Cooperatives in Mexico
Alejandro Cervantes
summer of 2005
History
• Nearly eighty years after enactment, agrarian reform
remains at once one of the Mexican Revolution's most
impressive accomplishments and enduring failures. At
the onset of the revolution, huge haciendas controlled
almost all agricultural land.
• The Agrarian Reform Act of 1915 and the constitution of
1917 laid the groundwork for dramatic changes in
Mexico's land tenure system. These documents
established that the nation retained ultimate control over
privately held land, which could be expropriated and
redistributed in the public interest to campesinos.
• The ejido, or communally farmed plot, emerged as
the uniquely Mexican form of redistributing large
landholdings. Under this arrangement, a group of
villagers could petition the government to seize
private properties that exceeded certain specified
sizes - initially 150 hectares (370 acres) for irrigated
land and 200 hectares (494 acres) for rain-fed
holdings. Assuming a favorable review of the petition,
the government then expropriated the property and
created an ejido .
• The state retained title to the land but granted the
villagers, now known as ejidatarios, the right to farm
the land, either in a collective manner or through the
designation of individual parcelas.
• Ejidatarios could not sell or mortgage their land but
could pass usufruct rights to their heirs.
• Ejidatarios had to work their land regularly in order
to maintain rights over it.
• In cases where villagers established that they had
collectively farmed the land in question before its
eventual consolidation into a hacienda, the
government created an agrarian community
(comunidad agraria). Comuneros (members of
agrarian communities), who lived primarily in
southern Mexico, had largely the same rights and
responsibilities as ejidatarios.
• Mexican administrations have varied widely in the
importance accorded to the ejido . During the 1920s and
early 1930s, policy makers typically viewed the ejido as a
transitional system that would lead to small private farms
nationwide.
• During the next three decades, the government favored
large-scale commercial agriculture at the expense of the
ejido. Federally funded irrigation projects in some states.
• In 1970’s, Luis Echeverría as president, shifted
government priorities back to the ejido. Echeverría felt that
the ejido would play a leading role in meeting domestic
food demand. Echeverría increased ejido holdings by
some 17 million hectares (42 million acres)
• Collectivized ejidos received preferential access to credit and
farm equipment through government agencies such as the
National Bank of Rural Credit.
• It is important to mention that the credits were very cheap
(very low interest rate) and in many occasions not even the
payment of the credit was required.
• Echeverría's successor, López Portillo, distributed only about
1.8 million hectares to ejidos . Yet like Echeverría, López
Portillo sought to channel government resources to ejidos.
• Following the discovery of vast petroleum reserves along
Mexico's southeastern coast, López Portillo used oil profits to
establish the Mexican Food System, which sought to ensure
national self-sufficiency in basic staples, such as corn and
beans.
• López Portillo encouraged ejidos to play a major role in this
effort and channeled petrodollars to agencies offering credit to
ejidatarios . For many ejidatarios , however, credit merely
generated increased debt and dependence on government
bureaucracies without significantly improving their overall
conditions.
• In the wake of the debt crisis that began in 1982, the
administration of Miguel de la Madrid Hurtado (1982-88)
abolished the Mexican Food System and cut agricultural
funding by two-thirds.
• Despite collectivist efforts of Echeverría and, to a much lesser
extent, López Portillo, a national survey released at the
beginning of the Salinas presidency revealed that
approximately 88 percent of ejidatarios and comuneros farmed
individual parcelas
• Mexico's post-1940 population explosion produced a continual
subdivision of most parcelas , resulting in holdings that were below
subsistence level. According to the 1991 agricultural census, nearly
31% of all ejidatarios held parcelas of two hectares or less, far below
the amount of land required to support a family. Another 27%
maintained holdings ranging from two to five hectares, with 38%
farming parcelas of between five and twenty hectares . Less than 3%
of ejidatarios held individual plots of between twenty and fifty
hectares.
• Data from the 1991 agricultural census on private landholding
patterns revealed an even more stratified picture. Nearly 40 percent of
all private (non-ejido ) farmers held plots of two hectares or less, with
an additional 17 percent working plots of between two and five
hectares. Together, these two groups had only 2 percent of the
privately owned land area. In contrast, 2 percent of all landholders
controlled nearly 63 percent of the privately owned land. Holdings
exceeding 2,500 hectares were particularly in evidence in the north
(especially in Chihuahua and Sonora) and in Chiapas.
• Some studies estimate that up to half of the irrigated ejido lands
in Sonora and Sinaloa and up to half of such holdings in the
Bajío region of Guanajuato and southern Michoacán are
rented. Regular migration to the United States also is an
essential survival strategy for many campesinos, with
remittances allowing many families to remain in the
countryside. Many young campesinos spend the bulk of the
year working in the United States, returning to their plots only
during the planting and harvesting seasons. An unknown
number of campesinos in isolated communities in southern and
western Mexico also engage in narcotics trafficking.
