The Reproduction of the Cocoa Industry and Biodiversity in Southern Bahia, Brazil

Keith Alger
Instituto de Estudos Sócio-Ambientais do Sul da Bahia
Universidade Estadual de Santa Cruz
Caixa Postal 84, Ilhéus, BA Brasil 45650-000
Tel/fax 073-634-2179
kalger@bitsnet.com.br
http://www.bdt.org.br/bdt/iesb

Cocoa is a commodity. Holding quality constant, the world market is mostly indifferent to whether cocoa is from Brazil or Malaysia, whether it is grown on monocrop plantations or in backyard gardens, whether it eliminates or perpetuates poverty, or whether it sustains or destroys the last pockets of tropical biodiversity. Consumers are guided by daily price movements which do not incorporate information about the medium-term, "plate-tectonic" factors which constitute the social and environmental basis of the production system. Economists increasingly recognize that if markets permitted consumers to choose between production systems with or without positive environmental and social externalities, prices of products like cocoa would be higher to permit the incorporation of these equally economic benefits. There are two key problems complicating the search for mechanisms permitting these choices: since global market problems require global policy fixes, negotiation among national governments is required to provide for transfer payments and, it is unclear how a willingness to pay higher commodity prices can be used to induce not more production, but the various specific environmental or social side-effects which consumer nations seek.

This disjunction between the global commodity market and the heterogeneous types of externalities which global policy is asked to redress is the model for three disjunctions I will discuss with respect to cocoa production in Bahia, Brazil. A disjunction, in this paper, is a gap between the nature of the problem and the nature of the tools available to address the problem. Three disjunctions will be addressed here. The first distinguishes between the problem of critical forest fragments and the tools influencing the way cocoa is produced. The second is between the economy of the traditional extensive cocoa plantations, and the socio-cultural base of the institutions that service this economy.

The third disjunction is on the time dimension, between the immediate need to implement solutions and the long-term nature of the fundamental reforms necessary to sustain these solutions.

I. Saving cocoa, with or without shade, doesn't necessarily save biodiversity.

On a map of the production areas for cocoa in 1974 (Figure 1), CEPLAC, the Brazilian federal agency for cocoa research and extension, shows that the chief production areas for cocoa are located some distance from the coast. With the exception of cocoa planted in river valleys approaching the sea, the areas for cocoa production are predominantly located inland at least 15 to 20 km. Superimposing the cocoa distribution map on a map of soils or forest remnants, (Figure 2) it is clear that most natural forest remnants survived close to the coast because these were areas of less interest to cocoa planters. The soil map shows the near-coastal areas to have sandy, acidic, and aluminum-toxic soils inappropriate for cocoa production.

The species-forest size relationship developed in the theory of island biogeography indicates that the areas with the largest fragments should be central to any strategy to conserve a larger number of the endemic species threatened with extinction. The conservation priority that has been placed on the Atlantic Forest of Southern Bahia stems from Myers' and Mittermeir's (Myers, 1983; Mittermeir et. al., 1997) analysis of endemism under threat. Considering the number of endemic species and the threat to their survival, expressed as the amount of forest remaining, only the forest of Madagascar is more of a world conservation priority than Southern Bahia. Three primate species in the cocoa region of southern Bahia, for example, are found nowhere else in the Atlantic Forest, nor elsewhere in Brazil: Leontopithecus chrysomelas, Cebus apella xantosthernos and Callithrix kuhlii. Though these fragments have been tremendously reduced since 1974, principally by road construction facilitating the work of loggers and cattle ranchers (Fonsca, 1985) the largest remnants are still located in the poorest soil regions near the coast.

