The Economics of the Estate

The altiplano livestock hacienda operated at a low level of productivity, and efforts at improvement remained feeble during the early decades of this century. Most owners sought to maximize the net income derived from their estates by minimizing monetary outlays for production and commercialization.^[64] In some regards such a strategy was exactly the opposite of that of modern capitalist agrarian enterprises seeking to optimize the return on invested capital. The labor regime, with its stress on minimizing the wage bill, was merely one, albeit central, aspect of this strategy. The same low productivity—low capitalization approach characterized the quality and pasturing of the estate's stock, its installations, and its means of transportation.

Most of the sheep roaming altiplano pastures around 1900 were descendants of the Spanish merinos brought to Peru during the sixteenth and seventeenth centuries. Contemporary observers agreed that Puno's sheep population, degenerate through lack of selective breeding, combined many of the characteristics in the species most undesirable for efficient ranching operations: low weight; coarse, irregular, and short fibers; and little wool. To boot, many sheep came in hues from black to shades of brown and gray, "dirty colors" that at times found no market in Europe.^[65] Whereas purebred merinos or Corriedales or South Downs, typical of Australian or Argentine flocks, weighed 60 to 112 kilograms and easily produced 7 kilograms of wool annually, Peru's criollos weighed about 15 kilograms and

produced 1 kilogram of wool.^[66] Obviously these sheep also produced little meat, a less important product for altiplano ranchers. Descriptions of Puno's cattle were no more flattering.^[67]

One of the advantages of large estates was that they could aim at economies of scale through the efficient separation of flocks and herds and their optimal rotation through different pastures. A typical small to mid-sized finca, with a livestock capital of 1,500 OMR and six or seven colonos, perhaps employed one labor tenant each in charge of one cattle herd and one flock of alpacas, undifferentiated as to age and sex. The remaining four or five shepherds employed to watch the stock of sheep would not be sufficient to form optimally differentiated flocks. In contrast, a large estate such as Sollocota, with some fifty colonos, maintained highly differentiated flocks: ewes placed with rams for fertilization; ewes with lambs up to six months old; yearlings separated by sex; rams; ewes between weaning of their last lamb and new fertilization; one- and two-year-old wethers; lambing flocks (pregnant ewes after separation from the rams); slaughter animals (three-year-old wethers and five- to six-year-old ewes). In addition, Sollocota kept fourteen differentiated cattle herds, two flocks of alpacas, one flock of transport llamas, and two colonos in charge of the riding horses.^[68]

Ideally such a careful regime of flocks and herds differentiated according to annual reproduction cycles should have produced certain productivity gains—through higher rates of reproduction and efficient use of pastures—even without any further investments. Thus, ideally, agglomeration of land into large estates should have brought productivity increases. But the gains seem to have been small. In 1909 Picotani's 20,844 adult sheep produced about 2.5 pounds of wool per head, only slightly more than the average for all estates.^[69] No estate could easily escape the complex set of conditions that kept productivity low. They were inextricably intertwined with the logic, or the "rules of play," of altiplano society.

Hacendados pursued a strategy of maximizing their livestock even to the point of risking fodder shortages.^[70] Ranchers relied nearly exclusively on unimproved natural pastures,^[71] and availability of fodder fluctuated sharply from year to year and from season to season. Many estates strove to bring their livestock capital to a level at which the carrying capacity of the pastures would be fully used during the season with plentiful fodder. Toward the end of the dry season, between September and November, fodder became scarce and mortality rates increased. In Sollocota's ledgers the following entries appeared for the animals entrusted to the shepherd Agapito Montesinos in 1906: "October 15, 2 ewes dead (because of weak-

ness [por flacas ])"; "November 19, 2 ewes dead (because of weakness)"; "November 22, 1 ewe and 2 rams dead (because of weakness)"; "December 10, 4 ewes and 1 ram dead (because of weakness)."^[72]

Haciendas set aside some of the best pastures, those maintaining moisture longest, for the dry season and constructed stone fences around these moyas. Some pastures produced fresh fodder months after the last rains in March or April through small irrigation works.^[73] But these moyas had "only a small extension," often insufficient to tide all animals over the long months without rain.^[74] And the shepherds did not always respect the moyas. They had the "shamelessness," lamented one administrator, to put their own huacchos on the fresh pastures, leaving the grazed, exhausted pasture for the estate animals.^[75]

