Ten years of the Coca Monopoly in Peru

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Details

Pages: 9 to 15
Creation Date: 1962/01/01

 

Ten years of the Coca Monopoly in Peru

Legislative decree No. 11046, of 13 June 1949,[1] and the regulations issued for its application on 2 August 1949 [2] set forth certain rules for the functioning of the Coca Monopoly and its administration, rules intended to ensure maximum efficiency in the control of the coca leaf and the recovery of the tax thereon, in compliance with the international conventions to which Peru is a party. The account which follows gives a picture of the government's efforts to achieve that end.

Historical background

The coca plant belongs to the genus Erythroxylon, and has its origin in Peru and Bolivia. It is grown also in Ecuador, Colombia and Brazil, and its cultivation was reported to be introduced a few years ago in the West Indies (particularly Jamaica), India, Ceylon, Zanzibar, Australia, Java and Cameroun.

The plant has been known in Peru and Bolivia from time immemorial, as shown by the sacks and baskets full of coca leaves which have been found in ancient tombs discovered in this part of South America.

The ancient inhabitants of Peru had dedicated the coca leaf to the worship of the sun and the habit of chewing it goes back to many centuries before the Spanish conquest; coca leaves also served as currency or as a means of exchange, a use which has persisted until this day.

When the Inca rulers extended their domination northwards, they restricted the consumption of coca leaf to the nobility and prohibited its use by the people under penalty of the law, as can be seen from such passages of contemporary chronicles as the following:

"... In the days of the Inca Huayna Capac it is understood that very little coca was grown in this country. The Incas alone had some very small plots under the plant; the other Indians had none; they drew coca leaf in very small hampers at the discretion of the Incas, who used to give small bags of the leaf to their favourite retainers and servants. The coca leaf was thus outside the reach of other persons ...." (Lima, 1570)

During the colonial period, Viceroy Toledo issued several ordinances to promote the cultivation of the coca plant and the consumption of the leaf.

The knowledge of the coca plant was first brought to Europe by Dr. Monardes of Seville in 1580. In 1750, coca plants were sent to Europe by José Jusseieu, and were examined by Antonio Lorenzo Jusseieu. The naturalist Lamarck placed the coca plant in the genus Erythroxylon as defined by Linnaeus. The effects of coca leaf mastication were first noted by Father Thomas Ortiz in 1499 and described by Benzoni in the middle of the sixteenth century. Since then, many research workers have studied the coca leaf, in particular Tschudi and Montegazza.

A campaign against the coca leaf has been conducted in recent years (1944/48) by Dr. Carlos Gutiérrez and Dr. Victor Zapata in the Review of Experimental Medicine and Pharmacology, Dr. Carlos Rickett Burga in his book The Social Prevention Problem of the Coca Leaf, and the Ministry of Public Health in its pamphlet The Coca Leaf is Harmful to Health, which is widely distributed in the coca producing and consuming areas of Peru. There is also in Arequipa a Peruvian anti-coca league. These campaigns have of course had some effect, and in recent years an appreciable reduction in mastication has been observed.

Social aspects

In Peru the ancestral, esoteric habit of coca leaf mastication (chaccheo) continues to be for the Indians a source of superstitious beliefs, and is supposed to have prodigious virtues; this is partly because of the Indian's extremely poor living conditions; the coca leaf provides relief from frustration and inspiration for local songs and traditions. Soothsayers and medicine men also use the coca leaf for such purposes as weather-forecasting and banishing evil spirits.

The method of mastication varies from one region to another. In the south, the coca leaf is chewed with a special paste known as "llipta" (a substance made from the ash of a wood called "manaccaraco" or "quishuar ": the ash is mixed with water, made into a paste and then dried in the sun) or it is mixed with cocoa husk, abundantly sold in the markets; in the centre and in the north, the coca leaf is mixed with chalk (in fact, calcium oxide) and in the mountainous valleys with the bark of the chamayro tree. These various alkaline substances, combined with saliva, liberate the cocaine in the leaf and improve the taste of the leaf considerably. The Indian will be prepared to do without anything rather than his huallqui (leather or woollen bag), where he keeps these ingredients protected from the weather. Indians will not work unless they receive from their employers (even if the employer is the government) their daily ration (jallpa) of coca leaves; quantities in excess of a worker's needs are taken by him to his village, and are called acucho (order).

