Contract Farming and Small-Scale Producers: Non-Traditional Vegetable Exports from Mexico*

By Huacuja, Flavia Echánove | Ibero-americana, January 1, 2006 | Go to article overview
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Contract Farming and Small-Scale Producers: Non-Traditional Vegetable Exports from Mexico*

Huacuja, Flavia Echánove, Ibero-americana


Mexico is an important producer of fresh vegetables and the third largest exporter worldwide. Although exports of these crops represent only a quarter of the total volume produced, they account for 70% of the value exported by the agricultural sector. Their exportation is realized by large, vertically integrated farmers, occasionally partnered with U.S. capital, as well as by agroindustrial firms, both national and transnational. Small-scale producers participate in these commodity chains, frequently under the contract farming scheme. However, the presence of those farmers is more important when the crop is destined for the internal market, due to, among other reasons, the lesser demand for quality in this sphere.

Contract farming may be defined, according to Roy ( 1972:3), as any oral or written agreement reached between direct producers and any of a wide range of agents (wholesalers, processors, retailers, packers, producer organizations, and public-sector enterprises), through which various aspects of the production and marketing of agricultural produce are regulated. Although, to differing degrees, those agreements involve a direct or indirect control over the productive process (Watts 1994a: 26-28; Key and Runsten 1999: 383; Raynolds 2000: 441), which differentiates them from other types of contractual relationships, such as sharecropping and purchase-sale agreements.

By means of contract farming, agroindustrial firms and other agents control, as never before, both agricultural production and the decisions of the farmers, a fact defined by Watts (1994b: 6) as "a form of industrial appropriation". The growers, who previously enjoyed independence, choosing, for example, which types of seeds, fertilizer and pesticide to use, and who sold their produce in the local market, are being progressively integrated into the food industry, in the process, weakening the link between farms and consumers (Perry and Banker 2000: 50). That is, the what, how, when, how much, and for whom to produce are now determined outside of the agricultural sector. However, more and more frequently, agroindustry is dominated, in turn, by agents located one link forward in the commodity chain, such as retailers (supermarkets), fast food chains and restaurants, as diverse case studies have demonstrated (Burch and Goos 1999; Dolan and Humphrey 2000; Echanove 200Ia; Rickson and Burch 1996; Lyons 1996).

Contract farming has rapidly expanded throughout the world during the last decades (Lawrence 1999; Little and Watts 1994; Raynolds 1994, 1997, 2000, 2002; Vellema 1999; McKenna et al. 1999; White 1997; Morvaridi 1995; Dolan 2001; Collins 1993; Little and Dolan 2000; Teubal 1995; Glover and Kusterer 1990; Grossman 1998; Gwynne 1999, 2000; Singh 2000; Winson 1990; Ruben et al. 2001; CEPAL 1995; llyse 1992). In Mexico, such labor agreements prevail in the production of tobacco, sugar, poultry and hogs, grain seeds, barley, yellow corn, certain varieties of wheat, and fruits and vegetables for export. The Mexican government promotes the contracts as an alternative to the market and credit problems that face the farmers, just as, at a global level, diverse organisms, such as the World Bank and the International Monetary Fund, have done.

The objective of this article is to analyze the contract farming practiced in the case of a non-traditional product: fresh broccoli for exportation. This crop, which figures among Mexico's ten principal exports, is produced in Guanajuato, an important horticultural entity of this country. We choose for our case study, the small-scale farmers (those who farm up to 10 hectares), located in the municipality of Valle de Santiago. The majority of them are ejidatarios1, members of the ejidos of Rincon de Parangueo, San Isidro, Presa de San Andres, San Nicolas and Mogotes. In this geographical scope, we investigate the characteristics of the contract fanning practiced and its effects (positive and negative) on the producers and the region.

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Contract Farming and Small-Scale Producers: Non-Traditional Vegetable Exports from Mexico*


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