THE ECONOMIC AND SOCIAL IMPACT OF RECENT DEVELOPMENTS ON
RURAL AND AGRICULTURAL POLICIES AND INSTITUTIONS IN MEXICO
Jose G. Vargas-Hernandez
School of Public Administration
Carleton University
ABSTRACT.
The aim of this paper is to explain and analyze conditions, implications and
impacts that have had rural and agricultural policies and institutions in Mexico on
growth and rural welfare under the framework of the neoliberal economic
development model during the last sixteen years. By achieving this purpose, we
also can identify several disfunctionalities between the existing agricultural
economic structure and the implementation process of the recent changes on
agricultural policy reforms. We contend that these severe disfunctionalities have
been created, induced or at least further deepened by the recent changes on
macroeconomic strategy and policies and institutional structure.
Our work hypothesis states that most of the existing disfunctionalities in the rural
and agricultural sector in Mexico, have had until now a direct influence on the
low levels of effectiveness and productivity of farm economy, and thus, affecting
the equity of social development and the stability of the political system.
we start by describing the most outstanding events within a historical perspective
and analyzing the implications and impacts of state policy and institutions, that
led to the consecutive models of rural and agricultural development after the
Mexican revolution. The Agrarian Reform distributed land and met partially the
challenges of the landless. The import-substitution industrialization (ISI) favored
more the manufacturing sector and the urban dwellers and neglected the rural
and agricultural sector. Although production of basic grains and other food stuffs
achieved self-sufficiency by the sixties, shortages started to appear during the
seventies mainly due to an increasing population and lack of investments in
farming. The food crisis was solved by increasing imports. The new project
called “shared development” failed to attract private investment to the agricultural
production. A turning point in rural and agricultural policy after the Mexican crisis
of 1982, under the framework of imposed structural adjustment and economic
stabilization policies, brought commercial liberalization and international
competition to the sector through constitutional reforms of land tenure and the
opening of the North American Free Trade Agreement.
We resume the analysis by identifying in the agricultural economic structure of
Mexico, the main factors that blockade growth and productivity. We categorize
those factors in two types. A first type of factors are grouped is the physical and
geographical environment, considered as limiting factors and obstacles that are
difficult to change because they are part of the nature endowment. The second
set of factors refer to the agricultural and institutional policies which are more
dependent on political will. We show that in the case of Mexico they have been
erratic. After analyzing the overall impact of these policies and institutions on
economic growth, social welfare and equity and political instability, we turn to
offer some considerations for the formulation of alternative policies. Finally, we
make some concluding remarks.
1.- Introduction.
Agriculture is at the center of the development debates in Mexico nowadays.
Historically speaking, it has always played the most important role in the
economic, social and political development of Mexico. The development of the
rural sector in Mexico has have until now, direct consequences on the growth of
other sectors of the economic structure. Thus, while the macroeconomic and
political environment gives form to the economic development model and this in
turn define the rural and agricultural policies and institutions, the consequences
of the application of these policies on other sectors, on the economy as a whole
and on the social and political systems, can not be ignored. We use this
systemic approach in our research.
2.- A historical perspective of the agricultural development problem.
The old revolutionary Zapatista slogans of “land and liberty” and “land is for
those who work on it”, have been since the Mexican Revolution period (1910-17)
and still are the expressions of the aspiration of millions of rural Mexicans: to
own a piece of land. Before the Mexican Revolution, the agrarian structure of
Mexico was comprised of large states formed during three hundred years of
colonial rule (1521-1821), which have continued concentrating the land after the
independence of Mexico. On the eve of the Mexican revolution, more than two
thirds of the arable land was owned by the rich “hacendados” who represented
only 1% of the Mexican population. The rights of peasants to hold and farm a
plot of land by redistributing large states was the popular demand of the Mexican
Revolution and a fundamental goal which was written into Article 27 of the 1917
Mexican Constitution.
A).-The Mexican Agrarian Reform.
Peasants gained political leverage when the Agrarian-Reform program was
effectively implemented by President Lazaro Cardenas from 1934 to 1940,
based on the breaking up of the colonial hacienda system and redistributing the
land by creating rural communities called ejidos.
