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Neoliberalism and Its Effects on Rural Livelihood in Mexico: Chiapas as a Case Study

Introduction:

            The debate between neoliberals and their critics has often focused on the impoverished southern Mexican state of Chiapas.  For neoliberals, this region symbolizes the virtues of integration into the world economy.  They argue that its traditional roots are the factors maintaining a status quo of impoverishment and stagnant economic growth.  Critics, however, counter that the people of this region are holding onto their culture, and avoiding the more destitute poverty that will await them in sweatshops and factories characteristic of neoliberal “development.”  They state that industrialization will commodify and exploit the lives of these people.

            This paper attempts to reconcile these two modes of thought.  Though neoliberalism brought undeniable macroeconomic gains to Mexico, it also contained a mechanism that was detrimental to the rural indigenous life of the majority of Chiapanecos.  By examining neoliberalism and its effect on the two most important agricultural markets in the state, coffee and maize, this paper illustrates the propensity of neoliberalism to prod rural dwellers away from their tradition by offering them a new “escape” from poverty.

Chiapas: Historical Considerations

            Any study of the Chiapas region must first consider its demographics and historical trends.  Chiapas consists of various Indian populations spread throughout its mountains and valleys.  Despite foreign rule through the last 500 years, this demographic characteristic has not changed a great deal.  San Cristobal de las Casas, among the major towns in the state was at one time considered, “a small Spanish island within a vast Indian sea.  The proportions have not changed.”[1]  These various Indian groups are largely concentrated in the highland regions of the state and have an agricultural economy.

            Chiapas was not much affected by the independence of Mexico in the early 1800s.  The new nation was exceptionally decentralized and lacked the power to override regional power structures.[2]  Therefore, the Ladinos (population of Spanish descent) in the region prospered from the labor of the Indians and provided the vast majority of economic development. 

During the 1890s, economic development skyrocketed in Chiapas, propelled by slight increases in transportation infrastructure and the infusion of a new agricultural product: coffee.  It was brought to the region by land-hungry German plantation owners in Guatemala.  They found and bought out most of the lands around Soconusco and dominated most of the economies in the state’s municipalities by the end of the 19^th century.[3]  The Chiapan governor’s permission to use Indian labor for work on the fincas, or plantations, helped the economic growth as well.  Thus, a new era of Indian subordination had begun, considered to be a “ ‘commerce in human flesh.’”[4]

            The early 20^th century was mired in the disorder and upheaval of the Mexican revolution.  By its end in 1921, a Constitution and new nation had emerged.  Agrarian reform, or the redistribution of land, was a central tenet of the new Constitution.  Article 27 highlighted an “ejido system” in which landless Mexicans received small communal plots of land for the purposes of “subsistence crops.”[5]  This land was not legal property and was often used communally by the farmers of an ejido.[6]

Unfortunately, the Article allowed for access of unused and potentially irrigated land to be used as well.  These rights fell into the hands of those with “the capital for larger-scale and mechanized agriculture that would produce cash crops, especially for export.  Mexico’s agrarian economy began to polarize, with a few rich farmers and many poor peasants.”[7]

            The polarization of the Chiapan agricultural population only intensified through the mid-20^th century.  The 1960s brought further development in the region.  At this time, 40% of economic value was derived from the coffee industry.  Unfortunately, the private and larger landowners who controlled the majority of coffee lands were the main recipients of wealth in the region.  The ejidatarios (ejidal land owners), in fact, “earned one third as much, owned one tenth as many tractors, and possessed land valued at one third of the amount of the private sector.”[8]  Their lands became overpopulated as well, which led to environmental deterioration and further reductions in agricultural productivity.[9]

            Through the 1970s, however, the ejidatarios started to become more politicized and organized in response to their increasing marginalization within the political system.  A virtual explosion of agricultural cooperatives emerged in hopes of improving bargaining power with the government.[10]  Attempts to ameliorate agrarian conditions, moreover, also created a spill-over into other areas of social reform for the Indian populations.  The first indigenous Congress emerged in 1974.  This forum provided an avenue for dialogue between various communities over the importance of cultural preservation and solidarity.  Though empowering, these movements were largely “coopted” by the government in order to avoid a clash between the dominant elite and the indigenous majority.[11]

