By Peter S. Goodman
Washington Post Foreign Service
Sunday, January 7, 2007
PEGUEROS, Mexico -- Even as his village emptied, Pedro Martin stayed behind. His schoolmates abandoned the scrub-covered hills of central Mexico for the land they called El Norte-- the North. They mopped floors in Fresno, poured concrete in Tempe and tended other people's children in Galveston, measuring their lives in dollars.
Martin worked at a poultry farm. His wages rose to 2,000 pesos per week, about $185. Meager by the standards of the north, it was enough to build a brick house with white tile floors. Enough to buy a car, and to stay in the village and watch his three boys grow, resisting the gravitational pull the United States exerts on much of rural Mexico.
"Up north, even though they pay more, you're not necessarily living as well," Martin said, as church bells echoed down lanes of pastel-painted houses. "You feel out of place. Here, you can walk around the whole town and it's comfortable. Life is easier."
But now, Martin worries that life in the central Mexican state of Jalisco is about to be shaken by globalization. Already much of Mexico's farm country has been overwhelmed by an influx of crops from the United States in the years following the North American Free Trade Agreement. Over the next two years, the final provisions of the trade pact kick in, opening Mexico to unlimited imports of poultry from its northern neighbor. Mexican farms will compete directly with an American agribusiness nurtured by subsidies on the corn that feeds the birds.
"If a lot of chicken comes in from the United States, we're not going to be able to maintain our farms," said Martin, 39. "What's going to happen? People are going to get fired. People are going to go north."
NAFTA, as the landmark trade agreement is known, was supposed to work the other way around. In the early 1990s, as politicians in the three countries of North America sold the pact, they promised it would spur enough development in Mexico to create millions of jobs, raise wages and diminish the lure of the north.
But since 1994, the year NAFTA took effect, Mexico's economy has grown sluggishly. Not enough jobs have materialized, while Mexico's working-age population has swelled. Meanwhile, the United States has been a magnet for Mexican laborers willing to take on low-paying, unpleasant work.
More than 6.2 million Mexicans now live in the United States illegally, according to Mexico's National Council of Population. Two-thirds arrived after NAFTA.
For Mexico, as for most developing countries, free trade was a gamble. It opened the world's most lucrative market, the United States, to wares produced in Mexico's factories, and to produce grown on Mexican soil. But it also lifted protections on Mexico's manufacturers and farmers, bringing an influx of products from the north.
As NAFTA's final provisions take effect next year, tying Mexico's fortunes more tightly to world markets, how will its economy adjust? And how will the latest wave of trade liberalization alter the calculations for millions of Mexicans wanting to stay home, but constantly feeling the tug of the north?Baby Boom Fuels Emigration
The demographic wave that has carried unprecedented numbers of Mexicans to the United States is the consequence of a baby boom that began in Mexico four decades ago, when improvements in rural health care allowed more infants to survive.
From 1993 to 2006, as those born during the boom reached adulthood, Mexicans of working age swelled from 34 million to 44 million, according to Agustin Escobar, a sociologist at the Center for Higher Research in Social Anthropology in Guadalajara. Over the same period, Mexico's businesses added only 8 million jobs that pay decent wages and benefits, exacerbating a backlog of about 15 million Mexicans needing work, Escobar said.
Population pressure, combined with the lifting of subsidies on the farm, sent rural Mexicans in search of higher wages. They moved within Mexico in vast numbers. Many crossed the border. By 2002, 14 percent of all people born in Mexican villages were living in the United States, according to J. Edward Taylor, an agricultural economist at the University of California at Davis. Mexicans in the United States sent home nearly $17 billion in 2004, according to the Bank of Mexico.
"If you want to buy a house, you have to go to the States," Escobar said. "People go to America to make their Mexican dream come true."
NAFTA, as the politicians sold it, was supposed to make Mexican dreams attainable at home.
Mexico's government promised that the pact would add 1 million jobs a year. But jobs have been created at roughly half that rate. Mexico's economy has grown less than 3 percent a year since NAFTA. Not even a sustained expansion of 5 percent a year would have been enough to stem the surge of immigrants headed north, given the numbers of Mexicans entering the workforce, declared the 1997 Mexico-U.S. Binational Migration Study.
