Land and labor in Guatemala

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Land and labor in Guatemala
Hough, Richard
Kelley, John
Miller, Steve
DeRossier, Russell
Mann, Fred L.
Seligson, Mitchell A.
Development Associates
Publication Date:

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University of Florida
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Full Text




This report was prepared by:


Richard Hough (Team Leader)

John Kelley

Steve Miller

Development Associates

Russell DeRossier

SFred L. Mann

Mitchell A Seligson





A. An Approach to the Problem

B. Land Tenancy in Guatemala

C. The Landless Population

D. Land Potentially Available for Distribution

E. The Man-Land Equation

F. Trends in Permanent Migration







The Etiology of the Agrarian Dilemma

Agrarian Reform, 1944-54

Agrarian Titling, 1955-1981

Analysis of Current Agrarian Reform Legislation in Guatemala

Colonization in the Franja Transversal: An Assessment of an AID-supported



A. Macro-Assessment

B. Parameters

C. Agrarian Change Options

D. The Development of an Active Commercial Land Market.

E. A Stratagy for Land Colonization

-F. The La Perla Experiment

G. Suggested Actions by the Government of Guatemala


Annex 1: Tables

Annex 2: Computer Program for Determining Land Potentially Available for '


Annex 3: Methodology for Computation of Land Distribution Statistics,


Annex 4: Crop and Soil Features of Agriculture in Guatemala with Eiphasis

on the Northern Lowlands.

.Annex 5: Settlement on New Lands and Settlement on Currently Producing

Lands: A Cost and Returns Comparison.

Annex 6: Note on the Feasiblity of Establishing an Active Commercial Land

Market in Guatemala





A few prefatory words are in order to introduce this study, Land and Labor

in Guatemala: An Assessment.

The study was accomplished by a six-man team over a two month period from

August 1 to September 30, 1952. The team was composed of three career AID

officers, Richard Hough, John Kelley and Steve Miller, and three contract

professionals from Development Asociates, Russell DeRossier, Fred L. Mann and

Mitchell A. Seligson.

The study was requested by USAID/Guatemala in March of 1982; its scope of

work was approved by the Government of Guatemala and the USAID before the

arrival of the team in Guatemala on August 1. The study was written entirely

in Guatemala, and was completed and submitted to the USAID on September 24,

1982. The Spanish version was presented to the Government of Guatemala in

October of 1982.

The.purposes of the study were essentially two. First, the team was asked

to do an in-depth, comprehensive assessment of "agrarian transformation"

programs and conditions in Guatemala, from both a contemporary and historical

perspective, and, second, to include in its findings a prospective set of

suggestions for further actions by the Guatemalan government. The Minister of

Agriculture, Ingeniero-Agronomo Leopoldo Sandoval Villeda, also requested

that the team include in its analyses specific data in particular areas such

as the amounts and quality of land Available for distributionwithin the

present Guatemalan legal framework, and the size of the universe of landless
population in Guatemala; and to include as well the team's suggestions for

changes in current Guatemalan agrarian reform laws. Needless to 'say, as
available data and time allowed, the team sought to meet both the broad and

specific substantive demands placed upon it.
The members of the team brought to bear on the assessment a broad array of

professional skills and experience in agrarian change and related fields. Mr.
DeRossier is a field crop specialist of forty years experience in Central

America. Professor Mann from the University of Missouri is an agricultural
economist with a broad sector analysis background in agriculture who had also

done extensive previous professional work in Guatemala. Professor Seligson

from the University of Arizona is a political scientist and area specialist in
Central America who has been deeply involved in research and writing on

agrarian reform for a number of years particularly in Costa Rica. John Kelley
is a social anthropologist and computer data processing specialist with

extended AID field research and program experience in agrarian change and

related fields in Honduras and Guatemala. Steve Miller is an AID rural
development officer who had previously served as a Peace Corps Volunteer in
Guatemala, 1976 1978. Richard Hough is an AID officer with a broad

background in agrarian reform programs in numerous other Latin American and

Asian countries.



The members of the team did not limit themselves to research and writing

in Guatemala City. Several field trips were taken by team members to various

regions of Guatemala, such as the Franja Transversal del Norte, El Peten, the

Baja Sur and the Boca Costa. The team also sought to the greatest extent

possible to use primary source data in its analyses, principally the

Guatemalan population and agricultural censuses collected since 1950, reports

and archival material provided by the Instituto Nacional de Transformacion

Agraria (INTA), and field interviews with knowledgeable Guatemalans.

The assessment could not have been accomplished without the considerable

assistance of numerous other people who freely gave of their time and support

in a multitude of different ways.

On the Guatemalan side, the Minister of Agriculture on two separate

occasions courteously and patiently submitted himself to prolonged question

and answer sessions with the members of the team. His interest in and support

of the study were very much appreciated by the team. There were also

officials in INTA and the Guatemalan Census Bureau (Direccion General de

Estadistica), to numerous to mention individually, who provided access to the

documents we needed, as well as answered all our questions, who deserve

special thanks.

On the American side, we would be very remiss if we did not make special

mention of the services and contributions rendered to the team by David

Thompson, AID employee in the Rural Development Office of the USAID. Mr.

Thompson was assigned to act as the control officer to the team for the

duration of its work in Guatemala. In effect, he functioned as an additional


member of team, allowing us to tap freely his extensive eleven year experience

in rural development and land resettlement in Guatemala, as well as providing

countless services for team members, inter alia, arranging field trips, access

to government officials and transportation.
0 We would also like to make particular note of the important contributions

made to the study by David Fledderjohn of Agricultural Cooperative Development

International (ACDI), regional cooperative advisor to USAID Missions in Latin

America and the Caribbean. Mr. Fledderjohn most kindly gave the team two

weeks of his professional time, providing us with invaluable background,

specific program ideas, as well as the benefit of his keen perceptions of
-Guatemalan realities.

We would also like to acknowledge the support the team received from

various members of the US Mission: Ambassador Chapin for the promptness and

substance of his comments on the initial draft; Peter Kolar, the Acting USAID

Director, for the access and help he provided the team leader; Larry Laird and

Cecil McFarland, the two-Chiefs of the Rural Development office. while the team

was in Guatemala, who provided unfailing support; Mrs. Miriam Belcher and Mrs.

Angle Castro, our two secretaries, who provided the team skilled and yeoman

service, to say the least; and Mrs. Regina Lainfiesta, our expert translator

who turned out an excellent Spanish version of the study in such a short time.

Last, but certainly not least, we would like to note the excellent support

the team received from AID/Washington and Development Associates from

inception to completion of the study. On the Development Associates side, the

alacrity and persistence displayed by Jack Sullivan, Vice President of

International Activities, and his associate Ms. Nancy Jaffee, in recruiting

the contract members of the team were especially noteworthy. In

AID/Washington, we would like to acknowledge particularly our appreciation of

the constant and detailed support provided by Rich Owens in the Rural

Development Office of LAC, as well as the initial inputs to and continuing

support of the team's efforts by Marvin Schwartz, the Desk Officer for
Guatemala and Scaff Brown and Wayne Nilestuen, the Chief and Deputy Chief

respectively of the Rural Development Office.
We thank all of you.



A. Approach to the Problem

This report examines, from a macro-perspective, the man-land equation in

Guatemala in both an historical and contemporary framework and attempts to

highlight the character of this equation and the disequilibria which emerge
from the data and analysis. The report makes extensive use of data gathered

from several sources, the most important of which are the population and

agricultural censuses collected since 1950, reports and archival material from

the Instituto Nacional de Transformacion Agraria (INTA, Guatemala's rural

settlement and colonization institution), and numerous documents and studies

dealing with land quality and land tenancy in Guatemala. The volume of

material available is considerable and, given the paucity of serious studies

on the subject in English, surprised the assessment team both in terms of its

quantity and quality. Within the limits of the team's time and resources, it

became our task to organize, synthesize, and interpret the data.

The report is organized in four parts. The first examines the

relationship between land tenancy patterns and landlessness. Part Two

explains how the characteristic patterns and disequilibria uncovered in Part

One occurred and documents governmental efforts to deal with the major

problems, which manifested themselves through various efforts in agrarian

reform and land colonization.

2 -

Part Three examines some options which the government of Guatemala might

consider as components of a future program effort in agrarian'change and

development; and Part Four contains various annexes developed for and used in

the analytical work of the study, including a complete set of tables,

explanations of the methodology used, and three substantive and technical

papers on the land and soils of Guatemala and alternative agrarian reform


B. Land Tenancy in Guatemala: The Contemporary Picture

Guatemala, not unlike many other countries in Latin America, is

characterized by striking inequalities in the distribution of land. The

situation here, however, is more serious than in all other countries in

Central America and most other Latin American countries. The most common

index of inequality is the Gini coefficient, which ranges from a low of zero

in a situation of theoretically perfect equality to a high of 100 in a

situation of theoretically maximum inequality. In 1979, the Gini coefficient

for Guatemala was 85, higher than all but two Latin American countries:

pre-reform (1961) Peru, 93.3, and pre-reform (1964) Colombia, 86.4.



Gini Index

National Index

El Progreso
Santa Rosa
San Marcos
El Quiche
Baja Verapaz
Alta Verapaz
El Peten




1979 .



Source: Computed from 1964 and 1979 agricultural census.

* The Gini Index or Gini Coefficient is a measure of the concentration of
resources. When applied to land, the Gini index is based on two variables:
farm size and amount of land. The number of farms in each farm size category
is compared to the amount of land in each category. In a perfectly equal
distribution, the Gini Index would equal 0. The higher the index (100 is the
theoretical maximum), the greater the concentration of land in larger farms.

1964 ~ ~ 17.

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S4 -

Guatemala's land distribution is more skewed than its neighbors.

Pre-reform Nicaragua (1963) and pre-reform El Salvador (1961) had Gini

cofficients of 80.1 and 82.7, while Costa Rica's (1963) was a 78.2 ,

Honduras'(1961) was 75.7, and Panama's (1961) was 73.5. This compares with an

average Gini coefficient of 67.0 in 67 developing countries (Taylor and


The 1971 Salvadoran agricultural census reported that 48.9 per cent of all

farms were smaller than one hectare, and occupied only 4.-8 per cent of the

land in farms. In Guatemala, as detailed below, farms smaller than 1.4

hectares (precise size range equivalent comparisons with the El Salvador data

are not available) total 54.2 per cent of the farms and 4.1 per cent of the

farmland. Thus, the prevailing pattern of minifundios in El Salvador in 1971

was nearly identical to that of Guatemala in 1979. In El Salvador, however,

the agrarian reform programs initiated in 1980 have reduced the extent of land

concentration. Honduras, Guatemala's other Central American neighbor,

exhibits a much lower incidence of minifundization of farm land than either

.pre-land reform El Salvador or contemporary Guatemala. Only 9.9 per cent of

the farms in Honduras are less than one hectare (Durham, 1979).

A more detailed examination of the Guatemalan census, data graphically

reveals the extent of land concentration in this country. The basic data come

from the agricultural censuses conducted in 1950, 1964 and 1979. These

censuses are notably different. While the reliability and coverage of all

three must in some measure be discounted1, the overall pattern is clear and

consistent. The basic information is summarized in Tables 2A and 2B which

display the distribution of farms by size category.

. V



Number of Farms Area (hectares)

Size 1950 1964 1979 1950 1964 1979

Less than (LT).7 hect.
.7 to LT 1.4 hect.
1.4 to LT 3.5 hect.
3.5 to LT 7 hect.
7 to LT 22.4 hect.
22.4 to LT 44.8 hect.
44.8 to LT 450 hect.
450 to LT 900 hect
900 to LT 2,250 hoct.
2,250 to LT 4,500 hect.
4,500 to LT 9,000 hect.
9,000 and larger














* The census of 1950 eliminated all farms of less than .04 hectare (i.e., una cuerda), whereas the 1964
census established no lower limit. The 1979 census recorded all farms irrespective of size, but at the
time of the compilation of this study the data for farms of less than .04 hectare had not yet been
processed. It is understood that there are approximately 70,000 farms of this size, yielding a maximum
estimated total of 3,043 hectares of land.

This table with citation of sources and further information is repeated in Annex 1.

6 -


(expressed in percentages)

Number of Farms Area (hectares)

Size 1950 1964 1979 1950 1964 1979

Less than (LT) .7 hect. 21.30 20.39 31.36 0.77 0.95' 1.33
.7 to LT 1.4 hect. 26.26 23.64 .22.83 2.54 2.77 2.75
1.4 to LT 3.5 hect. 28.62 30.94 24.19 5.70 7.85 6.40
3.5 to LT 7 hect. 12.17 12.47 9.74 5.32 7.04 5.74
7 to LT 22.4 hect. 7.72 8.87 7.60 8.36 12.95 11.91
22.4 to LT 44.8 hect. 1.76 1.59 1.72 5.10 5.90 6.77
44.8 to LT 450 hect. 1.86 1.88 2.31 21.86 26.53 30.66
450 to LT 900 hect ,16 .13 .17 9.52 10.03 12.81
900 to LT 2,250 hect. .10 .07 .07 13.32 11.22 12.00
2,250 to LT 4,500 hect. .03 .01 .01 8.8 4.92 5.43
4,500 to LT 9,000 hect. 5.28 5.17 2.12
9,000 and larger 13.43 4.67 2.05

TOTAL 99.98 99.99 100.00 100.01 100.00 99.97

* The census of 1950 eliminated all farms of less than .04 hectare (i.e., una cuerda), whereas the
1964 census established no lower limit. The 1979 census recorded all farms irrespective of size, but at
the time of the compilation of this study the farms of less than .04 hectare had not been
processed. It is understood that there are approximately 70,000 farms of this size for an estimated
total of 3,043 hectares of land.

This table with citation of sources and further information is repeated in Annex 1.


