Central America Is Growing More Beef and Eating Less - As the Hamburger Connection Widens

The "banana connection" is one fairly well known 'strand in the web of relationship between U.S. corporations and Central America (see MM, May 198 I). But there is also a "hamburger connection," and it is an aspect of dependence that links several disparate issues-foreign capital, government policy, the destruction of the environment, and malnutrition.

Until 1960, cattle ranching in Central America existed principally to feed beef to Central Americans. In the last 20 years, however, beef production has doubled in Costa Rica, Guatemala, Honduras and Nicaragua, and beef exports have tripled. In the 1970s alone, Honduras doubled-Its beef exports, and with Costa Rica and Nicaragua, it has been exporting more than half of its beef products.

The United States is the principal destination, buying 90 percent of all Central American beef exports-a total of 114,594 metric tons in 1979, or 14.5 percent of all U.S. beef imports.

The main incentive for this burst of production for export has been the ever-rising demand in the developed industrial nations, mainly the United States, for cheaper meat. The tough, lean beef that comes from Central America is fed on grass instead of grain, at a cost about one-fourth of that needed to produce grass-fed beef in the United States. Such meat is considered useful for only a limited part of the U.S. market- mainly the fast food business, whose sales of hamburgers, hot dogs and other processed meats have helped make it the fastest growing segment of the U.S. food industry.

As beef production in Central America leaped astronomically in pursuit of the lucrative export market, average per capita beef consumption by the people of Central America plummeted. From 1960 to the mid-1970s, consumption fell 41 percent in Costa Rica, 38 percent in El Salvador, 13 percent in Guatemala and Nicaragua, and remained static in Honduras. While U.S. beef consumption maintained a generally upward trend to 123 pounds per person by 1978, the average Costa Rican was eating 35 pounds in 1978. (the poor got less), the Honduran 13 pounds, the Salvadoran 15 pounds, the Guatemalan 23 pounds.

This has been the trend on a continent where malnutrition has long been regarded as the most serious health problem. In Guatemala and Honduras, 38 percent of the population have calorie intakes below the minimum level, according to the Food and Agriculture Organization's fourth world food survey. In Guatemala, the FAO found, one out of three children under four suffers from protein-energy malnutrition; in El Salvador, the rate is one out of four. Beef is out of reach of the local population because it is scarce, and therefore "beyond the purchasing power of the majority of local populations," according to a 1980 State Department study of the cattle industry in tropical Latin 'America.

The expansion of beef production in Central America has also accelerated the destruction of the region's tropical forests. Pasture land established for cattle grazing has more than doubled since 1950, almost entirely at the cost of massive deforestation.

In El Salvador, the most densely populated country in Latin America, the forests "are largely a matter of history," according to a National Academy of Sciences report on deforestation. One-third of Costa Rica has been converted from forest to pasture by the cattle industry, and in Nicaragua (the Central American country with the largest tropical forest), deforestation has been going on at a rate of at least 250 square miles a year-mainly to make way for more grazing land.

The continuing demand for cheaper beef is causing the trend to accelerate, and according to the National Academy of Sciences report, "Little could remain of Central America's moist forests within another ten years, probably less." The same report estimates that two-thirds of the region's forests have been cleared, largely to make way for grazing land.

In the tropics, deforested land is wasted land. After the forest has been reduced to pasture-by chopping, by stretching a heavy chain between two powerful tractors and "mowing" the tree cover, or by spraying with herbicides such as the banned-in-the-United States Agent Orange-it usually has to be abandoned in three to five years. The fertility of the soil declines rapidly, weeds take over, and the sown grass loses its nutritional value. Consequently, more forest is cleared and the whole process resumes.

The effects of tropical deforestation are potentially devastating. Erosion produces excessive river siltation. The loss of vegetation causes flooding. Herbicides and pesticides contaminate the environment as well as the beef. Extinction threatens hundreds of thousands of animal and plant species. Too much deforestation can even change the climate in a region by reducing rainfall. The State Department study mentioned above cited all of these effects, and concluded that of all deforestation activities, "cattle ranching is widely considered to be the most environmentally damaging."

With the exception of Nicaragua, the grazing land throughout Central America is largely owned by an elite of Latin and U.S. business that prospers by producing beef for the export market. Although it is impossible to penetrate fully the secrecy that cloaks private U.S. investment abroad, one important investor is the Latin American Agribusiness Development Corp., S.A., a Panamanian-registered corporation with offices in Coral Gables, Fla.; Santo Domingo; Guatemala City; and Santiago, Chile. Its shareholders consist of 14 U.S.-based banks and agribusiness multinationals (see sidebar), plus one Dutch and one Latin American concern: LAAD describes itself as an investor "in private enterprises located in countries in Central America and the Caribbean." Its objective: "To improve the production, distribution and marketing of agriculture based products," with high priority to investment in businesses that produce for export.

The second-largest target industry for LAAD investments (after food processing) is beef cattle. In 1980, the corporation was investing 15 percent of its capital, or about $7.5 million, in 20 different cattle raising ventures. Although the company does not identify the location of the cattle herds, it does point out that Guatemala, Costa Rica, Honduras and Nicaragua alone account for 62 percent of its investments. In the last five years, the corporation's profits have jumped 185 percent to $709,000 in 1980.

United Brands Co., better known as United Fruit when the Boston-based company's main business was raising and importing bananas from Central America, now is a major producer of processed meat. Its investment in cattle ranching in Central America helped propel its total meat sales to $2.2 billion in 1978, a little more than double that of its fruit sales.

The State Department's study provides a "rudimentary list" of 59 U.S. and other foreign interests engaged in "cattle related activities in the tropical forest areas of Latin America," mainly Brazil and Central America. The . concerns are involved in financing, ranching, processing, herbicide production, and trade development.

Many private investors, who already enjoy substantial "incentives" provided by the host country's government, also reap the benefits of U.S. and multilateral assistance in the form of loans and grants from the Agency for International Development, the World Bank, the Inter-American Development Bank, and the Export-Import Bank. The Overseas Private Investment Corp. insures U.S. private investment in cattle projects, and even the Department of Agriculture promotes the sale of U.S. breeding stock and helps develop the market for crops and livestock.

Douglas R. Shane, the consultant who prepared the State Department report ("Hoofprints on the Forest: An Inquiry Into the Beef Cattle Industry in the Tropical Forest Areas of Latin America'), concluded that the U.S. government and private interests "directly and indirectly promote the destruction of Latin America's tropical forests through forestry, mining, cattle ranching and other agribusiness activities." Third World countries, he continued, probably will never raise their standards of living as long as their economies are governed by the demand for raw materials in the industrialized nations. Shane advocates improving management of arable land, the development of new plant foods like soybeans, and the production of more fish, poultry and swine.

The nationalist movements of Central America are more likely to embrace this objective than are multinational agribusinesses. The Sandinista government - of Nicaragua has been considering a new foreign investment law that would encourage foreign investors to use more local raw materials, to develop the resources of the country instead of merely removing them, and to produce more goods and services for the use of Nicaraguans. The export trade sector of the Nicaraguan economy is already being brought under state control.

But that control must become considerably more widespread if malnutrition is to be eliminated from Central America. According to an Organization for Economic Cooperation and Development report of 1975, "such a development, which supposes important changes in the distribution of incomes is ... not expected in the next ten years." With the exception of Nicaragua, that's a pretty safe prediction for a continent where 7 percent of the people own 93 percent of the land.

Robert H. Holden is a Cleveland-based freelance writer specializing in Latin American affairs.