THE MEXICAN STATE AND THE AGRIBUSINESS¶ MODEL OF DEVELOPMENT IN THE¶ GLOBALISATION ERA

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THE MEXICAN STATE AND THE AGRIBUSINESS MODEL OF DEVELOPMENT IN THE GLOBALISATION ERA

Gaspar Real Cabello'

Cabello, G. (2003). THE MEXICAN STATE AND THE AGRIBUSINESS MODEL OF DEVELOPMENT IN THE

GLOBALIZATION ERA. Australian Journal Of Social Issues (Australian Council Of Social Service), 38(1),

129-139.

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This article analyses the relationship between the State and transnational capital manifested in

capitalist agribusiness schemes in Mexican agriculture. It illustrates a model that has privileged one type

of development in detriment to other forms of organising rural agricultural production and labor (Real

1997). Current agricultural development in Mexico is linked directly to the "Green Revolution ", Mexico

being prominent as its birthplace. Ironically, the Green Revolution contributed to a massive

displacement of rural population to cities as human labor was replaced by machinery (1992).

Development of capitalist agriculture in Mexico and Latin America is closely related to the effects of the

transnationalisation of agroindustry. The importance of agribusiness has expanded in recent decades

through a series of events, including the substitution of basic crops for more profitable ones and the

contribution to the "new international division of labor" (Sanderson 1990). Recent trilateral

transnational political and economic changes are linked to the North American Free Trade Agreement(NAFTA) between Mexico. United States and Canada (Kearney 1995). In the case of agriculture, Palerm

and Urquiola (1993) believe the relationship between United States and Mexico to be bimodal. From a

perspective of Social Anthropology we provide firsthand information about two areas of agroindustry:

production of vegetables for export and production of poultry where participation by different social

actors was observed. Agro-industrial entrepreneurs depend upon agricultural workers who wish to

conserve a peasant way of life. Agro-industry and the transnationalization of agriculture Although it is

not new, the development of capitalist agriculture in Mexico and Latin America has experienced a series

of problematic situations in recent decades. Among these situations is the substitution of basic crops

for more profitable ones, * Autonomous University of Queretaro, Anthropoiogicai Research

Department Gaspar Real Cabello: The Agribusiness Model of Development A on130 which has resulted

in what is known as "the new intemationai division of labor" (Sanderson 1990: 57). Agro-industry canbe defined as "...the social production process that conditions, preserves and/or transforms raw

materials whose origin is in agricultural, livestock and, forestry production. Agro-industry plays a vital

role within social production, because it fills the gap between the seasonal and spatial distribution of

agricultural production, as it relates to a relatively constant consumption concentrated in the great

population centers. In some instances, agro-industry transforms agricultural goods, modifying their

particular characteristics to adapt them for consumption, which diversifies the ways the goods are

consumed and creates new commodities and products" (Flores Verduzco e?. a/. 1987: 11). The term

agribusiness, emerged from the field of business administration with the purpose of analyzing a set of

seemingly dispersed activities, performed by a variety of heterogenous economic agents involved in

production, processing, transportation, storage, financing, marketing and, regulation of goods of

agricultural and livestock origin (Esteva s/f: 85). According to Feder (1976), in developing countries

agribusiness is a conglomerate of diverse organisms and interdependent operations that profit large

and medium size corporations and individual investors involved in agriculture or industries and services

related to it on a hemispheric scale. "This way, we are witnessing a unique process of transfer of

agriculture fi-om industrialised countries to Latin America, which is creating an entirely new form of

economic enclave that exceeds, comparably, in scope, importance and, impact, the old economies of

plantationary enclaves" (Feder 1984). The new "Industrial Revolution" that took place in the United

States after WWII set the precedent that initiated capitalist modernisation in rural sectors ofthe

developing world. The U.S. promoted this "industrial revolution" in its rural sectors to produce crops at


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lower costs largely through a reduction in labor costs (Tur Donati s/f: 71-74). Agro-industry as part of a

binational system, San Rafael case study. Diverse agribusinesses began to emerge in several regions of

Mexico in the mid 60's. Some researchers of Mexico-US relations consider the model of development

as part of a bi-national system of agricultural production and reproduction (Palerm Australian Journal Of

Social Issues VoL 38 No. 1 February 2003& Urquiola 1993). The consequences of coexisting with this

capitalist model, in what has been called a dual or bimodal relation, do not benefit most of the rural

population. A clear example of this type of agro-industrial development in Mexico is in the region

known as "El Bajfo" (The Lowland), located in the middle of the country. This region encompasses the

state of Guanajuato, and parts of the states of Queretaro and Michoacan. Large intemationai

companies are exploiting the fertile lands and human resources of El Bajio to grow a wide variety of

fruits and vegetables for export (Palerm & Urquiola 1993). Dramatic changes began to occur in this

region in the late 5O's when the region was discovered by U.S. agro-industrial corporations (Wilcox

Young 1988: 389). San Rafael, the case study, shares common characteristics with the state of

Queretaro, also known as "La Puerta del Bajio" (The Gate to The Lowland), where the community is

located. San Rafael has two notable characteristics; a) a high level of privately owned lands where a

highly technified agro-industrial development linked to intemationai markets has taken place, and, b)

communities made up of laborers, salaried peasants, who sometimes own land themselves.