The areas with soils most propitious for cocoa, more distant from the coast, also retained many large fragments. As late as the mid 1980s, the average farm with over 1000 ha had more than 30% of its land area in forest fragments. These were mostly located on hilltops or places far from roads. Roughly 65% of the cocoa planted on these farms is planted in the traditional "cabruca" system (Alger and Caldas, 1992; May and Rocha 1996). In this system, the original forest is thinned, understory is eliminated, and cocoa is planted in the shade of natural tree species. Since forest fragments are surrounded by this natural corridor, many wide ranging species can use it to travel from forest fragment to fragment. Ecological studies have shown nonetheless that cabruca does not harbor bird species requiring understory plants, nor can it serve for the reproduction of larger mammal species which are subjected heavy hunting pressure by farm workers (Alves, 1990). While some mobile canopy dwellers such as marmosets and toucans do well in cabruca areas, large birds such as the harpie eagle, and large mammals like capuchin monkeys and tapirs have been eliminated from cabruca areas by hunting, despite continuous unbroken canopy for kilometers in either direction. As natural tree species age and fall in cabruca areas they are also not replaced by natural species, since the understory is systematically cleared for work around the cocoa plants. The oldest cabruca plantations, in the areas near Uruçuca therefore lost much of their biodiversity, while younger plantations (planted in late 1970s and early 1980s) in areas like Camacã could preserve more.

With the decline in cocoa prices in the late 1980s to half of the $2000/ton price necessary for maintenance of plantations, combined with the onset of the fungal disease witches broom (Crinipellis perniciosa), which required more maintenance to prevent the disease from killing the cocoa plants, many uncared-for cabruca plantations were reduced to shade trees standing over blackened skeletons of cocoa plants. The cabruca plantations in the newer areas of Camacã were the hardest hit by witches broom. Since 1994, to obtain income from their farms, farmers logged their forested areas, and then burned and cut down extensive areas of cabruca. While undeveloped pasture on extreme slopes with 2000 mm of rainfall per year is reduced quickly to barren and eroded slopes, a few of these areas have been purchased for investment in coffee. Others have cut out cabruca to plant pupunha (Bactris gasapaes) for palm hearts. A rough estimate by CEPLAC is that 30,000 ha. of cocoa has been eliminated between 1992 and 1996 (Trevizan, 1998).

The declining economic fortunes of the cocoa planters reinforces the importance of efforts to guarantee the 20% of land area that farms are required to maintain in natural forests, and to prioritize corridors linking these fragments with larger fragments (Ayres et al. 1997). Since the largest fragments are still in areas bordering the coastline, and thesefragments function for a broader range of species than the cabruca matrix further inland, environmentalists have focused on consolidating the coastal fragments in conservation units linked to neighboring private forests.

Since approximately 1985, squatter movements have become a growing threat to the forested coastal regions. Unemployed farm workers, supported by a variety of human rights, Catholic church, rural farm workers unions, and by the national group MST(Movimento dos Sem Terra) seek disappropriation of farms and recognition of these areas as land reform communities. Brazilian law and public policy have encouraged squatters to settle in forested regions. Though forested land in the Atlantic forest region is technically protected by law against degradation, courts have traditionally considered forested land as "unproductive," giving cause to squatters in disappropriation cases. Once the courts award use rights to the occupiers, facilitating disappropriation, IBAMA, the federal environmental agency, considers the forest there to be outside their responsibility. INCRA, the federal agency responsible for land reform, then subdivides the farm in a checkerboard of lots, requiring only that each lot have a forest reserve. The modular lotsize for the cocoa region is 20 hectares, so that a disappropriated 1000 ha. farm with 400 ha. of natural forest reserve is subdivided into 50 lots each with an isolated 4 ha. forest reserve.

INCRA, is also under political pressure from Brasilia to settle as many families as possible with the least expenditure on land, in order to remove land reform as a critical election issue. Unsurprisingly, INCRA employees nod in the direction of forested lands when asked by movement activists where low land prices might make disappropriation possible. Rather than confront armed farm workers on cocoa farms, squatters have sought areas where squatters rights can be established without gunfight, and where courts have proved more sensitive to their claims. Figure 3 shows that since political rights were restored in Brazil in the mid-1980s, the first locations for land reform were in forested areas along the coast and adjacent to or inside conservation units. From 1990, this tendency continues, but with an increasing number of land reform communities established in areas of cocoa.

The disjunction here is that without jobs for unemployed rural workers in the favelas surrounding rural towns in the cocoa region, pressure increases for land reform in the less-contested forested fragments on the coast; but the instruments necessary to create employment, or to reinvigorate decadent cocoa plantations do not directly address the situation of the key larger forest fragments, located where cocoa plantations are not even very important. In Una, near the Una Biological reserve, where the soils are poor, rubber has been a larger income-earner for both small and large farmers than cocoa.