In the 29 years which elapsed between the first and most recent

agricultural censuses, the proportion of the nation' s land in farms has

increased only slightly. In 1950, 34 percent of Guatemala's approximately

10.8 million hectares of land was in farms, whereas in 1979 the land in farms

had only increased to 39 percent2. In 1950, the 3.7 million hectares of

land in farms were distributed in 348,687 farms. By 1979, this had increased

to 4.2 million hectares of farm land in 531,636 farms. The number of farm

owners in the country is less than the number of farms because an individual

may own more than one farm, a fact not considered by the census.

Ownership of multiple farms by a single individual is quite uncommon among

very small landholders, whereas large estate owners often own several farms.

In Guatemala, most farms are small. In 1950, 76 percent of all farms were

less than 3.5 hectares in size, while in 1979 this figure had risen to 78

percent. These farms contained only nine percent of the land in farms in 1950

and ten percent in 1979 (see Table 2B). According to the standard

classification employed in most studies of land tenancy in Latin America (see

Table 2C in Annex 1), 88 percent of all Guatemala's farms in 1979 were of

sub-family size (i.e., too small to provide for the needs of a family). These

farms possessed only 16 percent of the land in farms. At the other extreme,

farms of 450 hectares and larger, amounting to less than one percent of the

farms, contained 34 percent of the land in farms.

The pattern of land concentration is exacerbated by greater skewing of the

distribution in areas of the country in which the best farmland is located.

In the coastal departments of Suchitepequez, Izabal, and Escuintla, which

contain 49 percent of all Guatemala's Class A land, farms of 450 hectares or

8 -

larger account for 53 percent, 49 percent and 59 percent, respectively, of the

land in farms as compared to the national total of 34 percent. In sum,

Guatemala is a country in which the vast majority of farms are very small,

while a small number of farms occupy a large proportion of the best farm land

in the country.

In addition to the problem of land concentration, Guatemala suffers from

.the problem of indirect tenancy. 76 percent of the farms are considered as

being owned directly by their producers. The- remaining farms are rented,

sharecropped, farmed under the colono system3, or held in some combination.


Indirect tenancy arrangements in Guatemala are varied, depending upon the

region, quality of the land and idiosyncratic features growing out of the

nature of the personal relationship that tenants have with landowners. It is

cotmnon in Guatemala to require that tenants pay for the use of the land in

three separate ways. First, tenants are required to deliver to the owner a

certain agreed upon proportion of the crop. In the South Coastal region, for

example, it is common to require payment of two quintales of corn per

hectare. Second, tenants are usually required to leave the land planted in

pasture. Third, the tenant may be required to work on the owner's farm at a

wage below the legal minimum (CIDA, 1965:73).

The problem of indirect tenancy in Guatemala is magnified because it

affects the smallest producers most heavily. For the country as a whole, only

ten percent of the land area in farms in 1950 and 11 percent in 1979 was not

owned directly. While this is a relatively small amount which is held in

indirect forms, indirect tenancy is concentrated in the smallest farms where

almost 30 percent of the land is not farmed by its owner (Table 4).



The data on ownership in Table 4 do not present the whole picture. While

90 percent of Guatemalan landholders own their own land, the census makes no

distinction between land with secure title and land for which'there is only

traditional usufruct rights.

From our understanding of the titling system in use in Guatemala, large

numbers of small landholders cannot afford or have been unable to have their

farms surveyed and titled in the national land registry. As a result, prior

claimants of the land can, and do, demand the right to repossess their land,

even if they have not lived there for extended periods. Smallholders

confronted by such demands are often forced to either abandon their farms to

the claimant or to attempt to purchase the land from him. Smallholders do not

have the funds to sustain a protracted court battle over possession.

In sum, many rural Guatemalan smallholders are plagued with the insecurity

of knowing that at any time they could be forced off their land.

C. The Landless Population.

The population of Guatemala has been growing at a rapid rate, as can be

seen from Table 5 (in Annex 1). In 1950 there were 2.8 million Guatemalans,

in 1964 4.3 million, in 1973 5.2 million, and the projections for 1981 report

7.477 million people. Population growth in Guatemala is indeed at the very

high rate of 3.2 percent per annum which means the population will double in

22 years.

We define the landless population as that proportion of the population

which is in the agriculture labor force but does not own or manage land and is

10 -

employed in farming activities. Two alternative calculations of the size of
the landless population are made: one with all farm laborers and one which

excludes those with permanent employment.

In order to determine the landless population, it was necessary to make

some projections from the 1973 population census, using the overall 1980

population census figures as a benchmark because this census has not yet been

fully processed. In 1973 the economically active population in agriculture 10

years and older (the Guatemalan census definition) was 875,910 persons (see

Table 6 in Annex 1). Excluding those too young to manage their own farms,

this figure is reduced to 439,955 adult landless laborers in Guatemala in 1973

(see Table 7 in Annex 1). Projections at this figure with the preliminary

1980 census returns yields an estimated number of economically active landless

agricultural workers of 419,620. If we further reduce the size of the
landless work force by not including those who have steady year-round jobs on

large farms the calculation yields an estimated 309,119 economically active

landless workers in agriculture in 1980.

D. Land Potentially Available for Distribution.

We now calculate the amount of land which is potentially available for
distribution at the current time. Our principal assumption is that the amount

of land available should be calculated within the framework of the existing

legislation (see Part 2, Section D for a discussion of this legislation).


11 -

While changes may be contemplated in the legislation, our analysis of land

availability is based on the assumption that the legislation will not change.

Thus, our description here is based not on de facto but de jure agrarian

transformation processes.

1. The Legal Context

Current legislation provides for distribution of two principal categories

of land: unused land which is in the public domain (terrenos baldios) and

idle land (tierras ociosas) which is currently in farms. Idle land is defined

as land in private hands which is uncultivated or which is undergrazed

according to a complex cattle to land ratio. Portions of this land are

subject to expropriation under certain conditions. The law provides for a tax

incentive designed to encourage owners of idle land to either put it into

production or to sell it (see Part 2-D).

The idle land provisions of the law are infrequently applied. In 1981,

INTA records show that total income from the idle lands tax amounted to only

Q. 22,405.04. Based on the 1979 agricultural census figures showing idle

lands of approximately 1.2 million hectares, the minimum potential idle land

tax exceeds Q.900,000.

2. De Jure Land Availability

We determined the amount of land potentially available for distribution by

comparing actual and potential land use. The 1979 Agricultural Census reports

12 -

both total area in farms and the amount of land used for annual crops,

perennial crops, pasture, forest, and other types of land. We have defined

land in use as the sum of annual, perennial, and pasture land. Unused farm

land (ociosa) includes forest and other categories.

Potential land use is based on data reported in an extensive soils

assessment conducted by Bovay (see Table 8A and B, Annex 1). Land is

classified in eight categories, as follows:






13 -


Agricultural lands suitable for intensive cultivation,

with little or no limitation; areas with slopes of less

than 4%. Suitable for irrigation.

Lands suitable for intensive cultivation with little

limitation; areas with slopes of less than 8%.

Limitations imposed by the need to take precautions

against erosion. Suitable for irrigation.

Lands requiring feasibility studies to determine whether

they may most suitably be used for agriculture (perennial

crops), pasture or forestry. Severe limitations imposed

by the need to take precautions against erosion.

Irrigation possibility limited.

Lands mostly adapted to forestry, varying in topography

from steeply sloping to severely dissected. Soils shallow

and seriously subject to erosion. Small pockets of soil

suitable for agriculture may be found in valleys and

depressions but must be handled with extreme precautions

against erosion.

- 14 -

Lands limited to forestry by this extremely broken
topography, thin and eroded soils. Mostly deciduous.

Swampy and flooded lands under water a good portion

of the

Forests located on extremely broken topography with thin
and eroded soils which must be preserved to protect
watersheds and to avoid the destruction of soil and water
resources and to protect fragile ecosystems.

Institute Nacional Forestal
Includes wetlands.



A '

15 -

This study also develops a methodology for converting soils of different

types to their equivalent in first-class agricultural land, providing a

standard unit of measurement. The distinction between actual hectares of land

of different soil types and First Class Equivalent (FCE) units must be kept

clearly in mind throughout the following discussion. When we analyze existing

patterns of land use, we use actual extension in hectares. When we analyze

potential availability of land, we convert land of different soil types into

FCE units in.order to provide a standard unit of measurement. (See Annex 2

for discussion of the methodology employed).
We calculated the amount of land available for distribution at the

departmental level using a fairly complex technique. The total area of land

in farms and the total arable area is calculated. Unused public domain land

is the land that remains after subtracting land in farms from the sum total of

arable land. This unused public domain land is then converted to First Class

Equivalents with the conversion ratios.- The result is an estimate of the

number of FCE units of unused public domain land (baldio) available for

distribution. Obviously, in a department where the area in farms exceeds the

arable surface, there is no baldio land available.

Second, the total area of unused farm land (ociosa) is calculated by

comparing the amount of farm land in use in the department to the sum total of

arable land. If the amount in use exceeds arable land, the department is

considered to be overutilized and thus no idle farm lands are available for

distribution. If the arable amount exceeds the amount in use, it is converted

to FCE units. We assume that this land has the same mix of soil types as the

unused land in the department, and thus calculate FCE units using the same-

ratio of soil types.

16 -

The calculations of unused public domain land and idle land were done with

three different sets of assumptions about the amount of land that is defined

as arable. Under Option 1, arable land includes only first class, second

class, and multiple use land. Under Option 2, Karst forest land (described in

Part I. D-3) is considered to be arable. Under Option 3, swamp and wetlands

are considered to be potentially arable, though major investments in water

resources management and infrastructure would be required to make this in fact

the case.

Specific mention should be made of the potential amount of land available

for distribution in El Peten, since this is widely considered to be the

principal remaining frontier area in Guatemala. Our treatment of El Peten is

based on data reported in the Bovay soils assessment. Of the total 35,854

Ka2 in the department, almost one-third (11,224 Kin2) is in a forest

reserve above Latitude 170 10'. Under current government policy, this area

is not to be used for colonization. Of'the remaining 2,263,000 hectares of

land, a total of 686,750 cannot be distributed for agricultural use: 151,950

are in park and archaeological reserves, and 534,800 are forest reserves.

Thus, the starting point for analyzing land available for agricultural use in

El Peten is 1,776,200 hectares, most of which is in Karst and wetlands soil


The option selected for determining the amount .f arable land makes a

considerable difference for subsequent analysis of land availability. If one

includes only first class, second class, and multiple use land then the

potentially arable area is 2.95 million hectares (see Table 9 in Annex 1).

17 -

Since the area currently under cultivation in annuals, perennials, and pasture

is 2.9 million hectares, it is evident that under this option there is only a

minimal amount of arable land that is not already in use.

However, the inclusion of Karst forest land in Option 2 in the arable

category increases the arable surface estimate to 4.8 million hectares. Karst

lands deserve special discussion since about 50 percent of the north slope of

the Central Highlands and the Franja Transversal are Karst, and 40 percent of

El Peten has.Karst soils (see discussion in Part I-D.3).

The Bovay study places emphasis on the potential use of land which is

currently swamp or wetlands. If these are included, Option 3, the arable

surface increases to 5.0 million hectares. This potentially arable land,

however, requires considerable investment in water resource management before

it can be productively used. Nevertheless, since there is a significant

amount of this land both in the South Coast departments and El Peten, this

option merits mention.

3. Karst Soils

Karst is "a limestone region marked by sinks and interspersed with abrupt

ridges, irregular protuberant rocks, caverns and underground streams". Total

Karst lands, in Guatemala are estimated at 23,759 Km2, all of which are

found in the departments of Huehuetenango, El Quiche, Alta Verapaz, Izabal and

El Peten.

18 -

The Karst soils of Guatemala are acid. They also generally have a high

water conduction rate, and a tendency to dry out quickly. Hence, erosion and

nutrient loss resulting from the removal of forest cover are greater on Karst

soils than on other types. Karst soils are characteristically thin; the soil

layer may vary from just a few centimeters to half a meter in thickness over

the underlying porous limestone. Erosion can rapidly produce a total

elimination of soil from the substratum. There is less danger of this

occurring on relatively level land than on steep slopes.

There is general agreement among soil scientists and agriculturalists who

have examined the Guatemalan Karst region that the Karst soils should be

carefully tested before attempting to use them for agriculture. The fact is,.

however, that a great deal of Karst land has been cut over and is used for

crop production. No doubt this has resulted, and is resulting, in severe

deterioration of the soil in some areas as well as in potential drainage and

flooding problems.

There are, on the other hand, farms located on Karst which appear

prosperous and have no major erosion problems. This is because they are under

a dense cover of permanent crop, such as coffee, with shade trees, so that the

soil is never exposed. This implies that if Karst lands are to be used for

agriculture at all, the forest cover should be replaced as quickly as possible

with something similar in the form of a permanent crop.

Since Karst lands are variable in topography, depth, drainage and other

characteristics, decisions regarding their use should be made in the different

u_ )

19 -

micro-environments in which they are found. For example, the rocky

outcroppings, abrupt ridges, and sinks typical of Karst landsimpede their use

for annual crops; yet there are authorities who point out that these

characteristics do not necessarily interfere with the use of Karst for some

perennial crops, or pastures.

The Soils Department of the Ministry of Agriculture is studying the soils

of El Peten and developing recommendations for the rational management of the

Karst lands. If one can assume that roughly 10,000 Km2 of the 23,759 Km2

of Karst lands in Guatemala can be rationally used in agriculture, land for

the settlement of a considerable number of additional farmers could be made


4. Summary of Three Options of Land Availability

The amount of unused public domain land potentially available in the

country is 106,667 hectares of FCE units, as estimated in Option 1 without

including either Karst forest land or swamplands as potentially arable; or
472,642 hectares of FCE units as estimated including Karst forest land as in

(Option 2); or 571,342 hectares of FCE units as estimated including Karst

forest land and swampland (Option 3)(see Table 10 in Annex 1). Only the

departments of El Peten and Izabal in the North and Retalhuleu in the South
have public domain land available in Option 1. El Quiche, Alta Verapaz, and

Huehuetenango are added to this group in Options 2 and 3.