The San Rafael case study conducted in 1994 focused on the socio-economic and cultural effeets causedby the operation of a processing plant for exporting products, particularly broccoli. The workers were

involved in activities ofthe company from growing to picking, particularly broccoli. The purpose ofthe

study was to see what changes had occurred in the community, as peasants came to depend on a

salary generated by local agricultural and agro-industrial development. A relation of interdependence

has developed between the peasants and the agribusinesses that require their labor (Real 1997). A

significant number of works written on the subject of the development of capitalist agriculture agree

that this type of development has had negative effects as the peasantry has been subordinated into

the dominant system. Critics describe the proletarianisation of farm laborers as negative; even stating

that peasants are vanishing in the physical sense (Feder 1984). Issues of labor directly involved the

work in the fields. Barquin and SuSrez (1982) state that a complex of new products and work

processes, businesses, including industries, productive systems and, production and consumptionpattems, have been created. Changes brought by modernisation are uprooting peasants fom their

lands. Simultaneously, peasants are losing the possibility of supporting themselves with their own

production as traditional crops are replaced by more profitable ones. The proletariat is growing

because the intemationai expansion of capital requires the incorporation of new population sectors

into the work force. Production now responds to rules and demands of the international market.

Growers are subject to a Gaspar Real Cabello: The Agribusiness Model of Development 131132 new

discipline imposed by capital which determines what crops to grow. Technology and the utilisation of

labor are now closely linked to industry. The work process has changed the possibility of family self-

sufficiency (Barquin & Suarez 1982: 14, 48). Luisa Pare (1988) focuses on a process she calls

descampenization, that is, the loss of rural customs, and, capital accumulation that results in

proletarianisation. The agricultural proletariat in Mexico would be defined as a jornaleros (day

laborers), farmhands or peasants who do not own land, as well as a significant number of poor peasant

land owners. The vast majority of peasants occupy a determined place in the capitalist production

system, that is, farmhands and industry workers. When analysing the case of the San Rafael community,

the findings are not entirely negative. Workers increasingly depend on wages paid by agribusinesses in

the area rather than self employment income. What follows is a summary of how the people have

adapted to their current situation. Like most of the Bajio area, San Rafael has had a tradition of waged

labor, since the end of the 19"' century. Urquiola (1989) has referred to the conformation of small

settlements and rural communities that emerged as part of the hacienda system during the 18*


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century. The forms of modem agricultural development in the area have created a need for crucial

temporary labor during specific periods of time, particularly during the harvesting of crops like

broccoli, coliflower and asparagus. This has resulted in the adoption of alternatives where earned

wages become the main source of income for the household units. In San Rafael, the participation of

women as wage earners deserves special mention. Women have taken advantage of the employment

opportunities that have become available with local economic development. They have been playing an

increasingly crucial role in meeting the needs of labor for the fields. Since the late 198O's they also

have become an important source of labor for a chicken processing plant. Pilgrim's Pride (PP), a U.S.

company. By finding local work, though the jobs are physically demanding, they have given up their

search for employment in surrounding urban centers. Many become field laborers instead of becoming

maids in nearby cities. This has had helped keep family members living in the same house and has

increased the total household income. The female workforce is distinguished by its flexibility and quick

adaptation to temporary employment and work in the field. In the community, marriage usually leads

to temporary termination of work. We observed that there is a substitution of members in the

household unit as it relates to work in the fields and the commitments to bring income into the

household. As older daughters get married and start their own families, their younger siblings are

employed, replacing the lost income and helping the household maintain its level of income. Australian

Journal Of Social Issues Vol. 38 No. I February 2003Several aspects of the household organisation areworth noting. Such employment increases the diversified amount of income brought by each household

member and the possibility of keeping residency in the patriarch's home, which usually means building

additional rooms on the family lot. The incorporation into the workforce at a young age, partieulary for

women, often neglects formal education as a tool for increasing social and employment mobility. From

this perspective, large household units reward these alternatives. While large families imply greater

efforts during the stage where the majority of household members are young consumers, it increases

income as more become mature wage earners.