During the working day, coca leaf mastication is limited to 15 or 30 minutes at 10 a.m. and a similar period at 3 p.m.; mastication time is observed with the strictest punctuality. The first period is called "tacsha mallhua" (short break) and the second "jatun mallhua" (long break).

It has been observed in the coca-producing areas that there are 80-year-old Indians who have masticated all their lives and are still fully fit to work, have abundant hair and a complete set of teeth; they would be pointed out by their employer as his best workers in the field.

This may suggest that the use of coca leaf in that form must supply abundant vitamins, and hence sustain the worker's body, ward off hunger and the effects of exposure to inclement weather, as well as provide some form of comfort, relief from fatigue and diversion. It is important to bear in mind, however, that even an Indian who is strongly wedded to his mastication habit, if he leaves his miserable surroundings and goes to the coast or Lima where he enjoys better food and a different mode of life (or starts his military service), will automatically forget his habit; this shows that for him, mastication is not a deep-rooted vice, but a habit resulting from the environmental factors described above. Moreover, the coca leaf mastication habit is not progressive like other vices, but is generally maintained at an average of 50 grammes of coca leaf per capita per day throughout a person's life.

When social legislation will have liberated these large masses from the static conditions in which they live at present, the coca habit will rapidly disappear in Peru; the leaf of this remarkable plant will, however, continue to render other services to humanity, and Peru, as its chief producer, should not consent to the eradication of the coca plant, which would not only destroy a source of considerable wealth, but also bring unemployment to over 200,000 persons directly or indirectly employed by this industry. On 30 January 1940, the Peruvian Government set up a National Institute of Andean Biology for the purpose of making a study of the Andean population and a physiological and pharmacological survey of coca within the biological framework, thus adopting a scientific approach to the study of the effects of mastication on the human body. There is no information as to whether this institute has carried out its important task.

In 1949, the United Nations appointed a Commission of Enquiry [3] on the Coca Leaf consisting of the following specialists: Mr. Howard B. Fonda (United States of America), Mr. Jean-Philippe Razet (France), Prof. Frederic Verzar (Hungary) and Dr. Marcel Alfred Granier-Doyeux (Venezuela) to study the coca leaf problem in Peru and Bolivia. This commission, after three months of study (conducted with the assistance of the Government's specialized staff) reached the conclusion that the chewing of the coca leaf is harmful to health and to the economy, but that it cannot be regarded as cocaine "addiction in the medical sense "; it recommended a governmental policy "to limit the production of coca leaf, to control its distribution and eradicate the practice of chewing it." No reference was made to degeneration or harmful physical effects. One of the members suggested a three-year period for the eradication of coca plant cultivation.

The Coca Monopoly has adopted a Peruvian approach to the problem and has adopted these recommendations, taking all advisable control measures which do not affect the social, economic and psychological conditions obtaining in Peruvian hills and valleys.

Economic aspects

The coca plant is largely grown on land, and under conditions, little suited for other crops. In the large areas where it is grown, the whole economy is centred on the coca leaf industry, in which more than 177 million gold soles have been invested. This industry gives animation and colour to the neighbouring localities in which fairs are held, either every Sunday or at periodic intervals, and are attended by large numbers of Indians who come from their hills to sell and exchange their products.

The records of the Coca Monopoly show that 13,975 cultivators are engaged in coca production, and 11,767 persons are employed in the coca leaf trade.

Apart from occasional middlemen and persons engaged in barter operations, it may be estimated that the coca leaf trade amounts to 110,683,230 gold soles, and benefits smallholders.

