Is Selling Sugar to China Really Such a Sweet Deal for El Salvador?

Salvadoran government officials recently announced a deal to export 52,000 tons of sugar (12% of the country’s annual production) to China in a deal worth $15-20 million to local producers. El Salvador has sold sugar to South Korea, Taiwan, the U.S., Mexico, Canada, Indonesia, and the European Union, but this is the first time exporting to China.

Sugarcane burning in the Bajo Lempa

With Partnership for Growth pressing El Salvador to produce more exports, sugarcane has become a larger part of the country’s economic plan. Already, sugarcane production has created 50,000 direct jobs and 200,000 more indirect jobs. This week Vice President Oscar Ortiz said “This is the key, this is the solution for our country: to diversify our production of exports. We are unable to be alone in a market, we have to be open to a variety of markets and in this direction we have to have the ability to improve our process of commercialization.”

Exporting $15-20 million of sugar to China and creating 250,000 jobs may sound like a sweet deal, but El Salvador is paying a substantial price. In addition to labor, agrochemicals, machinery, processing, and shipping, there are enormous costs related to the environment, public health, food sovereignty, and local culture. The individuals and corporations profiting from sugarcane exports don’t pay these costs. Instead they pass the debt on to the country’s poor who earn sub-poverty wages, suffer from chronic renal failure and other diseases, live in depleted ecosystems, struggle to feed their families, and are forced to migrate to urban areas.

Last year, Voices staff spoke with a team of migrant workers from Santa Ana cutting cane in a field in Usulután. They said they earn the agricultural minimum wage for cutting sugarcane 14-hours a day during the hottest months of the year. In 2014, the minimum wage for agricultural workers was $3.79/day. In 2015, it is up to $3.94/day. That is less than half of what is needed to feed a family. When these migrant workers arrive in a field of ripe sugarcane, they begin by burning the field to defoliate the cane, making it faster and cheaper to harvest, transport and process. The next day, as the field smolders, workers use machetes to cut the cane and pile it into rows. A tractor then loads the cane into tractor-trailers that deliver it to a processing plant. Yes, these and others workers have jobs, but they still live in abject poverty.

Another issue with sugarcane exports is way it is grown – large-scale monoculture production that relies on agrochemicals and is burned before harvest. Monoculture production of any crop destroys local ecosystems and displaces or kills the wildlife and people that once depended on them. When an ecosystem is destroyed, soil structures and natural defense systems deteriorate, requiring inputs such as fertilizers, herbicides, pesticides, and many other toxic agrochemicals that contaminate local communities, rivers, streams, fields and forests. Many of these chemicals are linked to high rates of chronic renal failure, cancer, and other diseases common where sugarcane is produced.

Perhaps the most egregious practice with sugarcane production is burning the fields before harvest. Once alight, sugarcane burns quickly, flames and smoke snapping acre to acre, throwing thick black smoke, ash, and soot high into the air before snowing down on schools, soccer fields, homes, farms, and communities. The particulates include residues of all the agrochemicals that had been sprayed on the fields the months before. In addition to contaminating surrounding communities, burning sugarcane emits large quantities of greenhouse gases that contribute to climate change.

The use of toxic agrochemicals and burning of fields motivated residents of La Tirana, Monte Cristo, San Juan del Gozo and other communities to oppose large-scale sugarcane production next to mangrove forests on the San Juan del Gozo Peninsula. Residents fear that Glyphosate and other agrochemicals would have an adverse affect on their health and destroy the valuable and fragile ecosystem that they depend on.

In addition to the environmental impacts, large-scale sugarcane production also disrupts the local economy and culture. Rural communities in El Salvador have traditionally supported themselves by growing corn, beans, rice and other crops. Farmers generally keep a portion of what they grew to feed their family and sell the rest at local markets to generate a modest income. While small-scale farming will not generate the kind of concentrated wealth that large-scale monoculture can, it is a more sustainable way to live. And the campesino culture has always been one of humility, respect, and simplicity.