- 20 -

This confirms the commonly held perception upon which most recent land

distribution has been based: the Franja Transversal del Norte (FTN) and El

Peten are the principal areas of the country in which public domain land is

still available for distribution. This is the type of land that has been

distributed through the land colonization programs of the last 20 years.

Considerable amounts of land are available under the idle land provision

of the agrarian transformation law. The estimates range from 262,800 FCE

units of land to 198,978, depending on which option is used to determine

potential land use (see Table 10 in Annex 1).

The National Agrarian Transformation Institute of Guatemala has available

in the country either 369,467 First Class Equivalent (FCE) units, 671,621 FCE-

units, or 773,089 FCE units of land to distribute in colonization or

expropriation/sales programs, depending upon the option chosen and the

concomiitant investment made.

E. The Man-Land Equation

As noted earlier, the current population eligible for land distribution is

all Guatemalan males over 18 years of age who do not own land and who are not

involved in commercial activity. The method used to determine the total

number of potential recipients of land at the national level (see Section C,

above) was applied at the departmental level. Since the legislation does not

set standards for size of plot, we proceed with the assumption that adult

males over twenty years of age, as potential heads of household, will require

a parcel large enough to support a nuclear family.

21 -

We used the following method to set a norm for the minimum family-size

holding in Guatemala. The Inter-American Committee on Agricultural

Development (CIDA) adopted a standard of seven hectares as the minimum size

for a family farm. This standard does not adjust for land of varying quality

and type. Seven hectares of first class land is more than required to support

a family, and exceeds the labor capacity of a nuclear family. Seven hectares

of Karst land would not be sufficient for a family. Consequently, we

established a standard norm at the national level which is comparable to the

measures of land available. This was done by analyzing the relation between

land in use and arable land. We calculated the ratio of First Class

Equivalent land to land in use, excluding the department of El Peten because

of its current underutilization. The result is a ratio of .5628, the relation

between 1,480,400 hectares of First Class Equivalent land to the 2,630,500 of

land used for crops and pasture. Consequently, 7 hectares of average farm

area are equivalent to 3.9 hectares of First Class Equivalent land. This

standard norm corresponds very closely to estimates by agricultural economists

familiar with Guatemalan agriculture, who estimate that a farm of 3.5 hectares
of unirrigated land is the maximum that can be cultivated with family labor

We calculated the number of families that can be settled on potentially

available land by dividing the number of hectares available for cultivation in

each department by 3.9. Two separate sets of calculations were then carried

out under each of the three options of land availability. The first set of

22 -

calculations includes only those agricultural laborers who are not permanently

employed on plantations, a total of 309,119 workers (Tables 11 A, B, and C in

Annex 1). The second set of calculations includes these permanent workers,

for a national total of 419,620 (Tables 11 D, E, and F in Annex 1).

A net deficit of land is found under all three options of arable land

potentially available, regardless of the definition of the potential recipient

population. Under Option 1, only 31 percent of the non-permanent landless

laborers can receive a family-size plot of land if both idle farm and public

domain land are distributed (Table 11 A). Only 23 percent of all landless

laborers, with permanent farm laborers included, can receive land under this

option (Table 11 D).

The situation is somewhat less bleak if Karst land is considered arable:

55 percent (Table 11 B) and 41 percent (Table 11 E) of the landless could

receive land under existing legislation and land distribution conditions for

the landless, excluding and including permanent farm workers, respectively.

If we assume that sufficient public investment will be available to

develop the infrastructure required to drain and manage swamp and wetlands,

then sufficient land is available to distribute land to 64 percent of the

landless (Table 11 C) under the narrower definition and 48 percent of the

landless population (Table 11 F) under the broader definition.

To summarize: Guatemala does not have sufficient land to provide

family-size parcels to all the landless rural agricultural population in

1980. Contrary to the popular illusion, there is not unlimited land available

23 -

in the FTN and the El Peten. Any quantification of land available based on

soil conditions and the current size of the population shows that in the worst

case, Guatemala can accommodate only 31 percent of its landless; while in the

best case it can provide sufficient land to only 64 percent.


In the face of the patterns of land scarcity described above, migration

trends become integral to understanding the economic behavior of the landless

and the landpoor. Indeed, annual migration represents an extremely important

aspect of the labor market and can be an economic survival strategy of the

landless and landpoor, particularly Highland Indians (Schmid, 1973; Zarate,

1967; CIDA, 1965). Estimates of migratory workers range from 220,000 to

500,000. However, a comprehensive analysis of annual migration in Guatemala

in all its complexity and facets is beyond the scope of this study. This

section deals only with permanent relocation with emphasis on the rural

population of Guatemala. It should be noted here that in the area of

migration the data and background studies were neither as numerous nor as

in-depth as in other subject matter areas. Therefore, we are making maximum

use of limited census data and a few pertinent general studies.

Permanent migration in Guatemala does not differ significantly from other

countries in Latin America if the population is taken as a whole--i.e., there

has been a continuing process of urbanization. However, if the population is

divided into Indian and Ladino populations (see Tables 12 and 13 in Annex 1),

differing patterns of migration emerge (CSUCA, 1978; CICRED, 1974; McGrevey,
1978). The Indian population is predominantly rural and poor. The Ladino


24 -

population includes a large group of people more highly educated, urbanized,

and skilled in trades, as well as the rural poor. In the Western Highlands,

the Ladino population is highly concentrated in urban areas, with the Indian

population largely rural. Thus, the rural poor Ladinos and Indians, though

differing in area of origin, tend to converge in areas of destination which

are economically attractive.

As can quickly be seen in Table 12 in Annex 1, Ladinos tend to migrate in

greater numbers than do Indians, though this difference is exaggerated by the

ability to and the practice of, change of ethnic identity from Indian to

Ladino by some migrants. It should be noted that the data do not support the

myth that Indians do not migrate permanently or, if they do, that they

automatically lose their cultural identity.

The area of greatest egress for Ladinos has been the Oriente, the

departments of Zacapa, Chiquimula, Jalapa, Jutiapa, Santa Rosa, and El

Progreso. The Altiplano departments of Totonicapan, Chimaltenango, San

Marcos, Huehuetenango, El Quiche, the Verapaces, and.Chiquimula have lost the

greatest Indian population. Most of the migration for these two groups from

these departments has been poor and rural. The exception to this is

Totonicapan, where the majority of out-migrants have been urban Indians.

Migration to urban areas by rural poor is not uncommon; however, this is

usually the final move in a series, called step migration. A typical step

migration pattern for poor rural Guatemalans begins with a move to an area of

high agricultural labor demand, especially Izabal, the South Coast departments

25 -

of Suchitepequez, Retalhuleu, and Escuintla or the coastal portions of Santa

Rosa, San Marcos, and Quetzaltenango. Push factors, particularly high

population density, poor land or lack of land, and lack of off-farm

employment, and pull factors, especially opportunities of permanent employment

or sufficient day labor, precipitate initial migrations.

Though push factors affect successive moves, pull factors appear to be

more significant, particularly availability of land and permanent employment,

either in agriculture or in urban wage labor. It is not uncommon for migrants

to make one or more intermediate relocations prior to a final settlement.

Frequently these moves are among the departments of the South Coast. Final

residence varies greatly with some people eventually returning to their native

areas and others moving to urban areas, such as Guatemala City, Quetzaltenango

or Escuintla. Those who finally settle permanently in rural areas and

continue to be economically active in agriculture tend to become resident

laborers or permanent workers on coastal plantations or to purchase parcels of

land in Izabal or El Peten.

Another major aspect of permanent migration involves equilibrating

patterns of migration between contiguous departments. These can be part of

step migration, but more frequently rural poor seek nearby areas of lower

population density where small parcels are available. Obviously, a lot of

this type of migration also takes place within departments, but this is not

captured well by the census data.

Table 13 in Annex 1 deals solely with theperiod 1968 to 1973 and shows

change of permanent residence within that period. It is interesting to note

that the magnitudes- of migration by percentage show that some departments


26 -

reflect very distinct patterns as between their Indian and Ladino

populations. Some of these differences result from the socio-economic

advantages which accrue to segments of the Ladino population. The data also

suggest that in Escuintla, Santa Rosa and perhaps Suchitepequez, Indians are

supplanting parts of the Ladino agricultural labor force.

The departments of high egress rates have, with few exceptions, extremely

.low availability of arable land per capital. (Compare Table 3 and

Table 13 in Annex 1).

- 27 -


Department 1950 1964 1973 1980

All Guatemala 1.71 1.11 .92 .79

Chimaltenango .42 .32 .26 .22
El Progreso .28 .21 .19 .17
Guatemala .07 .04 .03 .02
Sacatepequez .05 .04 .03 .02
Escuintla 3.07 1.41 1.38 1.14
Santa Rosa .88 .62 .54 .48
Huehuetenango .69 .48 .38 .32
Quetzaltenango .33 .23 .20 .17
Retalhuleo 2.30 1.31 1.24 1.03
San Marcos .33 .23 .20 .16
Solola .09 .07 .06 .05
Suchitepequez 1.74 1.16 1.07 .91
Totonicapan .20 .14 .12 .10
Alta Verapaz 1.19 .86 .80 .70
Baja Verapaz .33 .23 .21 .19
Izabal 6.35 3.00 2.06 1.80
El Peten 154.03 92.09 36.50 18.66
El Quiche 1.04 .73 .60 .56
Chiquimula .63 .47 .44 .42
Jalapa .50 .38 .31 .28
Jutiapa 1.04 .74 .62 .58
Zacapa .51 .37 .34 .31

*Calculated from TABLES 5 and 9 of this Study. See Annex 1.

28 -

Guatemala and Quetzaltenango have urban concentrations which exaggerate

the population pressure there. Solola and Sacatepequez both have very

intensive agricultural production, particularly of vegetables, which is made

possible by serendipitous soil and climatic conditions, though both

departments are widely over-cultivated, as well. Given the magnitude of this

push factor, it is difficult to understand why permanent migration has not

been greater. If we look at the opposite side of the equation, the pull

factors, we can readily see the barriers to migration.

Most areas of high attraction, Escuintla, Suchitepequez, and Retalhuleu,

have relatively low population to arable land ratios. This would, in a truly

open economy, tend to attract land seekers to equilibrate population pressure.

on land. However, looking at Table 1 above, one can quickly see these

S departments show markedly skewed distribFhon of their arable land in

agriculture. This indicates a lack of opportunity for landpoor and landless

people who wish to be owners of adequate size land holdings. Areas where this

type of opportunity exist, El Peten and Izabal (see Tables 1 and 3) are

remote, lack infrastructure and are difficult for Highland peasants to obtain

information about. However, Izabal and El Peten are still major attraction

areas with significant in-migration.

It appears clear that Guatemala's rural population, both Ladino and

Indian, does respond to economic opportunity, where and when it exists, even

though the opportunity may be only marginally better than their prior


- 29 -

However, the lack of outlets for push factors in Indian migration is one

variable explaining the present unrest in the Highlands. The combination of

high and increasing population densities, severe and increasing

minifundization of landholdings, and the structural poverty of-the Highland

population intensifies socio-economic pressures, and leaves the victims open

to radical and violent politicization.


There is the recurrent problem, for example, of under-reporting,
particularly among large landowners. One manifestation of this is the figures
reported by the 1979 Agricultural Census in the four departments of the Franja
Transversal del Norte (FTN)--Huehuetenango, El Quiche, Alta Verapaz and
Izabal--on the number of farms larger than 450 hectares. The Census data
identify 309 farms in this category (for the total area of the four
departments). However, the more accurate cadastral work plan for the
USAID-supported GOG Pilot Colonization Project in the FTN identifies 266 farms
over 450 hectares in the FTN alone, which represents only about 25 percent of
the territory of the four departments. See Table 22 in Annex 1.
An examination of Table 2A reveals that the land in farms in 1964 was
actually less than in 1950. This anomaly should not be understood to mean that
the actual amount of land in farms decreased. Rather, the generally accepted
interpretation concerns inaccuracies in the census material. Widely differing
opinions are expressed as to which census, 1950 or 1964 is the more accurate.
Those who argue for the 1950 census state that it was conducted prior to the
widespread land reform of the 1953-1954 period and before the land reform in
Cuba and subsequent creation of the Alliance for Progress, which contained, as
one of its self-help indicators for United States foreign assistance the
establishment of land reform programs. These events all served to heighten


30 -

concern in Guatemala among the large landholders, and are seen as giving them
grounds for underreporting the amount of land they owned. In addition, it is
likely that some large farms have been divided up into separate units, each
owned by different members of the same family in some cases in order to avoid
drawing attention to the actual extension of the farm. Indeed, an examination
of the 1964 census in contrast to the 1950 shows a dramatic drop in the
number and size of farms in the largest category (i.e., 9,000 hectares and
larger). Hence, in 1950 there were 22 farms in this category occupying
499,848 hectares, while in 1964 there were only 9 farms occupying 160,927
hectares. Similar less dramatic drops occurred in the other categories of
large farms (450 hectares through 9,000 hectares). As will be shown in Part
Two, the large farms expropriated in the 1953-1954 period were almost all
restored to their original owners and no expropriation of large farms has
occurred since that date. It is likely that the decline in the largest
categories included considerable underreporting. However, others argue that
the 1964 census was a more professional effort and represents a more realistic
assessment of land tenancy in Guatemala. On balance and after considering the
arguments, the team concluded that the 1950 census, although less technically
perfect than the 1964, "presents a more accurate picture.
The colono system in Guatemala is one in which the owners of land,
usually large estates, cede small parcels of land to their permanent workers,
known as colonos The colonos have the right to work those lands so long as
they remain permanently employed on the plantation. Ownership rights are
rarely acquired.

