Farm workers in various regions of Peru- such as Ica, Viru La Libertad and Piurahad – went on a strike in the first week of December, 2020, blocking the strategic Pan-American motorway to demand wage increases, basic social security benefits and the repeal of the decades-old Agrarian Promotion Law, enacted in 2000, as a mechanism to bolster the bourgeoisie’s power in the agro-export sector. The law benefits agro-export corporations in two ways. Firstly, it cuts the corporate tax rate by 30 to 15%, making the government lose out on more than $1 million in tax revenue. Agrokasa, Beta and Miranda are some of the companies benefitting from such hefty income tax cuts.
Secondly, the law authorizes the hiring of personnel for the agricultural industry through intermediary companies. These third-party contractors avoid statutory labor regulations and pay workers extremely low wages. Farm workers complain they are paid about $10 for a 12-14 hour workday. They also don’t receive benefits given to other workers, including annual bonuses and vacations.
Despite its partisan attitude towards the capitalists, the reactionary law was extended until 2031 by the government of Martín Vizcarra. Mobilizations and strikes ensued this decision, with the state deploying police violence to quell mass anger. On December 3, 2020, Peru’s National Police officers shot dead young farmer Jorge Muñoz during a peaceful protest called by farmworkers in Viru city, La Libertad Department. “The police disrupted the march with tear gas and gunshots. My son was hit in the head with a pellet,” the young man’s father said. The next day, President Francisco Sagasti sent a bill to congress to repeal the law in the face of the five days of protests, and it passed by a vote of 114 in favor, two against and seven abstentions.
The Withdrawal of the State
Peru’s current agrarian crisis is historically situated in the authoritarian neoliberal model implemented by former President Alberto Fujimori. Popularly known as “Fujishock”, these economic reforms advanced a structural agenda of ever-deepening precarity for the people. Beginning in 1991, the Fujimori administration opened all sectors of the Peruvian economy to foreign direct investment (FDI) and lifted restrictions on profit remittances. The government offered tax-stability packages for foreign investors for terms of ten to fifteen years and implemented wide-ranging privatization programs that eliminated competition from state-owned and domestic firms. If that was not enough, the government ratified bilateral and multilateral investment-guarantee treaties, such as the Multilateral Investment Guarantee Agency (MIGA) convention and the Overseas Private Investment Corporation (OPIC) accords.
In the agrarian sector, Fujimori’s neoliberal restructuring entailed the closing of the agrarian bank, the cancellation of all forms of subsidies to farmers, the shutting down of the agrarian reform office and the bureau responsible for peasant communities. The Rice Trading Company (ECASA) and the National Supply Marketing Company (ENCI) – two integral institutions of the agricultural state apparatus – were also abolished. While the former established legal monopoly over the trading of rice – a key staple in the Peruvian diet – thus, ensuring rice producers an above-market return on their crop, the latter controlled imports of food and fertilizer.
The liquidation of ENCI and ECASA heavily impacted specific sectors. ENCI, for instance, had been the only institution that was allowed to import milk and its disappearance removed a source of support to the local dairy industry; as imports surged in the early 1990s (principally from New Zealand, but also Australia, the United States and Poland) the livelihood of smaller-scale producers were ruined in areas like Cajamarca and Arequipa. The abolition of ECASA liberalized the market in rice, removing an institution which had maintained prices artificially high for the benefit of producers.
The unleashing of deregulatory market forces led to the championing of individual over collective land rights since fragmentation consolidates profit-maximizing behavior. State farms were privatized and support withdrawn from production cooperatives and other group farming activities that were favored under the earlier state-led developmental model. The 1995 Land Law abolished the upper limits on personal landholding and allowed the state to sell land currently in public ownership. Privatization included the parceling and possible renting or selling of land previously held collectively by indigenous and peasant communities.
Agro-export Industrialization
Towards the end of 1990s, the structure of agricultural production began changing, with a notable increase in the share of tradable goods (such as rice, hard maize, wheat, soya, sugar, milk etc.) and a decline in the proportion of non-tradables (such as potato, quinua and other Andean grains). Policy under Fujimori tended to benefit larger-scale producers oriented primarily towards agro-industry and foreign markets. This was done mainly through the reduction of protective tariffs and the maintenance of an overvalued exchange rate. Both of these measures created a difficult environment for producers of tradable goods who found themselves increasingly subjected to competition from cheap food imports.
The disintegration of locally produced staples was additionally advanced through the dispossession of land and the restriction of proper water supply and credit to small-scale producers. To take an example, in 1989, Supreme Decree 037-89-AG, issued by President Garcia, signaled the transfer of water management in Peru from the state to private water user boards known as Junta de Usuarios (Users Board). In 1990, Fujimori continued this process, issuing Supreme Decree 003-90-AG, which allowed Juntas to collect agricultural water for the management of irrigation systems. The most important Juntas de Usuarios are controlled by agri-businesses and agro-export companies which regulate water services for their own class interests.
As a result of an amalgam of agrarian strategies implemented by the Peruvian state, domestic production of food crops has wholly collapsed. Imports of agricultural goods averaged $488 million in the period between 1986 and 1990, rising to $687 million in 1991–1995, and reaching $1035 million in 1996– 1999. In volume terms food imports rose from 1.6 million tons (1986–1990) to 2.1 million tons (1991–1995) and 2.8 million tons (1996–1999). Peru’s average annual agricultural trade balance, which until 1980 had been consistently in surplus, registered deficits of $216 million in 1986–1990, $383 million in 1991–1995 and $346 million in 1996–1999.
The Escalation of Class Struggle
With the pandemic-induced deterioration of economic conditions in Peru, the internal ruptures of the agricultural sector are being nakedly exposed. In the years between 2008 and 2018, there were considerably more individuals employed in agriculture than in the mining, communication, and finance sectors together. In spite of being the most labor-absorbing sector, agriculture is also the one where super-exploitation, accumulation through dispossession and permanent primitive accumulation have by and large prevailed. These inhumane features of the agricultural sector have been constantly criticized by the National Agrarian Confederation (CNA) – an organization which has highlighted the government’s prioritizing of agribusiness and called for recovering ancestral practices and land security. A groundswell of opposition against the ruling elite’s brutal policies will keep increasing as the masses confront the effects of a pandemic exacerbated by a pre-existing capitalist framework.
The post Cracks Appear in Peru’s Neoliberal Agriculture first appeared on Dissident Voice.
This post was originally published on Radio Free.