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Agro-industry, NAFTA and the poultry industry in MexicoThe author has also analysed the effects of NAFTA through the changes in the poultry industry, which is

still in the process of growing. A series of changes that began taking place in Mexico in the mid 90's are

related to the implementation of NAFTA (Arroyo s/f: 6-17); which aims to create a free trade zone from

the Ytikon to the Yucatan peninsula. NAFTA is an economic program that encourages govemments toadopt necessary measures that will allow nations in North America to compete advantageously in the

world market. Globalisation has given rise to successively more aggresive economic policies that make it

impossible for a country to remain isolated. The last decade of the 20th century saw the formation of

multinational trading blocs which implement trading policies intended to benefit each signing member

such as the United European Commtmity (Centro de Estudios Estrategicos 1995). Without analyzing

NAFTA in detail, it can be observed, in some socio-economic sectors already open to free or reduced

tariff trade, including the poultry industry, that the results have not been beneficial to Mexico. Rather

than increasing the possibilty of expanding Mexican operations to the other two participating countries,

NAFTA poses a serious threat to important social sectors. The economic globalisation process implies

unprecedented social processes with new dynamics which affect both rural and tirban environments. It

is important to observe and analyse the responses of social groups at risk before the effects brought by

these dynamics engulf them. We present ethnographic information related to the effects of NAFTA

affected by the presence of a U.S. company. Pilgrim's Pride, the third largest poultry company in the

United States and the second largest in Mexico after a national company, Bachoco. Both companies use

the latest technology in the poultry industry. Gaspar Real Cabelto: The Agribusiness Model of

Development * 30The current Mexican poultry industry, nationally and locally, has been organised in

anticipation of the fixture opening of the market. As part of the free trade agreement, the poultry

market will open to free trade with the U.S. in 2003. However, the industry is akeady being affected

since Canada, in an effort to protect its poultry industry did not include poultry in the agreement

negotiations. The poultry industry is one economic agricultural sector where the implications of

globalisation are especially clear. One major effect involves diseases that have entered Mexico from

other countries and are now attacking large chicken farms as well as the poultry raised by families in the

countryside. The situation of the Mexican poultry industry can be summarised as part of the globalisingprocess operating in the national poultry industry environment. Mexico, the U.S. and Canada are in

different stages of capitalist development, as described in theories that analyse the conformation and

evolution of the world system (Wallerstein 1987; Ianni 1997; Kearney 1995; Featherstone 1996). The

Mexican poultry industry has traditionally relied on foreign technology, a dependence which recently

has increased. Mexican chicken production has historically relied on genetics from the U.S., Canada

and, Europe. A Mexican genetic line has not been established nor has a technology of the diverse

components for production; facilities, feeds, medicines, inoculations, and so forth. Pilgrim's Pride

arrived in Mexico in 1988, stirting operations in several states. In the case of Queretaro, the company

took advantage of the economic crisis of 1994 and ptirchased chicken farming facilities that had been

built by the Union de Avicultores de Queretaro (Queretaro Chicken Farmers Union). The facilities

included a feed procesing plant, a slaughter house and incubators. Local farmers had recently upgraded

their facilities through a bank loan in U.S. dollars. A peso devaluation made it impossible for them to

pay off their loan. Since then, PP has been operating in a partnership with the local members of the

Union de Avicultores de Queretaro. Pilgrim's Pride initially invested to rescue the Union from

bankruptcy. The relationship between these farmers known as Aparceros (part owners) and PP is under

a "Shared Risk" agreement. This type of association is a way to prepare the stage for the opening of the

border to the trading of chicken in 2003 under the terms of NAFTA. The goal is to stay competitive

against intemational and national companies like Tyson Foods (U.S.) and Bachoco (Mexico). So far this

type of association and production is what could be called maquila, where the aparceros are owners of


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facilities solely for growing chickens. They receive chickens, feed, technical assistance, medicines and, in

some instances, loans to upgrade their facilities from Pilgrim's Pride. The farmers, in tum, are expected

to deliver a product that meets pre-established requirements. Their pay is based on their Australian

Joumal Of Social Issues Vol. 38 No. I February 2003productivity through a process known as conversion,

that is, the amount of meat in kilograms in proportion to the amount of feed consumed by the chicken

during the growing process. The production becomes PP property while the farmer receives pay in

exchange. Local producers associated with PP can be classified as three types of aparceros, depending

on number of chickens grown per six or seven weeks growing cycle a) Small, 28,000-50,000 , b)

Medium, 200,000-450,000 and, c) Big, one million plus. Pilgrim's interest in the partnership is based on

expectations for these farmers to be capable partners when they face future intemational competition.

