Sustainability, economies of scale, and social instability: Achilles heel of non-traditional export agriculture?

In this paper I propose a series of hypotheses for further study that are related to potential negative impacts of non-traditional export agriculture (NTEA) on peasantfarmers in Central America. International lenders and donor agencies are promoting this diversification of agricultural exports as part of structural adjustment programs in the region, in order to increase foreign exchange earnings and raise the incomes of the rural poor. There is growing evidence, however, that the impact on the rural poor may not be favorable. I argue that because NTEA can introduce powerful economies of scale, it is likely to accelerate social differentiation in the countryside and expel large numbers of peasant farmers from their lands. In this sense NTEA may be similar to previous export ‘booms,’ leading to rapid intensification of social instability and conflict in an already troubled region. This raises the serious question of the long term sustainability of this development strategy. There is a shortage of published studies that directly address these issues, making further work essential for the adequate review of NTEA policies. I formulate six testable hypotheses based on the economies of scale associated with NTEA. Each is related to a resource essential for successful agricultural production: land; credit; prices, costs, and subsidies; technology; technical assistance; and markets. I suggest that as NTEA grows, small farmer access to each is reduced, eventually making peasant production for domestic consumption an unviable alternative, while those who venture into NTEA encounter unacceptable levels of risk Copyright Kluwer Academic Publishers 1991