NAFTA did bring Mexico foreign investment. Jobs at its maquiladoras -- export factories set up in the 1960s, mostly near the border -- more than doubled from 540,000 to 1.13 million between 1993 and 2004. But in other factories, employment has slipped and average wages have dropped by 5 percent.
Economists emphasize that any assessment of NAFTA must include the financial crisis that savaged Mexico in 1994 and 1995, sowing unemployment. Some assert that without NAFTA and the exports it fueled, Mexico's recovery would have been slower. Many also say that Mexico's government squandered opportunities for growth by failing to improve highways and ports, and by leaving unchecked the monopoly power of the national telephone company, which has kept rates for Internet access and other telecommunication services high, discouraging new ventures. While Mexico has stagnated, China has exploded, capturing factory jobs.
Oddly, border enforcement may have stifled some of Mexico's gains. In a paper presented to the Federal Reserve Bank of Dallas, Raymond Robertson, an economist at Macalester College, found that Mexico's increased foreign trade has been a factor pushing wages up at home, but that has been countered by the intensification of U.S. border security, which has kept people in Mexico, leaving more workers competing for jobs and pushing wages down.
The clearest reason why Mexico has not prospered under NAFTA is found on the farm, the workplace for about one-fourth of the population.
From 1993 to 2003, exports of American agriculture to Mexico more than doubled, climbing from $3.6 billion to $7.9 billion, according to Gary C. Hufbauer and Jeffrey J. Schott in their book, "NAFTA Revisited." Over a similar period, Mexico lost nearly 2 million agricultural jobs, according to Mexico's National Employment Survey.
Mexico's agricultural exports to the United States also surged, climbing from $2.7 billion in 1993 to $6.3 billion in 2003. Huge farms have been developed to grow artichokes, tomatoes and other produce for the U.S. market. But those farms, many launched with American investment, typically pay about $13 a day. That's not enough to keep workers from leaving: They can make three to four times as much in even the lowliest U.S. jobs.
"I'm only here because someone had to stay home and take care of our mother," said Luz Maria Vazquez, 36, as she picked tomatoes in Jalisco, sporting a T-shirt from a tavern in McLean, Va. Six of her brothers and sisters were in the United States, most of them without papers, she said.
And the growth of Mexico's export farms, though good for the owners, has had a paradoxical effect on the country's markets. Produce not good enough for American stores is trucked instead to Mexican cities, sending local prices down. On a recent morning in Guadalajara, men unloaded crates of wrinkled bell peppers arriving from the northern province of Sinaloa -- rejects from the American market. Bell peppers had been selling locally for about $13 per crate. These were $10.
Two hours south, in the village of Ejido Modelo Emiliano Zapata, Ruben Rivera sat on a bench in a forlorn plaza, rather than working on his seven-acre farm. He used to grow tomatoes and onions, hiring 150 workers to help at harvest. Now he doesn't even bother to plant. He can buy onions in the supermarket more cheaply than he can grow them. A crop of tomatoes yields less than the taxes. He lives off the $800 sent home monthly by his three sons, who run a yardwork business in Macon, Ga.
"For people who can grow huge scale for export, NAFTA has been good," he said. "For people like us, it's been a bloodbath."
In the nearby town of Tizapan el Alto, where traditionally 90 percent of local people have farmed, one-third of all agricultural jobs have been wiped out in the last five years, said Mayor Ramon Martinez.
About 200 have gained jobs assembling electronics in maquiladoras on the edges of Guadalajara, earning as much as $23 a day, nearly double farm pay. Martinez is courting investment for a factory in his town. But roads and other facilities are in rough shape, and global investment is flowing to China.
"People do really want to stay," the mayor said, but with the pull of the north, almost half his town's official population of 19,000 has decamped for the United States. "We're basically exporters of people."In the Heart of Chicken Country
Jalisco has long been one of the primary sources of Mexican immigrants to the United States. And its farms produce more than 10 percent of Mexico's poultry. What happens next year, when the tariffs come off chicken imported from the United States, could test how continued globalization is altering life on both sides of the border.
