Coffee From Brazil, Colombia And Latin America

De Anapaula Iacovino Davila

This thesis has some goals to achieve. Some are theoretical, such as those pertaining to the merits and criticisms of the dependency theories, to assess the breadth of these theories in the context of globalization and verify if they can be applied to the coffee segment. It also aims to assess whether the role of core countries, according to the dependency theories, has been transferred to transnational corporations, studying the specific case of the international coffee market, and to contribute to the development of scientific knowledge in the field of international relations.

• Idioma: Português
• Editora: Clube de Autores
• Data de lançamento: 11 de set. de 2019

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INTRODUCTION

For years, the price of green coffee paid to farmers has been falling, and the fundamental reason for this decline is the classic relationship between supply, demand and exchange. Respected authors, such as Delfim Netto (in MALTA [Org.], 1973, p. 125), have already endorsed this position:

The international price of coffee is formed more by the product’s supply and demand than by the exchange rate [...]. When demand exceeds supply, the product’s international prices increase, regardless of a possible devaluation of the exchange rate; contrariwise, when supply exceeds demand, prices tend to fall, even with the exchange rate’s fixing. [...] Historical analysis [...] has shown that the price of coffee is mainly determined by the product’s supply and demand [...].

In spite of this consensus, this study analyzes the hypothesis that another factor also contributes to pushing prices down: the concentration of more than 60% of the acquisition of green coffee by few and powerful multinational companies. There are about 800 thousand coffee producers, among Brazilians and Colombians, selling to five multinational companies. Apparently, the international market for green coffee is oligopolistic in procurement, pulverized in supply and oligopolized in the final product’s market.

The choice of Brazil and Colombia is grounded on two main reasons: they are the largest producers and exporters of green coffee in Latin America and the world, and their condition of industrialization and economic growth is derived from the intensification of exports since the 1950s.

This thesis is anchored by a tripod. Two feet stand on theories developed in close periods (the 1950s and the 1960s), with different geographic bases: one Latin American and the other internationalist – especially European and North American. These bases have in common the openness of trade and, of course, the consequent intensification of international trade. The third foot stands over empirical research.

The first part of the study will therefore address the dependency theories, originated in February 1948, in the Economic Commission for Latin America and the Caribbean (ECLAC), an important laboratory of Latin American researchers concerned with assessing Latin America’s relationship with industrialized countries in a period of globalization intensified by multinational industries after World War II.

The second part deals with the analyses of important international relations theorists – realists, neorealists, institutionalists and liberals, some from the English School of International Relations (created in January 1959 under the context of the British Committee on the Theory of International Politics). These investigators focused on the Cold War and therefore were dedicated to understanding international relations from the relations (of peace and war) between states. Their analyses have become powerful tools for understanding contemporary international relations, and collaborate in the interpretation of another globalizing wave that occurred in the 1990s under the influence of the Washington Consensus.

Sustained in Latin American, European, and American theorists – there was naturally a selection of those deemed as most relevant –, the thesis examines whether its hypothesis can be explained by the dependency theories – of unequal trade relations – or by the theories that assess the relations between different actors in the international scenario, in this case, transnational companies and producers. It is understood that differences in actor sizes and strengths may give rise to opportunities or constraints in this relationship, a feature inherent to the foreign policy of trade liberalization.

The third part presents an economic analysis of the international green coffee market and includes empirical research conducted in Brazil and Colombia. Thus, the thesis aims to demonstrate and compare the action strategies of the two largest organizations representing producers – Cooperativa Regional de Cafeicultores em Guaxupé Ltda. (Cooxupé), in Brazil, and Federación Nacional de Cafeteros de Colombia (FNC), in Colombia – in their products’ consumer market.

Although the theme of dependency is somewhat marginalized by globalization and the triumph of the neoliberal ideology, this discussion is relevant from the perspective of exclusion and backwardness on the part of Latin American coffee growers; and is innovative because it confronts the dependency theories with the contemporary dynamics of international relations, in the empirical context of the relationship between green coffee farmers and this grain’s consumer industry.

In addition, works that address the profile of economic and social phenomena within a productive chain are incipient, differently from those that deal with the relations between States and the classical Marxist works that study the relations between classes.

The globalizing movement of the 1990s, coupled with the celerity of technological advances, has broken down barriers and made the direct contact between the grain roasting industry and green coffee producers possible. The role of the States has become more relative.

It is an agricultural sector that serves 40% of the world demand for the grain and that involves about 800 thousand producers in Brazil and Colombia. Only a scientific study is capable of performing a cognitive dissociation between industry and agriculture, evaluating the kind of relationship established between them.

This thesis has some goals to achieve. Some are theoretical, such as those pertaining to the merits and criticisms of the dependency theories, to assess the breadth of these theories in the context of globalization and verify if they can be applied to the coffee segment. It also aims to assess whether the role of core countries, according to the dependency theories, has been transferred to transnational corporations, studying the specific case of the international coffee market, and to contribute to the development of scientific knowledge in the field of international relations.