By the 1980s, a low-intensity agrarian war was underway in Chiapas.  The government chose to deal with an increased occurrence of land invasions by rural farmers with an increased military presence.  Additionally, an infusion of Guatemalan refugees fleeing their own repressive civil war contributed to the military build-up.[12]  The government was also shifting toward a more international and open economic policy, which resulted in decreased aid to Chiapan farmers.[13]  Both of these factors, militarization and a reduction of social spending, were largely influential on the growing support for a guerilla movement in the region.  “The timing of [the decline in agricultural support] parallels the escalation and expression of guerilla activity in the most marginal areas of the state...”[14]

            The culmination of these guerilla movements occurred on January 1, 1994, the same day that NAFTA (North American Free Trade Agreement- a free trade agreement between the United States, Canada, and Mexico) was enacted.  On this date, the EZLN, or Zapatista Army for National Liberation, took over numerous towns and municipalities within Chiapas in the name of reform and indigenous rights.  Led by the enigmatic masked Subcomandante Marcos, this group of indigenous people of the highlands started a revolution that was heralded by many critics of neoliberalism.  To these critics, the rebellion was perhaps the first sign of weakness in what was becoming the dominant global economic ideology.         

The Zapatistas’ demands ranged from free democratic elections, to inclusion of indigenous opinion in government decisions, to the renegotiation of NAFTA in order to reduce the effects of agricultural free trade on the campesinos of Chiapas and rural Mexico.  They also feared the destruction of their only claim to land, as the Salinas government (1988-1994) just recently reformed Article 27 to allow for the selling, renting, or buying of ejidal lands. [15]  NAFTA was a “death sentence” for the Chiapanecos, according to the EZLN.[16]  The Salinas government attempted to downplay global investment jitters by feigning to compromise with the Zapatistas.  Yet, Salinas simultaneously increased military involvement in the region to suppress the movement.

            The Zapatista movement continues, but their demands have not yet met with success.  Within the Zedillo presidency (1994-2000), the government and the EZLN came to a momentous agreement called the San Andres Accords of 1996.  This agreement provided a framework for the increased autonomy of indigenous populations.  It also provided a salient hope for an increase in responsible and democratic economic growth in Chiapas.  As Sec III N. 6 of the agreement states,

Historically, development models have not taken into consideration the productive systems of the indigenous peoples…. The Mexican judicial system… must push for the recognition of the indigenous peoples’ right to the sustainable use and the derived benefits of the use and development of the natural resources of the territories they occupy or utilize in any form, so that, in a framework of global development, the economic underdevelopment and isolation may be overcome.[17]

            Nonetheless, the accords remain legislatively unimplemented.  Furthermore, Chiapas continues to be largely militarized and marginalized in Mexican society.

The Failure of ISI, the Emergence of Neoliberalism, and the Implementation of NAFTA: 

            While Chiapas remained marginalized through the mid to late 20^th century, the Mexican macroeconomy was undergoing tremendous transitions.  These economic upheavals in the country were increasingly linked to the plight of the Chiapanecos and their struggles.

Import Substitution Industrialization

            Following World War II, many nations in Latin America trended toward a protective economic policy labeled import substitution industrialization (ISI).  The theory of this alternative mode of development revolved around the concept of cultivating nascent industries through protective trade measures in order to modernize their economies.  The government would raise tariff barriers on consumer goods, relying on capital imports to drive the growth of domestic industries.  Then, in the long run, the economy would develop to the point of harboring its own capital-producing industry and the eventual export of capital goods.  In practice, the agricultural sector provided the financing for such ambitious industrialization.  Its higher labor concentration and profitability made it an ideal financer for this national economic plan.  Instead of focusing on improving agricultural assets, nations felt that a move toward more industry would provide higher “linkage and elasticity” in the economy and better prospects for terms of trade.[18]  Such blind faith in industrialization resulted in severe economic marginalization of the needs of agricultural regions.

            Mexico moved toward ISI as a plan for development in the 1950s.  The agricultural sector, however, soon felt the brunt of harboring inefficient protected industries and started to deteriorate relative to the rest of the economy in the late 1950s.[19]  By the 1960s, as this sector of the economy declined, growth became increasingly dependent on imported goods and an increasing debt.[20]  Furthermore, the economy couldn’t “deepen” enough to move beyond a heavy reliance on imports to drive growth.[21]  It was clear that the system was unsustainable.