Even though related, the problems of cocoa and the problems of biodiversity cannot be solved in Bahia with the same policy instruments. Price premiums paid to "organic," "shade," or "fairly traded" cocoa would return most benefits to the largest farmers, since they produce most of the cocoa. The criteria for organic, shade, or fairly traded production would not necessarily require farmers to maintain forest reserves, limit hunting and burning, and, most importantly, observe a strategy to maintain fragment interconnectivity. Saving biodiversity on individual farms does not help much if the farms, chosen by farmer voluntarism, are disconnected from each other and from the largest forest fragments. Policy instruments for biodiversity linked to cocoa production would be largely ineffective without the prior existence of landscape planning and geographic zoning which conditioned agricultural and credit services on forest corridor maintenance in critical zones.

Concentrating efforts on cocoa production assistance to small farmers (< 25 ha.)also bypasses the biodiversity issues. It is the large farmers who have large forest fragments (> 10 ha), while small farmers must farm more intensively their areas. In areas with many small farmers, population density is higher (average family size about 10) and the small isolated forest fragments are almost entirely dominated by "edge effects" and by hunting, logging and other forest-degrading forms of extraction. Participatory planning by small farmer communities to unify their forest reserves, with incentives for maintaining fragment connectivity in critical zones, depends on policy instruments that are conceptually unrelated to cocoa production.

II. Resurrecting the existing structure of cocoa production ignores comparative advantage and distributional issues.

Environmentalists from the Amazon visiting Southern Bahia often marvel that an agroforestry system conserving canopy and forest fragments could also produce one billion dollars in yearly export revenues in 1979 under a labor intensive production process. This seems to be just what they're looking for. Jobs, income, and biodiversity conservation coexisted in Southern Bahia. Why not rescue this system?

This is also the argument of the traditional landed elites, and of CEPLAC, the cocoa development agency. Attributing the current crisis to a temporary oversupply of cocoa and to the witches broom disease, CEPLAC and the cocoa producers have focused their attention on obtaining subsidized loans for cocoa farmers and discovering chemical treatments or plant genetics that resist witches broom. Unfortunately, it would be impossible to recreate the production system of 1980 even if cocoa prices rose again to the levels of 1980 and a final solution were found for witches broom. The fundamental problems of the production system are found elsewhere.

After the first generation of cocoa planters opened the forested frontier, subsequent generations became absentee owners of farms, with homes in the local cities of Itabuna or Ilhéus and beyond. A typical farm in the middle range of the large farms that account for most of cocoa production in Bahia would have about 500 ha (Table 1). On a typical 500 ha. farm, a manager, assisted by technicians trained at the local technical school would supervise, on average, about 100 salaried farm workers (Alger and Caldas, 1992). An assiduous farm owner would visit his farm once a week, though monthly visits were considered sufficient. Farm owners in the cities concentrated on marketing, purchasing and delivering inputs, and the time-consuming task of intermediating loans and technical assistance from CEPLAC and the Banco do Brasil. The 100 farm workers cleaned, planted, and harvested cocoa, sustaining a community of about 500 dependents housed in farm-owned lodgings. A community this size would sometimes have a school, but illiteracy remained higher than 50% in the rural areas of the cocoa municipalities in 1991 (Anuário Estatístico, 1995, p. 125). A farm store often sold, at elevated prices, the beans, rice, manioc flour and meat which are the worker's staple. Workers were discouraged from maintaining farm gardens, as this might constitute legal grounds for a worker to claim that land (Alves 1990). Meanwhile, in the city, farm owners educated sons and daughters to aspire to the professions, and to distance themselves from working the land.

When cocoa prices fell and the scourge of witches broom attacked in 1989, a variety of other more subtle changes were taking place that made a return to the heady days of 1980 impossible. First, the return to civilian rule in Brazil allowed salaried workers to use the courts to demand and obtain the benefits guaranteed to all workers. The cost of paying the federal minimum wage, of about US$100 a month, is raised by 40% by payroll taxes. Because of their new vulnerability to lawsuit, Bahia farm employers at the end of the 1980s were required to pay the same per worker as automobile manufacturing plants in São Paulo, instead of the usual practice of paying workers less than the minimum wage, "off the books." The cost of cocoa workers doubled at precisely the same time that witches broom attacked, against which the only effective defense remains the redoubling of labor inputs to prune and burn the infected parts of the plant. Simultaneously, cocoa came into production in countries like Malaysia, Indonesia and the Ivory Coast, which lack the industrial sector wage structure of a more industrially advanced country like Brazil. The agrarian structure of cocoa production in Brazil, dependent on a proletarized work force, made it the world's highest cost producer even before witches broom became a factor and before the monetary stabilization policy overvalued the exchange rate (Hardner, 1995).