Classes of coca leaf

1st class (Ccacha): This term is applied to a deep-green-coloured leaf, carefully dried by mechanical means or by airing. It is pressed into bales and is the class of coca leaf best suited for export.

2nd class (Huanta or Pizada): This term is applied to a dark coloured leaf resulting from defective drying; in many localities, however, this class of leaf is produced deliberately by beating (mato) the fresh leaf in order to meet the wide demand for consumption from the departments of Aya-cucho, Hancavelica, Apurimac and Puno.

3rd class: This class covers leaves which, as a result of neglect, dampness, delay in drying or disease, have lost some of their alkaloid content. There is practically no commercial demand for this class of coca leaf. In many localities, it is used as a fertilizer.

Agricultural aspects

The coca bush grows abundantly in the damp tropical valleys of Peru from a height of 300 metres (department of Loreto) up to 2,400 metres above sea level, at temperatures between 20° and 30°C.

The plants are grown from seeds which are usually made to germinate in specially covered nurseries, away from the direct sunlight and situated in sheltered and very damp places.

The seedlings remain in the nurseries until they reach a height of 30 or 40 cm, when they become resistant to climate variations in the open.

The method of preparing the ground for the transplantation of the seedlings differs from one region to another, as coca plant cultivators generally do not apply technical principles which would have ensured uniformity of methods; nor is there any investigation into genetics, plant health and safety and resistance to climate disturbances and soil erosion. The cultivator only touches the plants during the harvest months, leaving them to themselves in between harvests.

In the Sierra valleys, the plants are as a general rule grown in trenches; in the mountain valleys they are planted in small, irregulary distributed, rectangular ditches. In the first, the average density is one plant per square metre; in the second, as many as four per square metre.

In the Sierra valleys, irrigation depends on the quality of the soil and the degree of ambient dryness; in the mountain valleys, where dampness is constant and rain regular and intermittent, irrigation is unnecessary. In the first, it is customary to protect the plants from direct sunlight by growing them in the shade of certain trees such as pacae, palta, orange trees and a bush called "cuca-mama"; in the second type of valley, the plants are not grown in the shade. In the first, there is a greater proliferation of animal pests and fungus diseases than in the second, but the leaves are much better in quality as regards thickness, colouring and even alkaloid content.

The most suitable soils for the development of the coca plant are the clayey soils, rich in humus and iron content, situated in sheltered valleys and exposed to a constant ambient humidity and rain precipitation. Under these conditions, the coca bush, if adequately cultivated, can thrive for a century or more, growing steadily in strength and foliage.

Production also varies considerably even within a single valley, depending on atmospheric variations, the age and condition of the plants, the quality of the soil, the fertilizers used, the timing of cultivation, etc.; hence, state control, through the Cadastral Survey Department and the Farm Production Control Services, must be constant and well coordinated. We recommend those who wish more information on the control work being done in the matter to read our pamphlet entitled "Plan of Action ".

Functions of the Cadastral Survey Department

In pursuance of the provisions of article 5, paragraph ( c), of legislative decree No. 11046 on the subject of the preparation of a cadastral survey, the Coca Monopoly proceeded in 1949, as a first step, to the registration of coca leaf producers on the basis of declarations submitted by them on special forms. Guided by the information thus obtained, groups of specialized staff undertook the work of cadastral survey in the south at the beginning of 1950, extending it progressively to the rest of Peru in the following years. It is satisfactory to note that the work was completed at the end of 1958.

The surveying of the coca plantations was carried out in accordance with a well co-ordinated technical plan, using land-surveying equipment.

Like all survey operations, the cadastral work has supplied to the Coca Monopoly the following information, which is considered essential for the purposes of an improved control system:

1.      Number of each farm or plot in accordance with its measurements;

2.      Number of each farm or plot in its zone;

3.      Number of each farm or plot in its district;

4.      Names of farms and plots, in alphabetical order;

5.      Name of producer (drawing a distinction between owners and tenants);

6.      Average height of land under coca cultivation;

7.      Number of plots included in each farm;

8.      Area under coca cultivation;

9.      Quantity of coca plants (productive and unproductive);

10.  Production, in kilos per harvest;

11.  Production, in kilos per year;

12.  Production, in kilos per 100 plants;

13.  Plants per hectare;

14.  Production in kilos per hectare and other information.

Agricultural control

In order to enable the Coca Monopoly to check accurately variations in coca plantations, an agricultural control is carried out, and records and statements are kept in respect of each farm or plot to keep track of the constant variations in the extent of cultivation, the number of plants grown and coca leaf production.