Agronomists and livestock technicians had no doubt that hacendados "preferred quantity to quality." "Don't we see here livestock ranches with numerous flocks of animals that are nearly always skinny and little developed?" the veterinarian A. Declerq from Peru's National Agricultural School asked in a lecture before the Sociedad Nacional de Agricultura in 1907. "What is the cause of this state of affairs? It is only the disproportion between the number of animals and the quantity of fodder."^[76] This choice of "quantity over quality" both expressed and reinforced a vicious circle like those encountered by other Third World economies, from which it is so difficult to escape: because the productivity of each animal was low, hacendados aimed for maximum stock, which in turn perpetuated low productivity. To choose significantly lower levels of stock heightened the danger of invasions of temporarily vacant pastures by neighboring hacendados and community peasants, initiating a downward spiral of hacienda resources: a further need to reduce livestock capital, in its turn inviting further invasions, and so on. Under conditions of high risk, insecurity, and disputed rights to resources, the efficient estate maximized livestock capital, even if this approach lowered productivity.^[77]

This rationality informed the strategy of stock reproduction adopted by most hacendados. The German agronomist Karl Kaerger calculated from the livestock inventory of an estate near Juliaca, a few kilometers southwest of Azángaro province, that only forty live lambs were produced per one hundred fertile ewes annually.^[78] Statistics for several estates in Azángaro confirm these low rates of reproduction (table 8.2). By comparison, on the Hacienda de Hermanas, one of the vast ranches belonging to the Sanchez Navarro family in the state of Coahuila, Mexico, even in 1847 more than ninety lambs were born to one hundred ewes. In the western United States lamb crops of range-herded sheep averaged nearly 80 percent by the early

twentieth century, and those of farm sheep, tended in enclosed paddocks, could be as high as 130 to 150 percent.^[79]

The major cause for low lambing crops on altiplano estates was mortality among lambs.^[80] As many as 50 percent of lambs died during the first six months after birth, most of them during the first few weeks. Another 25 percent of lambs fell to loss or theft.^[81] The lambs were born in the open range, during day and night, during lambing periods that lasted for a month or more. Sheepfolds to protect pregnant ewes and newborn lambs from frosts and hail were virtually unknown. Administrators complained that the shepherds "completely neglected" to care for the newborn lambs or appropriated unmarked lambs for their huaccho flocks. Some lambs were not accepted by their mothers, others were accidentally separated from them, and many ewes were too weak to feed their lambs. Lacking intensive supervision, many of these lambs died of starvation, if they were not too sickly to survive in the first place.^[82]

With such meager results in each lambing period, altiplano hacendados attempted to maximize the increase of their stock by scheduling up to four lambing seasons each year: the Christmas, March, San Juan's Day, and

Lapaca (Quechua for "stealthy") lambings. Ewes that had not produced a lamb at one of the two major lambings, Christmas and San Juan, were again placed with rams three months later. Many hacendados tried to get two lambs per year from each ewe, expecting at least one lamb to die. They were continuing a practice that the Jesuits had already sought to abandon—without clear success—on their ranches two hundred years earlier. Livestock technicians were advocating only one annual lambing season, around Christmas when the weather was more benign. Experience in Australia and Argentina had shown that this was the way to maximize lambing crops, allowing the shepherds to concentrate attention on each lamb and permitting the ewes to recover their strength.^[83]

Stock reproduction was further hampered by the failure to practice selective breeding, by diseases and adult livestock mortality, and by the short life span of sheep. Not only did most hacendados fail to introduce new blood through the purchase of purebred or improved rams, but they also neglected inbreeding through selection of the best ewes and rams from their own flocks. Ewes were culled only because of old age, thus keeping unproductive and infertile animals that depressed the lamb crop. Some 10 percent of adult sheep died annually on most estates because of both malnutrition and diseases.