During the late 1970s, ISI in Mexico entered its last moment of prosperity.  Then-president Portillo used increased OPEC prices and newly found oil in Mexico as important inputs into the national treasury.[22]  Despite this wealth, Mexico’s industries were failing and unemployment was increasing.  To aid the deteriorating economy, Portillo increased government spending with funds from oil and a rising international debt.[23]  The debt reached $70 billion dollars in 1981.  ISI was also failing to propel domestic industrialization.  By 1977-1981, manufacturing was neither evolving nor competitive.  In fact, 72.5% of exports during this period depended upon oil production.[24]  Thus, in 1982, Mexico announced to the world that it “could not meet its international financial obligations.”[25]

Liberalization and Export Oriented Development

            With the failure of ISI, the government entered a new era of economic policy that continues to this day.  Liberalization, also called neoliberalism, was becoming the dominant economic philosophy in the world.  After the debt crisis of the early 80s, Mexico shifted toward this economic theory.[26]

            Neoliberalism relied upon export-oriented production as a main catalyst for development.  According to this theory, a government must remain “neutral” in its subsidizations and rely upon large amounts of austerity in its spending.  This encourages foreign investment in the form of either portfolio or direct investment.  Thus, the trademarks of a successful economic plan become the containment of runaway inflation (by means of high interest rates) and the “privatization of state enterprises.”  The removal of market manipulators and the influx of foreign investment push the economy toward specialization of factors of production and an eventual maximization of the nation’s comparative advantage in the global market.[27] 

            The de la Madrid government, which came into power in 1982 under the unpropitious start of the debt crisis, fell quickly into line with this mode of thinking.  Automatically, the Bank of Mexico and the International Monetary Fund became “unofficial cosponsors of free trade policies.”  De la Madrid, at the behest of his country’s creditors, initiated an enormous economic restructuring for the purpose of paying back debts.[28]  Government spending decreased immediately.  The government cut 50,000 jobs in the public sector, reduced consumer subsidies, and privatized numerous behemoth state-owned businesses in Mexico City.[29] 

Agriculture avoided the immediate shock of the economic restructuring during the early and mid 80s.  There were actually small rises in the government-funded guaranteed price structure.  Yet, neglect to reform the agricultural sector resulted from a chronic negligence of the government toward agriculture.[30]  By the time the economy had become fairly stable toward the end of the de la Madrid administration, the sector was in widespread distress.  High interest rates forced farmers to face a spiraling debt problem because of their rising input costs.  The new agrarian crisis was also evident in rising food imports, which “rose from 8.5 million tons in 1981 to 10 million tons in 1988.”[31]  The opening of trade for an unprepared agricultural sector had begun.

Salinas and the Reformation of Agrarian Policy

By the time the Salinas administration had taken the reins of government in 1988, the path was paved for deepening liberalization.  Mexico just joined the General Agreement on Trade and Tariffs (GATT) in 1986 and was in the midst of a modest economic recovery.  Investment started to flow into the Northern and Central regions of the country, but remained noticeably absent from the south.  The maquiladora assembly industry on the U.S.-Mexican border boomed from under 20% of exports in 1982 to around 40% by the early 90s.[32]  Also, high interest rates, though successful in creating a strong peso, increased imports and pushed the current-accounts deficit upward.

Under heavy pressure from the United States, the government initiated considerable reform of the agricultural sector as well.  First, reforms overhauled the guaranteed price support system and government-backed credits for agricultural inputs.  Salinas replaced these aids with a system of more neutral direct payments (PROCAMPO) for basic staples.  PROCAMPO will expire by the year 2009.  Second, in 1992, the government made a bold step to modernize Article 27 of the constitution.  To open the way for more capital-intensive agro-business enterprises, this reform legalized the transaction of ejidal property. Both of these efforts attempted to create higher efficiency in national agriculture to enhance agricultural competition on world markets.[33]

            To offset the foreseeable rejection of such policies by the campesinos, the government set up the Program for National Solidarity (PRONASOL).  Though it attempted to decentralize decision-making of credit for severely disadvantaged farmers, most viewed this program as an attempt to boost rural support of the administration for political reasons.  Both of these government aid programs were largely ineffective.[34]

…the overall implication of PRONASOL and PROCAMPO… appears to be the repeasantization of those who have failed to perform under previous misguided government strategies for modernizing ejidal agriculture.  In other words, the majority of peasants will be eligible, at best, for incentive programs likely to re-create household subsistence units with little or no economic surplus, through a return to reliance largely on low-value staples cultivated via traditional practices.[35] 