In 2013, the UN Commission on Trade and Development published a report titled “Wake Up Before It’s Too Late”. One of the report’s findings is “the world needs a paradigm shift in agricultural development: from a ‘green revolution’ to an ‘ecological intensification’ approach. This implies a rapid and significant shift from conventional, monoculture-based and high external-input-dependent industrial production towards mosaics of sustainable, regenerative production systems that also considerably improve the productivity of small-scale farmers.”

El Salvador’s focus on producing more sugarcane and other export crops does just the opposite. It is doubling down on monoculture production at the cost of small-scale farming. Monocultural production displaces families when they rent, sell, or otherwise lose their land sugarcane producers. There has been a long trend of farming families moving to urban areas where at best they work for minimum wage jobs. Idle youth lack access to education and are subject to the violence and gang culture that El Salvador has become famous for.

Selling $15-20 million in sugarcane may be good for a few Salvadorans, but the money does not pay for or trickle down to people who are bearing the environmental, health, economic, and cultural impacts. The demand for sugarcane is going to grow and the Salvadoran and U.S. governments will continue to promote it as a way to develop the stagnant economy. But Salvadorans should have to an informed debate about whether they are willing to pay the real costs of sugarcane.

The Price for a $277 Million MCC Grant

Since Sanchez Cerén became the President of El Salvador on June 1, his administration has said securing the $277 million Millennium Challenge Corporation (MCC) grant is a top priority. Vice President Oscar Ortiz said they want to get it done within their first 100 days in office, which means within the next three months.

The MCC approved the grant in September 2013, but the US Embassy blocked the release of the funds until the government met conditions such as reforming the Public Private Partnership Law (P3 Law) and restructuring a popular seed program.

The P3 Law facilitates government contracts with private entities to provide public goods and services. The US Embassy made the P3 Law a prerequisite for the MCC funds but they don’t like the law passed by the Legislative Assembly. They don’t approve of the oversight role the Legislature created for itself – a committee that must approve all P3 contracts. The Embassy and business community also don’t like that the law exempts important public goods and services like water, health, education, and public security from public private partnerships.

One of the most vocal opponents of the P3 Law has been El Salvador’s labor movement. Unions fear that public private partnerships will result in a loss of jobs, decrease in wages, and even worse working conditions as private investors maximize profits. Other civil society organizations fear the P3 Law, even with the exemptions, will lead to the privatization of important goods and services – like water, health care, and education.

The US Embassy also doesn’t approve of the Seed Distribution Program operated by the Ministry of Agriculture (MAG). Officials argue the procurement process violates the Central American Free Trade Agreement (CAFTA) because the government only buys seeds from Salvadoran Farming Cooperatives, excluding international seed producers like Monsanto. The program provides thousands of jobs for people working for the cooperatives and ensures that more than 400,000 farmers have quality, non-GMO seeds.

Last week US Ambassador said that the Embassy’s problem was not with the seeds, but with the process. On May 2 Voices wrote an article arguing that the problem was not the seeds or the procurement process, but CAFTA.

The MCC program is popular with a lot of Salvadorans and politicians who see it as free money for development projects. But a growing number of environmentalists, unions, and communities argue that the Embassy’s conditions are too high a price to pay for development projects they don’t want anyway. And many see the conditions as an encroachment on El Salvador’s sovereignty.

Among those who oppose the MCC program outright are environmental groups and communities in the Jiquilisco Bay. MCC funds will support tourism development in the Bay and residents fear it will cause irreparable harm to mangrove forests, nesting grounds for the critically endangered Hawksbill sea turtle, and El Salvador’s most fertile agricultural land. (Voices has written about Tourism on this blog in the past – here are two reports we wrote on tourism in the Jiquilisco Bay).

Roberto Lorenzana, President Sanchez Cerén’s Chief of Staff said two weeks ago that the administration already has a draft Fomelinio Law (in El Salvador the MCC is called Fomelinio) that they will send to the Legislative Assembly soon. It’s unclear what is in the Fomelinio Law, but it likely contains all of the reforms the US Embassy is requiring for release of the MCC funds. Even before he became Chief of Staff, Lorenzana said the new administration is going to open the procurement process to national and international seed producers, in an apparent effort to satisfy the Embassy’s concerns.