Bacterial infections were rare in the dry and cold altiplano climate, but parasites such as the ovine ticks (garrapata ), scab mites (sarna ), and various species of worms attacking the sheep's lungs and stomach were endemic, stunting growth, reproductive capacity, and the weight of fleeces. In 1924, after nearly twenty years of striving for improvements on Hacienda Picotani, one of the altiplano's most "reformist" estates, its new administrator was shocked to discover that nearly all its sheep were infected with up to four varieties of worms in addition to being "covered with garrapatas." He warned the owners that if nothing was undertaken immediately, much of the stock might be lost.^[84] A number of widespread poisonous weeds, especially the "zenkalayo , of mortiferous effects for the animals," contributed to the precarious health conditions of many flocks.^[85]

"The tough and nutrient-poor fodder" that dominated Puno's pastures meant that sheep had to be slaughtered at five years, "at most at six, but sometimes even at four years," because they had lost their teeth.^[86] This meant that ewes, first served by rams at eighteen to twenty-four months, could be used only three to four years for reproduction. With annual lambing crops ranging from 20 to 50 percent, each ewe on average produced as few as 0.6 and no more than 2 surviving lambs during its entire life span. These were dangerously low rates of reproduction, which toward the lower end of the range did not guarantee replacement of culled sheep. For

example, the mid-sized Hacienda Huito in Santiago de Pupuja, belonging to Dr. Alejandro Cano Arce, judge on the bench of Puno's superior court, in May 1896 had two flocks of old ewes and two-year-old wethers, altogether 287 animals, which would be slaughtered in July. At the same time the estate had 326 lambs born since the previous June. With a comparatively high lambing crop of 52.2 percent Huito barely managed to increase its stock by less than 3 percent over the year.^[87] Lambing crops below 40 percent could be insufficient to replace existing stock.

The stability of estate livestock capitals was precarious in the altiplano. On average, the region's aggregate sheep, alpaca, and cattle population grew at a slow rate of perhaps 3 percent annually during the century after independence. But many estates saw their stock decline over several years, as did peasant smallholders. Lax management of the flocks, instability of borders, endemic livestock rustling, years of drought, sharp frosts, and hail, a livestock epidemic—all could disrupt the precarious balance of flocks and herds. A downward spiral could result, at the end of which small and mid-sized estates remained without livestock capital and the largest estates lost up to two-fifths of their capital during a span of several years. Such unstable, downward-spiraling livestock operations explain the frequent cases of estates sold without stock or with stock considerably below their pastures' carrying capacity. The need to restock was common for the precarious, low-productivity economy of altiplano estates.

Multiple annual lambings required frequent and highly complex movements of sheep between various flocks. Under these conditions rudimentary accounting and lax maintenance of livestock ledgers made optimal disposition of the flock nearly impossible. "The majority of estates," wrote Vicente Jiménez in the first practical guide for altiplano ranchers, published in 1902, "keep only sporadic annotations without system or order. The owners are . . . satisfied with lambings irregularly registered by the mayordomo, or with a verbal report by a mere quipu and at times even with the declarations by the shepherd himself, never complete or precise. As a result the livestock capital remains stationary, if it does not suffer losses."^[88] Multiple lambings, scarcity of fodder, diseases, high mortality rates, the pervasiveness of livestock rustling, and border insecurity tended to cancel out productivity advantages theoretically achieved by large estates through economies of scale.

But low productivity was not identical to inefficiency. Under the precarious, low-productivity conditions of the altiplano livestock economy, efficient operations made the difference between flourishing estates with high income-earning potential for the owner and decaying, disintegrating estates. Efficient livestock estates were characterized by a stable or growing

livestock population making full use of available pastures; enough colono families to minimize the need for external labor; enough food production for supplying the colonos; well-established marketing networks, including cheap sources for food supplements (maize, coca leaves, alcohol), preferably through barter for the estate's own surplus crops (potatoes) and livestock products; control and supervision of the labor force through at least minimal bookkeeping; and, last but not least, safe and stable borders.

