Sugar Cane Production in El Salvador - Essay Example

These workers are exploited in terrible ways and very little has been done. To improve the economy of El Salvador, first, the sugar cane industry must stop its human rights abuses.El Salvador is the smallest and most densely populated Central American country with the third-largest economy behind Panama and Costa Rica. El Salvador’s GDP in 2010 was $43.57 billion and the per capita GDP was $7200. By sector, the GDP is made of 11.3% in agriculture, 30.7% in industry, and 57.9% in services.

Their labor force was estimated to be 2.564 million strong in 2010 with 19% in agriculture, 23% employed in industry, and 58% in the services sector. The unemployment rate of El Salvador in 2010 was lower than that of the United States at 7.2%. However, an astounding 37.8% of El Salvador’s population falls below the poverty line. Many of those poor are the people who work in the agricultural sector of society. Agriculture remains an important source of revenue for the country; in 2007 it comprised nearly 11% of El Salvador’s GDP.

In fact, next to coffee, sugar is El Salvador’s main export. Sugar cane cultivation and sugar production jointly represent 2.3% of GDP. The country has sugar cane plantations all over and six large refineries refine sugar and other products from the sugar cane. While large and foreign companies own these refineries, they own less than 10% of the actual sugar cane crop after a land reform that changed the system and resulted in about 7,000 independent sugar cane farmers who cultivate sugar cane and sell it to the mills.

Between the mills and the plantations, the sugar industry in El Salvador employs around 50,000 people, with about 80% of them working in the fields.Like many other countries in the world, El Salvador suffered some economic setbacks in 2009 during the worldwide recession. Real GDP contracted by 3.5% because of the recession, but the economy of El Salvador began to rebound in 2010 partly because of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) which was signed in 2006 by then-president Antonio Saca.

DR-CAFTA has encouraged the export of processed foods, sugar, and ethanol. It also supports investment in the apparel sector of the economy and strengthened competition with Asian nations. According to the CIA’s, World Factbook, “With the adoption of the US dollar as its currency in 2001, El Salvador lost control over monetary policy” (CIA). Remittances may have had something to do with the El Salvadoran government deciding to relinquish the control of its monetary policy in favor of remittance.

According to Therese Nilsson, “Almost one of four households in El Salvador has remittance income, which makes El Salvador more dependent on remittances than any other Latin American country”.