While history prepared third or fourth generation cocoa planters for collapsing prices, it did not prepare them to recognize that the usual solutions did not apply. In the past, it was possible to lay off workers, quit using inputs, and wait until prices recovered. When prices rose, cocoa plots could be cleaned, plants pruned and fertilized, and productivity would return. Diversification was unproven, and the best returns had always been made by waiting out the cocoa cycles. In the 1990's, however, neglected cocoa plantations not only lost productivity, most suffered permanent damage by witches broom infestation.

Though less widely recognized, the distancing of cocoa plantation owners from the land also limits the degree to which productivity can be regained. CEPLAC now recommends that planters concentrate their forces on smaller plots, where soils are best, cocoa plants can be densely planted, and where existing plants can be pruned and receive grafts of cocoa strains resistant to witches broom. The crown of the new cocoa plants are to be trimmed low, to facilitate pruning and observation. Shade is to be minimal, with shorter stature exotic trees that can be more easily managed. Planting in rows is recommended. Rowless and sparsely planted cocoa in unrecoverable cabruca areas are to be eradicated, as a vector of new infection by witches broom (Ceplac, 1997).

Compared to the laissez faire management of the cabruca system, where uneducated workers need not be asked to be observant or conscientious, the new system requires a much more regular and participatory involvement between owner, managers and workers. Cocoa in the new system contains the complications, risks, and management requirements which in the past undermined diversification experiments into fruit pulps, bananas, shrimp farming, or other alternatives. Accustomed to a management style from the past, current land owners are unprepared to adopt new styles, though they remain unwilling to sell farms at current depressed land prices, in the belief that the past can somehow be regained.

Some politically well-connected and indebted owners with abandoned farms, have invited the Banco do Brasil to foreclose on loans by taking the property. (A Região, 9/2/98) Then, with support from the Banco do Brasil, they invite the land reform movement to occupy their farms. In an orchestrated conflict by the farmer, the land reform movement, and the Banco do Brasil, the land owner agrees not to contest the invasion in the courts, in return for commitments from INCRA for rapid compensation at a fixed price, negotiated with Banco do Brasil. Since this permits that Banco do Brasil close out the debt on better terms than through repossession of the farm, and the land-owner is left with something rather than nothing, some cocoa land owners have become reluctant supporters of "land reform." Necessity is the mother of invention, according to defenders of this scheme, such as Felix Mendonça, a federal deputy from the cocoa region. He argues that deconcentrating land ownership through buyouts for land reform can also provide the low cost labor inputs required by CEPLAC's technological package and, by saving the cocoa farms, save the Atlantic Forest (Mendonça, 1997, p. 3).

This approach actually addresses the fundamentals of the cocoa production problem, but so far has been limited to sweet-heart deals obtained through influence-peddling. The interest of the Banco do Brasil and the landowners would evaporate if INCRA were to make this buy-out only at the market price of the land. Even at market prices, INCRA's budget could only buy a small fraction of the large indebted and abandoned cocoa farms. Having one federal government agency pay over-market land prices to permit repayment of another government agency (Banco do Brasil) in a bailout of well-connected farmers, using funds earmarked for the landless rural poor seems a particularly regressive way of saving the cocoa economy. Without reserving resources for extension, zoning, and educational services for these communities, their forest conservation potential is limited.

The second disjunction contrasts the problem of rescuing traditional cocoa's environmental and economic benefits and the existing institutions overseeing cocoa production. The policy tools that don't turn back the clock on worker's rights would require a reduction in labor costs through a deconcentration of the agrarian structure. The landed elite, however, prefers a social or environmental standoff, waiting for the threat of environmental collapse or bank failure to bring in massive federal bailouts of failed farms. The middle ground, which urges the modernization of existing landowners into entrepreneurial agri-businessmen using the new cocoa technologies, is an elaborate exercise in the denial of this class's inherited socio-cultural position.