As the border prepares to open to production and marketing of chicken, competing major poultry

companies have provided incentives for local producers to invest in new technologies to improve

production processes, particularly facilities. Profitability depends 75% on the availability of efficient

equipment and 25% on labor (Teissier 1997). The changes the national poultry industry is going through

are essentially the result of technological demands for chicken and egg production, in addition to

effective marketing in the industry. Innovations constantly utilise cutting edge technology as

exemplified by the number of people who work in a caseta. Some years ago, two people were needed

to take care of a caseta. One person can now take care often automated casetas. Another advantage ofautomatisation is that human contact with the chickens is minimised, reducing the probability of

illnesses, as well as labor costs. According to preestablished logic by big companies like Pilgrim's Pride,

under current circumstances, and as a result of global competition, it is not possible to create a poultry

corporation as an independent entity or a vertical operation. Local producers, who do not form

partnerships with large-scale producers will likely disappear, just as those who do not modemise their

operations, will not be able to stay competitive. For poultry farmers in Queretaro, the relationship

established with Pilgrim's Pride as aparceros is differentiated according to their level of operations.

Medium size growers were essentially rescued from batikrupcy and were able to reactivate their

operations and pay off their loans. Big producers have found a way to stirvive a severe financial crisis

through this arrangement. Small to medium size growers show a greater sense of loyalty toward PP;

though bigger ones consider themselves as "self-sufficient". Small aparceros state they maintain a goodrelationship with PP. Because they perceive PP as having a vast knowledge and capacity in the industry

at national and intemational levels, they show no interest in working for another company. On the

other hand, big producers, if they feel the relationship is unprofitable, can terminate their relationship

at the end of their contract. Their loyalty is as strong as their profits. Gaspar Real Cabello: The

Agribusiness Model of DevelopmentThe severe economic crisis of 1994 in Mexico, when local producers

were taken over by the corporation as aparceros, has changed the concept of being poultry growers.

The new culture avoids the risks implied by production processes; costs of feed, medicines, marketing,

etc., but reduces profits, since aparceros only provide the casetas and their knowledge about chicken

growing. Pilgrim's Pride did not include the casetas in their itiitial purchase, saving them a significant

investment as well as having to deal with labor issues. However, through the aparcero agreement, PP

was able to exploit the knowledge and experience of local producers. Now, as the border officially

opens to free trade in the poultry industry, the differences between the two industries have become

more accute following the implementation of NAFTA in other areas. The loeal scene is preparing for

intense intemational competition in this industry, particularly in their acquisition of technological

equipment. Technology has heavily impacted the national poultry industry during the last five years,

though significant differences remain evident in comparison with the U.S. industry. In Mexico, 30% of

chicken production comes from traditional producers (limited use of technology), who characterise two

of the three kinds of current production systems; Backyard chicken growing 10% Partial use

technology 20% Full use technology 70% Within the poultry industry that makes full use of


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technology, there are few differences between the U.S. and Mexico. Both use similar facilities,

technologies and, feeds (especially when the use of technology is a condition imposed by intemational

companies that process feed and determine guidelines). One important difference between the nations

is the increase of chicken by-products in the U.S. These are produced in plants that perform additional

processes; processed foods like nuggets and chicken pudding. This aspect of the industry has not been

developed in Mexico. In the U.S., more than 90% of the companies have plants for additional

processes. It is not necessarily a difference in competitiveness so much as different pattems of demand

and consumption that underly this important value added source for U.S. producers.

Conclusion

It would be premature to reach definite conclusions from this study, since the situation is still in

progress. Still, it can be observed that for important social sectors in Mexico, NAFTA represents a

polarisation in social and economic inequities, Australian Joumal Of Social Issues Vol. 38 No. I February

2003particularly when it comes to food systems. In the ease of Mexican produce and poultry growers,

the future is not promising. We believe that globalisation will maintain a differentiated impact,

according to the scales of production. Small scale growers have a greater chance to continue operating

independently for two reasons. They still run their businesses in a traditional way and their operations

do not compete against large industrial conglomerates that already have found and maintained their

own market niches. They compete in small communities rather than in big cities, meeting the needs of aniche market that large corporations do not find attractive. Generalising fi-om the observations of the

case studies summarised in this paper, the consequences of globalisation on rural Mexico will be

profound. It also is likely that many of the effects in rural Mexico will likely be experienced in other

agricultural export nations, including Australia. An intensification and vulnerability to technological

efficiency will be inevitable. Population redistribution will continue to occur, though perhaps at lower

rates than in the past. However, economic survival and population immobility are only parts of the

consequences. That survival and population stability will occur with a cultural and social price.

Traditional rural life will be changed and many opportunities will remain relatively closed to most

rural people.

THE MEXICAN STATE AND THE AGRIBUSINESS¶ MODEL OF DEVELOPMENT IN THE¶ GLOBALISATION ERA

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