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Puerto Rico in the Great Depression

Cooperatives
From Puerto Rico Reconstruction Administration Annual Report, Year Ended June 30, 1940

Admiral William Leahy, Administrator

Publishing Information
  1. As will be seen from the attached table, the PRRA has been working during the past year with sixteen cooperatives, including three newly organized. Valuable cooperation has been extended by the Agricultural Extension Service, the Insular Department of Agriculture and Commerce, the Insular Department of Education and the Federal and Insular Experiment Stations.

  2. Lafayette Sugar Cooperative. Operations of the Lafayette Sugar Mill Cooperative have been satisfactory. It produced during the year from 249,095 tons of cane, 236,485 bags of sugar of 250 pounds each. The average sugar yield from cane ground was 11.867 per cent as against 12.794 average for the 1939 season. This decrease was due partly to the grinding of overmature cane that was left over from the 1939 season because of then existing quota restrictions, and partly to a prolonged drought. Despite the lower sugar yield and the increase in hourly wage rates from 25 to 30 cents under the Fair Labor Standards Act, the Mill accomplished a reduction in manufacturing costs.

  3. Unfortunately the twelve Land Cooperatives, to which sugar lands were sold on credit by the Government, have not experienced like success, and will have to be liquidated. Principal reasons for the inability of these agricultural cooperatives to meet their obligations to the Government are: (1) heavy fixed charges occasioned by the fact the properties were mortgaged to the Government for 100 per cent of value; (2) large expenditures for repairs and improvements during the first three years of operation which, while adding to the value of the properties, have not yet been reflected in increased production; and (3) the fundamental ineffectiveness of the Land Cooperative set-up, due to complications inherent in dealing with twelve cooperative entities, the inexperience of their worker-members, and their lack of knowledge of their rights and obligations. The members of these Land Cooperatives have authorized reconveyance of their holdings to the Government for credit at the fair value thereof on their mortgage obligations to the Government, and this reconveyance is now in process of being consummated. It is planned to subdivide the lands into relatively small parcels, each with a sugar quota, and to sell them to small experienced sugar cane growers. Thereby the investment of the Government will be safeguarded, the fundamental objective of the project for more equitable distribution of lands will still be realized, and laborers in the area will be assured of more employment than they were likely to have from the failing Cooperatives.

  4. The construction of a plant by the mill cooperative, with a loan of $550,000 from the PRRA, to provide facilities for experimenting with the conversion of cane by-products into solvents such as butyl alcohol and acetone, has been completed. The plant has a capacity for converting annually 2,500,000 gallons of molasses into 5,000,000 pounds of mixed solvents. Test runs have been made, and the plant is now in full operation. Not only will this plant produce by-products as an offset to quota restrictions limiting the production of raw sugar, but such products should also be of exceptional value in case of war.

  5. Los Canos Sugar Cooperative. The purchase in March 1939 of the other sugar mill property, Los Canos, was financed by a PRRA loan of $619,000 to a cooperative over 90 per cent of whose members are needy farmers. No land purchases were involved, outside of the 42 acres immediately surrounding the mill. The cooperative members individually own or lease some 8,000 acres of land in the mill area. An additional loan of $200,000 was made to this cooperative just before the close of last year for improvements, principally in machinery to increase production capacity. These improvements have now been made, Additional loans during the year just ended totaled $110,000 for purchase of equipment and operating expenses. During the 1940 grinding season, Los Canos produced 152,713 bags (250 pounds each) and 26,570 bags (100 pounds each) of raw sugar from 186,190 tons of cane. The average yield of sugar per 100 pounds of cane was 11.066, a decrease (for the same reasons as in the case of the Lafayette mill) of .745 per cent from the 1939 season average.