III. The disjunction between the problem and the time remaining

Unlike the pollution of a stream, the extinction of species is irreversible. With only 5-7 percent of Bahia's forests remaining in the 1980s, reversing the existing tendency toward conversion and degradation of the last fragments is necessary to prevent a biodiversity implosion. With attention focused on unemployment and farm abandonment, however, local politicians feel more pressured by the potential loss of a handful of jobs in the logging and cattle industry than by the environmental laws prohibiting deforestation. Public authorities in the state and federal agencies face higher risks of losing their jobs by enforcing environmental laws than by ignoring them. The loss of these forests for short term gain, however, eliminates development options for the entire region. The forests maintain soil and water quality for agriculture, supply water to cities, and serve as a verdant backdrop to the white beaches along the coast, with largely unexplored potential as a component of the tourist industry. The permanent loss of future income in tourism and agroforestry, which is the price the region pays for ignoring its environmental laws, has little or no effective opposition. The historic neglect of public education handicaps the population's defense of their economic future.

The fundamental reform required to renovate cacau, permit small scale agriculture, and generate public opinion that can constrain local elites is universal, high quality public education. Environmental education is important, so that local people discover what is unique to their region. Without basic education to improve economic opportunity, however, little is gained from environmental education. A poor man using slash and burn techniques continues to use slash and burn techniques even after he learns that he is cutting the last habitat of an important primate species. Only with a literacy that permits him to calculate how he can improve his family's future with perennial crops, will he be interested in adopting these alternatives, and in conserving some forest.

For large land-holders, public policy reforms conditioning agricultural assistance on conservation are necessary. These could take the form of tax subsidies to land owners or to local governments that maintain conservation areas. Farmers receiving governmental assistance in introducing new cocoa, oil palm, palm heart technologies should have this conditioned on the maintenance of forest reserves and limits to deforestation on steep slopes and riverbanks. Public policy reversing the incentives to locate land reform in forested areas is also important.

The outcry about deforestation in Southern Bahia has succeeded in changing the discourse of public and university officials, as well as the land reform movement to positions defending sustainable development. Because of this, it was possible for local environmental groups like IESB, supported by international groups like Conservation International to cooperate with the Bahia state government to designate a new 7000 ha. conservation unit, the Serra do Conduru State Park, in 1997. The agency responsible for the park and for regulation of forestry issues is DDF (Departamento de Desenvolvimento Florestal) With only 40 employees statewide, however, and nearly as few in the federal agency, IBAMA, the human resources to implement environmental regulations are lacking, even if political will were present. This is complicated by the unclear division of responsibilities among IBAMA, DDF, and the other Bahia environmental agency, the CRA (Conselho de Recursos Ambientais). The rate of illegal logging has increased in recent years, despite pressure from environmentalists, as loggers and landowners cut in anticipation of hypothetical future implementation of effective regulation.

Only an educated public that is able to hold public officials accountable for promises can create the political will to enforce the environmental laws. At present, the new environmentalist discourse can actually frustrate the implementation of environmental laws, as public officials learn that discourse satisfies public opinion as effectively as implementing the policies, at a much lower cost. The disjunction here, of course, is that without immediate action, it will be too late to prevent the biodiversity implosion, and the results of educational investment can only produce results in the medium or long term.

IV. Discussion and Recommendations

Southern Bahia, after 10 years of economic crisis, is awakening to the probability that land prices in the cocoa region are not going to return to the 1980s. Recent public policy changes have altered incentives. The rural land tax, which in the past was very low, and usually went unpaid until inflation wiped away its value, has been radically modified. The declared value of the farm, which is the basis of the tax, cannot be under reported as in the past, because the law declares that in the event of disappropriation, the declared value is the maximum the landowner can receive. Areas of forest on farms, that were formerly classified as "underutilized" and subject to higher tax rates now pay the lowest rates, but only if the farmer publicly registers these areas as the farm's forest reserve. Unused areas not registered as forest reserve are charged the highest rates. With these changes, cocoa landowners are put in the dilemma of either reporting high land values, and paying higher taxes, or reporting low land values and risking disappropriation. Though the possibility of exempting forested land from tax should encourage conservation, most landowners still prefer to keep the use option open for a future purchaser. Failure to pay the tax triggers interest correction and penalties which reach the total value of the farm after 3 years of non-payment.