31 -

A. The Etiology of the Agrarian Dilemma

Among the major structural changes introduced by the Spanish during the

colonization of Guatemala, perhaps none is of greater significance than the

large scale privatization of land. While there is evidence that private land

ownership existed along side of the predominant pattern of communal ownership,

the Spanish viewed the latter as an inferior and indeed primitive ownership

form. The conquerors, supported by a royal decree issued' in 1513, immediately

set about replacing the "primitive" with the "modern". This was accomplished

by dividing up much of Guatemala's land and labor through the application of

the dual systems of repartamiento and encomienda. The net result was that the

conquistadores gained control of'vast quantities of land with large numbers of

Indians working under-feudal conditions, though within a system of reciprocal

obligations and duties.

This narrative draws on CIDA (1965) Aballi Mota (1976), Paredes Moreira

(1961, 1963, 1964), CSUCA (1978), Menjivar (1969), Villacorta Escobar (1973),

Gayosa (1970) and Fuentes-Mohr (1955).

32 -
Independence from Spain in 1821 produced neither substantial de facto nor

de jure alterations in the structure of tenancy erected in the colonial

period. Indeed, the government of the new republic seemed committed to

exacerbating the inequalities which existed between Indians and Spanish

settlers. As early as 1825, Guatemala passed its first agrarian law, the

primary purpose of which was to help increase the volume of public domain land

transferred to private hands, in the belief that "the small number of

landowners is one of the causes of (Guatemalan) underdevelopment."

Acquisition of public domain land was accomplished through purchase from the

state and hence also served as a source of revenue for the fledgling

republic. The absence of capital among the indigenous population virtually

excluded them from acquiring such lands.

In a further effort to stimulate development, Guatemala passed a series of

laws designed to encourage European migration through the establishment of

agrarian colonies. An 1835 project failed, leading to a more carefully

planned scheme, approved in 1842, designed to attract primarily Swiss and

Belgian farm workers to settle in what is today Puerto Matias de Galvez. That

effort also ended in failure New programs were approved in 1877 (to attract

Austrians) and 1885 but also proved unsuccessful. These 19th century

colonization schemes were not designed to improve the internal distribution of

wealth or benefit the Indian population. Indeed, Guatemalan "backwardness,"

as it was referred to at that time, was viewed largely as a consequence of the

predominance of tradition-bound Indians in the population. Colonization

promised to infuse the local population with enterprising, hardworking

Europeans who would help stimulate capitalist development.

33 -
While these efforts to stimulate foreign colonization inched slowly

forward, a dramatic shift occurred in Guatemalan agriculture. In the early

1840's, coffee cultivation was introduced for the first time and proved to be

a highly successful crop. The rainfall and temperature conditions in
Guatemala produced a grade of coffee which commanded a high price in the

selective markets of Europe. The promise of unprecedented profits encouraged

the immigration of several German families who quickly became major producers.

Hence, even though the earlier colonization schemes had failed, they did bring

to the attention of.some European families the opportunities to earn large

profits. The existence of a large mass of Highland Indians who could be

employed to pick the ripe cherries offered the solution to the labor supply

problem. In order to provide a year-round supply of workers the colono system

was developed. All that was needed was for the state to facilitate the

transfer of inexpensive lands for those who wished to grow Guatemala's "brown


The first major governmental effort to encourage agrarian development in

response to the new opportunities created by the coffee trade occurred in 1871

with establishment of the "liberal reforms" of General Justo Rufino Barrios.

The stated central objective of these reforms was to create a class of yeoman

farmers in Guatemala. To this end a presidential decree of 1873

provided for the sale of from 45 to 225 hectare lots of public domain in the

South Coastal region. These reforms also were directed against the

34 -
Catholic church in Guatemala, stripping it of much of its large landholdings.

Unfortunately, rather than stimulate the development of a yeomanry, further

land concentration was the net result. Through this decree, and the agrarian

law of 1894 which superseded it, large portions of Guatemala were absorbed in

private hands. Between 1896 and 1921 approximately 3,600 persons acquired an

average of 450 hectares under the terms of the liberal reforms. As a result,

approximately 1.6 million hectares of land, or nearly 15 percent of the entire

national territory, was privatized in large holdings.

For the Highland Indian these reforms proved to be doubly pernicious.

First, much of the best land in the Highland departments was absorbed into

expanding coffee haciendas. Since coffee grows best in valley land k between

800 and 1500 meters altitude, Indians who had been farming those lands for

generations were forced to move to higher, less fertile lands in order to-

continue to grow their subsistence crops. Second, many Highland estates also

served the function of providing a labor reserve for coastal plantations

operated by the Highland estate owners. It was common to find Highland

estates planted with crops such as coffee which had labor requirements

complementary with labor requirements in the coastal region. Indians would

find steady employment in the Highland estates but be required to work a set

number of days in the owner's coastal plantation. The end result was serious

dislocation of the Indian family.


35 -
A further stimulus to both export-oriented agriculture and resultant land

concentration emerged at the turn of the century. In 1901, after having

established successful banana plantations in Costa Rica in the 1880's, the

United Fruit Company began operations in Guatemala. It did so initially by

providing ship mail service, using its fleet of banana boats. In 1904 the

Company was asked to complete the cross-Guatemalan railroad which had been

under construction for several years. In 1924 the Government of Guatemala

ceded large land areas to the company. Then again in 1930, in the fertile

Pacific lowlands, other large concessions of land were granted. These

concessions ultimately summed to 188,339 hectares. It was these lands that

were later to become a prime target of.the land reform of the early 1950's.

Despite the vast quantities of land passing into private hands under the

"Liberal" reforms, the largely rural Guatemalan masses remained poor while the

growing Indian population confronted a steadily declining land resource base.

This problem was exacerbated by the rapid erosion of small plots which the

Indians were compelled to work more intensively. Nonetheless, colonization

schemes continued to predominate the thinking of those who sought to develop

Guatemala. In 1928, a Department of Agrarian Colonization was created as a

branch of the Ministry of Agriculture. It was charged with responsibility for

encouraging the repatriation of Guatemalans who had moved to other countries

by attracting them with the offer of free land and free title. In 1929

colonization programs were opened in the departments of El Peten, San Marcos,

Huehuetenango, El Quiche, Jutiapa, Chiquimula, Jalapa and Alta Verapaz.

36 -
Guatemala's persistent Highland Indian poverty became the object of a

reform initiated by General Jorge Ubico. In 1931, Ubico decreed that the

ejidal (common) land of the Highland communities was to be divided up among

the indigenous population and an administrative board was to be established

for the development of these lands. The government was to have.provided

technical assistance and management guidance to the Indians. Also in 1931,

plots of up to seven hectares were made available for landless workers who

were permitted usufruct rights on these lands. But in 1934, a law was

introduced to help assure.the availability of Indian labor. Under this

"vagrancy law", smallholders were forced to work between 100 and 150 days a

year and carry an official passbook in which the employer would certify to the

number of days worked. Perhaps the most important changes introduced by Ubico

were passed into law in 1936. In that year, prior agrarian legislation was

revised and combined into a single law which essentially maintained the spirit

of the earlier legislation. But the accompanying ley de Impuesto sobre

Eriales y Latifundios of 1936 appeared truly revolutionary in the context of

Guatemala agrarian law. It established that idle land in farms larger than

500 hectares would be subject to a tax of from two to four percent of the

value declared for tax purposes. Moreover, it stated that farms over 4,500

hectares were to be considered "an obstacle to agrarian development...."

Unfortunately, the law was largely ignored while.Dbico contradicted his own

statements and distributed large tracts of land to his favored military


37 -
B. Agrarian Reform, 1944-54

The overthrow of Ubico in 1944 began a process which was to culminate in

1952 with the passage of Guatemala's first major agrarian reform law. The

constitutional base for that law was laid in 1945 by the newly elected

president, Juan Jose Arevalo. That constitution, (Titulo IV) declared that it

was the state's responsibility to develop agricultural activities and that the

benefits therefore were to go to the producers. Article 90 contained the

important provision, adopted from the Mexican constitution of 1917, that

private property was to be recognized and guaranteed only in so far as it

fulfilled its social function. The constitution went on to provide for

expropriation when in the public interest. Finally, the new constitution

abolished indentured servitude on plantations, and allowed for the

organization and unionization of peasants.

Following the ratification of the new constitution, a series of laws and

presidential decrees were promulgated which detailed and amplified the

agrarian provisions in the constitution. In 1945, the Law of Suppletory

Titling (Ley de Titulacion Supletoria) was enacted providing a mechanism by

which land worked for at least 10 years could be titled to those who had

worked it. The purpose of this law was to provide title security to

smallholders. Unfortunately, it was frequently used as a mechanism for the

already wealthy to acquire even larger landholdings. In 1947 the Labor Code

38 -
(Codigo de Trabajo) was approved, specifying, among other provisions,

procedures to be followed for the establishment of unions and for the

declaration of legal strikes. However, the Code prohibited unionization on

farms with fewer than 300 workers and hence restricted the right to unionize

to only the largest plantations.

The first law to focus directly on the land tenancy problem was enacted in

1949. Called the Law of Forced Tenancy (Ley de Arrendamiento Forzoso) it

decreed that all farm land currently being rented on both state and private

land would continue to be rented for an additional two years to those who had

rented it during the four years prior to the enactment of the new law.

Furthermore, landowners were compelled to rent idle land and to charge no more

than five percent of the value of the crop thereby obtained.

As far as can be determined, these various provisions had little impact on

traditional agrarian structures in rural Guatemala. This was to change

dramatically, however, with the election of Jacobo Arbenz in 1951. Arbenz

declared that he would convert Guatemala into a "modern capitalist nation"

through the dual process of industrialization and agrarian reform. The latter

was to be accomplished through the application of the Law of Agrarian Reform,

also known as Decree 900, approved by the Guatemalan Congress on June 17,

1952. The law declared that its objectives were: (1) elimination of feudal

estates in the countryside, (2) elimination of indentured servitude, a remnant

of the colonial encomienda system, (3) provision of land to the landless and

to landpoor laborers, and (4) provision of credit and technical assistance to


39 -
Land reform under Decree 900 was to be carried out through the

expropriation of idle land and land which owners had granted to others as

rented or sharecropped land. However, no farm less than 90 hectares,

cultivated or not, was to be affected by the expropriation provisions.

Moreover, farms larger than 90 hectares would not have subjected to

expropriation that portion of the farm beyond the 90 hectares which was not

idle or rented/sharecropped. In addition, farms between 90 and 270 hectares

which were at least two-thirds cultivated, were exempt from expropriation.

Finally, farms on which cash crops (for export or domestic use) were grown

were exempt from expropriation even if the land was rented to others.

Specifically included under this provision were farms which produced coffee,

cotton, citronella, lemon tea, bananas, sugar cane, tobacco, rubber, quinine,

fruit, hay, beans, cereals, and other commercial crops. In effect, these

exceptions and/or exclusions made Decree 900 a reasonably moderate land

reform, at least on its face, as it was characterized repeatedly by the Arbenz


The beneficiaries of the reform were specified as (1) smallholders, (2)

plantation laborers (mozos and colonos) and (3) landless agricultural

laborers. In addition, blue collar urban workers who were entitled to receive

payments under the Labor Code could opt to receive land instead of cash.


40 -
The amount and form of tenancy of land to be distributed to each

beneficiary also was specified in the law. In El. Peten, a maximum of 1,350

hectares could be claimed, but held only for the lifetime of the beneficiary

(usufructo vitalicio). In other parts of the country, land would be

redistributed as follows: for cultivated land, a minimum of 3.5 hectares and a

maximum of seven hectares; for uncultivated land, between 10.5 and 17.5

hectares; and for smallholders with less than seven hectares, their holdings

could be expanded up to a maximum of 17.5 hectares. In addition, if

sufficient land was deemed to be available, non-peasants with sufficient

capital could rent up to a maximum of 280 hectares from the state for periods

of between five and 25 years.

All land received by beneficiaries was to be paid for. Those who became

owners of land expropriated from private owners were to pay by turning over to

the government five percent of the value of the crops harvested each year.

Beneficiaries on state land (principally the State Farms expropriated from

German interests during World War II), would receive their land with lifetime

usufruct rights and would pay a rental fee of three percent of the value of

the annual production to the state. Non-peasants who rented land' under the

provision stipulated above, were to be charged five percent of the annual

value of the crop.

' *

41 -
The lands distributed to beneficiaries could not be sold or otherwise

alienated for 25 years, although they could be rented. Lands distributed in

the form of lifetime usufruct rights could not be transferred, but could be

rented with the prior approval of the government. Indemnization for the

expropriated land was to be based upon the value declared for tax purposes as

of May 1952. The land was to be paid for in 25-year agrarian bonds,

guaranteed by the government, yielding an annual rate of three percent. For

that purpose 10 million Quetzales (U.S.$ 10 million) in agrarian bonds were


Decree 900 was administered by a new institution created for that purpose,

the National Agrarian Department (Departamento Agrario Nacional), whose

director reported to the President of the Republic. Decisions taken by

Guatemala's President were deemed to be definitive, with no judicial appeals

permitted. A National Agrarian Council (Consejo Nacional Agrario) also was

established and charged with the responsibility of reviewing the expropiation

activities of the National Agrarian Department. Information about which lands

were subject to expropriation was to be generated at the local level by Local

Agrarian Committees (Comites Agrarios Locales), each of which was to be

composed of five members: one named by the Governor of the Department, one

named by the local municipality, and three by the local peasant organization

or plantation union.

42 -
Support for the beneficiaries was to come from two sources. Credit was to

be administered by a newly created National Agrarian Bank (El Banco Nacional

Agrario), opened in July 1953 with Q10.52 million (U.S. $10.52 million) of

capital, with deficits incurred during its first five years of operation to be

borne by the state. The government also was to provide technical assistance;

extension services, seeds, etc.

