Rural Social Policy in Mexico

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Panorama of Rural Social Policy in Mexico

International Policy Center for Inclusive Growth

Ryan Nehring

BrasíliaSeptember 2011

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Objective and Overview

• Provide a summary of Mexico’s rural social policy framework and brief analysis

• Link policy objectives and outcomes with food security and rural poverty

• Establish a broad understanding of the overall policy perspective within Mexico’s rural development approach

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Primary Programs

-PROGRESA-Oportunidades (1997/2002)

-Apopyo Alimentario/Abasto Rural (1972/2007)

-PROCAMPO (1993-2012)

-MasAgro (2011)

-Programa Especial de Seguridad Alimentaria (PESA) (2002/2005)

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Poverty and Food Security: The Mexican Context

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Programa de Apoyo Alimentar/Abasto Rural*

• Apoyo Alimentar offers social protection in the form of a food basket **(valued at MX$150) or a direct cash transfer of MX$150 to families in marginalized localities with little access to schools or clinics (Oportunidades).

•The beneficiaries become eligible based on SEDESOL’s criteria of poverty and CONAPO’s designation of the locality’s status of marginalization.

•The food basket and subsidized household goods are available at óne of the country’s 23,000 Diconsa stores.

•In the instance of little access to a Diconsa store, the Apoyo Alimentario becomes a cash transfer for direct purchase of food (5%)

•Additionally, the program offers nutritional classes however they are unconditional upon recieving the food or cash

**The food basket consists of the following: powdered fortified milk (8 packages of 240 gr. each), beans (2 kg), rice (2 kg), corn flour (3 kg), soup pasta (6 packages of 200 g), vegetable oil (1 lt.), cookies (1 kg), corn starch (100 g), chocolate drink in powder (400 g), cereals (ready-to-eat) (200 g), and sardines (2 cans of 425 gr. each)

* Budget: US$475 Million

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PROGRESA/Oportunidades

• One of the first CCT’s in the world (Bolsa Familia in Brazil, 4P’s in Philippines, etc.)

- Provides a cash transfer to eligible families (female head of household) under conditions based on three components: health, education, nutrition.

- Targeting is based on the popular proxy-means test

- Beneficiaries cannot recieve other welfare assistence (with the exception of PROCAMPO)

-Consumption results of immediate cash assistence provide short-term investments in nutrition and immediate food security

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PROCAMPO*

• Reason for Implementation: - Developed for farmers (specifically smallholders) to have access to assistance for transition to competetive markets (NAFTA) - Increase technological innovation on their farms and more marketability and expand productive investment - Remains as Mexico’s largest agricultural support mechanism in absolute terms• Tools: - Provides cash on a per hectare basis for growing nine staple crops: maize, beans, wheat, cotton, soybeans, sorghum, rice, barley, safflower and barley.-Payments can be made up to two times a year due to Mexico’s availablility of two growing seasons but this is usually limited to a farmer’s access to irrigation -Each season after planting, the farmer goes to one of the country’s 700 CADER offices and provides proof of planting to recieve a check (averaged US$329 per recipient and US$68 per hectare)-Future payments can be used as collateral in obtaining additional private lines of credit-Long-term investments and decreased credit constraints result in an income multiplier effect and long-term relief in food security • Smallholders and Ejiditarios: - Over 80% of Ejiditarios participate in PROCAMPO with an average land size of 5.2 hectares. - However the programs method of providing a uniform payment per hectare results in the program’s recipients of a farm size under 5 hectares compromising 45% of recipients but only recieve 10% of total funds- 90% of payment recipients are men *Budget: US$ 1 billion

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MasAgro (2011)

.• Objective:- To increase the role for traditional sustainable agirulcuture to combat raising global food prices, food security, and climate change through increased yeilds in corn and wheat.

