Coca and Agriculture in Cochabamba, Bolivia: Historical and Contemporary Perspectives

Robert H. Jackson

The Cochabamba City markets did report a handful of coca prices (Table 5), but the city appears to have been only a minor market when compared to the provincial markets discussed above. Even in the city, coca prices were higher than more specialized agricultural products. In June of 1915, for example, coca cost three times more than coffee grown in La Paz. A decade later coca still cost twice as much as La Paz coffee, and was still more expensive than rice imported from India and sugar.¹⁵ Coca prices in other Bolivian cities were also higher than prices for other products. Table 6 records February 1912 prices in La Paz. The highest quality coca cost between seven and twelve times selected commodities, including flour, sugar, and rice (see Table 6).

Coca prices were consistently higher than prices for other crops, particularly the traditional crops grown in the Cochabamba valley districts. Production costs, particularly labor, and supply account for the higher prices, but the high coca prices did not create a rush to the yungas. Most Cochabamba peasants worked as colonos (service tenants) on the haciendas in the region, or were buying small parcels of land as the land market expanded as a result of the break-up of corporate indigenous community lands and the subdivision of haciendas.¹⁶ Thousands of peasants also migrated from the region, and sought work in the emerging tin mining industry, the nitrate mines of northern Chile, and sugar plantations of northern Argentina.¹⁷ The decay of Cochabamba estates and the partition of corporate indigenous community lands created opportunities for peasants to acquire lands in the agricultural zones known to them, and employment in the cocales in an alien environment held little attraction. Contemporary accounts also described how peasants in the central valley districts aggressively sought opportunities to earn money to buy land in the valleys, and migration to the yungas simply did not figure into the equation if there was a possibility of acquiring valley lands.¹⁸

The relatively high price for coca and the foreign demand did stimulate production. Production figures for the Totora yungas, for example, do show increases. According to a report published in 1910, the Totora yungas produced 17,000 cestos (193 metric tons).¹⁹ A 1917 report recorded a total production of 20,000 cestos (227 metric tons).²⁰ Table 7 records information on the value and volume of coca exports in the first two decades of the present century. Between 1900 and 1902, the value of coca exports dropped, but then rose after 1909 as the volume also increased. However, the average price of a ton of coca dropped between 1909 and 1912 from Bs 2,324 to Bs 1,908 (see Table 7). The drop in export price may have been related to an increased supply, coupled with a general decline of prices in the coca producing regions following poor harvests and higher prices during the previous decade.

The Second Coca Boom of the 1980s

The Harrison Act and changing public opinion in the United States undermined the demand for cocaine and coca, and the first coca boom petered out. The revival of drug use in the United States created new demands for illicit drugs such as cocaine, and cocaine use increased in the 1980s with the development of the process to convert cocaine powder into crack cocaine. At the beginning of the crack epidemic, powder cocaine was an expensive drug that could cost as much as $5,200 an ounce. Crack, on the other hand, could satisfy an addict for $20, and was sold in large quantities in inner city neighborhoods such as South Central Los Angeles beginning about 1981.²¹

Events in Bolivia in 1980 and 1981 accelerated the growth of illicit coca production. A military coup that began in Trinidad on July 17, 1980 brought Gen. Luis García Meza to power, after a bloody repression of opposition that was particularly vicious in the tin mines. García Meza and his associate Luis Arce Gómez, installed in the Interior Ministry, instituted a virtual reign of terror to silence opposition. Arce Gómez employed paramilitary groups trained with Argentinean assistance, and had personal links to the Italian fascist terrorist Pier Luigi Pagliai and to Klaus Barbie, the World War II era "butcher of Lyon." García Meza and Arce Gómez brought Barbie and the Italian fascist in as security advisors and trainers for the paramilitary squads.²²

Another coup removed García Meza from power on August 4, 1981, as a result of negotiations among the Bolivian army officer corps. In 1982, a civilian president assumed power, despite another coup attempt by officers who had backed García Meza.²³ The year-long García Meza administration had enabled Colombian cocaine producers to extend contacts into Bolivia to obtain more coca. The crack epidemic created even greater demand for coca, and the second boom started.

The administration of Hernán Siles Suazo (1982-1985) faced severe economic problems, including a deepening agricultural crisis and inflation related, in part, to the influx of coca dollars. Over the next several years Siles Suazo introduced a series of austerity programs inspired by the International Monetary Fund (IMF), yet the crisis deepened.²⁴ In the 1985 presidential and congressional elections Víctor Paz Estenssoro won enough seats in Congress to guarantee his selection as president in August of 1985.

On August 29, 1985, Paz Estenssoro issued presidential decree 21060, that set the stage for a new series of economic reforms and austerity, including the down-sizing of the government interest in the tin industry managed by COMIBOL.²⁵ Tin production had declined during the 1980s, and the tin miners organized under the Confederación de Obreros Bolivianos (COB) had challenged government policy during the Siles Suazo administration. In particular the COB questioned the imposition on austerity measures on peasants and the working class to service a debt contracted primarily by the military presidents Hugo Banzer and García Meza, to benefit the military and the private sector.²⁶ COB also criticized efforts by Siles Suazo to negotiate with the IMF. Paz Estenssoro used decree 21060 to emasculate COB as a political force.