NAFTA and the Institutionalization of Neoliberalism in Mexico

The NAFTA negotiations, initiated during the early 90s, were a significant  impetus for modernizing the Mexican agricultural economy.    Negotiations for NAFTA were incredibly delicate and took years to complete.  In order to ensure its success, the benefits needed to outweigh the short and long-term disadvantages to all three nations.  For Mexico, this meant that strategic regionalism, imagined by the United States in defense of European and Japanese trading blocs, could not be strong enough to divert trade from vital trading partners for Mexico.[36] 

Economists in all three nations insisted upon NAFTA as a viable option for economic growth in the region.  For Mexicans, NAFTA promised to keep the US accountable to continue trade with their neighbor to the South.  It also provokes investment flows to increase as accountability within Mexican economic policy establishes itself.  Trade volume increases as well, which economists assert render any argument of declining trade balances in Mexico void.[37]  In other words, though Mexican export’s to the US rose from 66% to 80% between 1990 and 1998, the total trade volume increased, benefiting both sides.[38]

            Nonetheless, critics were highly disapproving of NAFTA and its ability to produce economic development.  NAFTA was simply an institutionalization of the dependency that was occurring in Mexico since the failure of ISI.  As Sidney Weintraub stated, NAFTA is “a way of formalizing a de facto integration that was already substantial.”[39]  Therefore, critics feared a continuation of an economic policy that stripped social protection in the guise of macroeconomic growth.  There was also fear that liberalization eliminated civil society for the purpose of fostering “efficient” market forces.  This effect decreases the amount of responsible governance in each country.[40]  Finally, critics rejected the concept that economic openness leads to development.  A blind faith in modernization as a panacea for inefficient, “traditional” causes of poverty was extremely short-sighted.

‘There is modernity in prosperity and success, and there is modernity in failure, in the oceans of misery which surround pockets of prosperity.  Both are as modern as each other, and the classical distinction between ‘traditional societies and ‘modernizing societies’ has lost all meaning.’[41]

            When critics spoke of the “losers” in Mexico, they almost invariably meant campesinos, or rural farmers.  This sector of the population faced extremely hostile international markets where prices decreased in recent decades as a result of industrialized agriculture.  Their lack of voice in the negotiation process (which was done with a minimal presence of small business owners as well) created a daunting economic reality in their lives and bitterness that compounded in the rebellion of 1994. 

NAFTA made limited concessions toward maize production due to its important role in the economy of Southern Mexico.  At the time of the NAFTA enactment, the maize yield in the US was 6.9 tons/hectare compared with 1.7 tons/hectare.  If the tariffs between the two nations were dropped automatically, it would have devastated regions of Mexico, especially Chiapas, in which “over 80% of ejidatarios grow maize.”[42]  Thus, NAFTA allowed for a 15-year phase out of the maize tariff.  By the end of this time period, the Mexican maize industry needed to be more capital-intensive to compete on the world market.

For the coffee market, another product for which Chiapas is a principal producer, NAFTA decreed in Chapter 7 Annex 702.3, “neither Canada nor Mexico may adopt or maintain a measure, pursuant to an intergovernmental coffee agreement, that restricts trade in coffee between them.”

The Effects of Neoliberal Reforms on Coffee Production in Chiapas:

            Coffee, as mentioned above, plays an important role in the agricultural economy of Mexico.  Chiapas is among the main producers of the product.  However, with neoliberal reforms of the 1980s and 1990s, Chiapan coffee producers are left exposed to an increasingly volatile world market.

World Market Trends 1970-2000

            Coffee is the second-largest export product in the world.  Because of this role in agricultural markets, economists often use it as an engine for development in the Global South.  Unfortunately, several factors led to the transition of the coffee market toward volatility.  During the 1970s, in Nicaragua, in 1976, a large crop damage due to leaf rust was solved by US Agency of International Development (USAID).  USAID increased the use of fertilizer and genetically modified coffee seeds.  These new seeds “respond well to chemical fertilizers,” but also rely upon sunlight, therefore reducing the traditional use of shade trees in production.[43]  The alterations also created a new standard of coffee production.  Yields increased in density from 1100 coffee plants per hectare to 4000.[44]

            Increased productivity in the coffee market, however, did not lead to a direct overproduction.  Instead, most coffee-producing nations abided to quotas set by the International Coffee Agreement (ICA).  First agreed upon in 1962, the agreement restricted coffee supply at constant levels to help producers maintain a profit.  In Mexico, it allowed for a growth in coffee lands of 70%.  Nevertheless, neoliberalism’s increasing role in world economic decisions led to the inability of coffee producers to decide upon a quota in 1989.  The agreement quickly fell apart.[45]  U.S. insistence upon free market policies in the coffee market also played a significant role in the ICA’s demise.[46]