It also has practical objectives, such as stimulating the debate on the international trade of grain producers with transnational companies and contributing to the line of research on Political Practices and International Relations of USP’s Postgraduate Program in Integration of Latin America (PROLAM), offering a multidisciplinary thesis that respects aspects related to Economy, Sociology, History, Political Science, Law and International Relations.

This thesis was conducted based on a work methodology. The research had two phases. The first, compiling the existing bibliography on the dependency theories, the contemporary international dynamics and the coffee economy of Latin America, in the libraries of FEA-USP (School of Economics, Administration and Accounting of the University of São Paulo), FFLCH-USP (School of Philosophy, Literature and Human Sciences) and FEA-PUC, as well as in newspapers, periodicals, directories and reports, cooperatives, employers and workers unions related to coffee, and in the internet.

After the bibliography had been compiled, the exploratory method was used, through which characteristics of the theories and market analyzed were described, establishing bridges and verifying the nature of the relations identified.

The second phase was empirical research, in which data and information were collected from Cooxupé, FNC and the producers themselves.

The study is divided in four parts, which, in turn, are subdivided into chapters. Part I deals with the Dependency Theories; Part II, with the Contemporary International Dynamics; Part III, Economic aspects of coffee production, presents the world green coffee market, focusing on Brazil and Colombia, and Part IV is the report of the studies carried out in Brazil and Colombia. The more theoretical Parts I and II allow generalizations. Part III examines a specific market and Part IV presents the results of empirical research.

The format of the presentation will feature the inclusion of boxes with extra information pertinent to the subject, but not necessarily about it. It may be a story from some mass-circulation newspaper or magazine, or a poem, a song, a work of art, with the goal of making the reading of the thesis, always so dull, something more pleasant. The idea of inserting the boxes was inspired by the work Paradigmas do Capitalismo Agrário em Questão, of Professor Ricardo Abramovay. The intention is for this thesis to be read by others besides my advisor, Professor Amaury P. Gremaud, and the professors making up the examination and defense panels.

Part I – Dependency Theories

"[...] as Marx and Lenin observed, Freedom is to achieve the necessary within the possible¹."

1.1 INTRODUCTION

It can be argued that the dependency theories (DT), originated from the debates in the Economic Commission for Latin America and the Caribbean (ECLAC), found that underdevelopment is closely connected with the expansion of industrialized countries. Thus, both development and underdevelopment are different aspects of the same process, in which underdevelopment is not understood as a condition for, in an evolution process, becoming developed. They also recognize that dependency can manifest itself in social, economic, ideological and political factors interconnected within a country’s internal structure.

In addition to the debates inherent to the various phases and groups of the DTs, there is another relating to whether they are theories or a school of dependency. This study will not address this debate and, therefore, will assume the generalist denomination dependency theories: for purposes of this analysis, what is important is to highlight the ways in which ECLAC studies the development of capitalism in the peripheries when relating the internal and external structures.

For Ricardo Bielschowsky – organizer of a series of articles that cover the construction of ECLAC thought and which resulted in the book Fifty Years of ECLAC Thought  – since its origin, ECLAC... was the only intellectual center in all the region capable of generating its own analytical approach, which it has maintained for half a century (2000, p.15).

Throughout these five decades, Bielschowsky (2000, p.17) noticed:

[...] four common analytical features [...]. The first concerns method. It is the historical-structuralist approach, based on the idea of the core-periphery relationship; two others refer to thematic areas: the Analysis of international insertion and the Analysis of internal structural conditions (of growth and technical progress and of the relations between them, the employment and distribution of income); finally, there is the Analysis of the needs and possibilities of State action²."

For BIELSCHOWSKY (2000, p.16) [...] The contribution of ECLAC [...] belongs to [...] a broad set of economic policies that the authors maintain based on certain unifying (normative) principles such as the principles of liberalism, socialism, etc.³ According to the author, the [...] normative principle is the idea of the necessity of the State’s contribution to the order of economic development in the Latin American periphery’s conditions.

When selecting the texts, Bielschowsky (2000, p.15) systematized a synthesis-table of the analytic production developed in the period. The table, presented below⁴, includes the analysis plans common to all stages of the institution’s intellectual trajectory, as well as a periodization of the history of the ideas generated in it:

SUMMARY OF THE ANALYTICAL ELEMENTS THAT MAKE UP ECLAC THOUGHT

In the work Teoria de la dependência. Una revaluación crítica (1987), author Palma (in SEERS, 1987, p. 48) sorts the various authors who study the DTs into three groups. The first group denies the possibility of development of capitalism in the periphery, arguing that only the development of underdevelopment is possible. The second group analyzes the obstacles faced by the development of capitalism in the periphery. As for the scholars of the third group, they defend the possibility of development of capitalism in the periphery, but with a capital that is dependent on the core countries.

