Institutional Adaptation and Innovation in Rural Mexico

Snyder, Richard, ed. Institutional Adaptation and Innovation in Rural Mexico. La Jolla: Center for U.S.-Mexican Studies, University of California, San Diego, 1999. Maps, figures, tables, acronyms, 166 pp.; paperback $12.

With the economic crisis of the early 1980s, Mexico began to dismantle or reform public institutions that stood as barriers to private enterprise. The government began moving toward a development model that favored economic liberalization and the free market over state regulation. The new model required modifications in the rural economy, and these are embodied in the 1992 reforms to Article 27 of the Mexican Constitution. These amendments, inter alia, permitted land that was collectively controlled, such as that in the social sector, to be legally bought, sold, and rented.

Other reforms dismantled state-owned enterprises, like TABAMEX (in tobacco) and INMECAFE (in coffee). Campesinos received their crop loans, fertilizer and other inputs, and technology through these parastatals, which also marketed the crop. In authoritarian fashion, the government directed agricultural production and marketing. Francisco Javier Guerrero Anaya describes the old ejido system:

The ejido form of land tenure developed as a means of assuring the social sector's access to land. Yet rather than promoting campesino self-government, the legal institution underlying the ejido structure became a tool by which the federal government could exert political and social control over rural producers.... the ultimate patron was the federal government, which granted campesinos access to land but denied them a role in decision making... placing this authority instead in the hands of the ej/do governing bodies. . . . People forgot that the ejido was intended to be a viable unit of production, not just an arena for subsistence agriculture. (p. 158)

Neoliberalism called for a return to an emphasis on production.

The volume under review is valuable because it shows that in the new system, the producer did not necessarily stand alone before the free market. When the parastatals were dissolved, new peasant-grower private institutions were initiated, and some even flourished. These new institutions often served as buffers between the peasantry and the market. This anthology also reveals that these new institutions diversified the Mexican rural economy by permitting organizational forms that were not subject to ejidal, party, or governmental aegis.

The initiatives in Oaxaca, for example, were meant to promote economic performance at the grassroots in addition to strengthening the government's political support base. In a very real way, the statist economic relations inherent in the old INMECAFE were refined and streamlined among Oaxaca's coffee producers. Genuinely participatory organizations were born that were more robust than the original institutions. Of course, the state's elite agriculturists repudiated this accomplishment. Government action and producer readiness engendered an explosion of campesino organizations not associated with the government and the ruling party.

As INMECAFE withdrew, the domination of campesino organizations by the PRI's CNC (National Peasants' Confederation) was challenged by quickly formed independent producer organizations. Richard Snyder concludes, "The case of Oaxaca illustrates how powerful grassroots organizations can transform exclusionary corporatist institutions into participatory policy regimes. In Oaxaca, a neocorporatist project ... [was] reworked into a participatory framework that benefited small coffee producers" (p. 77). He believes that "the combination of institution building from above and organized pressure from below can result in participatory policy regimes" (p. 78). More than organizational strength from below and guidance from the top, however, the control of the producers' associations over marketing and production made for an economic division of labor that favored campesino producers and helped improve their social welfare.

Jorge Hernandez Diaz, who examines the coffee enterprise in Oaxaca's Chatino region, draws conclusions similar to Snyder's. But Hernandez Diaz also reveals that the road has not always been smooth for contemporary campesino organizations and that conflicts have arisen as new institutions were built. The tensions have been among the growers themselves, between growers and organization leaders, among the organizations themselves, and between growers and government agencies. In some instances, government officials took part in the organization process. Sometimes these efforts resulted in participatory practices, but sometimes they did not. Campesino organization was promoted from the top, but "the activities carried out by the coffee growers were the result of a continuous process of negotiation in which decisions were frequently taken and defended by the grassroots" (p. 106). Hemandez Diaz also reminds us that those who receive the benefits of organization are among the least poor of those in poverty, and that more than half of the small farmers in the area did not belong to those organizations.

Horacio Mackinlay's analysis shows that the dismantling of TABAMEX did not have such fortuitous results for the campesino-growers. The parastatal organization's withdrawal frequently fostered individualized relationships with the powerful tobacco companies, lower product prices, and declining standards of living for producers. The campesino-grower tobacco sector in general has suffered with the demise of TABAMEX, because latter-day unionized activity has never been vigorous enough to counter the powerful, oligopsonistic tobacco companies.