As a product of those demands for land, Article 27 created a new form of
communal ownership, the “ejidos” which essentially are community centered
plots of land worked by the farmers themselves in order to maintain the rights to
farm and hold them and which can not be transferred, sold, leased, mortgaged,
used as a collateral, etc., in an attempt to avoid a new re-concentration by few
land holders. An ejido is a communal group which manage rural land primarily in
common (Thompson and Wilson, 1994). The term ejido refers to an agrarian
community which had received and continue to hold land in accordance with the
agrarian laws growing out of the Revolution of 1910. It consists of at least
twenty-five individuals, usually heads of families called ejidatarios. All rights to
ejido crops are granted to individual families on an usufruct basis. Ejidatarios are
these agricultural workers 16 years old or older (unless married) who have legal
rights to a plot of ejido land. A person is counted as ejidatario even if he has not
yet received his share of ejido land. Rights to these lands may be passed on to
heirs, but they may also be lost if the land is not under cultivation for two
consecutive years (De Vany and Sanchez, 1997). Community holders of ejidos,
called ejidatarios, could work individually in small assigned plots or collectively
the communal land, but did not have the right to sell, rent or mortgage their
parcels. In practice, however, farmers continue to be economically marginalized.
The Agrarian Reform redistributed the land benefiting more that three million of
poor households and establishing 29, 951 ejidos, (Torres Torres, 1994),
although it is estimated that 85% of the land distributed between 1952 and 1982
was not arable (Quintana, 1994), and three quarters of all ejido lands are
common lands. In the eyes of these poor rural communities, the Mexican state
acquired legitimacy when Cardenas began to promote the Ejido as the basis of
its agricultural program. The Mexican state played an active role in the Agrarian
reform.
However, it has been questioned that this Agrarian Reform resulted in a
community-farm structure which allocated only the extension of land necessary
to satisfy subsistence needs of the holder’s family and provided them very poor
incentives for work and investment. Most of the criticisms addressed the
inefficiency and low productivity of the system, and were in favor of larger private
estates for large-scale crops production for the market.
In fact, the original Article 27 of the 1917 Mexican Constitution had established a
dual policy strategy for land tenure. It has preserved the private ownership of
land subject to some limitations in the extension according to the quality and type
of land exploitation, but also has recognized the rights of indigenous
communities to hold rights on communal ownership land, the Calpulli that has
persisted from the pre-Hispanic as a tenure regime for holding marginal lands.
Article 27 also created a new form of communal land tenure, the ejido.
Since 1943, international research organizations colaborated with the Mexican
government in a project called the “green revolution” to facilitate rural and
agricultural development through the promotion of higher-valued crops. Although
rural policies became more complex in the following decades, the Agrarian
Reform encouraged the peasants to increase productivity of their lands at an
average annual rate of more than 3% and to achieve yields of corn to more than
1.2 tons per hectare by 1960. In the northwest of Mexico, the successful “green
revolution” program achieved the development of dwarf wheat varieties,
cultivated in irrigated land. Finally, the mids-1960s was the period when Mexico
achieved self-sufficiency in the production of basic foodstuffs.
Despite this encouragement, Barkin (1994:30) sustains that “the peasants were
condemned to poverty by a rigid system of state control of credit and by prices of
agricultural inputs and products”. In fact, the Mexican state became strong during
the 40’s coinciding with economic policies that conceived the emerging process
of industrialization as a priority and even at the expense of Mexican peasant
farmers who should not only provide cheap food for the urban population, but as
a source for cheap labor.
B).-The import-substitution industrialization development model on rural and
agricultural policy.
The import-substitution industrialization (ISI) development strategy, as it was
called the new economic policy, privileged manufacturing of goods for urban
consumption over agricultural production and development, and thus creating a
highly polarized rural society. On one hand, an international market oriented
agricultural sector emerged, capitalized and financed by generous programs of
credit-subsidy and incentives to introduce modern systems and agricultural
infrastructure for production of fruits, vegetables and cattle. On the other hand,
most small landowners did not have access to credit and incentives programs
and were relegated to traditional cultivation systems of basic grains, maize and
beans for family consumption at levels of subsistence. Most of them were
displaced as producers by large agroindustrial transnational corporations, and
those who could not engage as a contract producers or day laborers had to
emigrate.
From around 1945 and until 1970, the import-substitution industrialization
strategy was considered as the “Stabilizing Development” model aimed to protect
the domestic production of manufacturing goods for the internal consumption,
and for export of surplus. The agrarian structure was mainly characterized by
unfavorable policies, unsupportive environment, dominance of public owned
enterprises, and import barriers, compensated by large public investment
programs and partial land reform, which addressed structural problems and had
resulted “in modest increases in agricultural output and modest reductions in
rural poverty. Rent seeking by large farmers and bureaucrats has, however,
often reduced the efficiency of public expending, which has steadily shifted from
investment in public goods (for example, irrigation) to distortion subsidies for
privately used inputs (for example, water and electricity), eroding the basis for
long term growth” according to Binswanger and Klaus (10997) who categorized
the agrarian structure of Mexico within the third group of countries in the typology
they developed.
