Bolivian lowlands farming: The scramble for income shares under hyperinflation

Abstract

Patterns of resource allocation are examined in Bolivian lowlands farming during the early to mid-1980s, when longstanding problems of poor targeting of official intervention were compounded by the breakdown of market allocation mechanisms owing to hyperinflation. Each of Santa Cruz's eight principal agricultural commodities is produced by farmers having distinct ethnic, locational and farm-size characteristics. The success of corresponding Producers' Organisations in negotiating with the authorities over subsidised allocations of credit and foreign exchange, and over product prices is shown to depend partly on these characteristics, but also on the features of the product market faced by each group, and on the extent to which current production technologies require imported inputs. Patron-client relations postulated in earlier work as a mainspring of resource allocation are shown to be an incomplete explanation of observed patterns. These patterns give cause for concern, possibly on efficiency and certainly on equity grounds: from negotiations in credit, foreign exchange and price arenas, large commercial farmers secured the highest net gain per farm and per dollar of gross value added. Official intervention should be reduced in scale and focused more sharply, and market mechanisms strengthened.