            In the aftermath, the coffee market quickly became flooded.  Coffee prices reduced by half between 1989 and 1994 and declined further in the years since.  Furthermore, overproduction is not matched by overconsumption.  In the 2002/2003 crop cycle, world production will reach 117 million bags as consumption follows at 108 million bags.[47]  The biggest losers from these shifts in the world coffee, especially in Mexico, have been the small producers.  In Mexico, this sector of coffee producers “ ‘suffered a 70 percent drop in income [between 1990-1993].’”[48] 

            The commodity chain is of utmost importance in understanding coffee economics.  While coffee is produced raw by most small producers, it must undergo a number of expensive stages before it reaches the consumer.  First, wet-processing and dry-processing prepare the raw coffee for sale on the international market.  Then, once it has been sold and traded, the beans are roasted and marketed; processes which take place largely in the consuming country.  These intermediary steps increase the value-added of the product significantly.[49]  For medium and larger scale producers, much of the processing is done on sight due to a high degree of vertical integration and economies of scale allowing for the purchase of the agromachinery.  Therefore, in Mexico they earn 22 pesos per kilo instead of 3 pesos per kilo for “unprocessed coffee cherries.”[50]  For small coffee producers, this lack of control over the commodity chain results in conditions in which a small, unprotected coffee producer may gather only 30 cents for a pound of coffee that retails at 7-8$US.[51]  The world coffee market is extremely harmful to small producers.  In Mexico, small coffee farmers faced these harsh market forces with decreased aid from the government.

Chiapas Coffee Market Structure and its Modifications Resulting From Neoliberal Policy

            In Chiapas, about 90% of coffee producers farm 5 hectares or less.  In the past, the government provided a variety of structural buffers to help producers maintain a sufficient profit.  Prior to the early 1990s, INMECAFE provided input credits and price guarantees for small rural farmers of coffee.  During the 1980s, INMECAFE was a target of scrutiny for austerity economists in the IMF and the government itself.  With a debt of around $90 million dollars in 1988, it was among the first agencies dissolved under the Salinas administration in 1989 in the name of privatization.[52]

            INMECAFE, however, provided the only avenue of aid for coffee campesinos.  During its existence, it stifled intermediary actors, such as private farm creditors, in Mexico’s coffee market.  Therefore, its dissolution created a “vacuum for small coffee producers.”  Many faced amassing personal debts as drastic increases in input prices coincided with the decrease in the world coffee price.[53]  Some families left their ejidos  to work on the larger plantations still capable of achieving profit.  Other families used migration of at least one member in order to diversify their income.  Many farmers who continued to farm attempted to increase yield production by clearing more land, which resulted in increased environmental degradation.

The peso devaluation of the mid 90s created increased exports of coffee through the end of the decade.  Intermediaries and larger coffee producers reaped the majority of profits from this increased production, however.  For small farmers, inflation rates increased the price of inputs, offsetting any perceived benefit from the devaluation.[54]  Debt crises, therefore, persisted for small farmers.

Neoliberal reforms opened the unleashed forces of the international coffee market upon small producers in Chiapas without transitional state aid needed for adjustment.  “[B]etween 1989 and 1993 thousands of coffee growers in Chiapas abandoned production.”  Production shifted from small coffee growers toward the larger, foreign-owned plantations on the coast.[55]

Prospects for The Future: Producer Organization

The remaining small coffee growers still have several options to resist the forces of neoliberalism and remain on their land.  First, these growers need to organize in order to gain more value-added from the product.  Because of the decrease in coffee prices, no individual coffee producer can live off the sale of raw coffee to international companies.  In fact, of the 7-8$/lbs paid by United States consumers on Mexican coffee, “small scale farmers receive 10%, 30% goes to the coyotes and exporters, and 25% to retailers… 35% goes to the four corporations (Philip Morris, Procter and Gamble, Sara Lee, and Nestle).”[56]

            Organization helps reduce economies of scale and allows for cooperative purchase of expensive agromachinery.  Unfortunately, in Chiapas, producer organization faces severe obstacles.  With the collapse of INMECAFE, groups in surrounding states, most notably in Oaxaca, were able to gain concessions from the dissolution.  Chiapas producers organized too late, and were too divided, to benefit from any of these dispensations.[57]

            Furthermore, state level forces usually overturned the few government policies that reached the small farmers. 