The “Stabilizing Development” model was the dominant framework for policy
making on Mexican agricultural and rural development. In part, the analysis of
Almazan (1997) give us an idea of the situation and the conflicts that prevailed in
“rural Mexico” during this period of time, when he explains that “Rural
communities, both indigenous and mestizo, were subjected to severe economic
exploitation, which in turn led to low economic standards of living in comparison
with urban centers. At the same time, rural unrest was controlled by co-opting
would be leaders or repressing violent outbreaks. The unrest, however, tended
to be sporadic and highly localized. On the whole, the pueblos were willing to
sacrifice economic development for territorial security and viewed the Mexican
state as the guarantor of the late.”
It is quite clear that in order to favor industrial development, the state had
benefited the urban dwellers and had to inflict high levels of social costs on other
sectors such as the rural population. In fact, most part of peasants and farmers
were socially excluded of welfare benefits; opportunities of education, health,
housing, etc., and other democratic forms of participation. To exercise a rigid
and more strict political control on rural population, the one-party regime created
the Confederacion Nacional Campesina (CNC)
or National Peasant
Confederation, one of the three main organizations of the Partido Revolutionario
Institutional (PRI) in power since its foundation in 1929.
At this point, we argue that institutional and other academic accounts in current
literature, have exaggerated the economic, social and political achievements of
the stabilizing development period in Mexico, describing them as the “Mexican
miracle”. The impressive results of 6.9% as yearly average of economic growth,
the social development and the political stability of this period should be
questioned. The truth of the matter is that in order to maintain political stability the main argument that the one party-regime had at the time- a type of
benevolent authoritarianism and patrimonialist state had developed. Once the
Mexican government was called “the most perfect of the dictatorships” by the
Peruvian, now Spanish writer Vargas Llosa. One good example that challenges
the existence of the alleged “social and political stability” is the student
movement of 1968 when the Mexican Army killed some hundred of students, nobody knows the exact number- in a public demonstration against the
antidemocratic government in the Plaza de las Tres Culturas or the Three
Cultures Square in Tlatelolco.
In the mid sixties, three years before the killing of Tlatelolco, the “stabilizing
development” model started to show signs of exhaustion in all sectors of the
economy, and a crisis appeared in agricultural production, crisis that has been
since then recurrent and cyclical. Since then, Mexico hardly has achieved food
self-sufficiency. In other words, to regain the nutritional sovereignty of Mexicans,
has been the objective of any agricultural plan of all governments, but the real
achievements have been far away in most of the years.
C).-The “shared development” economic model on rural and agricultural policy.
Starting on 1970, the next two six-years governmental periods experienced more
intervention of the state in the economy structure of Mexico. Under the
guidelines of a new economic development model called “shared development”,
based on a “mixed economy” with direct participation in production of the private,
public and social sectors, and export oriented, the state policies were aimed
towards seeking new structures and forms of collaboration for production
between the manufacturing and the rural sectors. Several experiments were
settled down with heavy public founding which later turned into unfruitful
spending because the achievements were always behind the expectations, such
as the case of the so called “Industrias del pueblo” or “People’s industries” that
visioned a new approach to social participation under a framework of “Social
solidarity societies” formed in 43 municipalities in the South of the State of
Jalisco. Twenty two years after the end of the experiment, marked by the last
day in power of President Echeverria in i976, part of the infrastructure is being
used by the communities such as for example roads, some buildings, etc., but it
is sad to see that other part of the infrastructure has been neglected due to lack
of budget for maintenance, and is useless or even in ruins. A good examples
are several agroindustries, fruit processors, etc. that now remain as “white
elephants” in the scenography of rural communities.
“Que solo los caminos queden sin sembrar” which means “that only the roads
had left without crops” was the agricultural slogan at the midst seventies.
Unfortunately, the efforts to join public and private interests in agricultural
production which would lead to a food self-sufficiency, failed. Private investors
benefited from public investment in agricultural infrastructure such as irrigation,
roads, etc., but when they needed to invest in more risky projects, they rejected
any possible partnership with the state. However, the opposite meant that private
capital was willing to invest if businessmen foresaw rapid returns on investment
wrapped up with financial incentives, subsidies or any other kind of public
financial support. By the last years of the seventies, it was evident that a new
agricultural policies were required to promote rural development of Mexico. The
Mexican government was aware of the need of new agricultural policies and
“began to argue” in favor of changes. Almazan (1997) recognizes the fact that
“Criticism of the Ejido as an unproductive economic unit began to be voiced”
and that “...the Mexican government had wanted to modified the ejido since the
late 1970s.”
Nevertheless, the twelve years of these two governmental periods that had
experienced the model of “shared development”, -also they were called the
“tragic dozen”, to recall the “tragic dozen”, a famous battle of the Mexican
Revolution- were marked by constant conflicts between the state and the
entrepreneurial elites, remarkably more with the financial groups of the North.
