The dynamics and processes of transformation and of the reorganization of industrial and class relations were particularly evident within the coffee industry itself.
Industrial and agricultural development, technical assistance and credit programs within the sector were remarkably successful; replacing the symbiotic smallholder producer vs. aristocratic processor relationship with a two tier system of mega-processors, often allied with foreign wealth, and state-sponsored small-holder cooperatives.
Relaxation of production regulations combined with public investment in technology and infrastructure meant that between 1950 and 1980 Costa Rican coffee production increased six fold although the area cultivated had only doubled; making the country the most efficient and lowest cost coffee producer in the world. This massive increase in production created potential for hugely increased revenues for those who could find the capital outlay to extend and develop their processing facilities. Hence the larger cafetalero elite operations, particularly those who were known on international markets and could secure external funding, were the main beneficiaries of the changes, expanding to become ‘mega-processors’.
However, under this capitalist logic of unregulated free-market competition, many smaller producer/processors were pushed out and marginalized as the traditional aristocratic families gradually lost their economic hold on the industry.
For the former cafetaleros the problem was further compounded by the Figueres initiated cooperatives scheme, whereby smallholder producers were encouraged to unite and work collectively and were given technical and marketing support, bank credit and tax exemptions in an attempt to prevent total domination of the market by foreign-backed mega production and decrease private-sector share of the crop. By 1980 40% of the national crop was produced by cooperatives whose preferential financing options and tax benefits meant that they too had a distinct competitive advantage over the smaller independent operations.
By introducing competition, deregulation and transnational wealth the Liberación reforms transformed not only the coffee economy but also its ruling class structure. The apparently ’harmonious’ relations of the past, in which many hands, both large and small, saw a share of the profit, began to disappear as what had been a ‘low-volume, high-margin, local monopoly business’ was converted into a ‘high-volume, low-margin, intensely competitive enterprise’.30 the traditional aristocratic processor became a ‘vanishing species’ and oligarchic control was slowly liquidated.
Relaxation of production regulations combined with public investment in technology and infrastructure meant that between 1950 and 1980 Costa Rican coffee production increased six fold although the area cultivated had only doubled; making the country the most efficient and lowest cost coffee producer in the world. This massive increase in production created potential for hugely increased revenues for those who could find the capital outlay to extend and develop their processing facilities. Hence the larger cafetalero elite operations, particularly those who were known on international markets and could secure external funding, were the main beneficiaries of the changes, expanding to become ‘mega-processors’.
However, under this capitalist logic of unregulated free-market competition, many smaller producer/processors were pushed out and marginalized as the traditional aristocratic families gradually lost their economic hold on the industry.
For the former cafetaleros the problem was further compounded by the Figueres initiated cooperatives scheme, whereby smallholder producers were encouraged to unite and work collectively and were given technical and marketing support, bank credit and tax exemptions in an attempt to prevent total domination of the market by foreign-backed mega production and decrease private-sector share of the crop. By 1980 40% of the national crop was produced by cooperatives whose preferential financing options and tax benefits meant that they too had a distinct competitive advantage over the smaller independent operations.
By introducing competition, deregulation and transnational wealth the Liberación reforms transformed not only the coffee economy but also its ruling class structure. The apparently ’harmonious’ relations of the past, in which many hands, both large and small, saw a share of the profit, began to disappear as what had been a ‘low-volume, high-margin, local monopoly business’ was converted into a ‘high-volume, low-margin, intensely competitive enterprise’.30 the traditional aristocratic processor became a ‘vanishing species’ and oligarchic control was slowly liquidated.