Hard-line governors Castellanos Dominguez (1983-1988) and Gonzalez Garrido (1988-1993) were unsympathetic to the demands of independent coffee producer unions… it wasn’t until 1993 that an underfunded and ineffectual state coffee council emerged in Chiapas.[58]

For those who are capable of organization, organic coffee proves to be a profitable sector of the economy.  It now consists of about 5% of the world coffee market.  Within Mexico, organic coffee production has grown 45% between 1996 and 2000, despite its lack of acknowledgement from the government.[59]  The organic market is especially helpful for ejido farmers because they are able to use their environmentally sound methods of shade grown, diversified coffee farming as an economic advantage.  By using less costly, traditional methods, and relying less on large amounts of industrial processing, farmers producing for distributors of organic coffee are able to receive a larger share of income for their work.[60]  Unfortunately, this market still is not large enough to absorb the majority of farming labor in Chiapas and Mexico.  Most coffee farmers in Chiapas, due to lack of government aid and lack of control over the commodity chain, will continue to move into other crops, urbanization, or migration.

The Effects of Neoliberal Reforms on Maize Production in Chiapas:

NAFTA and the Theory of Comparative Advantage in the Maize Market

            The maize market differs from coffee because it faces competition with the U.S.  Therefore, there was a vast amount of negotiation surrounding maize in preparation of NAFTA.  Negotiators felt that the vast differences in maize yields between the United States and Mexico, (which resided at 6.9 tons/hectare in the United States to 1.7 tons/hectare in Mexico) represented a comparative advantage for the United States.  In the U.S., increased capital endowments helped exacerbate this divide.  A 15-year phase-in of tariffs, it was thought, would buffer any harmful effects of an immediate opening of trade.  During this period, Mexican farmers would diversify, modernize, or move to other sections of the economy.  As a result, production would decrease in the Mexican maize sector. 

Despite the theory behind NAFTA, production increased over the past decade.  Increased production was not accompanied by substantial economic development in Chiapas, however, and productivity decreased on cultivated lands.  Mexico faces only five years to mend this situation before full trade will be opened between all three nations.

The Structure of Maize in the Mexican Economy and Culture

            Maize plays a significant historical and cultural role in Chiapas.  Planted in Mexico for five thousand years, maize has a place in both indigenous religion and local economies unparalleled in the rest of the world’s production zones.  Mexico is therefore the traditional source of maize to the world.  Chiapas, along with the other Southern states, holds the majority of producers in the country.  Since the crop remains untouched by technology (which has given the higher yields of American agriculture industry), Chiapan maize is the most genetically diverse in the world.[61]  Additionally, production of maize has a high subsistence-farming component in Mexico.  Thirty-three percent of Mexican maize production is for family subsistence.[62]

            Neoliberal reforms needed to be exceptionally sensitive to any effects that may produce sudden or drastic consequences to this sector of the economy and culture.  Nonetheless, the effects of these reforms show an insensitivity to the subject and the actors involved.  As recently as 2002 the president of Mexico, Vicente Fox, mentioned, “In the world today, all sectors have to adapt to the new competitive environment… Agriculture cannot be the exception.”[63]

Neoliberal Reforms, NAFTA, and their Modifications Upon the Chiapan Maize Market

            In the 80s and 90s, neoliberal reforms attempted to reduce the inefficiencies of the maize market by reducing the number of ejidal farmers and modernizing the agricultural sector.  First, credit drops started occurring through the various government organs that affected maize producers.  “In Chiapas the number of producers with credit for planting fell from an annual average of 20.4 percent in the period 1985-1989 to 12.7 in 1990 and only 5.7 percent of producers received credit for machinery in the 1985-1990 period.”[64]

            With the introduction of the Salinas administration, and the NAFTA negotiations of the early 90s, the Mexican government underwent enormous efforts to reduce market manipulators.  The reformation of Article 27 in the Constitution endeavored to destroy the ejidal system.  Other reforms included the replacement of price guarantees with the PROCAMPO program in order to replace manipulative policy with direct investments that don’t distort the market, but still help the farmers.  Finally, the government created PRONASOL for the promotion of “solidarity” and decentralizing decision-making toward the producers of maize and other staple crops.