These domestic conflicts and the turbulent shifts of the international economic
environment, such as the oil crisis of the seventies, led to the country to become
highly indebted. Finally, an economic crisis exploded on September of 1982,
leaving a nation with large fiscal deficits, devaluation of the peso, increasing
interest rates, capital flights, etc., and economic recession. To worsen things off,
in a hopeless move to stabilize the economy, at his last address to the nation,
the leaving President of Mexico nationalized the banks in a direct confrontation
with the holders of the powerful financial groups.
D).-Structural adjustment and economic stabilization
implications on rural and agricultural development.
policies
and
their
The new President that took over government in 1982 was determined to change
the economic policies, as a turning point in the Mexican economy. He belonged
to a new generation of professionals well trained mainly in elite USA and
European universities, known as “technocrats”, which have in power since then.
The new economic strategy was based on trade liberalization, export oriented
policies and less state intervention. In the context of this economic development
model, several measures were imposed by international financial institutions that
provided credits to solve the crisis, based on structural adjustment and
stabilization policies oriented toward manufacturing exports. All these the
measures were fully addressed by Mexican government after Mexico joined the
General Agreement Trade and Tarifs (GATT) in 1986.
These measures considered that the agricultural sector was a burden to sustain
and thus, it has been the most affected by these policies of all other economic
sectors. Criticisms against the Ejidos were increasing after President de la
Madrid took over office. He have considered the risks to reform Article 27 of
Mexican Constitution to make radical changes in land tenure, as Allan Riding, an
acute reporter wrote in 1984 in his book Distant Neighbors, “the political risks of
tampering with the ejido system still outweighed the advantages of addressing its
built-in inequalities and inefficiencies” (Almazan, 1997).
The explicitly objectives of the structural adjustment and stabilization policies
were to modernize the agricultural sector by plunging into a market oriented
economy, privatizing agricultural state-owned enterprises, deregulating farm
prices while maintaining them at low levels to control inflation and establishing
price-subsidies mechanisms to control agricultural production. The imposition of
these neoliberal policies had abandoned the commitment to food self-sufficiency
by the encouragement to produce crops for export, until annual food imports
rose at alarming levels in the late 80’s. Since then, the state policies to channel
resources to the agricultural sector, only have benefited the richer and large
producers. Small landowners and peasant farmers have been neglected and
excluded from incentives for producers of basic foodstuff, maize and beans.
Structural adjustment and stabilization policies applied in Mexico during the
presidential period 1982-88 resulted in restrictions to public expenditure in all
sectors but the rural sector was the one most affected. Public investment
diminished also which was reflected in a withdrawal from most of all policies
directed toward promotion and support of rural and agricultural activities.
However, we can argue that although the Mexican stated was determined to
intervene less in the sector as in any other sector, it has not stopped to
intervene. There are sufficient evidences to sustain that state intervention is still
high in regulating and enforcing the rules of the new game.
Although it is true that not all the small farming plots represented a real option of
subsistence for peasants and their contribution to the agricultural economy was
not significant, due mainly to reasons such as the extension of land, bad quality
of soil, lack of technical assistance and credit support, etc., it was evident that
they also represented the major political-ideological factor which maintained the
Revolution alive and the fundamental link of submission to the Mexican state. On
the other hand, however, ejidos and indigenous communities contributed to
safeguard the regional cohesion and to preserve and diversify one of the most
important world’s reserves in vegetal and animal genetics. (Torres Torres, 1994).
The State played an active role in the Agrarian Reform.
The wrong regulatory measures adopted by the Mexican state to protect
producers against the falling of production during the seventies and eighties, had
negative effects. Import permits, trade and tariff barriers, subsidies, etc
contributed to the deepening of the crisis. Instead of these regulatory measures,
it was necessary to invest more in infrastructure and to provide more credits.
Besides, a corrupt state interventionism and lack of profitability provoked
absenteeism of private capital.
The freezing and backwardness of the
guaranteed policy prices slowed down capitalization of the countryside (Morales
Aragon, 1994).
The agricultural policies of the 1988-94 presidential period displayed as “Actions
of transformation in the countryside” the following:
-Deregulation and administrative simplification in institutions of attention to the
countryside.
-Adaptation of the property regime in the countryside to strength initiative and
entrepreneurship of rural producers.
-Rationalization of subsidies scheme and its substitution by an scheme of
agricultural
payments.
-Development and promotion of a modern scheme of commercialization of
agricultural
products.
-Commercial opening in the agricultural sector to support modernization of
production
and to promote its increasing specialization in such areas where exist
comparative
advantages.
-Establishment of programs to fight poverty in the rural areas.
From these general policies followed some programs, among which are
important to mention because they left serious consequences, the Amendments
to Article 27 of Mexican Constitution, the program Procampo of direct subsidies,
and the North American Free Trade Agreement (NAFTA).