It is possible to draw a parallel between the classifications elaborated by Palma and Bielschowsky. The first group, of Palma, would correspond to Bielschowsky’s first phase of industrialization, in which the idea of development was directly tied to that of industrialization. The substitution of imports was sought for at the same time economies opened up to multinational companies.

The second group could correspond to a mix of (Bielschowsky’s) phases that integrate the hectic 60s to the no less troubled 70s, scene of the oil crises: Palma’s obstacles or Bielschowsky’s insistence of crises in the balance of payments and social imbalances, in addition to external debts and inflation, and the frustration of industrialization as a possible solution to these problems. They are all elements of a coin’s same face.

Palma’s third phase, of the core-dependent capital, is similar to the approach of the works of Fernando Henrique Cardoso and Enzo Faletto (1969/70). Bielschowsky’s element of industrialization combining internal market and export effort (p.12) is present in the idea of acceptance of foreign capital, both as industrial technology and as currency.

In addition to these classifications, there are others, just as there are other intellectuals, authors and positions comprehended by the dependency theories. However, two theoretical branches will be addressed to theorize about dependency, chosen for the importance of the work developed and for the authors’ influence. The first is based mainly on the works of André Gunder Frank, Theotônio dos Santos and Ruy Mauro Marini – that would correspond to Palma’s first group or Bielschowsky’s first phase of industrialization. The second approach is anchored by Fernando Henrique Cardoso and Enzo Faletto – corresponding to Palma’s third phase and Bielschowsky’s phase of strengthening of manufactured goods exports.

1.2 THE PARADIGM OF FREEDOM IN A CONTEXT OF DEPENDENCY

Subordination, subjection, disposition for obedience, submission to the will of others, need for protection, support, etc. These are some synonyms or explanations of the meaning of the word dependency found in a quick search in the Houaiss dictionary⁵.

To better explain the concept of dependency in the context of international relations, Theotônio dos Santos clarifies:

[...] dependencia es una situación condicionante en la cual las economias de um grupo de países están condicionadas por el desarrollo y la expansión de otras. Una relación de interdependencia entre dos o más economias o entre esas economias y el sistema económico internacional, se convierte em una relación dependiente cuando algunos países pueden expandirse por su propia iniciativa mientras que otros, que están en uma posición de dependencia, pueden expandirse solo como reflejo de los países dominantes, lo cual puede tener efectos positivos o negativos en su desarrollo inmediato⁶ (SANTOS, apud SEERS, 1987, p. 55).

It was for their position that periphery countries could not become developed countries, except as a reflection of the core countries, that Santos and other authors were classified⁷ as belonging to the first branch. For them, the crisis of Latin American capitalism was not only a crisis of national steering; it was, above all, the crisis of a capitalism that had since the mid-1950s tied its industrial dynamism to multinational companies and the widespread penetration of foreign capital. As explained by Santos (2000, p. 55), the dependency theory intended to understand the formation and evolution of capitalism as world economy. Prebisch already spoke in the 1950s of the existence of a world core and periphery, a thesis that will be perfected in the 1970s under the influence of the debate on dependency.

These theorists argued that foreign capital did not represent external savings that were integrated with the Latin American economies, but rather sought profits and surpluses that were destined to their accumulation centers, located outside the region. The result in the medium and long term was the capital flight of countries in the region, obtained from the super-exploitation of labor, creating a powerful obstacle to the consolidation and deepening of the democratic process.

Super-exploitation and the vulnerability of the deterioration of the terms of trade present in the export of raw materials, with long-term losses, were the central arguments of dependency theorists. This is what Palma reminds us (inSeers, 1987, p.12-13) when corroborating Prebisch and stating that this was a reason that justified the substitution of imports and the increase in import tariffs.

To understand the essence of the concept of dependency, it is necessary to resort to Ruy Mauro Marini and his idea of the super-exploitation of work, which, according to him, inhibits the formation of a domestic consumer market while creating a dependency of the external market for the consumption of this Latin American production. For this author, (1977, p. 49), the essence of dependency is based on a contradiction:

Desarrollando su economía mercantil, en función del mercado mundial, América Latina es llevada a reproducir en su seno las relaciones de producción que se encontraban en el origen de la formación de ese mercado, y que determinaban su carácter y su expansión. Pero ese proceso estaba marcado por una profunda contradicción: llamada a coadyuvar a la acumulación de capital con base en la capacidad productiva del trabajo, en los países centrales, América Latina debió hacerlo mediante una acumulación fundada en la superexplotación del trabajador. En esta contradicción radica la esencia de la dependencia latinoamericana. [...]

Nacida para atender a las exigencias de la circulación capitalista, cuyo eje de articulación está constituido por los países industriales, y centrada pues sobre el mercado mundial, la producción latinoamericana no depende para su realización de la capacidad interna de