JUMPING INTO THE MARKET

The above considerations should not lead to a romanticization of campesino wisdom. The same risk aversion that supports peasant households in avoiding hunger and falling into absolute poverty may prevent them from exploiting the opportunities to build a wealthier future. ASEJO’s decision to face 2004’s poor yields and credit delinquency by purchasing seeds from producers at a lower price, instead of increasing resale price (as any capitalist enterprise would have done) prioritized the preservation of good relationships with powerful outsiders and ensuring a safe outlet for production, over cost-recovery and profit maximization. This is a vivid example of how campesino logic can conflict with market rules and prevent capitalization.

Some ASEJO members are now aware that a more entrepreneurial management of seed multiplication is needed. Hence, there is a lot of discussion within the Association regarding evolving into a legally recognized cooperative enterprise, renting fertile vega land, hiring extra labor, establishing a store in town, and competing on the national market with other producers to supply government agencies and private customers. Small attempts to move in this direction are being made by a few progressive members of the association. However, they also recognize that ASEJO’s financial resources and know-how are insufficient to jump straight into the market. They are interested in receiving further support from SPFS or other projects. However, they do realize that such support is unlikely to be long-term in nature. They recognize that not all ASEJO members are ready to follow them and that most probably such a change will entail a further loss in membership (and volume of production). As such, these innovators can be seen to be swinging between the household and the market, between livelihood diversification and enterprise development.

Aiding these ASEJO members to move beyond this middle ground is largely a matter of financial investment. Capital is needed to make the association capable of renting land and hiring labor, training members in administrative and commercial matters, and covering transaction and marketing costs. Who should or would be interested in investing in ASEJO up-scaling? To answer this question it could be useful to consider some of the economic and social benefits of the Association which have not been internalized in relevant market transactions.

Regarding maize seed production, which in 2004 was of about 152 American quintals (7 metric tons). Maize seeds were sold (mostly to FAO and other development agencies) at 350 Quetzales (46 US$) per American quintal, with a total benefit of 52,200 Quetzales (6,820 US$). To buy the same amount of seeds from conventional market sources the purchasing agencies would spend exactly double (i.e. 700 Quetzales or 92 US $ per quintal). Hence, to spell it in macro-economic jargon, due to "market imperfections", ASEJO 2004 maize seed production has generated an untapped financial externality of 52,200 Quetzales (or 6,820 US $).

If, based on these considerations, the maize BC figures presented in the previous section are retaken and benefits recomputed according to a producer price of 400 Quetzales per quintal, corresponding to a resale price of 500 Quetzales (which would be still highly competitive and will continue to leave a significant overhead for the association), producer B/C ratio would increase up to 2.5 for the best performer, and range from 1.5. to 1.2. in the other three cases. It can be concluded that narrowing the gap between ASEJO and market prices is essential for starting-up the association’s capitalization process.

It must be stressed that in the last three years, FAO and other agencies have distributed ASEJO maize seeds to thousands of extremely poor and food insecure campesinos (often in combination with land husbandry extension services). This is likely to have resulted in a 30-40% increase in yields and in a proportional reduction of rural food insecurity. Hence, ASEJO’s work has directly contributed to the implementation of national seed security, which is an important component of national food security^[30]. Of course, the value of this contribution is difficult to quantify, but it is not fully compensated by the small in-kind subsidies (fertilizers) that ASEJO received in 2004 from government agencies.

The above suggests that there might be scope not only to pay ASEJO a higher (and fairer) price for local seeds, but also to identify means to recognize the social benefits of the association (and the other seed multiplication projects that SPFS is launching in other departments of Guatemala). The former is something that FAO and other agencies can easily afford to offer. The latter depends on the Guatemalan government’s political willingness to assist small farmers with appropriate services and measures^[31]. Among these, control over certified seed quality, issuing a non-GMO, locally produced seeds certification and supporting a crop insurance scheme would be of key importance for artisan (and highly vulnerable) small-scale seed producers.

These two measures alone will not be able to overcome all the obstacles that the progressive ASEJO members will meet in their attempt to bridge the gap between household livelihoods diversification and rural enterprise development. However, they might increase significantly the chances of up-scaling successfully this SPFS good practice.