Documents establishing any extension or decrease noted by the technical staff of the sector concerned in the areas under coca cultivation are carefully classified, and the information contained therein is recorded in special books kept by the central office, for purposes of confrontation with the agricultural card index and production tables.

Only in cases of a new land survey or a replanting ordered by the general administration is there any change made in the original plans to the form of the plots, and hence in the data recorded in the cadastral records.

Control and production

The cadastral registers give only somewhat approximate information in regard to the production of each farm because calculations made when surveying the coca plantations are made on the basis of pre-established indices; accordingly, the control work of the Coca Monopoly is directed mainly to securing, by all lawful means available to it, that growers render a full account of their harvests at the end of each period and, where a difference appears with figures for the movement of coca leaves, that the growers establish the reasons therefor, so as to reconcile the various interests at stake.

Records of coca-leaf movements are kept in respect of each farm by the Coca Monopoly in special forms termed "Summary account of coca leaf production by farms" (form 20); the balance or excess production is established by comparing the figures in that form with the cadastral calculations; these balances are worked out at the end of each cycle (Balance of production of coca leaves per farm - form 21).

Contrary to other industrial crops, coca leaf production figures cannot remain stationary; as we said above, in connexion with the technical aspects, a series of factors can bring about an increase or decrease in production; accordingly, production figures must be periodically adjusted by correcting the data in the indices, records and statements.

The specialized staff of the Coca Monopoly, in co-operation with the general services staff, is responsible for carrying out the necessary checks in the farms, and for noting the actual production and movement of coca leaves.

Control and recovery of taxes

As will be readily understood, production control facilitates the recovery of taxes, since any amounts due in respect of the balance of production is offset against taxes due.

The control of coca-leaf movements from the farms is effected by means of check-posts situated at strategic places where the crops must pass. The check-posts are of two kinds: collecting posts and checking posts. The staff of collecting posts is responsible for issuing certificates relating to payments made on demand and to credit with the corresponding amounts the producing farms in the "movement records ". The staff of the checking posts checks the crops as they pass, comparing the quantities involved with those shown in the covering documentation, and seizes any amounts in excess, or collects the tax due.

The collecting offices generally keep a record of coca-leaf movements, and of the seizures effected by them, and transfer the figures for the weight in kilos involved to the "summary account of coca leaf production by farms ", so as to make it possible to use the information in question for the purpose of establishing the balance of excess production.

In the main centres of consumption, the policing staff check the entry of the product, weigh again the consignments in the establishment where they are kept, and make a periodic inventory of stocks.

These various forms of control are at present so well coordinated and so strictly enforced that, as a result, the contraband and illicit use of the product have been reduced to a minimum. In this connexion, the Coca Monopoly does not merely control consumption in accordance with the usual practice - i.e., by zones - it goes much further and carries out this control by districts, with the purpose of determining whether the quantities introduced under cover of certificates of payment and free transit are consistent with the number of coca leaf chewers shown by the census figures and statistics. If the quantities introduced are unduly large, it will become clearly apparent that the district involved is making an illicit use of the product and the necessary investigations will be carried out.

Production and Tax Revenue

Table 1 gives a summary picture of the production, tax revenue, collection premiums and net yield for the years 1949-1959.

TABLE 1

Production, tax revenue, collection premiums and net yield; consolidated statement for the years 1949-1959

^a  The Monopoly instituted the control of production and tax collection ihroughout the republic through a supreme resolution dated 2 August 1949, tmplementing Act 11046 of 13 June 1949.