            These reforms had diverse effects.  First, the reformation of Article 27, which was integral in NAFTA negotiations, did not result in many changes in the South, where a large majority of ejidal producers lived.  In fact, “only .3% of ejido land has been sold [by the year 2000]… farmers seem reluctant to leave the only sure thing they have.”[65] 

PROCAMPO, designed as a transitory economic aid for farmers, benefited larger producers of maize and was not used by campesinos for commercial purposes.[66]  Though credit to subsistence farmers was welcome, it did not help the economic viability of the 67% of maize producers selling their product on commercial markets.[67]  Furthermore, the inflation of 1994-5 pushed PROCAMPO’s real value down 40%.  The program cutback on its level of operations and lost much of its infrastructural investment as a result. By 2000, it had turned into a largely ineffective vestigial arm of the Mexican government.[68]

PRONASOL ran into the same government problems that stood in the way of successful organization methods for coffee producers.  As a direct line from campesino groups to the Salinas administration, this program threatened the governor and state actors in Chiapas.  Governor Garrido, therefore, headed a campaign to arrest local organizers and “created a state-level fund directly under his control” to control where the Solidarity funds were directed.[69]  Thus, once again, state government corruption stood in the way of one of the few concessions given to campesinos in Chiapas to offset the injustices of neoliberal reforms.

The NAFTA concession to the maize market was a significant acknowledgement of the crop’s importance in Mexico.  It arranged for the use of a 3% increase in tariff free imports every year and the import tariffs would reduce to zero by 2008, thus allowing for an measured transition to free trade in maize between the two countries.  While these changes were occurring, Mexico was expected to gradually reduce the subsidies upon the maize market.  For instance, the “universal tortilla subsidy, costing $650 million in 1995” and which provided grants and price guarantees on tortillas in small shops across the country, was destroyed in 1996.  The liberalization of this subsidy pushed consumer prices upward.[70]

            Some argue that the intended phase-in of unobstructed maize trade was "compressed to roughly 30 months."  According to a study done by Oxfam and the World Wildlife Fund,

Between January 1994 and August 1996 domestic corn prices fell by 48%, thereby converging with the international market some 12 years earlier than provided for under NAFTA, and forcing Mexican corn producers into a rapid adjustment.  This was because the Mexican government did not implement the tariff rate quota as planned, but instead exempted all corn imports from tariff payments after 1994, on the grounds of a need to lower prices and reduce inflationary pressures.[71]

Farmers were forced to deal with near international market levels much quicker than anticipated.  Many responded to the market pressures by resorting to the slash and burn method of acquiring more land, because it provided the only avenue toward higher production capacities.  Unfortunately, however, this only resulted in lower yield values across ejidal lands and soil degradation that ruins the chance for agriculture in the long run.[72]  “The forested land that they clear for subsistence agriculture quickly loses productivity and is converted into pastureland for cattle.”[73]

Prospects for the Future: Migration and Urbanization

            Most commercial maize farmers in Mexico and Chiapas will shift toward either diversification of crops or modernization.  Yet, these two directions run counter to cultural trends and are actually undermined by the government.  Neoliberal reforms, along with NAFTA, have caused “an institutional vacuum which is only partially being filled by (a) the private sector, but this mainly for access by the larger commercial farms and (b) by targeted welfare interventions of the state… but this mainly for the most marginal rural households.”[74]

            Organizational prospects for commercial maize farmers are dismal.  Though ejidos have gathered together in order to fill orders for larger companies who in turn helped buy pieces of agromachinery, ejidos in maize production are generally averse to organization or cooperation.[75]  For many of these farmers, either eking out a living working for larger producers, or migration/urbanization will be the direct responses.

Future Development in the Region: The PPP as a Consistent Model of Marginalizing Southern Mexico

Has the increased poverty and decreased plight of rural farmers harbored recognition by the government in consideration of its future plans?  The answer to this question is an overwhelming no.  The Plan Puebla Panama (PPP), put forth by Vicente Fox in conjunction with the World Bank, represents the maintenance of the status quo in development tactics.

            This vision of development in the South consists of a detailed plan that will aid the region in a multi-state, multi-national program to boost infrastructure and increase international economic development in the region.  The official “ ‘Base Document’” of the Plan Puebla Panama asserts that the PPP,

‘aims to promote and strengthen development in the south-southeast region of Mexico, through the rapid and coordinated implementation of public policies, programs and projects of public and private investment oriented towards, to name a few, the educational and social development of the population, expanding and integrating development of sectors of basic infrastructure, promoting and developing productive activities, modernizing and strengthening local institutions, and expanding the technological base of the region.’[76]

The plan is also geared toward the substantial expansion of transportation avenues in hopes of attracting investment for cross continental passage throughout the Central American region.  In fact, the PPP spokesperson in the Mexican government, Salazar, asserts that “some 2,200 kilometers of roads need to be constructed or revamped.”[77]  Roads are needed, asserts the government, in order to attract the required international investment to the region.

