731-1959760, Revista
Cafetalera, v01. 1, Nos. 1-3 (January-March, 1961). 53; 1960/61-1961/62,

Bol ti E tadistico (ANACAFE), Nos. 21-23 (February—April, 1963), 25;
e n 8 lema nacional del café (ANACAFE) (April, 1967), 6h; and

1962/63, El rob .
1953/65-1937533, unpublished data from ANACAFE. These figures are

approximate, having been converted to a common unit from a variety of
other units.

 

 

265

APPENDIX C

GREEN COFFEE TRANSPORTED TO PUERTO BARRIOS BY IRCA

 

 

Bags of 70 Kilos%(158 183:7

 

 

 

Loading 1951/52-1959/60 1961/62-1966/67
Station Average Average
Santa Inés 11 98
Iguana 23,463 29271
Gualén 3,788 5,328
Zacapa 89 80
El Rancho 9,528 6.809
Guatemala 61,026 88,787
Pamplona 78,270 118,979
Mbrén 17,879 6,317
Zapote 8,798 228
Amatitlén 53,368 75,098
Palin 816 ---
San Fernando 535 ---
Concepcién 8,882 68,819
Escuintla 13,878 6,288
Obispo 801 565
Santa Lucia Cotzumalguapa 5,872 27,926
Pantaleén 135 ---
Patulul 18,275 25,196
Guatalén 5,572 880
Rio Bravo 209 6,863
Nahualate 2,880 15,822
Palo Gordo 202 919
San Antonio Suchitepéquez 10,555 8,190
Mazatenango 70,522 22,811
Chital6n 1.290 865
San Feli e 2, 35 “'
San Sebagtién 8,306 2,861
Retalhuleu 63,023 50,068
San Miguelito --- 886
Las Animas 3,157 2,185
La Esperanza 272 “*-
Alianza 1933: -..-.56
Gén va -

Coagepeque 138,890 130,151
Pajapita 77,353 67,209
TeCGn Uman 12.350 51022
TEtel 670,283 696,681

 

Source: International Railways of Central America, Guatemala
Division.

266

APPENDIX D

GREEN COFFEE TRANSPORTED TO CHAMPERICO BY IRCA

Bags of O K1108 15 lbs.

 

 

 

 

 

 

Loading 1951/52-1959/60 1961/62—1966/67—
Station Aver e ‘ Average
E1 Rancho “a? 17
Guatemala 10 608
Pamplona 135 717
Morén 155 ---
Zapote 31 ___
Amatitlfin 371 313
Concepci6n --- 227
Escuintla --- 91
Santa Lucia Cotzumalguapa 31 275
Patulul 3 , 801 553
Guatalén 918 ---
Rio Bravo --- 168
Nahualate 386 1.758
Palo Gordo 71 83
San Antonio Suchitepéquez 897 2,017
Mazatenango 6,601 6,083
Chitalén 63 255
San Felipe 518 ---
San Sebastién 680 ---
Retalhuleu 11,173 6,627
San Miguelito --- 189
Las Animas 2,281 2,318
Alianza 555 ---
Génova 23 ---
Coatepeque 36,882 32,598
Paj apita 18 ,805 17 ,111
Tecfin Uman 2,920 1,082
Total 82,825 721962
' Source: International Railways of Central America, Guatemala
Division.

267

APPENDIX E

GREEN COFFEE TRANSPORTED TO SAN JOSE BY IRCA

 

 

Bags of 70 Kilos (158 100.)

 

 

 

L08d%n8 , 1951/52-1959/60 1961/62—1966/67
Station Average Average
Gualfin 338 58
El Rancho 778 217
Guatemala 16,067 8,856
Pamplona 31,583 20,207
Morén 18,872 1,817
Zapote 1,229 257
Amatitlén 22,203 11,931
Palin 88 2
San Fernando 25 ---
Concepci6n 1,161 3,791
Escuintla 3,885 165
Obispo --- 303
Santa Lucia Cotzumalguapa 226 1,979
Pantale6n 88 83
Patulul 5.180 2.396
Guatal6n 180 "'
Rio Bravo --- 13
Nahualate 188 ~--
San Antonio Suchitepéquez 917 83
Mazatenango 761 978
ChitalSn ---- 31*
San Felipe 6 "’
San Sebastién 169 ---
Retalhuleu 886 359
Alianza 125 "’
Génova 31 "'
Coatepeque 6:593 1,787
Pajapita 2,092 2,088
Tecfin Umén 188 188
'fi;§;§“"‘*‘ 109,255 53.108

 

Source: International Railways of Central America, Guatemala

Division.

268

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. Memoria de las labores realizadas durante e1 afio de 1966-1967.
Guatemala: Asociaci6n Nacional del Café, 1967.

 

. Memoria de las labores realizadas durante el afio de 196711968.
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. Memoria de las labores realizadas por la Directiva de la
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1959-

Unpublished Material

Acevedo L6pez, Carlos. "La industria del café y su influencia en el
desarrollofeconémico de Guatemala." unpublished thesis for the
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San Carlos, Guatemala, 1958.

Asociaci6n Nacional del Café. "Esfuerzos de diversificacién agricola,
programa de la Asociaci6n Nacional del Café." Part of a state-
ment by the Guatemalan government to the 100 to Justify a
request for an increase in the basic export quota assigned to
Guatemala. Guatemala: Asociaci6n Nacional del Café, 1965.

(Mimeographed. )

Berg, Klaus W. "Guatemala's Coffee Economy, Its Coffee Surplus Problem
and Diversification Possibilities." Final report of the Agri-
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1968.

Brannon, Russell H. "Coffee: A Background Study with Primary Emphasis
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Mission of the International Coffee Organization to Guatemala.
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Naflez Falc6n, Guillermo. "German Contributions to the Economic Develop-
ment of the Alta Vera Paz of Guatemala." Unpublished Master's
thesis, Department of History, Tulane University, 1961.

281

Schmid, Lester. "The Role of Migratory Labor in the Economic DevelOpment
of Guatemala." Land Tenure Center Research Paper No. 22,
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Atlases and Maps

Guatemala. Ministerio de Agricultura. Observatorio Nacional. Atlas
climatolégico de Guatemala. Guatemala: Direcci6n General de
Cartografia, 1965:

Instituto Geogréfico Nacional. Atlas_preliminar de Guatemala. 3rd. ed.
Guatemala: Instituto Geografico Nacional, 1966.

. Mapas bésicos de la Repfiblica de Guatemala, 1:2S0,000, Series
E—SO3. Guatemala: Instituto GeogrEfico Nacional.

. Mapas topograficos de la Repfiblica de Guatemala, l:S0,000.
Guatemala: Instituto Geografico Nacional.

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