Negotiating Contract Farming in the Dominican Republic

1. Negotiating Contract Farming in the Dominican Republic By Laura T. Raynolds

2. Contract farming • In Latin America and the Caribbean peasant producers are growing fruits and vegetables such as grapes, tomatoes, broccoli, okra, green beans, and peas under contract for processing and export firms • Contract farming is likely to expand because of the global increase in luxury and processed-food markets and the widespread adoption of export promotion policies • Contract farming is unique because it commits household land and labor resources to the production of a commodity that is ultimately controlled by an agroindustrial firm • The conditions and meanings of the contract relationship are continuously negotiated by growers and contracting firms

3. Points of Article • Explores the complex negotiation and renegotiation of contract relations in the Dominican Republic • How the country has restructured the Dominican Republic that has fueled the growth of contract farming of nontraditional labor-intensive crops, especially in tomatoes for processing • Two perspectives 1. processing-firm officials 2. contract growers • Tomato contracts work to provide: 1. Processing firms with access to state irrigated land and peasant household labor 2. Peasant growers with credit and guaranteed markets

4. Contract Farming–How it works- • The recent spread of contract farming is associated with • 1) global patterns of restructuring that privilege flexible accumulation strategies in agriculture, as well as in industry and service sectors • 2) widespread adoption of neoliberal policies that foster the growth of new agroindustries • Contract production provides a distinct alternative to either open market purchases or direct production • The purchaser enters into a formal agreement with the grower to buy the farm output prior to production • The grower in turn for this guaranteed market agrees to abide by a set of established production procedures under the oversight of the purchaser • The term “contract farming” is used to describe production by smallholders for private corporations

5. Some suggest that contract farming represents a form of “disguised wage labor” where production is essentially controlled by the purchasing firm and producers are basically proletarian workers Others argue that the control over production rests largely with the growers, who are essentially independent family farmers engaging in a form of advance market agreement The author believes we need to research how contract relations are negotiated and renegotiated by growers and firms within the context of shifting production and market conditions Debates

6. Nontraditional Agriculture and Contract Farming in the Dominican Republic • Over the past 20 years agriculture in the Dominican Republic has been restructured by globalization, international debt, and neoliberalism • The rise of nontraditional agriculture in the Dominican Republic has been associated with a dramatic increase in contract farming • The marginal peasant producers who dominate Dominican agriculture-struggling to exist on tiny parcels using household labor and limited capital investments have been devastated by the declining markets for traditional peasant crops • The Dominican state has encouraged contract farming in nontraditional agriculture as a way to organize the peasant community and reduce its obligations

7. Tomato-Processing Firms’ Negotiation of Production Contracts • The industry is controlled by 5 Dominican-owned corporations that are among the largest firms in the nontraditional agricultural sector • 75% of tomato contract growers are located in the southern valley of Azua, one of the poorest regions of the country • Why contract farming of tomatoes? • Tomatoes are a relatively labor-intensive crop, requiring person-days per acre under local conditions, under the contract responsibility for assembling labor and assuring work performance is shifted from the firm to the growers • When asked to explain the position of contract growers, company managers and field supervisors respond “the contract growers are not farmers” • If contract growers are not farmers, what are they?

8. Contract Growers • Over 90% of contracts in the Azura region are signed with men, since they are the ones who hold rights to the land • Most growers have resident female partners and typically three or four children • Despite having multiple earners and, some source of off farm income, households are poor • Why do contract farming? • “How else could I work this land?” • For growers who “eat from” their parcels, contracts provide a critical source of consumption, as well as production credit • Household labor

9. “We all work in the tomatoes, that way the money stays here. The little ones are good at transplanting, my wife knows the harvest, I do the rest. We are poor and cannot afford to hire others, except in the harvest-you have to hire others for that”

10. Distribution of risks and the role of debt in contract farming In the early 1980s, Dominican production of processing tomatoes was relatively stable In the mid 1980s the processing firms introduced a set of new procedures aimed at tightening their control over production In addition to increasing costs, by escalating the volume of variety of pesticide use, tomato companies fueled a white fly outbreak which caused huge agricultural losses through out the region Contracting in the Face of Production Losses

11. Conclusion • In the Dominican Republic, the rise of contract farming is linked to the increasing consumption of processed foods and the declining capacity of the state to provide credit and other inputs to peasant producers • Contract growers’ subordination is heightened by the fact that most cannot read calculate their profits, or more commonly in recent years, their debts