The initial divestment plan for TABAMEX called for creating campesino organizations that were micro-versions of TABAMEX, with responsibility for representing the interests of the small producer. Equipment and other production-related assets were to be passed to the grower organization, together with some debt from TABAMEX that the new organizations were to pay off in a number of years. A major difference from the INMECAFE model was that the product would not be purchased by the new intermediary body but directly by the private companies. The private companies, moreover, proved reluctant to pass the credit to a campesino organization that would then distribute it to producers. Ultimately, the companies themselves distributed the working capital and the package of technology, leaving the organizations with very few functions aside from representing campesino interests to the private companies. This last would have been important, but campesino organizations, when pitted against the large companies, were too weak to do the job well.

In Nayarit-Jalisco, where the most productive small tobacco farmers lived, 1990 to 1994 were difficult years of declining income. For their part, the private companies had to deal with a declining hectarage planted in tobacco; some growers took at least some of their land out of tobacco and planted beans instead. Companies also began to pay farmers for the quality of the leaf, which lowered the profitability for some campesino-grower families. Somewhat later, the weather caused crop failures, and those farmers not as much damaged had to pay the debts of those who were (as provided in the solidarity rules). Changes in the value of the Mexican peso helped tobacco farmers after 1994, but the companies gained even more. The net effect has been declining standards of living in Nayarit-Jalisco and even worse conditions in Chiapas and Veracruz, where campesino organizations are even weaker.

When a few oligopsonistic private tobacco companies buy the product from a campesino group, they can pay less than the competitive price. Companies need only to make certain that competing buyers are not ready purchasers and prices are not so onerous that growers cease to plant, thereby denying the companies the product they require.

Jorge Mario Soto Romero analyzes several small cooperatives in Baja California and very usefully distills several factors that led to their success. The campesinos perceived threats or opportunities to which they could not respond unless they organized. They had preexisting bonds of trust, forged because members were related through kinship, fictive kinship, or knowing someone who could vouch for another. The group could restrict entry to ensure fiduciary responsibility and technical competence of all members, and could restrict the group's size to balance economies of scale and transaction costs. Finally, the group managed to develop an institutional framework that gave producers incentives to comply with their commitments to each other (p. 110).

Guerrero Anaya hones in on four campesino organizations in western Mexico that aimed at increasing campesino production and income. Dedicated to achieving the production goals of neoliberalism and attaining some of the welfare goals of the growers, these groups performed a number of functions. Among other things, they bundled orders for fertilizer and other agricultural inputs so as to obtain a lower per unit price and better quality. They sold grain assembled from member campesino households and purchased consumer goods in bulk so they could sell them more cheaply in their own supermarket. They managed a series of warehouses to hold the product until the price was right. They brokered new technology, such as precision seeding and laser-guided field leveling, and tested the soil. They cooperated with government programs when they perceived they were working on behalf of members' welfare; they also struggled against government policies they perceived as unjust. They began negotiating contracts with the private sector for more favorable prices and on other matters, engaged in lobbying and some other political activities, started programs to extend credit to members, even founded women's groups.

This partial list of accomplishments is impressive even though it is combined from four separate organizations. In each case, campesino cooperation, good leadership, and sound technical advice were essential to success.

This anthology will interest students of Mexican development and rural development in Latin America more generally, in addition to institutional, applied, and agricultural economists and political scientists. In the main, it makes the point that even under a free market model, campesinos can find a voice through organization. The volume makes an illuminating starting point for a study of emerging institutions under neoliberalism. It also raises some important researchable questions. To what extent can campesino groups prevail when faced with oligopsonistic buyers? What characteristics of the specific oligopsonistic buyers make it difficult for campesino groups to countervail against them? What is the interaction between these small growers and more commercial establishments in each area? What is the future of solidarity groups in granting credit in rural Mexico? Does NAFfA serve to promote rural organization? Can an organization of small growers compete for lower-cost production with large and commercial farms? Is there a trade-off between campesinos, production and their non-income welfare?

The book is uneven when it comes to discussing what it takes for campesino organizations to succeed and why they fail. Several of the contributors do grapple rather successfully with this key issue, however. It seems as though one of the few ways relatively poor rural people can progress is by making sure that the market treats them fairly (because government aid is less and less an option). Fair treatment is attainable only through enlightened producer organizations with good leadership and a strong technical component, together with some control over marketing as well as production. Where will these come from? What happens to the poorest strata of rural society-not covered by this book because they have either very small plots or no secure access to land and no organization?

This anthology offers much to think about. As Snyder comments in his introductory chapter, The contemporary Mexican countryside is not a barren wasteland ruled by unregulated market forces. Rather, it is a rich, complex landscape with different types of institutions for market governance that connect producer organizations, government actors, and private firms in novel and often surprising ways. (p.1)

William C. Thiesenhusen

Emeritus, University of Wisconsin, Madison

Copyright Journal of Interamerican Studies Summer 2000
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