^b  Including a loan of one million gold soles to the state laboratories for the processing of coca leaf and derivatives (supreme decree of 14 November 1955).

^c Including the refund of the loan of one million gold soles referred to underfootnote b above.

A comparison of the production and tax revenue for 1958 and 1959, by regions and zones, is given in table 2.

TABLE 2

Production and tax revenue for the year 1959, by zones of collection, compared with the year 1958

a. Including 13 891.89 soles transferred to alcohol revenue, for settling item debited to the office of Puerto Maldonado.
b. Cancellation of credit (according to supreme decree of 14/11/1955) for fiscal laboratories of industrialization of coca and derivatives.
c. Including 5 397 kg 160 g of production of the department of Madre de Dios, exempted from tax by laws No. 11867 and 12651.

It may be noted that the comparative reduction in production is due in the first place to climatic circumstances, secondly to negligence by producers, and thirdly to requested destruction, such destruction having eliminated in 1959 519.5 hectares of plantation (comprising 10,797 plants) and a potential production of 690,800 kg.

Exports

Pursuant to the supreme decree in force, the Coca Monopoly exported, through its agents, the following quantities in 1958 and 1959: 1958, 147,653.900 kg; 1959, 169,516.900 kg.

The 1959 excess over 1958 is 21,853.000 kg. The excess would have been larger if the high price-level reached by exported coca leaves had not prevented two shipments of coca leaves from being postponed. The rise in the price of coca leaves is attributable to a variety of causes: the heavier inland-revenue tax (increased from 1.80 to 2.80 gold soles); the rise in wages and in the cost of materials and equipment; climatic circumstances; and the destruction of plantations. The value of the shipments effected in 1959 was 3,349,255.67 gold soles as compared with 2,455,605.98 gold soles in 1958. It is urged that for the purpose of convenience, all the taxes at present levied under various heads by the customs authorities of the republic should be combined into a single tax; the proceeds of the latter would be broken down and appropriately allocated by the accounts division. Table 3 shows the consumption, industrial use and exports of coca leaves by departments and countries during 1959.

TABLE 3

Consumption, industrial use and export of coca leaves by departments and countries, 1959

 

a. Coca utilized by the fiscal laboratories for the industrialization of coca.

Consumption of coca leaves

It has been estimated that the population of the republic includes 825,441 coca leaf chewers, and that during 1959 their per capita consumption was 10 kg. 644 g. Table 4 gives details of coca leaf consumption.

TABLE 4

Estimate of consumption of coca leaves in the republic by departments in 1959; with population, consumption in kilogrammes and annual per capita average

Note: The consumption of coca leaves in islands is included in the provinces to which they appertain.
Population:Data obtained from the National Directorate of Mathematical Statistics and Investigations.

Industrial uses - state laboratories

Deliveries of coca leaf for this purpose were:

A total quantity of coca paste (crude cocaine) of 533 kg 100 g was sold during 1959 for the equivalent in Peruvian currency of 2,099,648.74 gold soles.

Land register

The survey completed by 31 December 1959 in the three regions of the country yielded the following figures: 13,975 properties owned or rented, total area: 16,092 hectares 6894 m2;296,090,050 plants and 11,068,323 kg. Owned or rented properties numbering 754 and having an approwimate total area of 970 hectares still remain to be surveyed.

TABLE 5

Agronomical classification by categories of coca leaf plantations in the republic as at 31 December 1959

Classification: la. - More than 5 hectares; 2a. - From 1 to 5 hectares; 3a. - Less than 1 hectare.

Valuations

The average value per hectare in the three regions being 10,998.89 gold soles, the capital value of the land carrying coca plantations covering an area of 16,092 hectares 6,894 m ² is 177,033,162.5 gold soles.

Control of cultivation

Surveys and corrections of 145 properties with a total area of 260 hectares, 3,971,560 plants and a potential yearly output of 145,039 kg were carried out in 1959; 196 owned and rented properties covering an area of 519 hectares, bearing 10,797,006 plants and having an output of approximately 690,887 kg were taken out of production.