The two major threats to efficient operation of seigneurial livestock estates were posed by rising costs of production and by disintegration. Costs reached critically high levels if the estate failed to produce sufficient crops to feed its resident labor force, if it needed to hire outside labor on a permanent basis, if flocks could not be kept stable and needed to be replenished through purchases, or if disputes over land required expensive litigation. Estates were threatened by disintegration when they were considerably understocked, when control over shepherds was especially weak, and when serious disputes about hacienda lands arose either within the owners' family or with neighbors. All these factors, often interrelated, could cripple estate operations and lead to a serious decline of its income-generating capacity. The owner might be forced to sell, or the hacienda might shrink in size or become atomized. Clearly then, a great difference existed between efficient and inefficient seigneurial livestock estates. But the criteria for efficiency had little to do with capitalist, profit-optimizing modes of operation.

Available sources do not allow us to calculate the rate of return on altiplano livestock estates with any degree of confidence. It varied according to the conjunctures for livestock products and from one estate to the next. Returns depended on the estate's efficiency, on the type of tenure (that is, whether the hacienda was held in fee simple or emphyteusis or was rented), and on the level of debt incurred in the acquisition of land and livestock capital. Large estates usually rendered a greater rate of return than small ones did, not because they were more productive through economies of scale, but because they could more easily achieve the kind of efficiency described above. Their owners were more powerful and could protect their colonos more effectively against abuses by authorities, traders, and the military, crucial for stabilizing a resident labor force. They could use their considerable labor power to fight border incursions and livestock rustlers; on many large haciendas the ratio between resources used for "demesne" production and those given over to the colonos also tended to be more favorable to the owner. Because power was such a vital ingredient in the altiplano's livestock economy, large landowners faced fewer risks of seeing their stock decline or control over land diminish through external and internal siege, with obvious consequences for the rate of return.

The very notion of profit or rate of return renders misleading results for the type of economy prevailing in the altiplano during the early twentieth century. Labor and land were not fully commodified, and the goods produced on an estate did not all enter the market.^[89] Calculating market prices for capital, inputs, and labor, as well as for the output of the hacienda, thus exaggerates the amount of capital invested, the costs of production, and the total value of production.^[90] If, by contrast, calculations are based merely on the money actually paid and received by the hacendado for the various factors of production and for the estate's output, the results for individual haciendas are no longer comparable. (For example, one hacendado may have purchased his or her estate, whereas another may have inherited or agglomerated land through trickery.) Because the notion of rate of return continued to be so inappropriate for altiplano estates, it is not surprising that accounting for profits and losses was practiced hardly at all. What hacendados cared about in 1910—just as they had in 1830, when José Domingo Choquehuanca differentiated Azángaro's social classes according to wealth—were net revenues, the difference between current gross revenues produced by the estate and the current costs of production.

The meaning of the following widely differing estimates of rates of return, then, should not be exaggerated. In the first years of this century the French traveler Paul Walle visited livestock haciendas in the central sierra, where some hacendados had undertaken considerable efforts to improve their estates. In spite of the high mortality and low productivity of the livestock, ranchers there claimed rates of return (intérêt ) of up to 25 percent and not below 10 percent.^[91] Altiplano estates rarely reached Walle's maximum rates of return, except perhaps during the boom years of World War I. During the decade before 1915 they may have hovered around 10 percent. In 1909 Hacienda Picotani was worth about 80,000 soles m.n., more than any other estate in Azángaro province. It sold about 8,000 soles m.n. of wools that year, and additional sales of animals on the hoof, dried meat, tallow, hides, butter, and cheese probably totaled about 4,000 soles m.n. The estate paid wages and salaries, mostly in kind, of 3,498.93 soles m.n. to its permanently employed colonos and administrators. Other expenditures—for livestock medicine, salt, a small number of new stock, legal fees, and incidental wages for special construction projects—were small, perhaps no more than 1,000 soles m.n. Thus, total costs of about 4,500 soles m.n. represented slightly more than a third of the value of production, 12,000 soles m.n. Picotani's net revenues of 7,500 soles m.n. for 1909 would have brought a rate of return of 9.4 percent.^[92]

José Sebastian Urquiaga, the large landholder from Azángaro, calculated that in 1916, early in the World War I export boom, an altiplano hacienda of "ten square miles" (about 25,000 hectares) with a livestock capital of 10,000 head of all types and ages, or 7,500 OMR, and average quality pastures, would have cost between 33,750 and 41,250 soles m.n. He suggested that its "net rent" at that moment, "when wool achieved its highest price due to the European war," would amount to 5,000 soles m.n. annually, a rate of return of between 12.1 and 14.8 percent.^[93] Because Urquiaga sought to downplay hacendado exploitation, this was perhaps a conservative estimate. In any case, such an average hacienda's "net rent" would have increased over the next two years as a result of even steeper increases in the price of wools.