D.1).-Ammendments to Article 27 of Mexican Constitution.
According to the Agricultural Census of 1991, more than three million ejidatarios
and comuneros, (they are holders of rights of lands in ejidos and indigenous
communities respectively), organized in 29 951 ejidos and indigenous
communities holding 102.9 millions of hectares, 52% of 196.7 millions of
hectares which formed the total national area. Most of the communal land were
organized in individual plots and hold 20 million hectares of arable land, more
than half the total, accounted for 55% of the total maize production and were the
social factor for the proclaimed long period of Mexican political stability.
When in June 1990 the Mexican government decided to enter negotiations of a
North American Free Trade Agreement (NAFTA) with United States and Canada
as a partners, it was clear that agriculture would be a major stumbling block.
In preparation for clearance of the road to NAFTA, Mexican government was
determined to imposed the necessary measures on agrarian reforms, following
recommendations “especially as these were being urged by the United Statesdominated World Bank and were therefore seen as a condition for reaching a full
trade agreement. Both in March and May 1991, this institution issued reports
recommending that the Mexican government allow peasants to sell or rent their
ejido parcels and to enter into partnership with private firms” as Almazan (1997)
sustains. A controversial proposal for amendments to article 27 of Mexican
Constitution were presented by the President to the Congress in November
1991, claiming that “these would bring much needed capital to Mexico’s rural
areas and lead to higher standards of living for the campesinos...Supporters of
the amendments also pointed out that given the new international environment,
Mexican farmers must become more competitive in order to survive and this in
turn depends on attracting capital investment to the countryside”. However,
behind the smoked scenes was the strategy to concentrate plots of farming land
through the policy of privatization of ejidos and indigenous communities which
will enable to apply economies of scale production.
The amendments included to provide private ownership of ejidos and communal
lands in such a way that their owners could celebrate any type of contracts, such
as to sell, rent, mortgage, give their property rights of land as collateral, and to
enable corporations to invest in rural areas. The discussions, comments and
arguments of those political analysts, politicians, scholars, etc., who were in
favor and opponents, reached high levels of heated controversy. However,
Congress approved the amendments in a short period of time.
On January 1992 a constitutional reform to Article 27 reorganized land tenure by
allowing the ejidatarios and comuneros to rent, sell and mortgage their rights to
hold land. Also corporations and private sector were allowed to acquire land and
to finance farming infrastructure and cultivations. Since the pre colonial era, the
settlers of indigenous villages and communities have been holding communal
land, which even the Spanish conquerors had recognized, respected and
assigned to other new townships.
So, the amendments to Article 27 has broken down one of the oldest and most
respected traditions of indigenous people who had a different sense of belonging
to the land. They perceived the amendments as a major threat to their survival.
Almazan (1997) quotes a Jesuit priest in close contact with some indigenous
communities who commented in relation to the amendments: “From the
perspective of the reforms to Article 27, land is conceived as a productive
resource...but land for the Indian, is something totally different...it is his culture.
And all of this is not being contemplated in the reform even though the
government says that it will protect the territorial integrity of the indigenous
communities. One doesn’t see how it will be able to guarantee this. One can’t
see any way, because all the reforms and economic measures being taken go in
the opposite direction.”
In short, the constitutional amendments have been highly criticized by its
pervading effects for millions of small landowners and farmers who after being
isolated from institutional and financial support, finally they have to be driven out
of their own land and thus, facilitating land concentration, the main cause that
motivated the poor peasantry to fight during the Mexican revolution. The same
pressures of poverty are the driving forces of peasants to sell their land to private
firms and corporations, leading to a concentration of large properties of land and
the creation of disguised latifundios as they existed before the Mexican
Revolution. There is a general consensus among the poorest indigenous people
of Mexico, that another revolution is needed, as it has already uprising in
Southern Mexico.
These changes of rural and agricultural policies under the agricultural
modernization program and the neoliberal model of development mean a
treason to the Agrarian Reform for the critics. But, on the other hand, other critics
recognize (Barkin, 1994, 32) that these policies offer “the prospect of a bright
future for a small but significant segment of the population...Local producers
throughout the country are already beginning to enter into various kinds of
production agreements with Mexican and foreign interests to produce under
contract for export and local specialty markets...Recent advances in the
achievement of food self-sufficiency, for example, are based on important
advances in yields, resulting from the use of new seed varieties and
agrochemicals. This is evidence of the official decision to promote domestic food
production without trying it to the traditional producing groups who, in the official
view, would hold back the pace of modernization.”
