The Contract Farming and the Agribusiness in Mexico

Abstract

The objective of this article is to make clear the significance of the contract farming system in Mexico by means of some detailed case studies. The contract farming system usually involves the developed countries' agribusiness and farmers in rigid contracts with respect to their agricultural production and supply of agricultural products. It has often attracted researchers' attention as a strategy of the rural development in less-developed countries, and was formulated as "the core-satellite model" by Arther Goldsmith (1985). The case studies in this article deal with production of asparagus and strawberry. These crops have been grown for exporting abroad from Mexico since the beginning of their production. Both the production and export of these crops have remarkably increased since the 1960s. They are mainly exported to the United States and other developed countries. In the States of Guanajuato and Michoacan, which are the prime producers of these crops in Mexico, the large-scale farmers concentrate a large proportion of the total sales of farm products, irrigated land, farm laborers, and so on. One of the case studies investigates the contract farming of asparagus in Bajio Vally (in the State of Guanajuato), the other analyzes that of strawberry in Zamora Vally (in the State of Michoacan). These case studies make it clear that the most advanced technologies in agriculture have been introduced to Mexico through the contract farming there, and as a result of this, the productivity of the Mexican agriculture has been unambiguously enhanced. The large-scale farmers have further increased the number of their farm laborers and enlarged the scale of cultivation. The small-scale farmers, by contrast, have little opportunity to share the benefits provided by the contract farming. On the other hand, the contract farming system enables the agribusiness to command farmers' production by holding the channels of sales, furnishing credit in kind, and rigidly controlling the production process in agriculture. The agribusiness can also extend their sphere of activities into the farm supplying industries. In short, the contract farming system functions as one of the new ways of comprehensively controlling agriculture by the agribusiness, and creates a new form of the evolution in capitalistic agriculture. Completely commercial agricurture is operated under the total control of the agribusiness, for the purpose of sales in the world market, with the most advanced technologies applied.