Expropriation under Decree 900 began on January 5, 1953, and continued

through June 16, 1954. During that period 1,002 decrees-of expropriation were

issued affecting 603,615 hectares of land (see Table 14 and related notes in

Annex 1). Added to this was an approximately 280,000 additional hectares of

State Farms, for a total of 883,615 hectares.

Compensation to be paid totaled Q8,345,544, of which Q7,870,775 was issued

in bonds up through June 16, 1954. The price paid per hectare of land varied

from a low of Q1.89 to a high of Q28.53, with the national average of value

declared for tax purposes in May 1952 being Q6.29 per hectare.

Estimates of the number of beneficiaries of the reform vary. One source

cites 78,038, another 88,000, while another refers to 100,000. Of these,

somewhere between 23,000 to 30,000 were beneficiaries of the distribution of

National Farms. It is difficult to determine what proportion of the landless

43 -
population benefited from the Decree 900 reform because of the absence of

reliable estimates of.the number of landless peasants at that time.

CIDA(1965:59) estimates 68,700 landless laborers in 1950. Wie feel that this

is an understatement of the magnitude of this group because it does not

consider the colonos as landless laborers when in fact they were the principal

beneficiaries of the land reform. We have used the agricultural and

population census material to produce what we consider to be a more reliable

estimate of 248,000 landless laborers in 1950. Using that estimate, between

31 and 40 percent of the landless labor force benefited from the reform1.

The National Agrarian Bank provided nearly 36,000 loans for a total of 8.4

million Quetzales. In addition, the National Mortgage Bank (Banco de Credito

Hipotecario Nacional) made 17,843 loans to beneficiaries for a total of Q3.4


Several problems plagued the reform and reduced its effectiveness. First,

while the reform sought to eliminate indirect forms of landownership (renting

and sharecropping) it provided a series of mechanisms, discussed above, under

which land was to be rented from the state. Indeed, the predominant form of

land distribution under the reform was that of lifetime usufruct (72.5 percent

of the land) upon which rentals would have to be paid. As a result, some of

the problems which were a by-product of the pre-reform system were maintained

in a modified form under the new system. One could argue that a new

dependency was created between the cultivator and the government, substituting

one "patron" for another. Indeed, most beneficiaries became state tenants --

albeit with lifetime property rights -- not private farm property owners.

44 -
Second, since land loaned by plantation owners to their workers (colonos)

prior to the issuance of Decree 900 was subject to expropriation, and since in

many cases those plots were scattered throughout the plantation, a crazy-quilt

pattern emerged out of the reform of these lands. Moreover, those plantation

owners who had been more generous with. their workers and given them larger

plots on better soils lost more under the reform than less generous plantation

owners, thereby creating a substantial inequity.

Third, the local committees lacked participation of the landowners, an

omission which led to numerous abuses of power. Since there was no appeal of

presidential decisions made under Decree 900, there was little chance for

these abuses to be corrected. In one case where a landowner successfully

appealed to the Supreme Court for a reconsideration of his case, President

Arbenz dismissed four of the judges and packed the bench with judges favorable

to his position.

The abuses referred to above were magnified by another provision of Decree

900 which stipulated the total expropriation without indemnization of land

owned by those who opposed the reform by violent or subversive means.

In many cases the price paid for the expropriated land was unrealistically

low. While it seemed just that the value declared for tax purposes was a fair

price to pay for the land, the nature of the tax system was such that

virtually all property holders in Guatemala, smallholder and latifundista


45 -
alike, undervalued their land for tax purposes. Low taxes on agricultural

property have long been seen in Latin America (perhaps incorrectly) as a

mechanism to stimulate agricultural development by increasing the

profitability of the enterprise. The magnitude of the problem was compounded

by the fact that the Government of Guatemala had not readjusted the declared

assessment value since 1931.

The rapidity of the reform also led to abuses. Once the process of

expropriation began it was hard to control. In the first months of the

reform, from January to March 1953, between 22 and 25 expropriation orders

were issued per month. That number increased substantially so that in March

1954, of 98 expropriations were decreed. Indeed, of the 443

expropriations decreed from December 17, 1953 through June 16, 1954, not one

was published in the official government newspaper.

In effect, the Arbenz land reform program could be characterized as -- on

balance -- a moderate, progressive reform though flawed in a number of

respects. Its basic thrust was to redistribute idle lands held in large

private estates and Government-owned State Farms. In principle, Decree 900

respected private farm lands in production. However, it also seems clear that

in practice, the program suffered from a progressive political radicalization

and a volatile proliferation of land disputes between different types of


46 -
The reform came to an abrupt end when on June 27, 1954, President Arbenz

was deposed by Colonel Castillo Armas.

C. Agrarian Titling, 1955-1982

1. Narrative Description of Agrarian Transformation

a. *Agrarian Development Zones, 1955-62

In the six months following the fall of the Arbenz government,

the majority of land expropriations were annulled. The National Farms were

taken away from the workers who had received them under Arbenz and returned to

government management and control. The land reform law (Decree 900) was

abolished by Decree 31, and a subsequent decree established a legal mechanism

for owners of expropriated land to regain title to their farms.

In early 1956, Decree Law 559 was passed to regulate agrarian reform

activity, establishing the Department of Colonization and Agricultural

Development as part of the Ministry of Agriculture. This law introduced a

progressive tax on idle land and a mechanism by which land that remained idle

for five years could be expropriated. Agrarian Development Zones were

established as areas in which land distribution would be concentrated.

Rather than distributing titles for large farms to cooperative groups of

workers, fee simple titles for family-size parcels were awarded to reform

beneficiaries. By 1960, a total of 3,800 parcels averaging 20 hectares each

47 -
were distributed in 21 Agrarian Development Zones. These zones were

concentrated in the South Coast (Departments of Escuintla and Retalhuleu), the

Pacific Piedmont (Suchitepequez and Jutiapa), and the Northeast (Izabal).

American foreign aid, through ICA, provided $6.5 million for a supervised

credit program in these zones, and the Guatemalan government provided $4

million from its own resources.

A review of Guatemalan agrarian history by Herrera characterizes the

principal obstacles to effective agrarian reform which led to a slowdown in

agrarian transformation after 1954. These include inadequate public

financing, lack of organizational knowledge in rural areas, and continuous

changes of legislation and regulations. But the most serious obstacle was
"systematic opposition of the capitalists who see land tenure reform as a

taboo to their private interests" (Herrera, F. 1966:25).

During this period, the Department of Colonization and Agricultural

Development was responsible not only for distribution of land but for the

provision of services to the beneficiaries of reform. Road building, housing
development, potable water systems, and school construction were all programs

for which the land reform agency had primary responsibility.

Progressive taxation of idle land was to be regulated by the agrarian

reform agency, though actual tax collection remained the responsibility of the
Ministry of Finance. Between 1958 and 1965, 233 farms were assessed a tax of

Q.117,269.19. This tax affected an idle surface area of 99,077 hectares.

There is no indication that any farms were expropiated under this provision of

the law.


48 -
The reform carried out was largely ineffective because of its minimal

impact on land distribution patterns, and because its focus on granting small

parcels resulted in a perpetuation of subsistence agriculture among

beneficiaries. However, these individual beneficiaries were relatively better

off than Highland subsistence farmers.. Yields of corn in the Agrarian

Development Zones were three times higher than in the Highlands as a result of

double cropping, the higher fertility of land, and the provision of inputs and

technical assistance.

The statistics of the period speak for themselves. An estimated 550,000

hectares of land distributed under Arbenz were returned to their former

proprietors and 265,197 hectares were distributed to small farmers. Thus,

twice as much land was taken out of the reform process as was subsequently


The governmental regimes of the period seem to have been vying to outdo

each other in the rollback of the Decree 900 reform, particularly with regard

to the selling of the National Farms, which had been property of the state

since the mid-1940's. Of the 74 National Farms, 11 were distributed as large

landholdings to private individuals under Castillo Armas (1954-1958) and 28

were distributed under Ydigoras Fuentes (1958-1962). In this fashion, an

estimated total of 122,000 hectares of national lands were distributed to 39

farmers at an average farm size of 3,128 hectares each. This land contained

prime acreage in permanent crops such as coffee, cardamom, and sugar cane.


49 -
In essence, land distribution followed two very different patterns during

the period. The principal beneficiaries of redistribution were large

landowners, each receiving large tracts of prime agricultural land (either

from National Farms or returned expropriated farms) producing cash crops. The

secondary beneficiaries were the landless poor, receiving small parcels of

land producing primarily corn and other subsistence crops.

The period can best be characterized by the following quotation from the

1970 AID/PPC Spring Review of land reform in Guatemala:

"The impact of colonization on the land tenure structure has been

negligible, if any (sic). A number equivalent to less than ten percent of

the 308,000 minifundia farm operators in 1950 have been settled. The land

tenure structure in 1964 remained highly skewed with 2.9 percent of the

farms controlling 62.6 percent of farm land while 87.5 percent of farms

all below 17 acres- covered 21.5 percent of the farm land. The number

of these minifundia operators increased by 18 percent. Plantations remain

the mainstay of Guatemala's agriculture and still control most of the

country's foreign trade. Levels of productivity have remained low -

bananas and cotton excepted helped by continuous reliance on a large

supply of cheap labor originating in the colono system and in the

subsistence sector. The character of rural life in Guatemala has changed

remarkably little since 1950. If the 1952-54 episode were to be erased

out of the history books, it would not be missed since history would

appear to continue without interruption." (Spring Review, 1970:6.)

50 -
b. Land Colonization, 1963-1981

A new agrarian reform law, Decree 1551, was passed in October 1962 in

preparation for the Punta del Este conference. The law, drafted by a Spanish

lawyer contracted by the Guatemalan government, consists of a restatement of

the major provisions of Decree 559 alohg with some new elements borrowed from

Spanish agrarian law. This law, as modified, in Decree 27-80 in 1980, has

provided the legal framework for agrarian transformation activities up to the


During this current period, as in the previous one, colonization in

Agrarian Development Zones has continued as a package program including

distribution of land, credit, and technical services. Decree 1551 has been

viewed by some as a more effective agrarian reform instrument; this is

contradicted by the facts.

For example, the pace of distribution between 1963 and 1970 was even

slower than in the preceding eight years. Approximately 69,000 hectares were

distributed between 1963-70, but the bulk of this distribution was National

Farm lands -- about 46,210 hectares. This is the same land that had already

been given and subsequently taken back.

Also during the current period, the focus of agrarian transformation has

turned to development of the Northern and Northeastern areas of the country.

The policy of the Mendez Montenegro government which took power in July 1966

was to make the development of the departments of Izabal, El Peten,

Huehuetenango, Alta Verapaz, Baja Verapaz, and El Quiche a matter of national


51 -
This policy did not translate into effective programs for various reasons,

principally because land virgin territory is expensive. Land

distributed in Agrarian Development Zones in areas with varying degrees of

infrastructure development was relatively inexpensive to the Government.

However, the expense of extensive new lands colonization, in areas with

virtually no infrastructure, was greater than what can be financed by the

resources of the Guatemalan public sector.

The 1970 Spring Review by AID/PPC poses the dilemma for Guatemalan

agrarian transformation at the time, should expensive colonization be

preferred to relatively inexpensive distribution of idle lands in the private

sector. The review estimates that 1.77 million hectares (4.5 million acres)

of idle lands in the private sector were already accessible and with some


The choice made by the Guatemalan government and supported with external

financing from the USAID Mission was to carry out colonization. Between 1971

and 1981, approximately 330,000 hectares of land were distributed. Almost

ninety percent of this land (292,000 hectares) is located in frontier

colonization areas.

2. Analysis of Land Distribution Statistics, 1955-1982

For an explanation of the methodology used to compute statistics on

land distribution for this period, see Annex 3.

52 -
a. Rate of Land Distribution during the Period

The actual number of hectares distributed between 1955 and 1982

is 664,525 hectares. A total of 50,267 beneficiary families are currently

settled on this land. These total figures provide an instructive contrast to

the 1953-1954 reform period in which approximately 78,000 families received

602,000 hectares. The annual rate of distribution for the 1953-1954 period is

401,378 hectares. The comparable rate for the 1955-1982 period is 24,612

hectares per year. In other words, the pre-1955 agrarian reform distributed

* land at an annual rate 16 times greater than the post-1955 reform.

Distribution throughout the period did not proceed at a uniform pace.

Land seems to have been distributed in fits and starts, as indicated in Table

15 in Annex 1. After an initial surge between 1955 and 1962, distribution

tapered off substantially until 1969. The pace picked up and peaked in 1972,

after which it again tapered off until 1976. Since 1977, distribution has

proceeded at a more uniform pace of about 28,000 hectares per year.

The largest amount of land -- 182,000 hectares -- was distributed under

Arana Osorio, between 1971-1974 (see Table 16 in Annex 1). The least amount

-- 4.500 hectares -- was distributed under Peralta Azurdia, between 1963-1966

which followed Punta del Este and the new agrarian reform law. The

presidential periods are ranked as follows:
Number of Hectares Percent of
President Period Distributed Total

Arana Osorio 71-74 182,228 27
Ydigoras Fuentes 59-62 165,197 24
Lucas Garcia 79-82 104,652 16
Castillo Armas 55-58 99,655 15
Mendez Montenegro 67-70 64,508 10
Kjell Laugerud 75-78 43,417 7
Peralta Azurdia 63-66 4,523 1

I .

53 -
b. Type of Land Distributed

The agrarian reform law includes five categories of land for

distribution. Family parcels (Patrimonio familiar mixto) include a house,

crop land, and pasture land in one unit. Crop land is titled to the family as

a unit, whereas pasture land is community property to be used by the owners

under conditions agreed to by them and approved by INTA. Pasture land cannot

legally be divided among the individual families.