There is substantial evidence, however, that proves the contrary. Who once were
successful producers needed to organize themselves in regional coalitions, such
as the movement of el Barzon in the West of Mexico, to declare being in
bankruptcy and to resist legal actions taken against them by their financial
creditors. An account by Morris (1995) captures the essence of the conflict when
he describes the situation: “...in late 1993, protests and violence with agricultural
interests organized in El Barzon movement cut into the government’s traditional
bases of support in the countryside. Demanding solution to their debts with the
banks, the agricultural workers used tractors to occupy first the center of Ciudad
Guzman and later Guadalajara, gaining much national attention and the jailing of
their leader.”
However, full implementation of the neoliberal policies to the entire rural and
agricultural sector during the next following years in Mexico, means the
elimination of all kinds of governmental financial support in forms of guaranteed
prices which the government had applied to basic grains -already gone-, the
elimination of subsidies in inputs, such as fertilizers, seeds, fuel, etc., -partially
done-, and the elimination of direct subsidies such as Procampo. Small scale
producers of basic grains who had beneffited from guaranteed prices and
subsidies for several decades for the domestic markets are already resenting
this dramatic shift in agricultural policies and the effects on the overall
productivity of the sector have been already measured in terms of a declining
percentage of gross domestic product, but the social and political ramifications
are enormous ( Quintana, 1994).
According to Barkin (1994, 32), “there was an explicit commitment to eradicate
the traditional forms of cultivation of basic food crops in rain-fed areas. In fact,
the present Under-Secretary of Agriculture, Luis Tellez, has stated unequivocally
that it is the government’s intention to encourage the emigration of more than 13
million people from the rural areas during the remaining years of this decade,
people who do not only were “redundant”, but were actually preventing progress
in rural Mexico.” In fact, Tellez predicts an average annual exit of 1 million
farmers each year for 10 years from Mexican agriculture, which amounts to 10
million people (Lehman, 1994, 72). It’s clear that the dislocation and migration of
peasants and small-scale farmers is an inevitable consequence of Mexico’s
changing economy. But this massive migration from he rural areas to the urban
centers and to United States has occasioned environmental, political and social
problems beyond the capabilities of the system to be managed.
D.2).-Procampo, a program of direct subsidies.
So far, too little has been done to stop this process and to support the
transitional period between the traditional guaranteed prices for basic grains and
the new rural and agricultural policies such as Procampo launched in late 1993
with 11,790 million new pesos in land subsidies as a transitional income-support
program. Procampo was designed to provide direct support payments to 2.2
million very poor and smaller subsistence farmers to help them make a transition
to other more market oriented crops. For some analysts (Morales Aragon, 1994)
Procampo does not introduced any radical element different to other traditional
types of subsidies and has contributed to increase disfunctionalities in the rural
sector. As any other former schemes of subsidies, it has tended to benefit the
more capable agricultors and to partially solve the more harmful effects of
consumer’s falling income and have not benefited the marginal agricultors.
Procampo, progreso para el campo con justicia y bienestar (progress for the
countryside with justice and welfare), was crafted as a market oriented program
not only to provide relief to low income agricultural producers but also had
another second intention, as the analysis of Morris (1995) clarifies, it “offered an
avenue for Salinas to nurture his image, but it also tried to ‘breack...alliances
between bureaucrats actors and particular interests,’ weakening the old
corporatism and establishsing a new alliances between state and society.”
Furthermore, Procampo have targeted electoral results conditioning to a some
extent the application of the benefits to those peasant farmers in need.
D.3).-North American Free Trade Agreement (NAFTA) and its impact on the rural
and agricultural sector.
With the opening of the North American Free Trade Agreement (NAFTA) in
January 1994, under a free market scheme, trade barriers and tariffs between
Mexico, United States and Canada started to be lowered and will be completely
eliminated in a phase-in period of fifteen years, although unilateral elimination of
trade barriers and tariffs started in Mexico ten years before. NAFTA represents
the main instrument through which the Mexican government has confirmed and
consolidated the application of full “free market” oriented initiatives, privatization
schemes and other neoliberal economic policies of development.
Specifically in agriculture, liberalization of corn markets in a fifteen-year transition
period has been an important agricultural policy codified in the North American
Free Trade Agreement (NAFTA) since 1994 when Mexico became partner of a
commercial agreement to accelerate economic integration with United States
and Canada. Maize is the main crop in Mexico and because small peasant
farmers grown it for subsistence and medium and large farmers produce it for
larger infra-marginal rents, it becomes the main rural employer. Production of
maize has been protected and supported with subsidies which represent a high
fiscal cost. Liberalization of maize has distributional implications in rural
employment and on welfare of peasant farmers.