Conditions for cooperatives
• Ejidatarios remain highly dependent on the bureaucratic channels
of both the state and the ruling PRI). All ejidatarios are
automatically members of the peasant sector of the PRI; but
owing to their lack of political experience, they become easily
manipulated by professional "peasant" leaders in Mexico City, who
are usually of middle-class backgrounds. Many ejidatarios look to
the state as a modern patrón (traditional paternalistic landlord)
who has the power to control prices, credit opportunities, and
access to farm machinery and water rights and who must be
continuously courted and reminded of their pressing needs.
• To all this it is necessary to add conditions of corruption and deceit
with social programs, abuse authority, fights between the
members of the ejidos for possession of communal property,
machinery, wells, and market.
• Confronted with the dysfunctional character of much of Mexican
agriculture, the government in 1992 radically changed the ejido
land tenure system, codifying some existing actions that were
illegal but widely practiced and introducing several new features.
• Under the new law, an ejido can award its members individual
titles to the land, not merely usufruct rights to their parcelas .
• Ejidatarios can, in turn, choose to rent, sell, or mortgage their
properties. Ejidatarios do not need to work their lands to maintain
ownership over them.
•
• They also may enter into partnerships with private entrepreneurs.
The law also effectively ends the redistribution of land through
government decree.
• Finally, the processing and resolution of land disputes are
decentralized.
• The government's perspective is that these new measures provide
ejidatarios with more realistic and sensible options. A winnowing
effect is anticipated, as some inefficient and marginal producers sell
their properties to more efficient farmers. With property to mortgage,
the more entrepreneurial ejidatarios have collateral that can be used
to obtain private-sector credit. By removing the prospect of
widespread government-directed land redistribution, owners will be
more likely to invest resources to increase agricultural production.
• Since Salinas’ government, Zedillo and Fox worked strongly in to
developing new sources of subsistence for the ejidatarios promoting
the conformation of groups of farmers focused to the market,
unfortunately, the farmers were victims of abuses for many years
and now they don’t believe in work together, government social
programs and the private industry.
The other face of the currency
• In Mexico we have several examples of successful cooperatives,
among them are the cases of Lala, Alpura, Pascual and many
others, is important to mention, have been conformed by people
to high economic potential and vision.
• In the Mexico of the Fifties, each dairy ranch processed and
distributed its milk of independent way. On that rustic context, in
the North of Mexico initiates a history forged by a group of men
with great vision and enterprising spirit. They conformed the
Group LALA, 20 years later, also in the country center, the
National association of pure milk producers conformed the
cooperative Alpura, whose fundamental objective were to improve
the quality and the hygiene of the milk of the partners who had
distribution in the city of Mexico, and of the dairy cattle dealers
who were suppliers of other states.
• “Group LALA transforms the natural resources into search of the
best quality. With hundreds of stables and more than 200,000
heads of select cattle, a culture is originated that is reflected in
products that day to day, conquer the preference of the
consumers.”
• Mission
– “We fed every day... all the life”
– Elaborating and commercializing products of the
highest quality.
– Innovating constantly.
– With marks of high value.
– Thanks to a human, able equipment and
jeopardize.
• LALA is present in all Mexico. They has 8 located plants in the
more important centers of population of the Republic and has the
ampler cooled network of distribution in Mexico. With more than
3,500 routes and 128 centers of distribution, LALA visits more
than 200 thousand clients every day, obtaining a sale of almost
8.8 million daily pounds of milk and thousands of tons of diverse
milky products.
http://www.lala.com.mx/
• The Alpura Group is one of the top Mexican dairy food producers
with over 82,000 cows on around 160 dairy farms producing more
than 4.4 million pounds of milk per day for two processing plants.
•
Hundreds of supermarkets in Mexico carry Alpura’s wide variety
of dairy products. The Alpura Group in Mexico is made up of 11
companies that support the production cycle. These include
companies that specialize in financing, cow embryos, plastic
containers, milk processing and transportation.
• Mission
– To satisfy the consumers needs, being elaborated innovating
products of high quality, that offer a style of healthful life,
providing the best nutrition and confidence.
• Ganaderos Productores De Leche Pura S.A. is the official name
for the company that produces the products, but the company is
usually referred to by its popular brand name Alpura. Alpura
produces a wide variety of products including liquid milk, milk
powder, cheese, desserts, yogurt, creams, butter and even bottled
water.
http://www.alpura.com.mx/
• In the case of both cooperatives, they do not admit more partners,
so for small or medium size producers it’s impossible to accede to
that companies, for the other hand, the cost of conforming a similar
company is huge.
• It’s for that reason, I’m thinking about developing new niches of
market that are not being covered by those companies, with simple
products with great demand.
• Imitating the good practices of organization and labor culture,
consolidating the distribution and the quality of the products that
have those great cooperatives, although there is much work to do.
• Of the most important things that I learned in Wisconsin,
through the talks with business people and professors:
– To focus mainly in local market, independently that the
tendencies are towards the globalization, or specialties
products.
– To have a name and brand (Product identification,
Positioning)
– To operate the competitive advantage (“Fresh
cheese…as fresh as the morning of today”)
– To establish clearly the principles of the cooperative.
– To identify producers with similar capacities.
– To establish technical systems of health and quality.
Thank you very much for your
time and for your attention…
History
• MASD ASD