In the town Atotonilco el Alto, Sergio Garcia's chicken houses are scattered among lemon orchards and rows of blue-green agave cactus, the source of tequila. Garcia is betting that Fresko Pollo, the chicken business his father started from the back of a truck in 1950, can survive the expected American onslaught by catering to local tastes. His workers weigh chickens and slaughter only those of ideal size. He runs a chain of retail shops, where he sells marinated breasts, chicken sausages and smoked chicken prepared at his processing plant.
"I'm not so worried, because we're not just producers," Garcia said. "Despite free trade, niches remain."
But he knows he faces a formidable foe. An archetype of efficiency, the American poultry industry is dominated by enormous brands that control all aspects of production -- employing computerized feed mills that mix grains, mechanized slaughterhouses, and hatcheries that use genetic science to breed disease-resistant chicks.
At Garcia's feed mill, workers shovel grain by hand. At his slaughterhouse, a man slices throats with a wood-handled blade.
Feed amounts to nearly 60 percent of the cost of raising a chicken. For the American poultry industry, the cost has been held down, historically, by subsidies for corn production. In 2005, American cropland for corn received a range of subsidies worth more than $10 billion, according to a Washington Post analysis of data from the U.S. Department of Agriculture.
Labor, where Mexico has an advantage, makes up only about 5 percent of production costs.
Already, Garcia is feeling the pressure. Americans prefer breast meat, while Mexicans opt for dark. So U.S. poultry producers can sell leg quarters -- dark meat -- in Mexico at low prices and still make money. From January 2005 to January 2006, even though a 59 percent tariff applied to some chicken imports, the wholesale price of chicken leg quarters sold in Mexico City plunged by nearly one-fourth, according to the U.S. Department of Agriculture. Next year, as NAFTA's final provisions kick in, the door opens to unlimited imports.
"The price will fall," Garcia said. "It could drop by half."
In the village of Pegueros, a center of poultry, NAFTA is a word laden with anxiety. Corn farmers saw prices fall due to American imports, though demand for ethanol in the United States, made from corn, is now sending prices up. Dairy farmers have been decimated, a trend expected to intensify next year as protections on powdered milk expire.
The forces of trade have laid waste to the Mexican dream of Trino Franco, who came home three years ago to launch a dairy business with his three brothers after more than a decade in the north. He poured $40,000 into the venture -- everything he saved in Los Angeles, where he parked cars at a 24-hour gym from six in the morning until two in the afternoon, then worked security at a hotel until 11 at night.
But the price of milk has dropped by nearly one-fifth in the last year. The farm has lost money, forcing Franco, 38, to take a job as general manager at a larger dairy operation. He earns $200 a week, enough to keep him home with his wife and baby. For now.
"You can't see a good future in this area," he said. "That's why so many people cross the border."
Pedro Martin, still at home while so many friends and relatives make their lives in another country, is intent that his three boys -- 13, 8 and eight months -- stay in Mexico. On a recent morning, as firecrackers boomed in salute to Mexico's patron saint, Guadalupe, a procession of shiny SUVs pulled into Pegueros, their license plates advertising the riches of Texas, Virginia and California. People were returning for Christmas.
Martin professed no envy. His sister and her two boys are crammed into an $1,100-a-month apartment in San Francisco. The boys have to work to help pay the rent. "They're thinking of returning," Martin said. His own boys are growing up with the fresh air and broad vistas of Jalisco.
But in the adjacent town of Tepatitlan, the people in control of the poultry farms are fretting. They are organizing into cooperatives to improve their bargaining position as they brace for a flood of imports next year. The well-trod path to El Norte is never far from their minds.
"If there are corn subsidies in the United States and none here, we're dead," said Lorenzo Martin, president of the Tepatitlan Poultry Farmers Association and the head of one large producer. "If the U.S. starts selling things extra cheap outside the U.S., then it won't just be small farmers and individuals who will be leaving. It will be people like me."
Database Editor Sarah Cohen contributed to this report.