Although NAFTA represents the main instrument to consolidate agricultural
market oriented policies, has not established institutional mechanisms to attend
the affected sectors. Four years after the opening of NAFTA it means for the
poor peasants of Mexico face direct and unfair competition from Canadian and
United States agribusiness. One good example is the case narrated by Darling
(1995) of the avocado which was exempted from NAFTA because the Growers
of California and Florida used “political muscle”. Maxican avocado was restricted
for decades to enter Alaska (where the little critters freeze to death), because
there were claims that “may carry seed weevils, avocado ruths and other
destructive pests”. It was until July 1995 when the Department of Agriculture
“proposed to give Mexico a permit to export avocados between November and
February to 19 cold-weather U.S. states. But even these limited concessions
annoy the U.S. avocados interests”. NAFTA can not be challenged without the
resources, capital, technology, equipment, etc., necessary to achieve higher
rates of agricultural productivity.
Until now, the transitional costs of the liberalization process under NAFTA have
impacted already the rural sector. Rich (1997) contends that “contrary to what
many Americans believed when NAFTAwas being debited -that Mexicans would
steal American jobs- there are signs that, thanks to lack of capital, mexican jobs
are being lost to the better-trained and technologically empowered American and
Canadian labor market...” In fact, NAFTA have had serious consecuencies on
the redistribution effects and has already impacted the social welfare, not only of
the poor peasants and farmers, but also more heavily in indigenous
communities. NAFTA has deepened the differences in Mexican society creating
an immense mass of socially excluded people. Now, as some analysts recognize
(Barkin, 1994:31), this “redundant” people are “engaged in an increasingly
difficult struggle to survive, as the neoliberal policies of modernization through
international economic integration threaten their very existence.’
The impacts of NAFTA on the rural sector have been very distressful as some
analysts evaluate. Almazan (1997), for example, contends that NAFTA and the
negotiations leading up to it had two kinds of impacts, “They gave added impetus
to a series of agrarian reforms, which in turn led to a loss of legitimacy for the
Mexican government in the eyes of indigenous communities; and they awakened
certain sentiments among large numbers of Mexicans, sentiments that were
taken advantage by the Ejercito Zapatista de Liberacion Nacional (EZLN), a
rebel group that claims to speak on behalf of all of Mexico’s indigenous peoples”.
In fact, with the uprising of indigenous peoples in Chiapas the same day, First of
January of 1994, that the trade agreement initiated to be implemented, Mexico
was rudely reminded that many communities in rural society had been permitted
to participate “neither in the fruits of the revolution nor in the benefits of more
recent material progress” (Barking, 1994). The Chiapas uprising occurred partly
because of the threat that indigenous peoples and peasants perceive coming
from NAFTA and related changes. In Chiapas, has said the famous Mexican
writer Carlos Fuentes, “an entire campesino culture has felt threatened” (Rich,
1997), because the land is its culture. The oppressed and impoverished
peasantry had in the armed struggle the only alternative to express their primary
concerns over land tenure in a state where the agrarian reform never was fully
implemented.
Despite these assessments of the uprising of indigenous communities and most
poor peasants of Mexico, we contend that NAFTA was not the main cause that
triggered the decision to initiate the movement. There are clear evidences that
they have long standing grievances, lasting more than five hundred years ago,
against the different dominant regimes since the colonial period when they were
dispossessed of their land. Since then, they have been the forgotten people,
condemned to levels of infra-subsistence. The rebellion in Chiapaz, according to
a report of the Economist (1996) “where some peasants still plough by jabbing
sticks into the ground before them, was fed by demands for more land and more
help in farming it.
But the impacts of NAFTA are more far reaching. It had offered Mexican
agricultural producers many expectations in obtaining financing and new
opportunities through a process of modernization and integration in international
markets. But very soon, just eleven months after the beginning of NAFTA, the
Mexican economic crisis of November 1994, had worsened off the financial
conditions not only of small landowners but medium and large scale agricultural
producers as well, to the point of becoming highly indebted.
After four years of NAFTA implementation, there is a generalized consensus
that only the big producers have benefited and that it has crushed and excluded
the aspirations and the productive efforts of millions of small and medium-scale
agricultural producers. What is evident is that producers with lower productivity
are the ones who are confronting NAFTA under very unfavorable conditions.
These producers are the ones who have more risks to be displaced by the
external competency. They have two alternatives: to change their crops to a
more profitable ones, or to emigrate.
It is also well known that the operation of NAFTA is destroying “the immense
cultural and ethical reserve that represents the familiar rural agriculture and
would leave enormous investments not only to create in the cities the jobs lost in
the fields, but to build an infrastructure and public services for the millions of
displaced people” (U.S. Congress, 1994). Therefore, still the main problem
persists, millions of poor peasants need to produce basic grains for family
surviving strategy, meanwhile they need institutional and financial support to
diversified production more market oriented to improve economic and social
conditions. Otherwise, these 13 million of Mexicans are “redundant”.
