Living off the land, barely: extended decline in campo hits traditional, communal farmers hardest, but several markets show international promise.

In March, Mexico clinched a free trade deal with Japan, the first agreement by the Asian nation that included provisions for the liberalization of agricultural trade. The concluded negotiations add one more free trade deal to the basket of such agreements Mexico has gathered over the last decade, but their effect has been a mixed blessing.

Mexico is nearly 20 years into its experiment in free trading on the global food market. The nation is struggling to transform itself into a modern agricultural producer under the weight of a large traditional farm culture.

Like all the Mexican economy, the agricultural sector has its First-World and Third-World faces. Since the free trade era began, mechanized, export-oriented agribusinesses have flourished while farmers working small plots with hand tools have struggled. In between, medium-sized producers have fought to maintain a hold in the domestic market, while some have begun looking beyond Mexico's borders.

During this same time, the Mexican campesino has become an endangered species, and many blame free trade. Agricultural imports have doubled from 1993 to 2002, rising from US$5.5 billion to US$10.8 billion. Prices have fallen, and cheaper imports have displaced producers, especially grain farmers. At the beginning of 2003, farmers' threats to shut down the border to U.S. imports forced the government to the negotiating table to work out a new deal for domestic producers.

"The winners are no more than a thousand in front of millions of losers," said Heladio Ramirez, head of the National Campesino Confederation (CNC). "The only thing growing and prospering in our fields is unemployment and poverty."

ESSENCE OF EJIDO 

Over the last two decades Mexico ended its revolutionary-era redistribution of land and dismantled its supports to the agricultural sector.

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The redistribution of land effectively ended during the administration of Carlos Salinas with constitutional reforms that allowed for the sale of communal farmland, known as ejidos.

The ejidal system includes roughly three-quarters of Mexico's 5.4 million farmers and one half of the nation's farmland. Ejido farmers are among the poorest of Mexico's lot, with many working small plots of corn and beans, growing barely enough to eat, let alone sell.

The redistribution of land was considered a major accomplishment of the Revolution, but today it appears an unworkable relic to many. Small plots have grown smaller, as generations have divided their share of the land among their children.

The promoters of Mexico's liberalization of the agricultural sector hoped that free market forces would redesign the campo for the better. Investments would flow to the most productive areas, and farmers working uncompetitive crops would move onto new produce, or find new jobs.

But what may have been promising on paper has proven much rougher in reality, according to Jose Luis Calva, an economics professor specializing in agriculture at the National Autonomous University of Mexico (UNAM).

In jumping into the free trade pool, Mexico found many of its producers unprepared to compete in an open global market. Mexico harvests 2.4 tons of corn per hectare compared to 8.4 tons in the United States. The per capita output of Mexican agricultural workers was US$3,759 in 2001 compared to the US$67,871 per U.S. farmer, according to research by Calva.

Given such a productivity breach, prices for commodities have steadily fallen. UNAM studies say the value of Mexican corn is down 37% from 1993, the year before the North American Free Trade Agreement took effect, and 2002. (For commentary on why Mexico should stop growing corn, see page 64.)

On top of the drop in crop prices was added the government's abrupt withdrawal of many of its previous supports to farmers. According to Calva, public investment in rural development projects fell over 73% between 1993 and 2002. Total aid to the sector fell nearly 20% over the same period.

For the policy architects who dismantled Mexico's protectionist trade barriers and paternalistic farm aid programs, the flood of imports was supposed to lower consumer prices.

"Increased imports have pressured primary agricultural prices more than consumer prices, which keep going up," said the CNC's Ramirez.

UNBALANCED SUBSIDIES

A key reform in Mexico's agricultural policy shift was the restructuring of subsidy programs. Price supports were replaced with the Procampo program, which pays out according to the amount of land cultivated for specific crops. While many see the current system as an improvement to the market distorting and paternalistic programs previously run, others say much more is needed.

While under the 2002 Farm Bill, the United States increased by billions of dollars per year the amount of subsidies it directs to farmers, Mexico continues to scrape the bottom of the budgetary barrel just to keep current programs running.

"Mexico doesn't have the funds to increase its subsidy programs, and the subsidies it does pay out are badly managed," said Dr. Rita Schwentesius Rindermann, director of the research center on agribusiness at the Univerity of Chapingo, the nation's largest agriculture college.

Most programs are directed toward big producers, who reap the biggest benefits from land and fuel subsidies, Rindermann said. For the poorest producers, subsidies are used to meet their families' basic necessities rather than improving crops.

Rindermann also points out the bulk of aid for commercialization goes to large producers.

Of 6 billion pesos directed toward marketing programs last year, 4 billion went to large-scale operations in Sinaloa and Sonora.

Mexico has not planned for the long term in backing its agricultural sector, according to Rindermann. The best U.S. aid has been directed toward research and infrastructure. But in Mexico, the poor highway system means high transportation costs, and there has been little technology transfer to smaller farmers.

While U.S. farmers have 1.6 tractors for each agricultural worker, in Mexico the ratio is two tractors for every 100 laborers. Additionally, few farmers can access credit to improve their operations. UNAM's Calva said there is a quarter of the amount of credit, private and public combined, available to the sector compared to 20 years ago.

FLEEING RURAL DISASTER

The agricultural shakeout has led to an exodus from the countryside toward urban centers and the United States. Young farmers see little sense in working other men's fields for US$4 dollars a day when they can sneak into the United States and earn at least 10 times as much.

In the last decade, millions of farmers have left the fields. In Mexico roughly one in five workers are in the agricultural sector, which produces 5% of the nation's gross domestic product. In the United States only 2% of the population are farmers producing a roughly equal share of GDP.