The second category -- parcelamientos -- differs from the first in that

all land is titled to individual families in areas designated as zonas de

desarrollo agrario. In both this category and the patrimonio familiar mixto,

the size of parcel is to be sufficient to support a family.

The third category includes cooperative farms and a new modality

introduced in 1980 called patrimonio agrario colectivo. Title to the land is

provided not to individual families but to a group. Prior to 1980, this group

had to be organized and legally recognized as a cooperative. After 1980,

group title to land could be given to any group of families, regardless of

their legal status as cooperatives.

The agrarian reform law provides for distribution of parcels of land that

are less than family-size, called microparcelamientos. This exception to the

minimum size allows for titling of land in situations where insufficient land

for a family is available. This fourth category is similar to the fifth,

which is urban lots. These urban house plots (lotificaciones) are provided to

recipients of cooperative or microparcel land, usually in planned settlement


54 -
Almost half (44 percent) of the land distributed after 1955 has been in

parcelamientos located in Agrarian Development Zones (see Table 17 in Annex

1), where title is vested in fee simple to individual heads of family. A

quarter of the land has been titled to agrarian reform groups, mostly in

frontier colonization areas. A quarter of the land has been of the mixed

type, with individual ownership of crop land and communal ownership of pasture
land. The remaining 6 percent of land is distributed primarily in

microparcelas scattered throughout the country, with a very small proportion

*in urban house plots.

Interesting differences are found in the average amount of land

provided to each family in each of these types. The parcelamientos, primarily

distributed prior to 1963, have the largest parcel size, i.e. 22 hectares.

Cooperative farms provide an average of 17.7 hectares for each member family.

The mixed family patrimony parcels provide parcels averaging 8 hectares, just

slightly larger than the size considered to be a family minimum.

Microparcelas average.4.7 hectares, which is smaller than the minimum but

Ulrger than most sub-family farms listed in the census.

c. Size of Parcel Distributed

Half of the land distributed has been in parcels that exceed 25

hectares in size, which is considered to be the upper limit of a family-size

plot of land (see Table 18 in Annex 1). Two-fifths has been in family-size

plots between seven and 25 hectares. Only eight percent of the land has been

distributed in plots that are less than the minimum required for family


55 -
One of the aspects of agrarian transformation, well-known in Guatemala but

not previously quantified, is the distribution to the rural elite of

significantly larger parcels of land than is contemplated in the legislation.

The breakdown noted above shows that almost half the land distributed has

exceeded the maximum size required by a family. The bulk of this land is in

farms which are greater than 100 hectares.

The data show that the Arana Osorio period is characterized by the highest

rate of distribution of large farm parcels (see Table 19 in Annex 1). Almost

three-quarters of the area distributed during that period was in parcels

greater than 25 hectares. During the other presidential periods, the land is

much more evenly distributed by size categories.

d. Distribution of Land by Region
Two-thirds (67 percent) of the land distributed has been in the

frontier lands colonization region, i.e. departments of Alta Verapaz, El

.Quiche, and Izabal (see Tables 18 and 19 in Annex 1). Only 12 percent of the

land distributed has been in the prime South Coast area, which includes the

departments of Escuintla and Retalhuleu. An additional 14 percent has been

Distributed in the Western Highlands.

The part of the country that has been least affected by agrarian

transformation is the center and the east. The Central Highland departments

of Guatemala, El Progreso, Sacatepequez, and Chimaltenango have only three

percent of land distributed. The Eastern Highland departments of Zacapa,

Chiquimula, Jalapa, and Jutiapa have approximately four percent of the land

that has been distributed.

56 -
e. Impact.of Land Distributed on the Number of Landless

One way to evaluate the impact of land distribution is to

compare the amount of land distributed to the size of the landless

population. This comparison will be made at three points in time for which

population data are available: 1964, 1973, and 1980.

In 1964, an estimated 262,750 landless laborers existed; between

1955-1964, a total of 23,476 beneficiaries had received land (see Table 20 in

Annex 1). Thus, the number of actual beneficiaries prior to 1964 represent

S8.9 percent of the potential beneficiaries in that year.

Between 1965 and 1973, 9,274 families received land under the agrarian

transformation program. This represents 3.5 percent of the potential target

population of 267,058 landless laborers estimated on the basis of 1973

population figures.

Finally, between 1974 and 1981 17,877 beneficiaries received land. This

is 5.7 percent of the total estimated number of 309,119 potential

beneficiaries. (Note: The above estimates do not include permanently employed

plantation workers, who had been a recipient group uider the Decree 900

agrarian reform.)

57 -
D. Analysis of Current Agrarian Reform Legislation in Guatemala

The current agrarian reform law, Decree 1551 as amended, defines the types

of private lands that are subject to acquisition by the government for

subsequent redistribution. Farms with more than 100 hectares of idle

(abandoned or under-used) land can lose that land through expropriation

(Decreto 1551: Art 27-33). Areas that have been defined as rural development

zones are treated differently (see Decreto 1551: Art. 47). Farm land in these

areas can be expropriated if the lands exceed the amount recorded in the land

registry. If untitled, the amount that exceeds the limits established by INTA

for these zones can be expropriated.

Certain categories of idle land are exempt from expropriation: (l)farms

of 100 hectares (or less) irrespective of the proportion of idle land on the

farm; (2)farms larger than 100 hectares are permitted to have at least 100

hectares of idle land or 10 percent of their surface area idle, whichever is

greater; (3)forest land not being utilized but on which there are forest

stands with tree varieties at least 50 percent of which are commercially

exploitable; (4)land certified by the General Forest Administration (Direccion

General Forestal) to be forest reserve land; (5) zones designated as mining

regions by the Mining and Hydrocarbon Administration (Direccion General de

Mineria e Hidrocarburos); (6)areas designated as appropriate for urban

development by the corresponding municipal government

The process for determining idle lands is labyrinthine. INTA does not in
the first instance identify or delimit the idle land. The process is

58 -
initially based on sworn declarations by the owners themselves and proceeds

through multiple steps of topographical surveys, technical inspections and

reports, etc. If land is finally found to be idle (ociosa), the owner has two

years to put it back into production.

Once land has been declared ociosa by INTA, farmers desirous of working

the land may petition the Institute to proceed with expropriation. After a

provisional notification period has elapsed, INTA may proceed with an

appraisal of the land in which the owner and INTA.each select their own

appraisers. For establishing the value of the property, no.official tax value

declarations may be used. This is in contrast to the Decree 900 which

employed the value declared for tax purposes as the expropriable value of the

property. In cases of disagreement between the two appraisals, the National

Department of Mortgage Credit Appraisal (Departamento de Avaluos del Credito

Hipotecario Nacional) makes the final determination.

Once the price of' the property has been fixed, INTA may proceed with the

expropriation after agreeing to pay the full value of the property in cash, in
five equal annual installments including four percent annual interest.

However, if INTA decides that it is not in a financial position to undertake

the expropriation of the land at that moment, it can offer to the landowner

the option to put his land in production following a plan established by INTA

for that purpose. In such cases the expropriation proceedings are suspended.

59 -
This legal framework is inadequate for carrying out the stated or

ostensible purpose of the law. The procedures are time-consuming and

elaborate, and have had the effect of primarily protecting the owners of idle

lands. Also, the INTA office charged with implementing the idle lands

provisions of Decree 1551 has traditionally been understaffed and

underfunded. Indeed, INTA has not expropriated any appreciable amount of

arable land since the law was passed.

The idle land tax provisions of the law are somewhat less cumbersome.

Lands which have been declared idle are subject tooan annual tax 6f between

Q0.75 and Q2.50 per hectare; the better the quality of land, the higher the

tax. The tax increases each year, progressing from a 20 percent surcharge in

the second year through an 80 percent increase beginning in the fifth year.

However, this section of the law has not been fully-employed. Between

1963 and 1972, only 263 farms were assessed an idle lands tax; most of the

taxes owed were unpaid and government decrees in 1972-1973 exonerated all

.delinquent land owners from the payment of such taxes (Farfan 1974: 160-169).

The law also provides for distribution of public domain land. Various

conditions are attached to such land transfers: e.g. the land must be directly

cultivated by the beneficiary; parcels cannot be divided without prior

60 -

approval of INTA; and parcels cannot be transferred without INTA's approval.

Recipients of land receive provisional title upon payment of ten percent of

the value of the land. The balance of the cost of the land is to be paid off

lbain annual payments over a period of ten years.

It is instructive to note that this portion of the law has been applied

more effectively than the idle lands provisions. As noted in Section C above,

the majority of land distributed has been in colonization areas. Furthermore,

INTA has applied the payments requirement of the law far more vigorously than

the idle land tax provision. According to official INTA records, between 1970

and 1981, INTA took in Q5,334,609.50 for payments on land parcels

distributed. During the same period it took in only Q601,762.05 in idle land


INTA has taken in nine times as much in land payments as it has in idle

land taxes. In other words, Decree 1551 has provided a legal framework that

makes it possible to collect funds-from the rural poor but makes it difficult

to collect the idle land tax from the rural landed elite.

E. Colonization of the Franja Transversal: Assessment of an AID-supported


1. AID Loan 520-T-0262

One of the major efforts of the Government of Guatemala and

USAID/Guatemala to address the problems of high population density on marginal

( ,





SCALE: 1/5,000,000

Area. Nocthem Trraneal Strip

Area: Project 520-T-026

Departmental Divitloni

61 -
-lands and sub-subsistence minifundia holdings involves support of colonization

._.. of lands-in.-the-Northerni-Lowlands. --art-of the-Small-Earmer JDevelopment

Project is designed to move landless and landpoor farm families from the

Highlands onto family-size plots within the Franja Transveral del Norte

(FIN). The FTN stretches across the northern portions of the departments of

Huehuetenango, El Quiche, Alta Verapaz and Izabal (see Map 2).

Mhis project was preceded by two examples of successful resettlement in

theF TN, one somewhat planned and the other spontaneous. Maryknoll missionary

-priests working in the Highlands of Huehuetenango helped establish a series of

.settlements in the Ixcan section in the western end of the FTN. Approximately

1500 Indian families moved from the Highlands to the Ixcan with virtually no

technical assistance and a modest budget. Toward the other end of the FTN, in

-Sebol in Alta Verapaz, spontaneous settlers moved into the area following a

newly opened road to oil exploration sites.. In both cases, the settlers began

to -adapt -their agricultural practices to the different agronomic conditions of

the Northern Lowlands.

In 1975, USAID/Guatemala in cooperation with the Guatemalan National

mPanning Council contracted for a study of potential agricultural settlement

dn the FIN. As details of the study .were presented to the mission, a project

-paper was written -which resulted in the signing of a loan agreement. The FTN
1iAnd Resettlement portion of the agreement, with counterpart funds, totalled

$7.3 million for settlement of 5,000 families on 50,000 hectares of public

--domain lands over a five-year period. The project included infrastructure

-development, technical and social services support, and the establishment of

multi-purpose cooperatives.

62 -

As of August 1982, over a year after the original terminal disbursement

date, the project has not been completed. About 2,000 families have been

settled and there have been numerous delays and problems with implementation.

Early in the project it became obvious that the agronomic study and the

accompanying recommendations were less than satisfactory. Plot sizes for

settlers were increased to assure adequate size holdings for families to

support themselves, while several areas proved too swampy for settlement.

Agencies of the Guatemalan government did not provide adequate support in

the areas of education, health, agricultural extension and infrastructure

support; and badly needed U.S. technical assistance particularly in the

adaptive research, agronomic and field crop elemems of tropical agriculture,

was very limited. Several factors contributed to he shortcomings of

performance by Guatemalan government agencies. Tlre were problems of

isolation and climate which made, the placement of government workers

difficult. Inappropriate machinery and techniqueswere often applied to

problems, irrespective of the settlers' opinion ar capacities to contribute

to solutions of these problems. And the slownessof processing paperwork, by

both AID and the Guatemalan government, especiallyvouchers for reimbursement

of funds to cooperatives, caused some phases of th~project to be unduly


Finally, the level of political and militaryviolence within the project

area in the period December 198141arch 1982, madeit much more difficult for

contractors and government agencies to operate effectively. Work was stopped

in the project area by military authorities in Frbuary 1982 for several

weeks. During this period perhaps as many as 400families left the project

site, with two villages being evacuated. One otte; Trinitaria, was burned to

63 -

the ground. Since the change of government in March, the military authorities

in the project area have been considerably more cooperative and helpful,

though difficult on the distribution of food for food-for-work activities.

Farmers in the FTN reported that the military had confiscated stockpiles of

corn "to keep it from the guerrillas." It should be pointed out that the

Guerrilla Army of the Poor (BGP) has been active in the project area since its

formation in 1975.

Given these problems, this project cannot be termed a success, at least

thus far. It has had successful aspects, however, which can be built on.

There are also lessons to be learned (see ACDI report, 1982). In addition,

since the change of government in March, the project in virtually all its

aspects has picked up substantial momentum.
ttrn powrz tRIZMES
The strongest part of the project centers on the response of peai- s to

the opportunity for settlement of new lands and their capability to organize

themselves for the completion of project activities, such as construction of

schools, roads and community facilities. The popularity of this type of

colonization project is reflected in the fact that there is a list of about

1000 prospective colonizers who are still waiting to be settled in the project

area. Second, the multi-faceted supportive role of the Federacion de

Cooperativas Agricolas Regionales (FECOAR) in project implementation

progressively improved after some initial problems and confusion. Overall

FECOAR became quite effective, as was the unit in INTA which processed the

land titles. About 1425 titles were issued to the settlers.


- 64 -

The need for detailed agronomic and climatic knowledge cannot be too

strongly emphasized. Also, planning must not yield unreasonably rigid project

timetables and designs which cannot be altered to changing conditions.