The resulting polarization in the countryside between those farmers who are able
to engage in the market and those who are not, becomes the central focus of
social and political tensions and imbalances between rural and urban economic
growth and social development. Protests and demonstrations of discontent
against the state policies have mushroomed. Not only the very impoverished
peasants of Mexico, but also the once prosperous farmers, both are rejecting
already the agricultural and rural institutions and policies imposed by the
neoliberal economic development model of the actual ruling elites.
The last Mexican government (1988-94) was proud of some of its impressive
results: Mexico had less peasants and farmer producers and only more
billionaires, according to a survey conducted by Seneker (1992), which reported
8 Mexican billionaires among the wealthiest people of the World, the same
number that Hong Kong, just behind United Sates, Germany, Japan, Canada
and France and before than Switzerland, Italy, Taiwan and United Kingdom. The
argument given was that “when entrepreneurs flourish so dos an economy”. In
the case of the Mexican economy, there is substantial evidence to disapprove
this argument.
6.- Conclusions.
Different aspects of rural and agricultural sector have been changing their
behavior during the last sixteen years essentially by two fundamental facts: the
impact of structural adjustment and stabilization policies on the sector and the
radical modification of functions of Mexican state. Liberalization of the
agricultural and rural sector in Mexico clearly has hurt the majority of small-scale
farm producers, and the implications are far reaching on the economic growth,
rural labor markets, social welfare and equity and political instability.
Rural and agricultural policies play an important role on the distribution of wealth
and can lead to higher levels of economic growth and social equity. Policies are
always the product of a political decision making process. When this process
satisfies certain ideal conditions, it can be consistent with any kind of desired
ends, such as maximization of growth, maximization of social welfare, etc. The
desired ends of the political decision making process justifies, to a certain extent,
the variations of rural and agricultural policies. It is clear that when these policies
are directed towards the maximization of a desired end without satisfying other
ideal conditions, then the whole process can be distorted. However, distortioned
policies have a large impact on economic growth, social equity, welfare and
political stability. Wrong agricultural policies can result in deep disequilibria of the
whole economy.
Amendments to Article 27 of Mexican Constitution, desired or not by peasant
organizations, are present already in the in Mexican countryside. It is clear that
organizations that are not capable of integrating themselves into the main stream
will challenge difficult situations.
The natural resources of Mexican countryside can not be converted in one large
agricultural laboratory for patents of large transnational corporations only
because of its biodiversities are “universal heritage”. However, in such a case,
the trends toward economic globalization and liberalization of markets should
preserve and protect these resources applying the most appropriate technolocal
advances.
We argue that the explicit liberal premises of the dominant idelological-political
system that constitute the framework of reference of rural and agricultural
policies in Mexico, as we have shown on our analysis, have been erratic, leading
to an inefficient results and low productivity. The are substantial evidences that
the final balance of applied rural and agricultural policies in Mexico during the
last sixteen years have resulted in controverted results. There is a contradiction
in rural and agricultural policies since the announcement that the Mexican state
would withdrew intervention in the rural economy structure, but in a certain way
the state has reinserted intervention even deeper than ever before.
There is a general consensus among policiy analysts and scholars that the
policies have benefitted more to the export oriented agriculture of a few largescale producers than to the small-scale producers for family subsistence. Thus,
the large-scale and export oriented producers of non traditional crops have a
more promising perspectives under the dominant neoliberal framework of
policies. Since the actual agricultural policies of Mexican government are
pressuring for elimination of guaranteed prices and subsidies, we expect the
situation of small-scale agricultural producers in Mexico to deteriorate further in
the coming years.
The possibilities of modernization of the rural and agricultural sector are at the
crossroads of de Mexican economic development. The dominan economic
project of agricultural modernization is well determined to exclude agriculture of
of the beneffits of any type of state support. Projects of modernization of this
sector exclude the majority of peasant farmers who are condemned to levels of
agricultural subsistence. Twenty eight percent of the total labor force of mexican
economy is located in the rural sector, among which we find 13 million of the
most poor peasant who form the “redundant” labor force.
The displaced peasant farmers from the rural Mexico have several alternatives:
a less viable option is to change traditional crops for more export oriented crops.
The most viable options available to the poor peasantry of Mexico are to
emigrate to the large urban centers or to “The North” and the deseparate
alternative, to join deliquent organizations (drug trafikers, drug dealers,
kidnapers, etc), to join revolt groups such as the Revolutionary Armies of South
and Southern Mexico. Each one of the most available alternatives have
tremendous consecuences for social and political stability in the near future of
Mexico.
Our analysis of rural and agricultural policies and institutions in Mexico for the
last sixteen years supports the claims that the contribution of agriculture to the
whole economy is weak, the levels of poverty on rural population are increasing
and thus, the gaps of social welfare and equity are widening, and political
instability is also increasing.
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