Categories of plantations

Table 5 assigns the Peruvian coca leaf plantations to various categories. Plots of land belonging to the third category (area from one square metre to one hectare) number 10,350, constituting a total area of 3,732 hectares with 134,582,339 plants and a potential annual production of 2,732,000 kg of coca leaf. This output, sold at a minimum price of 10 gold soles per kilogramme, would yield for the small-estate operators (Indians of scanty means) an aggregate income of 37,320,000 gold soles. In view of the wide fluctuation to which plantation output is subject for various reasons, these figures cannot be determined with any great precision, but they can at least serve as a basis for any discussion of the coca problem in Peru.

Conclusions

The operation of the Coca Monopoly is not merely a question of tax collection; it entails giving attention to many other matters to ensure that no one's interests are harmed. The Monopoly co-operates in the production and sale of the coca leaf, and seeks outlets for it; it maintains a balance between the owner and the planter; it helps the small planter with advice in the event of pest-infestation or bad weather, and persuades him not to abandon those areas of his land which are devoted to this single crop. It has guided the planter by distributing appropriate literature and has sent out Quicha-speaking staff to interview planters and explain to them the Monopoly's aims. There is the satisfaction of seeing that this work has produced results: coca fetches a good price, and the Indian knows what is the proper price at which he should sell his produce. In March 1958, the Peruvian League to Combat Coca Addiction transmitted a vote of thanks to the Monopoly, doubtless to express its approval of the activities of that organization.

 

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^1.  Published by the United Nations as document E/NL1950/68. The decree consists of six articles, as follows:

Article 1. The Coca Monopoly is hereby established in the territory of the republic.

Article 2. The Monopoly shall control the sowing, cultivation, harvesting, distribution, consumption and export of coca. In conformity with the supreme decree of 8 June 1948, the Ministry of Public Health and Social Welfare shall remain responsible for the industrialization of coca for medical purposes.

Article 3. The Ministry of Finance shall, by special decree, designate the areas of the national territory in which the coca leaf may be cultivated; and shall establish the time-limits within which stocks of coca suitable for consumption must be declared, for purpose of the acquisition of these stocks by the Monopoly at prices to be fixed by the said ministry.

Article 4. The Tax Collection Department of the Caja de Depósitos y Consignaciones shall be responsible for the administration of the Coca Monopoly.

Article 5. The Ministry of Finance is authorized to make the relevant regulations, which shall cover the following matters: ( a) the establishment of a single price for coca, which shall include all the local and state taxes at present in force; ( b) the apportionment of the revenue obtained from this source among the various bodies which benefit from these taxes; ( c) the preparation of a cadastral survey of the plantations in the producing areas; ( d) the penalties applicable for infringements of this decree and its regulations; ( e) the estimate of the expenses required for the operation of the Monopoly.

Article 6. The revenue obtained from the operation of the Monopoly shall be employed principally for the building of barracks for the army.

^2.  Published by the United Nations as document E/NL. 1950/69.

^3. The report of the Commission of Enquiry on the Coca Leaf of the United Nations was published as document E/1666 of 28 April 1950.

^a. The Monopoly instituted the control of production and tax collection ihroughout the republic through a supreme resolution dated 2 August 1949, tmplementing Act 11046 of 13 June 1949.

^b. Including a loan of one million gold soles to the state laboratories for the processing of coca leaf and derivatives (supreme decree of 14 November 1955.

^c. Including the refund of the loan of one million gold soles referred to underfootnote b above.

4a. Including 13 891.89 soles transferred to alcohol revenue, for settling item debited to the office of Puerto Maldonado.
b. Cancellation of credit (according to supreme decree of 14/11/1955) for fiscal laboratories of industrialization of coca and derivatives.
c. Including 5 397 kg 160 g of production of the department of Madre de Dios, exempted from tax by laws No. 11867 and 12651.
5a. Coca utilized by the fiscal laboratories for the industrialization of coca.