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Coffee Policy - Mexican State - 1970´s
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Latin American Economy & Business 10 October 1980
MEXICO: Warning accompanies call for coffee reforms
Mexican grain production suffered a severe setback this year (CR8012). So, too, did sugar. Now it appears that coffeeoutput has fallen well below target.
On the agricultural front, 1980 has been a very poor year for Mexico. The country has had to negotiate massive grainand oilseed imports to cover the shortfall in domestic production, caused largely by bad weather. It has also contractedto buy substantial quantities of sugar (CR8019), because of a decline in output.
Now comes a warning that, within a decade, the country faces the prospect of becoming an importer of coffee, which last yeargenerated a record US$546m in export earnings (CR8006).The warning was issued recently by Roberto Maldonado,president of the Union Nacional de Cafeticultores. It was made in the context of a wideranging attack on the structure of theMexican coffee sector, during which he called for much greater government control.
Coinciding with Maldonado's attack, the USDA released its latest estimate of Mexican production of coffee during the 1979/80season, which ended on 30 September. This shows that output totalled only 3.6m bags (60 kg), against more than 4.3m in1978/79 and the earlier expectations of the Instituto Mexicano del Cafe (Inmecafe) of 4.2m bags in 1979/80. The outlook forthe current 1980/81 season is not much better. At the moment, the USDA is forecasting only a small rise of 100,000 bags inoutput. The country's production goal (LACR III, 1) of 5.4m bags for 1981/82 still seems unattainable.
At the moment, hoewever, there are few signs that Mexico is running a serious risk of turning from an exporter to an importer ofcoffee. Admittedly, exports dropped during the 1979/80 season (the USDA estimates them at 2.35m bags, against 3.0m in1978/79) and there seems little scope for much of a recovery this season. However, there are no signs that production is set fora longterm decline. In fact, the authorities are committed to continuing with their plans to raise the sector's general efficiencyand productivity (CR8011). Furthermore, domestic consumption of coffee has remained remarkably stable in recent years atjust under 1.5m bags, according to ICO figures. In fact, per capita consumption in Mexico, estimated locally at 1.3 kg, is wellbelow that in Latin America's other major producing nations for instance, 3.6 kg in Brazil, 2.9 in Colombia and 2.6 in El
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Salvador.
By raising the prospect of coffee imports, Maldonado was clearly attempting to support his general criticism of the coffee sectorand his call for urgent reforms. He believes that private companies have too much control over production and marketing. Heclaimed that just 10 families, whose names are Sardian, Pineiro, Dosal, Mugueira, Bueno, Alvarez Sardian, Neuman, Torres,Ludman and Regales, handle 75 per cent of the country's exports. He said that, in contrast to this powerful oligarchy, based inthe principal coffeegrowing state of Chiapas, there were 250,000 coffee workers and 98,000 small producers who could onlyjust scrape a precarious living.
Maldonado was also critical of the important role played by transnationals in internal coffee marketing. He said that of the 1.2mbags (60 kg) earmarked annually for the domestic market (a smaller total than that from other sources), 250,000 were boughtby Nestle, General Foods and International Coffee, who allegedly made enormous profits on the deal. He claimed that theybought the coffee from growers at 6,000 pesos a bag (70 kg) and then resold it in processed form at a price equivalent to21,000 pesos a bag.
The three firms have denied Maldonado's charges, which they see as part of the current drive for nationalisation of the foodindustry. Certainly, Maldonado called for much greater state control of the coffee sector. He urged that Inmecafe be given amonopoly of both export and domestic marketing. This, he said, would effectively place it in total control of the producingsector, too.
Maldonado has joined a growing list of people calling for the strengthening of Inmecafe, the state marketing agency. Inmecafe,which was set up in 1958, largely handles the coffee from the country's small growers. It also implements the goverment'snational coffee policy and, by arranging credit and giving technical advice, is spearheading the plans to raise production.However, its ability to carry out this role and also expand its marketing activities has been hampered by lack of funds (CR8011).
Maldonado may be no more successful than others in persuading the government to back Inmecafe more forcefully. However,the Union Nacional de Cafeticultores is part of the Confederacion Nacional Campesina (CNC) one of the most powerfulMexican agrarian bodies. The CNC, which is part of the ruling Partido Revolucionario Instucional, is in a better position thanmost to put pressure on the government.
Apart from structural changes, Maldonado also called for the rehabilitation of the country's coffee plantations. He said that 70per cent of the country's 450m trees had already exhausted their productive life or were threatened by disease. The replacethese trees, an investment of US$1bn was required, he said.
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