Ten years later, in 1929, when costs had increased while prices had not recovered high wartime levels, Carlos Barreda, an agronomist and spokesman for reformist ranchers in Puno department, suggested much lower rates of return. "Rigorously calculating the production of a mid-sized estate which is managed by the owner, . . . the utility barely reaches 6 percent of the capital employed." Even this low rate of return was possible only by paying "extremely low" wages to colonos. If shepherds were paid the legally mandated minimum wages, "no hacienda would produce a utility or interest on capital," and at a "rational wage" of 30 soles m.n. per month, "most haciendas would go bankrupt." Barreda concluded that the profit of most altiplano estates "is due . . . to the work of the Indian shepherds converted into utility."^[94]

These widely divergent estimates of rates of return, from 6 percent in 1929 to perhaps 15 percent in 1916, in part reflect different conjunctures. More important, however, they demonstrate the imprecision of the measure. With accounting continuing at a rudimentary level in most estates, hacendados simply did not think in terms of capitalist rates of return. It is worth repeating that it was the notion of net revenue that mattered to them, the simple calculation of the difference between the value of the estate's marketed commodities and the cost of production and other regular expenditures. The data confirms for the altiplano the notion well established for Andean estates and haciendas in other parts of Spanish America, that low labor costs were crucial for maintaining large net revenues.^[95] Other costs were even lower. Expenditures for tools, improved stock, seeds for pasture, and building materials were so small that they rarely figure in estimates of hacienda production costs.^[96] Thus, the fixed capital of the estates remained minimal, limited largely to the simple adobe constructions of the caserío.

Under such conditions rising wage bills would have an immediate, devastating effect on net revenue. Greater outlays for labor allowing a more controlled, regularized work process and making use of increasingly specialized skills made economic sense only if they went hand in hand with capital investments, such as fencing and improved stock and pastures, assuring higher productivity per unit of labor. Initiating such a process was out of the question for most hacendados. They lacked sufficient capital, the credit system was not designed to proffer it, and their control over the estate's resources remained strictly limited. Endemic land invasions and livestock rustling by neighboring hacendados and community peasants and the colonos' stubborn defense of their autonomy made it less than certain that improving landholders could reap any benefits from capital investments. Under the circumstances most old and new hacendado families adopted the least risky strategy for increasing net revenues: they expanded their haciendas, ran more livestock on them, and settled additional colono families, while keeping outlays for land, labor, and inputs of production at a minimum. They did so by making full use of kinship networks, clientalism, and especially their strengthened position vis-à-vis large segments of the altiplano peasantry resulting from many peasants' dependent insertion into dendritic commercialization channels and the provincial elite's greater power of repression.^[97]

It would be too simple, however, to identify the low-productivity, "seigneurial" operation of most altiplano livestock estates during the early twentieth century as mere traditionalism, a continuation of how things had been in 1850 or even 1780. Ironically, it was the very structures blocking the emergence of capitalist livestock enterprises that offered the opportunity to hundreds of modest families of mestizos, whites, and even a few affluent Indian peasants to acquire small to mid-sized haciendas. Given the economies of scale in highly productive, capitalized ranching operations, a tidy transition to agrarian capitalism, with secure and well-defined property rights, skilled rural wage laborers, and improved stock grazing on fenced pastures would have resulted in a predominance of latifundism in the altiplano perhaps akin to the vast estancias of Argentina's fertile pampas. The continued and indeed enhanced strength of clientalism, paternalism, and violence as sources of power paradoxically fostered the emergence of middling landholders—owners of small to mid-sized haciendas as well as affluent peasants—rather than blocking it. While locked in a fierce contest over the distribution of resources that reproduced the main colonial divide between Hispanic conquerors and a subordinate Indian peasantry, most gamonal hacendados and Indian peasants joined in re-

jecting attempts to transform the altiplano along the lines of agrarian capitalism.