Finally, the utilization of resources, human, financial and institutional,

must be better coordinated for purposes of development.

2. Survey of Colonization Beneficiaries

In March 1982, INTA conducted a survey of all d the heads of household in

the project area. The survey consisted of two parts. First, it contained

questions designed to gather basic socio-economic -adsdemographic data,

information on migration, production data, and a li ?of the most urgently

felt community needs. Second, the survey instrumeftwas accompanied by a

legal document which the respondents were asked tosign. The purpose of this

document was to have the settler swear that he/sheieets.the legal

requirements for being entitled to INTA land (i.e,,to be indigent and

landless). In an effort to get a clearer overall)dture of the settlers than

was possible from visits to the site, the team deeddd to analyze the first

portion of this survey. Time and manpower limitains: forced us to take only

a ten percent sample of the nearly 1,600 interviewsnd to restrict our

analysis to the demographic and socio-economic datin the survey. Coding of

the production data would have proven too time-camming, while the section of

the questionnaire regarding urgent needs of the-t.ders was so poorly

constructed that we did not feel that there wasn~-itpurpose in analyzing it.

Despite these limitations, we feel that the samplis:an accurate reflection

of the universe of settlers3. Our data bank costs of 158 interviews.

65 -
There was a surprisingly wide range of ages among the settlers. The

youngest head of household was 16 and the oldest 69. Grouped by ten-year age

categories, the age distribution is as follows:

Age Categories Per cent

10 thru 20 19 12.1

21 thru 30 51 32.5

31 thru 40 38 24.2

41 thru 50 29 18.5

51 thru 60 12 7.6

61 thru 70 8 5.0

(One case of missing data) 157 100.0

As can be seen from the table, the largest.number of settlers are in the 21

thru 30 year category (32.5 percent), the age group which is probably most

capable of enduring the hardships of colonization. However, there are a

substantial number of heads of households who are older than forty, and 12.6

percent who are over 50 years of age. The'average age was 34.5 years. It is

likely, however, that these older settlers already have children old enough to

help with work on the farm, although we did not have enough time to include

family data in our data bank.

Most of the settlers are married or live in common law unions. We found

that 41 percent of the settlers have a common law union and an additional 38

percent are married. Only 15 percent are single, and the remaining settlers

were either widowed, separated or divorced.

66 -

Very few of the settlers were living in the project area prior to their

receiving a parcel from INTA. In all, only five settlers (three percent of

the total) resided in El Quiche, the department in which the project is

located, prior to receiving their land. -The largest number of settlers,

however, came from nearby Alta Verapaz. (36 percent). An additional seven

percent migrated from nearby Baja Verapaz. The second largest department of

residence prior to moving to the project area was Escuintla (11 percent). No

other department yielded more than ten percent of the settlers. Migration

from the South Coast to new lands in the North and El Peten is a common

pattern in Guatemala. Grouping the departments of Escuintla, Suchitepequez,

Retalhuleu, and San Marcos as a South Coastal region we find that 23 percent

of the settlers follow this pattern. Hence, the majority of settlers came

from either the South Coast or departments neighboring El Quiche.
Turning now from the demographic to the socio-economic characteristics of

the settlers, we find that they are virtually all disadvantaged and very

poor. Fully two-thirds of the heads of households (66 percent) are

illiterate. An even larger proportion (89 percent) have fewer than three

years of formal schooling. Only three percent of the heads of household have

completed the sixth grade.

It is not surprising to find, given the frontier nature of the region,

that most settlers live in primitive conditions. A few of the settlers have

access to a potable water system. Fewer than one quarter (23 percent)

67 -
have self-contained water systems (using collected rain water). An additional

9 percent take their water from a well. The remaining 68 percent of the

settlers draw their water from rivers and streams. A further indication of

the rustic nature of the settlement is" that none of the settlers had electric

lights in their homes, and only 20 percent used some type of kerosene or gas

lantern. The remaining settlers use candles or kerosene lamps to illuminate

their homes.

Nearly half (49 percent) of the colonists have corregated tin roofing; the

remainder have straw and/or palm frond coverings for their houses; A small

minority (15 percent) of the houses have walls made of lumber; the great bulk

live in dwellings constructed of rough hewn poles tied together with straw or

string. Finally, sanitary conditions are poor in the project area, e.g. only

six percent of the settlers report having a latrine.

There are few surprises in this overview of the socio-economic and

demographic characteristics of the settlers. By definition, all of the

.beneficiaries are indigent, and all have moved to the colonization site within

the past few years. The interview data presented in these pages confirms the
structure of poverty well-documented by Fledderjohn and Thompson


3. New Lands Settlement; Costs and Benefits

It remains to appraise the relative costs and benefits of this pilot

colonization project. This is particularly important because

68 -
this GOG/AID project represents the only source of current information for

estimating costs and returns of land colonization of poor campesino families

in Guatemala.

a. Costs

First, detailed complete cost records were not maintained for

the public sector investment in settling colonizers. Where the records were

not adequate, persons who worked on the project in managerial and advisory

roles were asked to'provide estimates.

For estimating costs, settlement activities were broken down as follows:

1. Recruitment, selection, transfer and initial support.
.2. Land surveying (blocks, perimeters, townsites, farm plots, roads
and pathways).
3. Public Infrastructure.
a) Aldea schools (3 rooms)
b) Center schools (6 rooms)
c) Health posts (one per center)
d) Public program facilities construction (offices, shops,
warehouses, living quarters, plant nurseries, etc., for INTA,
and DIGESA, and other facilities providing staff services to
e) Aldea drying floors (for coffee drying and general community
f) Potable water system (centers, aldeas).
4. Cooperative facilities construction (offices and warehouse space).
5. Roads.
6. Credit
a) Grubstake credit for land clearing and construction of shelter.
b) Operating credit for first year.
7. External technical assistance (ACDI).

Except for grubstake credit and first-year farm operating credit, the

above categories do not include farm operating capital requirements. Actual

and estimated costs on a per family basis by activity category are shown in

column I of Table 5-1.

- 69 -

TABLE 5-1:Actual/Estimated Settlement Costs for Pilot Colonization
Project in the Franja Transversal del Norte, and
Projected Future Costs, Per Family and Per Hectare,
In Dollars, Guatcmala, 1982

Number of Act/Est. Projected Future
Cost Families Cost.Per Cost.
Base Involved Family Per Family
c() () ()

1. Recruitment, Selection,.
Transfer and Initial

2. Land Surveying
(Blocks, perimeters, town-
sites, farm plots, roads)

3. Public Infrastructure
a. Aldea Schools
b. Center Schools
c. Health Posts
d. Program Facilities (Offices,
shops, warehouses, living
quarters, etc.)
e. Aldea Drying Floors
f. Potable Water Systems

4. Roads

5. Cooperative Facilities

6. External Technical Asst.





2,000 each

10,000 each
5,000 each

















$2 609






$1, 984

- 70 -

7.- General GOG overhead

Sub Total


Estimated at
50% of direct
-cost per family
-cost per hectare

1. Land preparation

2. First Annual
operating credit

Clear 3 hectares
at $50/hectare


per family

per family


-cost per family
-cost per hectare

1 Using Metes and Bounds system instead of optical (transit) surveying methods.
2 Settlers finish school construction after roof structure and floor are completed by


3 Number of families for which pilot program designed.

4 Access to the project site benefited considerably from prior and continuing work on principal
access roads from Sebol to Xalbal by the oil companies, the Military and INTA. If future projects do
not benefit from similar road construction financed from other sources, road construction costs per
family could increase substantially.

5. Technical assistance mix should shift from major focus on planning and administrative support to.
agricultural production and local organization.


1 305


$_ 283



$4 564

$3 826

71 -
Since the project on which these cost data are based was experimental in

nature, it is reasonable to assume that if the lessons learned in the pilot

effort are applied in a continuing program, cost reductions can be achieved.

Column II of Table 5-1 represents best estimates by those who were involved in

pilot project implementation on cost savings that could be achieved in future

new lands settlement programs.

These data indicate that actual pilot project costs, excluding credit,

totalled $3,914 per family ($373 per hectare). This figure represents sunk

(non-recuperable) costs. Total investment, including requirements for
first-year credit, is $4,564 per family ($435 per hectare). Best estimates

suggest that somewhat more than 50 percent of the first-year credit granted

may be recuperated. Thus, the estimate of total sunk costs is $4,239 per

family .($404 per hectare).

Project personnel estimate that future programs can realize cost savings

in the categories of l)recruitment and selection, 2) surveying, and 3) aldea

school construction. They also believe that additional grubstake credit (Q2.00)

is required for materials for shelter construction. Applying these

adjustments to the costs of the pilot project, the following costs are

projected for continuing settlement programs:

72 -
1) Excluding first-year credit

a) per family $2,976.

b) per hectare $ 283

2) Including first-year credit.

a) per family $3,826

b) per hectare '$ 364

b. Returns.

The GOG receives virtually no direct returns from the pilot project.

Settlers are required to pay only Q160 for the land received, with Q16 payable

on receipt of provisional title and the balance of Q144 payable in.equal

annual installments over 20 years, without any interest charge. The only

significant returns are to settler families from agricultural production.

Net returns to the family were developed from a combination of crop

budgets prepared by Ingeniero Xuan (BANDESA) in 1981,4 and information from

persons knowledgeable and experienced in agricultural production in the

project area.5 BANDESA has not had sufficient lending experience in the

region to have developed wholly reliable crop budgets for the region. Wle thus

used crop budgets from similar nearby areas (Coban and Fray Bartolcme de Las

Casas) for additional perspective.

73 -
For purposes of. analysis, three sets of cropping plans and budget

projections were prepared. Utilizing the BANDESA budgets as base information,

projections classified as 1) most optimistic, 2) most likely, and 3) most

pessimistic, were prepared, both for cropping plans and for crop budgets.

Variables considered were; 1) rate of and total amount of land brought into

production, 2) costs of production, 3) yields, and 4) prices.

This above approach was used in lieu of a single set of crop plans and

budgets because of:

1) Lack of prior recorded agricultural production experience in the


2) Inexperience of the colonizers, e.g., the colonizing families had

no prior experience in the area, and many had no prior experience as managers

of their own farms, and '

3) Downward price trends for major crops being produced for export.

Cropping plans were prepared for four crops: coffee, cardamom, corn and

pasture. BANDESA budget information was not available for deriving pasture

costs and returns; they are based on knowledgeable judgments.

Cropping plans and criteria applied to the three crop budgets to obtain

the three different projections were as follows:

BANDESA budget labor requirements and hired labor costs were accepted

unchanged for all budgets. However, it was assumed that all labor would be

family labor for food crops, and 50 percent would be family labor for

permanent crops. It also was assumed that subsistence requirements for family

labor are equal to two-thirds of the BANDESA specified hired labor wage rate

74 -
for the area. Thus, family labor is included in the budgets as a family

subsistence cost. This means that net returns shown in the budgets are

returns after paying for family subsistence expenses. In addition, an

interest charge has been included in the budget for the full amount of crop

production expenses. Therefore, net returns shown are returns to land,

permanent improvements, working capital, management, equity and profits.

These returns are available for increased family consumption or investment.

Differences in cropping patterns among the three projections are as


Cropping Pattern (hectares)

Projections Coffee Cardamom Corn* Pasture* House, Wood lot,

waste, fallow.

Optimistic 2 3 2 3 0.5


Likely 2 3 2 2 1.5


Pessimistic 2 2 2 2 2.5

*Corn and pasture will rotate on a 2 corn-3 pasture or 2 corn-2 pasture


75 -
Differences in rates of bringing land into production for the three

projections are as follows:

Year Brought into Production

Projection 1 2 3 4 5 6 7 8 Total


Optimistic 2 has 3 has 2 has 2 has 1 has 10has


Likely 1 ha 2 has 1 ha 1 ha 1 ha 2 has Iha 9has


Pessimistic 1 ha 2 has I ha 1 'ha 1 ha 1 ha lha 8has

1) The 'host optimistic" projection includes input levels, yields,

and prices called for in the BANDESA budgets referred to earlier, for all

crops budgeted.

2) The "most likely" projection reduced fertilizer use by 30

percent for coffee (no fertilizer is used for cardamom and corn) below that in

the BANDESA budgets, yields were reduced by 25 percent for all crops from the

'"ost optimistic" levels, and prices remained the same as for the "most

optimistic" levels.

S 3) The "most pessimistic" projections are the same as the "most

likely" except that for corn, yields were reduced to two-thirds of 'most

optimistic" yields, and prices were reduced by ten percent for coffee and by

one-third for cardamom.

76 -
From the relevant crop budgets and cropping plans, cash flow projections

were made by crop, by year and by hectare. These are shown in Tables 5-14,

5-IS and 5-16 in the Statistical Appendix of Annex 5, and are summarized below.

Cash Flow Projections (Quetzales)

Most Most Most

Year Optimistic Likely Pessimistic

1 -256 64 40

2 -38 -200 -272

3 -174 -789 -861

4 775. -24 .-233

5 3,176 -199 -549

6 5,046 1,109 -851

7- 6;732 .2,262 1,631

8 6,648 3,278 2,011

9 .6,798 3,903 2,328

10 6,798 4,390 2,478

77 -
Internal rates of return on the actual/estimated and the projected costs

of colonization, for the three cash flow projection levels are as follows:

Projected Internal Rates of Return (ROR)

Internal Rate of Return by

Actual/Estimated Projected

Colonization Cost Colonization Cost

Cash Flow Projections of Q4,564 of Q3,826

Most Optimistic

Most Likely

Most Pessimistic







These projections suggest that under the "most optimistic" cash flow

projections, rates of return are quite satisfactory (30 t.o 33 percent

rounded). It should be kept in mind that these returns accrue to the poorest

segments of Guatemala's rural society since most of the colonizers were under

- or unemployed agricultural workers when they were recruited.

