Cooperative and Contract Farming for Export Crops in the Guatemala Highlands

Abstract

This research describes two types of smallholders’ organizations (cooperative and pyramidal contract farming) which produce for an export oriented processor. The research took place in the Departments of Chimaltenango and Sololà, Guatemala. The survey was designed in 2011, with visits to the area, focus groups and semi-structured interviews with farmers and key witnesses. The first version of the questionnaire was tested in June 2012. After modifications, the interviews were by master students of a local university, with a sample size of 170 families; codification and data entry took place in August 2012; statistical analysis was realized with SAS version 9.1. The farmers belonging to the two modalities do not show meaningful differences, with regard to age, household size, land availability, price determination, and access to credit. For other variables, the two groups are less similar: farmers in the pyramidal contract modality have more years at school, less diversified farming system, more formal and individual contracts, are paid faster, declare to have suffered hunger less frequently and reveal a higher willingness to change for new crops. The latent class regression analysis has determined two clusters: the Small Diversified Collective, which fits 99.95% of the cooperative members and only 0.05% with contract farmers, and the Medium Homogeneous Individual, 83.96% with contract farmers and 16.04% with cooperative members. Both the cooperative modality and the pyramidal contract farming approach contribute to solve some of the problems of these very tiny smallholders in Guatemala. On the other hand, due to their extremely small land size, poverty and risk of hunger and malnutrition cannot be totally eliminated. In many cases, the lack of trust towards the buyers and the belief to be price takersindicate that these smallholders still feel to be exploited and that their efforts are not properly recognized.