Compared to a complacent rural elite, the cocoa elite's exhausted patience creates opportunities for creative conservation-based development policies. The principal barrier to the introduction of new policies is that new or different institutions must be used to implement them. Existing cocoa development institutions have sunk costs in modernization strategies incompatible with Bahia's new comparative advantage. These strategies cannot be disowned without the existing elite's loss of control of these institutions. Since these institutions are the source of the few jobs in Brazil's northeast that buffer the tiny middle class from free-fall into the vast underclass, even the normally disputatious trade-union movement defends the status quo on cocoa policy, to protect the members' "hearth and home."

Innovative agricultural policy would build on the demand for job creation and the development of market outlets for alternative agricultural products. A much discussed alternative is the creation of an industrial processing anchor for a product like african oil palm, bananas, or palm hearts, with a system for subcontracting out production to small producers served by an efficient collection, processing, and marketing network. If it were possible to leverage the necessary investment, by linking it to a "biodiversity-friendly" package of policy instruments, there would be significant public interest.

The one source of investment currently on the horizon which might permit this kind of linkage is through global trading of carbon offsets. Certificates for hectares of deforestation avoided in cabruca and natural forest might be purchused by northern power and automobile companies if it were less costly than to meet required reductions in carbon emissions by other means. Brazilian institutions could develop a "menu" of options for landowners, where certificates would either buy the land outright, or conservation easements, or nationally tradeable development rights. Independent auditors could be contracted to monitor compliance, with payouts dependent on conservation outcomes rather than conservation discourse. Payouts could match support for agricultural intensification and marketing efforts by participating farms. Brazil's support for thetrading of carbon offsets internationally at the Kyoto global summit on carbon emissions signaled a new willingness to consider this policy tool.

Besides the considerable institutional hurdles to carbon offset trading, there is a conceptual hurdle as well. Hundreds of thousands of hectares of eucalyptus planted for cellulose production in Southern Bahia can sequester carbon as well as natural forest. The companies that own these hectares are avid to qualify to sell carbon offsets, and they have considerable political power. These technologically advanced, multinational enterprises are the symbol of "modern development" to Brazilian forestry professionals and to state institutions. The administrative costs of organizing the sale of carbon by this handful of companies would also be much lower than in the cocoa region, where candidates would be tied up by labyrinthian bankruptcy procedures or questionable land titles. In the end, hectares of sequestered carbon do not necessarily conserve biodiversity. Without the buyers demanding hectares with biodiversity, the sellers will prefer selling forests of exotic trees representing "high-technology" silviculture.

The scale of the problem requires analysis of ambitious proposals, but urgency requires solutions that permit biodiversity to survive until ambitious proposals can be implemented. The recommendations in the upper left-hand corner of the "what we know" matrix (Table 2) show these priorities. Obtaining support for the consolidation of existing conservation units is key. Instituting more significant tax subsidies for landholders with private forest reserves, especially in areas adjacent to conservation units, could forestall the complete isolation these conservation units. In critical areas, research and trial implementation of agroforestry alternatives, with processing to add value and increase income for farmers with forest conservation commitments could substitute for slash and burn manioc cultivation or pasture. Pilot projects to generate income from eco-tourism that conserves forest might boot-strap an industry that depends on forest conservation. Working with municipal and state authorities on conservation of watersheds which supply cities, where the immediate interest of the human population overlaps with biodiversity conservation. These initiatives have received support from international environmental groups, financed by bilateral, multilateral, and private contributions. Their scale, however, is limited to the defense of selected key natural forest fragments, and does not address the surrounding problem of cocoa's economic decline.

With the Bahia cocoa crisis in its ninth year, few expect miracle solutions. The unsustainablity of the status quo has been stripped bare, but democratic elections, associational activity, and an independent press have been preserved. Compared to societies which have not made the democratic transition, fundamental policy reform can be discussed without threatening pillars of the political regime. The future depends on creating conservation policies which can avoid the yawning gaps between the nature of the problem and the currently existing tools for their resolution.

Figure 1

map showing southern bahia cocoa in 1974

Figure 2

map showing southern bahia forest in 1974

Figure 3

map showing southern bahia land reform settlements

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