While some Salvadorans have spoken out against the second MCC compact, the P3 Law and other neoliberal policies, many have not. The politics of opposing neoliberal economic policies grew more complex when the leftist FMLN party took office in 2009 and again on June 1, 2014. People and groups that organized against privatization, dollarization, CAFTA, and the first MCC compact (all policies adopted by the rightwing ARENA party between 1994 and 2008) have not been as critical since the leftist FMLN party took power. The result is that opposition to these destructive policies is less now that the FMLN is power.

El Salvador will soon get a $277 million grant from the U.S. Millennium Challenge Corporation, but it should be clear – this is not free money.

The 17 farming cooperatives that have been growing seed corn and beans for the MAG’s Seed Distribution Program will pay for the MCC grant when they have to compete with Monsanto and other international seed giants.

Communities that depend on the mangroves for their survival will pay for the MCC grant when developers cut down forest to build resorts and golf courses.

The Salvadoran labor force will pay for the MCC grant when private contractors take over government services and cut jobs and wages to increase profitability.

And all Salvadorans will pay if public goods and services like water, education, and health are contracted out to for-profit entities, especially if there is no oversight in the process.

 

Royal Decameron Announces Plans to Build Resort in the Lower Lempa

Last week the Royal Decameron Hotel Group announced plans to invest $60 million in three El Salvador projects – an expansion of their high-end beach resort in Sonsonate, construction of a four-star hotel in San Salvador, and a beachfront resort in Usulután. The new Usulután facility, which will cost $12 million, will be modeled after their Sonsonate resort with 300 individual cabins, an office center, spas, and a conference room.

Royal Decameron’s announcement wasn’t completely unexpected. Investors have been working to develop tourism in the Lower Lempa for many years, and there are likely several other projects being planned. Though tourism may seem like a great boost for the local economy, it’s a complicated issue and Royal Decameron is likely to face some stiff opposition from Lower Lempa residents.

Usulután is centrally located along El Salvador’s coast. One of the local treasures is the Bay of Jiquilisco, a large inlet known for its fishing, mangrove forests, and beautiful beaches. The stretch of land between the bay and the ocean is the San Juan del Gozo Peninsula. The only things out on the peninsula right now are mangrove forests, a few fishing and crabbing villages, and a nesting ground for endangered sea turtles… and a very fancy highway.

In 2004, the Ministry of Tourism hosted an event for potential investors at the Intercontinental Hotel in San Salvador. An Argentinean architect presented plans for the Espino Resort, as well as other infrastructure development plans. His presentation included draft plans for “El Pueblo,” a high-end shopping center on the San Juan del Gozo Peninsula for tourists that included grocery stores, ATMs, and other amenities. It was all part of a 25-year plan that outlined specific stages of development – land acquisition, construction of a highway to the end of the peninsula, and a dyke that would supply water. Eight years into the plan, investors have acquired land, the highway through the peninsula is complete, and the government announced plans last year to install a water system.

Three people are reported own much of the real estate between La Tirana and Isla de Mendez. Angel Velasquez owns two sections of land totaling 2.5 miles of waterfront property. Eduard Quiroz owns 1 mile of beachfront property, and the Tesak family owns another 3 miles along the coast. CESTA, a Salvadoran nonprofit environmental organization, owns 872 feet of beachfront that they preserve. Sources also claim that ex-president Alfredo Cristiani owns property in the region, as does FMLN politician Facundo Guardado, who has a consortium of investors that includes possible FMLN VP candidate Oscar Ortiz. Royal Decameron is rumored to own 103 acres in the region though it is unclear whether this is the property they plan to develop.