78 -
The projected ROR under the "most likely" cash flow projections are

considerably less satisfactory at a nine to 11 percent (rounded) yield. This

is considerably less than the open market cost of credit in Guatemala today

(16 to 22 percent). Nevertheless, since economic and social benefits from

this type of colonization accrue to the poorest segments of rural Guatemala,

these benefits may well be considered to justify the lower ROR.

Even under the "most pessimistic" cash flow projections, ROR remains

positive at one to three (rounded). This compares favorably with other

colonization efforts in Latin America. Derived economic benefits, such as

bringing new land into production and expanding the purchasing power of a

segment of the population, and derived social benefits, including the prestige

of land ownership and greater opportunities for future generations of the

beneficiaries, will accrue to the population from this type of colonization.

It is reasonable to assume that the GOG might consider at least this level of

subsidy to be justified.

- 79 -


SThe estimate for the number of landless laborers for 1950 age 20 and over

was computed in the following manner. From the Economically Active in

Agriculture population, 659,550, the number of Economically Active in

Agriculture between ages 7 and 9, 10,385 was deducted, leaving 649,165

Economically Active in Agriculture age 10 and over. Using the 1973 percentage

of Agricultural Laborers within the Economically Active in Agriculture, 50.9

percent, the number of Agricultural Laborers for 1950 was estimated to be

330,425. From the estimate of Agricultural Laborers, 330,425, the number of

Agricultural Laborers ages 10-19, 81,945 was deducted, corresponding to 24.8

percent of the Economically Active in Agriculture between Ages 10 and 19.

669,550 1950 Economically Active in Agriculture

10,385 Economically Active in Ag. Age 7-9

649,165 Economically Active in Ag. Age 10 and older

x.509 % Ag. Laborers in Econ. Active in Ag. 1973

330,425 Ag. Laborers Age 10 and older 1950

x.248 % Econ. Active in Ag. Ages 10-19, 1950

81,945 Ag. Laborers Age 10-19, 1950

330,425 Ag. Laborers Age 10 and older, 1950

81,945 Ag. Laborers Age 10-19, 1950

248,480 Estimate of Ag. Laborers Age 20 and older, 1950

Note that the estimated number of colonos is not subtracted from the estimate

as it was done in table 7 because colonos were a prime beneficiary of Decree


80 -
2 This section draws heavily from personal interviews with David Thompson

and David Fledderjohn of Agricultural Cooperative Development International;

their Final Report, Northern Transversal Strip Land Resettlement Project; and

the unclassified Guatemala 5605 cable of July 27, 1982, drafted by Larry Laird

of the Office for Rural Development, USAID/Guatemala.

3 We employed a "systematic sample of elements" to select the

questionnaires to be included in our data bank. This involved selecting every

10th questionnaire and coding it. In this way we were able to assure that our

sample covered all of the aldeas in the project as the questionnaires from

each aldea were bound together in separate folders.

4 Bandesa, "Costos E. Ingresos de Produccion", Guatemala, 1981.

5 David Fledderjohn and David Thompson, ACDI.

- 81 -


A. Macro-Assessment. This Part of the study is broadly prescriptive, not

program specific. The scope of work for the team -- which we have carefully

tried to adhere to -- asks us to "describe and compare possible alternative

AID project strategies such as colonization, agrarian reform and improved

agricultural technology on current holdings." What we have sought to do below

then is to take a broad and strategic look at alternative program and/or

project options, making some initial judgments on what might be feasible and

drawing attention to the areas and problems where follow-up investigation and

analysis are needed. In effect, we have sought to do a macro-assessment of

available options, hopefully consistent with and drawing on the findings in

Parts One and Two, while leaving to others the tasks -- as the Guatemalan

Government and US Mission see fit -- of program development and project design.

B. Parameters. The Minister of Agriculture on more than one occasion

specifically stated to the team members that the agrarian reform policy of the

Guatemalan Government explicitly excludes expropriation of privately-owned

lands in productive uses. It indeed seems clear that the GOG does not

presently contemplate a land reform program along the classic lines of

government intervention in land ownership-land tenancy relations,

82 -
expropriating privately owned lands in production, and distributing them to

other producers, or cultivators. The extensive land reform experience of this

broad character in other countries in this century, such as in Mexico, Japan,

Taiwan, South Korea, Bolivia, South Vietnam and now El Salvador, would thus

appear to have only marginal relevance to the tasks at hand in Guatemala.

We accept this limitation as a given, for reasons of both substance and

prudence. The United States risks ineffectiveness and counter-productive

-relations with a host government by getting ahead of the latter, in effect,

finding itself in an out-front advocacy position, on sensitive domestic policy

issues such as land reform. Questions concerning the character and pace of

structural social and economic change in a country, as mirrored in an agrarian

reform program, are best left to the host government. The U.S. role,

especially if linked to prospective and concessional external resource

transfers, is certainly an important factor, but should be viewed as secondary

to Government decisions and will to follow the path of change it chooses.

However, no one can doubt the deep dualism that permeates Guatemalan rural

society with respect to ownership of and access to the land. As set out in

Part I, minifundization, or fragmentation, of land holdings for the large

number of primary producers has progressively increased over the past thirty

years; to the extent, that in 1979, 78 percent of all farms in Guatemala were

under 3.5 hectares, while occupying but 10 percent of the land in farms. On

the other end, land concentration is equally dramatic with farms of 450

hectares and larger, constituting less than one (1) percent of the farms, but

containing 34 percent of the land in farms. The pattern of land concentration

is further intensified by the fact that the farms which have the higher

I .

83 -
quality lands under cultivation generally are found where land concentration

is the greatest. And last, the dualism is reflected in the amount of idle

(abandoned or not in production) arable lands which exist on large private

holdings, approximately 1.2 million hectares as estimated in the 1979

Agricultural Census, in the face of severe land scarcity among the large mass

of rural poor.

In some part, this dualism is a reflection of a traditional skewed

division of assets between a largely subsistence sector composed of Indian and

Ladino rural poor, which has not been effectively integrated, with a few

exceptions, e.g. wheat and vegetable farming, into the mainstream of the

Guatemalan economy, and a modern sector which is dominated by commercial

agriculture and import substitution light industry.

Yet this does not fully capture the extent of Guatemala's dual society.

An excessive 3.2 percent population growth rate per annum increases

malproportion in the distribution of income, as well as generating unrelenting

land pressures in the subsistence sector. Cultural and ethnic distinctions

reinforce economic inequalities, and conservative Guatemalan leadership groups

distrust social change, seeing it more in conflict terms rather than as a

moderate process calculated to blunt and eventually dissolve the extremes of


However, there is still momentum for change in Guatemalan society, and

among its leaders. This momentum is being energized in part by negative

factors such as the insurgency in the Highlands and Northern Lowlands, the El

Salvador reform model next door, and the depressed state of the economy.

84 -
There are positive factors at work as well such as changes in social values

among more than a few of the large landowners, a more enlightened perspective

of national unity and welfare on the part of the senior leadership of the

present government, and an apparent growing awareness in the military of the

absolute need of the support and confidence of the Indian population if the

insurgency is not to be interminably prolonged. These factors to be sure are

equivocal, or less than clear-cut, but they merit support.

C. Agrarian Change Options. Our approach to the options which we discuss

below is to build-on the factors of change noted above while not going beyond

the policy confines played out by the Minister of Agriculture. The intent is

to develop programmatic ideas, or alternatives, which though they may not be

decisive in their impact on the pressing land problems in Guatemala -- some

will call the alternatives "minimalist" -- do stand to reinforce, and take

advantage of, the forces of change which over time may lead to definitive


To this end, we discuss three options below: l)the development of a

commercial land market in Guatemala; 2)a strategy for further program efforts

in land colonization; and 3)the feasibility of the "La Perla" experiment of

converting privately-owned agricultural estates into joint worker-employer

enterprises by allowing the permanent agricultural workers to purchase shares

in the ownership of such enterprises.

8S -
These options are not mutually exclusive. Nor is it our intent to

necessarily choose between one or another, though it will be clear as to which

we feel, prima facie, has the most merit.

In the last section on suggested actions by the Guatemalan Government, we

discuss what in effect is another-option, but one solely for the government to

consider and act upon: the redesign of present agrarian reform legislation so

as to facilitate the distribution of idle lands.

D. The Development of an active Commercial Land Market in Guatemala. This

option is elaborated and appraised in some detail in the latter part of Annex

5 and in Annex 6. We limit ourselves here to the highlights and some of the

important implications of this more extended statement.

The purpose of developing an active commercial land market in Guatemala

would be to provide means by which substantial numbers of landless and

land-poor campesino farmers could gain access to family-size parcels, even

though they have only limited funds for down payment. The land market that

presently exists in Guatemala is small in scope and virtually excludes

campesino families from participation. Essentially, there are no. formal

institutional sources for the financing of land purchases by small farm

buyers. The informal means that are available -- the moneylender, borrowing

from family or friend, or seller financing of the purchase -- by their very

nature restrict the market and make it too dear for all but a very few of the

small farmers.


86 -
The land market on the other end, that is, the commercial buying and

selling of big farms as units, or as relatively large tracts, has also been

limited in Guatemala. Bank financing is expensive and contingent on extensive

assets other than the farm property itself to secure the loan. This market is

unusually slack at the present time as well because of depressed economic

conditions and the insurgency.

Clearly, an effective institutional financial system or structure that has

heretofore been lacking, would be imperative for activating and expanding a

commercial land market which would serve the policy purpose of movement toward

.a significant voluntary redistribution of land assets in Guatemala in favor of

the small farmer.

It first should be ascertained, however, whether in the present Guatemalan

setting there are large farm owners with significant amounts of productive, or

potentially productive, lands which they would be willing to put on the market

if a financial mechanism existed to facilitate fair and expeditious land

transfer. Similarly, it would have to be ascertained if the effective demand

exists among the target group of landless and land-poor farmers to purchase

the lands.

Neither of these questions can be answered in a systematic, definitive way

within the time frame and scope of this assessment. A follow-up study on the

feasibility of this land market approach would clearly be necessary. The

study group would focus on exactly the above types of questions, including the

vital one of the behavior of land prices and would as well collaborate

See the AID Evaluation of the Land Sale Guaranty Programs in Ecuador and
Costa Rica (1975), by Goldstein and House, for a discussion of the problems
these types of questions presented in private sector land transfer programs in
these two countries.

87 -
closely with representatives of the Guatemalan private sector -- e.g.

landowners and the banking community -- and with government officials.

We would emphasize here however that one of the reasons we have pursued

the land market option so assiduously is that our initial soundings have been

that there is indeed a surprisingly ample potential land market of sellers and

buyers if a facilitative financial system were to be established. A random

sample of knowledgeable Guatemalan opinion clearly indicated that substantial

amounts of productive land would be offered for sale by private owners of

large farms if realistic conditions of sale obtained. Some of these lands are

in the Highlands and Northern Lowlands. More are in the Boca Costa and Costa

Ba-a. "They tend to be under-utilized and .in some part are likely already

spontateously settled, particularly in the Highlands. They are principally in

cash crops such as coffee, sugar and cotton. Some are in a more or less

quiescent state; that is, still productive but in a condition of gradual

abandonment with the owners not making recurrent or new investments, but only

seeking to realize the income possible with minimum capital outlays.

INTA alone has offers of sale of some sixty eight 68) Fincas averaging

nearly 800 hectares each. The majority of these are located in Alta Verapaz

and several are in the Highlands and Izabal.

The reasons given for the apparent readiness of substantial numbers of

large farm owners to sell are varied but can be summarized as follows:

l)unstable politico-security conditions; 2)high-short term debt loads which
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existing levels of farm income cannot service; 3)depressed international

prices for most large farm export crops combined with mounting input costs, a

crunch exacerbated by the low efficiency of labor utilization on large farms

which suffer from diseconomies of scale in labor use; and 4)the reduced

attractiveness of owning farmland for financial security and as a hedge

against inflation under present economic and political conditions..

The demand side of the market also, on balance, looks hopeful. The

consensus view among those we talked to was that there would be no shortage of

prospective small farmer buyers who had the assets, or the near-term potential

to earn them, if appropriate financing was available. It was felt however

that interest rates would have to be subsidized so that the small farmers

would not be paying more than 8 to 12 percent; that nominal down payments

should be the rule; and that institutional support and assistance from

cooperatives and organizations like the Fundacion del Centavo would be needed

in the promotion, arrangement and negotiation of purchase by the small

farmers. It could be added that there are now at -a minimum 50,000 Highland

small farmers of modernizing, entrepreneurial bent who are cultivating labor

intensive, high market value crops, rather than subsistence level basic grains

-- which is a hopeful sign in and of itself. We would also note that for a

first-time observer of the rural scene in Guatemala the most striking aspect

of rural life is the pent-up demand for land on the part of the rural poor.

The specific character of the financial system best suited to energize and

service a commercial land market in Guatemala again is a matter that would

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have to be dealt with in some detail by a follow-up study. We have suggested

in Annex 6 a "land mortgage company" with minimal government involvement, and

set out some of the features which we would think might characterize its

functions and procedures.

Responses were positive among the limited number of people knowledgeable

about land conditions in Guatemala which we talked to about a land mortgage

company. It was generally felt however that a significant amount of the

initial capitalization of the company would have to come from soft money

sources. It was also urged that any effort to establish a land market

financing system first be tested on a small scale until needed experience is.

gained -- advice with which we fully concur.

We have also estimated in Annex 6 the magnitudes of funding that would be

required from domestic and external sources in order to provide a rough

picture of what the financial parameters of a project like this might look

like. However, the most important aspect to focus on at this time is not

these useful but soft financial projections, but rather the advantages or

positive factors that prima facie recommend serious consideration of voluntary

land redistribution on existing productive lands, that is, the land market


First, the option stands to be considerably less expensive than settlement