Bolivian farmers faced extreme problems in the early and mid-1980s. In 1983, a shift in Pacific Ocean currents off of the coast of South America created a El Niño effect, that caused drought in some parts of the country and flooding in others. Hundreds of peasants flocked to cities such as La Paz to beg in the streets.²⁷ The drought and floods reduced food production in the country. Bolivia already depended heavily on imported grain to feed the population. Table 8 records Bolivian wheat production and wheat imports between 1973 and 1982. Wheat imports grew during the late 1970s and early 1980s (see Table 8).

The growing reliance on imported wheat dated back to the late 1920s, when the government authorized the importation of equipment to build modern wheat mills. The government attempted to convince Bolivian farmers that the new mills would benefit them, since the mills would create a greater demand for wheat. However, in reality Bolivian wheat farmers did not grow the right type of wheat for the new mills, and did not have the capital to introduce new types of wheat. The new mills also put smaller and older mills out of business. Moreover, the government did not initiate programs to change the wheat grown locally until the 1940s. Between 1930 and 1949, Bolivia imported 641,499 metric tons of wheat and 405,488 metric tons of wheat flour. During the same period the new modern mills only purchased 88,688 metric tons of Bolivian grown wheat.²⁸

The reliance on imported wheat and wheat flour created the "emergency" conditions that Cochabamba wheat farmers reported in 1987. Wheat farmers could not make a profit at the prices offered by the mills, and the price would remain low as long as the government authorized the importation of large quantities of wheat purchased, or donated by the United States government. Moreover, Paz Estenssoro's economic policies implemented after 1985 and that favored free trade reforms, did not give farmers hope that conditions would improve. Free trade reforms also meant that farmers would have to compete with other imported products such as coffee and sugar, and imports would depress prices for these products while at the same time coca produced for illicit purposes continued to enjoy a considerable price advantage. As long as the United States anti-drug policy continued to emphasize reducing supply without taking steps to eliminate demand, illicit coca would produce the best prices for Cochabamba farmers.

Price inflation was a further manifestation of the economic crisis in Bolivia during the mid-1980s, and the value of the boliviano collapsed in relation to the United States dollar (see Table 9). Through 1985, the official exchange rate lagged behind the parallel black market rate, and the dollar became the medium of exchange for many transactions. Coca producers and workers received payments in dollars, whereas farmers producing traditional crops generally received payment in Bolivianos. Inflation also reduced the real wages of most non-agricultural workers. Hyperinflation and monetary instability created even greater incentives for thousands of Bolivians to migrate to the coca producing regions.

Conclusions

During both coca booms, coca prices were higher relative to prices for other crops. The major difference, then, was related to the state of the agricultural economy, and the expectations of Cochabamba peasants. During the first coca boom in the early years of the present century, Cochabamba peasants sold their surplus crops as far away as the developing tin mines in Oruro and other parts of the altiplano (high altitude plains), and production of traditional crops was still profitable despite the differential between coca and other crops. The completion in 1917 of the Oruro-Cochabamba railroad made it even easier for peasants to market their crops in the mining centers, or to leave Cochabamba to look for work to earn money to buy land.²⁹

Conditions in the 1980s were very different, and the economic policies of the Siles Suazo and particularly the Paz Estenssoro governments only contributed to the exodus to the coca regions. Under pressure from the IMF, the Bolivian government imposed austerity measures and free trade reforms that removed trade barriers. Cochabamba farmers, such as the wheat farmers who declared a state of emergency in 1987, faced stiff competition and low prices relative to what could be earned in the illicit coca economy. Moreover, the down-sizing of the tin mines resulted in thousands of miners being laid-off at a time when the crisis in the economy and traditional agriculture left few options for unemployed mine workers. The poor and many peasants, caught between hyperinflation and government austerity measures that included the imposition in 1987 of a ten percent value added tax on all transactions, including the sales of food, found employment in the coca economy very attractive. After 1985, the Paz Estenssoro government used repression to squash the protests that resulted from the new economic policies, which meant that the economic policies would not be modified to ameliorate conditions for the poor and peasants.

Contradictory United States government policies also contributed to the attractiveness of jobs in the coca economy. In the 1980s the Ronald Reagan administration placed greater emphasis on restriction of the supply of cocaine, which meant that considerable pressure was placed on Bolivia to eradicate illicit coca production. At the same time the Reagan administration placed considerably less attention on the problem of consumption in the United States, so that demand did not drop and probably increased. The persistence of demand made continued coca production attractive in the face of continued economic crisis in Bolivia. On the other hand, Bolivia's debt largely inherited from the military regimes of the 1970s and early 1980s became a matter of concern to the United States government, that pressured the Paz Estenssoro administration to institute free trade reforms. Free trade and the sap program have only accentuated the factors contributing to the large scale migration to the coca producing regions.

According to a recent estimate, somewhere between 100,000 and 460,000 Bolivians work in all aspects of the coca-cocaine trade, including some 200,000 to 250,000 cultivators.³⁰ Efforts to reduce illicit coca production have not been matched by similar efforts to find viable alternatives for the thousands employed in coca. At a certain level the only possible conclusion to be made is that, short of massive military or police repression, eliminating illicit coca production is doomed to failure.

Notes