If Mexico wants to look like the other members of the Organization for Economic Cooperation and Development, it has to reduce the number of farm workers. But that transition has been guided by the rough hands of the market, without sufficient state intervention to direct often uneducated campesinos to new sources of income, analysts say.

"The big question is whether the Mexican campo should continue to be used as an enormous laboratory for neoliberal policy experiments or if we need to reformulate our strategy of agricultural development," said Calva.

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PAY DIRT WITH VEGGIES 

Despite the many negatives, there is the successful side of Mexican agriculture.

In the north, truck-driving, cell-phone sporting ranchers manage vegetable and fruit farms worked by local laborers and passing migrants from the south.

Over the last decades, the north has been transformed into a major producer of vegetables and fruits, providing fresh produce for 50% of the U.S. market during the winter months. Mexico has become the world's third-biggest exporter of fresh vegetables, behind Spain and the Netherlands, shipping over US$2.3 billion a year, mostly to the United States.

U.S. distributors help finance Mexican landlords, and packing plants sponsored by Green Giant and Dole have sprung up in Sinaloa's Culiacan Valley.

Several members of the northern agricultural elite are prominent in the current administration, including the vegetable-ranching President Fox and Agriculture Secretary Javier Usabiaga, the garlic king of Guanajuato. Their highly mechanized operations providing U.S.-standard frozen vegetables and powdered garlic embody what is needed to be a successful exporter.

Other promising export products suffer from disputes with the United States. Sugar cane growers have been fighting for greater access they say was guaranteed under Nafta but never granted.

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AVOCADO GOLD MINE

Mexico is the world's leading producer of avocados, with production hovering around 900,000 tons a year, mostly grown in the beltway stretching from the State of Mexico through Michoacan. But a U.S. ban running for 80 years kept Mexican avocados out of the U.S. market based on California growers fears of fruit fly contamination.

Studies by New Mexico University Professor Lois Stanford show how private sector entrepreneurs developed the avocado industry with little aid or interference from the government. They transformed a sector geared toward the domestic market by introducing the California-developed Haas variety, creating a product that stored better and fit differing U.S. standards for how avocados should look.

Now, Mexican avocados are finally gaining a foothold in the U.S. market. In 1997, the U.S. began allowing avocado exports into 19 northeastern states, where cold weather kills off possible pests. Exporters have also geared up production of processed frozen avocados and avocado paste, getting around the ban on fresh produce.

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But U.S. companies have also been part of the show. According to Stanford's research, since 1990, U.S. companies like Mission Produce and Dole have bought export-quality avocados to ship them to Europe and Japan. These companies control around 85% of export volume, with only 15% marketed by Michoacan-based companies.

Analysts say Mexican farmers still need to learn how to take advantage of Mexico's host of free trade deals and tailor their produce for specific international markets.

BIG BUSINESS, ANGRY FARMERS

At the far extreme from the bean-farming campesino are Mexico's giant agribusinesses like multinational bread giant Bimbo or Gruma. Gruma has become the new economy success story, with communication and financial holdings built on the back of corn flour miller Maseca.

Maseca boasts dominion of over 70% of the domestic market in corn flour for tortillas. Their tortilla-stamping machines produce some 2,400 tortillas per minute, compared to the machines common throughout Mexico that generally churn 30 to 50 per minute. Over half of Gruma's sales are in the United States, supplying the corn for Taco Bell's taco shells.

With such lucrative success stories, the envy of small farmers is understandable as is their suspicion that U.S. agribusiness wants to incorporate the Mexican campo.

The rising tide of angry farmers connected to political organizations from opposition parties has proved a headache for the Fox administration.

Until last year the slow-burning "crisis in the campo" had routinely clogged the front steps of federal and local government buildings with protesting farmers.

But at the beginning of 2003 the government brokered the "National Agreement for the Countryside," which brought farmers to the negotiating table. But farmers' demands are big, including wholesale changes to existing free trade deals.

"The agricultural chapters of Nafta need to be revised," said Federico Ovalle, head of the Permanent Agrarian Congress that groups farm unions outside the Institutional Revolutionary Party-affiliated CNC. "We can't win this war with the biggest producer in the world."

CALL FOR PROTECTION

Usabiaga and other officials have said the renegotiation of Nafta is not on the table. But the free trade deal will continue to draw flack.

Ovalle said the government has been unwilling to use the protections allowed under the treaty. For example, Mexico imports millions of tons of corn over the quota established under Nafta and doesn't enforce the tariffs allowed, losing out in billions of dollars since Nafta took effect, Ovalle said.

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But beyond protectionism, farm union leaders want programs directed to basic grains, beans and other "strategic" crops.

"We want a national program to promote the creation of stronger production chains to add value to the basic crops," said Ovalle.

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For example, Mexico exported US$172 million of green coffee beans last year, but only US$27 million in toasted coffee beans. Poor coffee farmers in the south who harvest the beans in the back-breaking mountainside sell their unprocessed beans to middlemen who reap the profits.

The rise of organic coffee farming has been a niche market where Mexico has had some success in adding value to its agricultural exports.

Ovalle points to cooperatives of bean farmers in his native state of Zacatecas who have built their own canning operations. This entrepreneurial initiative in the sector needs to be encouraged with government aid.

But the chances for small farmers to develop under the economic model in fashion are slim, analysts say.

Expanding agribusiness in the United States has nearly driven the small farmer out of existence. The trend is repeating itself in Mexico.

But if the leaders of farm unions are to be believed, campesinos won't give up their culture without a fight.

"This isn't a struggle just about getting higher income to survive," said the CNC's Ramirez. "It is also a fight for healthy food and for a dignified lifestyle."

Michael O'Boyle is a reporter for the Mexico edition of the Miami Herald.

Photos by Marco Ugarte