-Tools: - Utilize new seed varities for smallholder use and reactivate technological exchange and capacity building between small-scale producers

-Budget:-US$50 Million over 10 years

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PESA (Programa Especial de Seguridad Alimentar*

• Objectives: •Increase production•Promote regional food security (sufficient nutritional access) and sustainable agriculture•Promote innovations and technological advancements to transform productive models for income generation •Generate local business to foster employment and increase local income

-Components: - 1st

i. Institutional capital – development and acquisistion of informationii. Local analysis of oportunidies/limitations/capacity buildingiii. Study of local economies (microfinancing, local markets, mobilization of local funds and

accounts for project implementation, productions potential, support of rural livelihoods) - 2nd

i. Utilize local command and technical agents to integrate specific subprojects ii. Capicity building of some family or community members to participate in administration

and implementation of projectsiii. Evalute the effects on local communities on the effect of executed projects

* Budget: US$ 135 Million

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Actors in PESA

The Operation of PESA is based in active participation and aligns the three actors in a determined purpose of alleviating poverty and promoting food security

1.- Operation Group PESA1.- Operation Group PESASAGARPASDRUTN

2.- Development Agency2.- Development Agency Promote Identify Oversee

3.- Rural Communities 3.- Rural Communities Community Organizations

Local Management Community Promoters

Operative StrategyOperative Strategy

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Micro-regional Development Strategy

1. Activate Society• Community Organization• Identify and Formulate Leaders

2. Reactivate Microregional Economies1. Development Local Markets

• Productive Growth• Microregional Food Security• Development of Local Financial Entities

2. Utilize Local Resourses • Design Productive Models• Reduce the use of external inputs• Lower-energy consuming models• Transformation of the productive system for the

generation of wealth3. Employment Creation

• Develop entrepreneurship• Develop smallbusinesses through transformation

and commercialization

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Participatiing Municipalities

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Trajectory of Rural Mexico

Source: Ifad: www.ifad.org

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Banxico (2006), Remesas familiares, in www.banxico.org.mx

Calva, J. (2005) ‘México: la estrategia macroeconómica 2001-2006. Promesas, resultados y perspectivas’, Problemas del desarrollo, 36(143).

Delgado Wise, R., H Márquez and H Rodríguez (2004), ‘Organizaciones transnacionales de migrantes y desarrollo regional en Zacatecas’, Migraciones internacionales, 2(4.

Federal Government of Mexico, CONAPO, www.conapo.gob.mx

Federal Government of Mexico (2007),”Plan Nacional de Desarrollo: 2007-2012”, Gobierno de los Estados Unidos Mexicanos, Presidencia de la República

Federal Government of Mexico, PESA, http://www.utn.org.mx

Federal Government of Mexico, Oportunidades, www.sedesol.gob.mx

Federal Government of Mexico, SAGARPA, www.sagarpa.gob.mx

Food and Agricultural Organization of the United Nations (FAO), www.fao.org

International Fund for Agricultural Development, www.ifad.org

International Maize and Wheat Improvement Center, www.cimmyt.org

Rangel Faz, Gabriela (2009), “Programa de Apoyo Alimentario 2009: Evaluaciones, Resultados y Presupuesto 2010”, (CEDRSSA)

Ruiz-Arranz, M., B.Davis, S.Handa, M.Stampini, P.Winters (2006), “Program Conditionality and Food Security: The Impact of PROGRESA and PROCAMPO Transfers in Rural Mexico”, Revista EconomiA: Brasilia, 7 (2), p.249–278 Skoufias, Emmanuel, Mishal Unar, Teresa Gonzalez-Cossio (2008), “The Impacts of Cash and In-kind Transfers on Consumption and Labor Supply”, Policy Research Working Paper 4778, The World Bank, Washington D.C. Winters, Paul and Vera Chiodi (2011), “Human Capital Investment and Long-Term Poverty Reduction in Rural Mexico”, Wiley: Journal of International Development 23 (4), 515-538.

References

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•Job creation has fallen short of government goals every year since 1995

•Average economic growth of only 1.87 percent annually between 1982 and 2009

•the informal sector grew by almost 50 percent, from 17.32 million to 25.78 million workers

•the formal sector represented just 40.1 percent of the economically active population in 1991 and dropped to 39.8 percent in 2006

•Liberalized trade policies continue to plague Mexican agriculture and incidence of volitility in domestic food prices

• NAFTA (North American Free Trade Agreement):“dumping margins” for eight agricultural goods – corn, soybeans, wheat, rice, cotton, beef, pork, and poultry – all of which are heavily supported (directly or indirectly) by the U.S. government

•Gini Index (inequality) remains high

•Unable to locate information on origins of Diconsa’s products from ag. to hygiene products, only prices

•Examples of MasAgro and PESA were few and far between. Concrete numbers on PESA were almost non-existant.

Points of Discussion, Criticisms, and limitations

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Thank You!

Questions and Comments are welcome!

Ryan Nehring [email protected]