  6. Vegetable Cooperatives. The four vegetable cooperatives are producing winter vegetables, such as tomatoes, cucumbers, peppers, and string beans, principally for the New York market. These cooperatives increased the total Island export of tomatoes from 9,381 lugs last year to 33,388 lugs during the present year, an increase of 356 per cent. Gross receipts of the four cooperatives totaled $124,654, and each operated at a profit. In one cooperative, individual members sustained losses due to sudden vegetable blights. Most of the members received a net profit equal to production cost. Some even trebled their investments. A Puerto Rican farmer under PRRA guidance in April of this year established a record price for tomatoes on the New York market when he received $8.40 for a lug of tomatoes. Three of the four vegetable cooperatives were granted small operating loans during the past year, totaling in all $17,000.

  7. Vanilla Cooperative. The vanilla growers' cooperative, an outgrowth of encouragement given to growers by the PRRA through production and distribution of vanilla cuttings to growers on a loan basis, instructions in growing, and the construction of a pilot plant for curing vanilla, is marketing vanilla for its members, serving for the present only as a marketing association. The cured vanilla beans marketed by the member-growers last year amounted to only 140 pounds whereas this year the cooperative will probably market 800 pounds.

  8. Other Cooperatives. The Puerto Rico Marketing Association for Minor Crops, producing sea island cotton, increased its total sales from $64,587 in 1938 to 428,367 in 1939, and it is now estimated that the crop being ginned will exceed $200,000. The PRRA loan of $30,000 was recently made to this cooperative to enable it to advance to its members 50 per cent of the value of the cotton when delivered for ginning.

  9. The purchasing cooperative (Sociedad Agricola), purchasing farm supplies for its members, has increased its volume of annual business from $215,000 to $477,206. The PRRA made an additional loan of $25,000 to the cooperative during the past year for working capital.

  10. Additional operating loans totaling $35,000 were made during the year to the fruit growers canning cooperative at Arecibo. The cooperative canned 24,440 cases of fruits and fruit juices as compared with less than 10,000 cases during the previous season. The restrictions of the Fair Labor Standards Act, however, necessitated discontinuance of the canning of orange juice.

  11. The Puerto Rico Rug Cooperative, although less than two years old, had a $8,883 volume of business last year of which a little more than $2,000 represented profits for its members, on a total investment of only $5,000. In the coming year, it is planned to expand the facilities of the cooperative to provide for the weaving of small rag rugs.

  12. The manual arts cooperative (Puerto Rico Artcraft Cooperative) to which the PRRA made a loan of $20,000 last year, has been in operation for eight months, during which time it has sold $15,000 worth of handmade products delivered to it by needy persons. Its members do the work at home, producing many useful articles and souvenirs from various native woods, straws, shells, seeds and other materials. Since the PRRA loan was available only for assistance to rural persons, the cooperative consequently has encountered difficulties in securing a sufficient variety of handmade products to complete a full line of articles for its sales room. During the next fiscal year, it is therefore planned to repay the loan to the PRRA, and to secure a loan from the Puerto Rico Self-Help Corporation through which the Artcraft Cooperative may assist both urban and rural persons-- thus enabling it to obtain handmade articles produced in urban as well as rural areas.

  13. The coconut growers cooperative was organized during the past year in response to petitions from growers on the Island, for the purpose of marketing coconuts produced by members, either as fresh fruit for export or through a plant recently established in the Island for the production of shredded coconut.

  14. The Cooperative Handcrafts, Inc. of Puerto Rico, organized by the Puerto Rico Self-Help Corporation, because of inability to meet the requirements of the Fair Labor Standards Act, has been forced to discontinue operations. It is now in liquidation under supervision of the PRRA. Cooperative Division.

  15. During the forthcoming fiscal year, the Cooperative Division will be engaged in close supervision of the several smaller cooperatives with which it has been working, including attendance at board meetings and assistance in determining policies and operating methods. Also, the Division will maintain relations with some of the larger cooperatives in order to insure in every way possible their financial success.

  16. Summing up, it may be said that the cooperative movement in Puerto Rico is steadily growing and improving. Those who are working with it, including cooperative members, management, cooperating public agencies and the public in general, are gaining valuable experience in cooperative effort.