Land acquisition on the peninsula has been quiet, but not free of controversy. Locals report that Quiroz and Velazquez regularly violate land-use and easement requirements. For example, environmental regulations allow landowners to own property up to 50 meters above the highest tide. Quiroz and Velazquez, however, fenced their property at the high-tide point, ignoring the 50-meter boundary. Similarly, in 2006 ISTA (the Salvadoran Land Reform Institute) distributed plots of land to landless families in La Tirana. The families moved in, but lacking roads and utilities, seven of them sold their plots to Velazquez. Ignoring ISTA regulations that require passage between the plots and access to the mangroves, Velazquez fenced off the plots and blocked access to the forests. The president of La Tirana, Nahum Diaz, has spoken out about the violations but to no end. The 23 families in La Tirana have to survive on crabbing and shellfish, while Velazquez controls access to all of the farmland, which he uses to graze his several hundred head of cattle. Residents are also upset because in addition to blocking access to agricultural fields, Velazquez cleared large areas of forest to expand his cattle operation.

As investors were starting to buy up land along the Peninsula, Gustavo Guerrero arrived in the Lower Lempa. He introduced himself as the charity manager for the Tesak family, which owns Bocadeli, a Salvadoran food company. In 2007, Guerrero created the San Juan del Gozo and Jiquilisco Bay Integral Development Association and illegally listed local community leaders as members of the board without their knowledge. The new organization published a full-page add in a Salvadoran paper listing its priorities – building a levee for irrigation, constructing a National University campus in the Lower Lempa, and other investments to build the tourism infrastructure. He is still handing out checks and has financed several projects in the region including hiring the Linares Company to repave of the road in La Canoa. In 2009, one of our local partners said “Gustavo Guerrero is the person that made it possible for the rich to buy land,” which they often did at prices far below-market value.

But land acquisition also included making room for the new highway through the Peninsula, primarily convincing landowners to allow builders to cut across their property. Linares, the company that repaved the road in La Canoa won the contract to build the road. If you’ve been in the Lower Lempa at all over the past few years you’ve seen large dump trucks tearing up and down the main road – that was Linares hauling sand and backfill for the highway.

Few people or groups are currently protesting tourism in the Lower Lempa. Many locals, however, oppose development projects that threaten their fragile environment. The community of Amando López, for example, released a statement in May 2012 stating: “This land is our life and our life is this land, we will never stop resisting any project that threatens our natural resources and our organized communities.” They also said, “we know that so-called development means more problems for poor communities, and we are not interested in the development they are offering, because in the end the only thing they develop are transnational businesses. We care about our livelihoods and our children’s lives, and we want proposals to come from our communities, that respond to our interests, to our livelihoods, our needs, and our own worldview.

While Amando López residents were specifically referring to the Millennium Challenge Corporation in their address, they assure us that these sentiments apply to a wide array of initiatives being imposed on the region, including tourism. Amando López was the only community in the region to reject funding offered by Gustavo Guerrero.

The Jiquilisco Bay is one of El Salvador’s few remaining treasures, and residents know that once it’s gone – it’s gone. The mangrove forests protect the region from flooding, which is happening with greater frequency, and the Bay provides residents with food and a livlihood. Communities are very aware of how fragile their ecosystem is and are unlikely to let outsiders exploit it.

The argument for allowing tourism is that it will provide jobs and economic growth, but local residents understand that most jobs will go to people with degrees in tourism and hotel management. They also know that profits will be distributed to investors in San Salvador and beyond and not stay local. Residents of the Lower Lempa also know better than to count on the government to enforce the environmental laws that are supposed to protect their natural resources.

But as pointed out by our friends in Amando López, there is a bigger issue at play. Many in the Lower Lempa are not interested in the kinds of development that wealthy investors from San Salvador are selling. Communities prioritize food security over tourism, and a healthy environment for their kids over a larger income for themselves. Amando López residents said “this land is ours and we will defend it with the same courage with which we won it.”

Royal Decameron says that they still have to work out some land acquisition issues, so this is a story that will likely play out over the next several years. Along the way they will likely face a healthy opposition to their ideas of development.