            The center of the plan is its emphasis on industrial development in the form of a de facto new “maquiladora” zone equivalent to that on the Mexican northern border.  Though creating large amounts of economic development in the north, maquiladoras have done very little for the wellbeing of their workers or the development of regional infrastructure for long-term self-sufficiency.  Many feel that the U.S. has a large stake in creating this southern zone in order to slow migration of southern Mexicans toward the northern maquila zone and across the U.S.-Mexican border.  Furthermore, the plan’s effectiveness in creating new urban zones centered on maquiladoras needs “indigenous Mexicans’ willingness to abandon their homes and farms in the countryside.”[78]  If they are unwilling to do so, Salazar reassures that there will be no enforcement of their integration.[79]

            Finally, the decision to advertise the abundance of natural resources in any such plan is a direct affront to the Zapatista challenge of self-determination in resource management.  In fact, the interaction of maquila zones and natural resource exploitation may work hand in hand. 

The PPP endeavors to attract more than 90 maquiladora industries into the south-southeastern region, that could serve as magnets to attract the indigenous and poor population and free up the territories where strategic resources are concentrated… For the indigenous people, the maquiladoras would be like the coffee plantations of the new century.[80]

Conclusions: Neoliberalism’s effect on Mexican Rural Populations and Prospects for Better Governance in Economic Decisions

            The Mexican government ignored its rural consitutuency during both ISI and the neoliberal reforms.  Despite their differences in approach, ISI and neoliberalism had a very similar goal: competitiveness in the world market.  Both strategies followed paths of industrial investment to induce this global competition.  Yet, they simultaneously relied on the destruction of the rural economy and the migration of its residents toward these new population centers.

Neoliberalism has more clout from the international community, who are adept at ostracizing those nations that may step out of line.  Therefore, it is a much more entrenched development policy for Mexico and other Southern nations than ISI.  Through monstrous international financial organizations and the burdensome weight of the United States’ demands to the north, Mexico felt pressured to promote extreme austerity measures and work on its debt repayments.  Yet, by focusing on international investment and pushing for a competitive market, the country inevitably created a marginalized rural population.

By opening the agricultural markets, while at the same time pulling back their support structures in a haphazard and hasty manner, neoliberal economic policy pushes this sector of the economy toward large-scale industrialized agriculture.  The large majority of small producers are left with only a few options: migrate to urban-industrial sectors of the economy, migrate north, work as landless laborers for agrobusiness, or continue living in deep poverty.

Neoliberalism also has a tendency to exclude Chiapanecos from economic decision-making.  It created a reduction of middle actors and intermediaries in the Chiapan social structure. As Sergio Zermeño states, “In Mexico, NAFTA and global integration are criticized for their powerful ability to dissolve the social- obliterating collective identities, spaces of communicative interaction, and the critical formation of the public sphere.”[81]

            Governance must exist on three axes; the public sector, the private sector, and civil society.  In Chiapas, the effects of PRONASOL to employ the support of the rural people had disastrous consequences on the ability of grassroots civil society to gain sufficient strength.  Furthermore, the corrupt state administrations over the past 30 years resulted in much harm toward the collective movements in the region.  These factors stifled the private sector’s ability to develop in the region.  Without an entrepreneurial spirit, the existence of a sustainable capitalistic economy in the region will only remain a dream.

            Without these features in development strategies, the rural dwellers of the Mexican South face the threat of continued marginalization or eventual cultural irrelevance.  Though the Zapatista movement demonstrated solidarity in the region and hope for the indigenous rural population, their inability to negotiate with the Mexican government has only resulted in their own marginalization as a group.  Only with a competent cohesion of the public, private, and civil sectors can any fair development plan be conceived.

            Is cohesion of these sectors probable?  On one hand, the government and international community may recognize the inability of neoliberal reforms to improve the livelihood of Chiapanecos and look toward alternative development models.  Conversely, the PPP represents a stubborn entrenchment of neoliberal development.  The PPP is about the recurring blind faith that “if we build it, they will come.”  Without a new and innovative look toward governance in the region, which this plan does not elaborate upon, the results will only be the maintenance of the status quo: the marginalization and aggravation of rural Chiapans.