El Mercado Paisano Opportunities for Small-Scale Mexican Producers in the U.S. Nostalgia Market

A Report for the Rockefeller Foundation by Rick Mines, Ph.D. Sandra Nichols, Ph.D.

September 14, 2005

Under the auspices of: The California Institute for Rural Studies 221 G Street, Davis, CA 95616-4550

Note: This report is intended for internal use only by the Rockefeller Foundation. For additional information please contact Rick Mines ([email protected]) or Sandra Nichols ([email protected]). TABLE OF CONTENTS

Acknowledgements...... i Introduction: The Dilemma of Nostalgia Markets...... 1 Section I: Background...... 3 Overview of Nostalgia Markets...... 3 What are the Products? ...... 3 How Important are These Markets?...... 4 Why Focus on Small Producers? ...... 6 Tools of Analysis to Determine the Benefits to Small and Medium Producers of the Nostalgia Market...... 6 Region Specificity...... 6 Specialized Products ...... 7 High Costs of Entry ...... 8 Product Chain...... 8 The Workings of Nostalgia Markets...... 9 Problems with the Nostalgia Market Small-Scale Producer Model as a Motor for Development...... 14 Section II: Examples and Case Studies ...... 16 Examples of Locality-specific Products ...... 16 Appeal of Locality-specific Products...... 16 Pinole Jerezano ...... 18 Additional Challenges Facing Small Producers ...... 20 Expanding the U.S. Market for Localized Products ...... 20 Mexico-wide Generic Products...... 21 Lessons from the Mexico-wide Market ...... 25 Case Studies...... 26 Oaxacan Foods Case Study...... 26 Emergence of Oaxacan Food Merchants ...... 29 Growth in Demand for Oaxacan Foods ...... 31 Methods of Importing ...... 33 Product Chains: Tlayudas ...... 33 Product Chains: Mole ...... 35 Other Oaxacan Products ...... 38 Clothing and Crafts...... 39 Impact on Home Regions...... 39 Opportunities...... 41 Constraints and Challenges...... 42 Charro Gear Case Study...... 43 The Charro and the Sport of Charrería ...... 43 Charro Equipment and Attire...... 45 Growth of U.S. Charrería...... 47 Production of Charro Goods ...... 50 A Case of Local Production...... 51 Charro Goods in the United States...... 52 Methods of Importing ...... 53 Impacts on Home Region...... 54 Constraints to Growth...... 55 External Intervention ...... 55 Role of the government...... 55 Role of the Federación Mexicana de Charrería ...... 55 Producer organizations...... 55 Fresh Produce Exports Case Study—Models for Small Producer Wealth Capture by Heavily Migrant and Remittance-Rich Areas in Rural Mexico...... 56 Introduction...... 56 Prickly Pears (Tunas) in Zacatecas...... 57 History of exports to the United States...... 57 Organization of producers...... 57 Role of the government...... 58 Cost structure ...... 59 Export methods ...... 60 Packers’ share ...... 61 Investment and help from the U.S. side...... 61 Impact on the home region ...... 62 Mangos of Lombardía, Michoacán...... 62 History of exports to the United States...... 62 Organization of producers...... 63 Role of the government...... 65 Cost structure, packers’ share, investment from U.S. side, and methods of export ...... 65 Impacts on the home region...... 68 Another attempt to bring in Michoacano mangos...... 68 Edible Tubers from Tuxtepec, Oaxaca ...... 69 History of exports to the United States...... 69 Organization of producers...... 69 Role of the government...... 70 Cost structure and export methods...... 70 Packers’ share ...... 72 Investment and help from the U.S. side...... 72 Impact on the home region ...... 73 Vegetable Production Under Cover in Izúcar de Matamoros, Puebla...... 73 History of exports to the United States...... 73 Organization of producers...... 73 Role of the government...... 74 Cost structure ...... 74 Export methods ...... 74 Investment and help from the U.S. side...... 75 Packers’ share ...... 75 Impact on the home region ...... 75 Comparisons Across the Fresh Produce Case Studies...... 75 Ayoquesco Nopal Leaf Exports Case Study...... 77 Background...... 77 Project to produce Oaxacan food products ...... 78 Role of migrants...... 80 Some lessons from the Ayoquezco case ...... 82 Section III: Recommendations...... 86 Types of Assistance ...... 86 Business development services...... 87 Logistics of exporting and importing...... 88 Growing the Market for Localized Products ...... 89 Protecting Localized Products from Generic Competition...... 90 Producer Associations...... 91 Fair Intermediaries...... 92 Unique Marketing Opportunities ...... 92 Mexican Immigrant Businessmen Mentoring Program...... 93 Opportunities for Government, Business, and Philanthropy ...... 93 Bibliography ...... 95 Appendix I. Nostalgia Products and Services...... 98 Appendix II: Methods...... 101 ACKNOWLEDGEMENTS

The willingness of Mexican immigrants to meet with us—businesspersons, professionals, leaders of hometown associations, entrepreneurs large and small, and consumers of hometown products—enabled us to gather the information contained herein. Without the cooperation, insights, voices and concerns of so many, this report would not have been possible. We are immensely grateful to them for their generosity, time, and valuable information.

In particular we would like to acknowledge the assistance of Felipe Delgado, Sara Zapata, Arturo Aguilar and Pedro Sandoval for arranging appointments and gathering people together to meet with us in Los Angeles. Mexican government officials, in both Mexico and the United States, were also extremely helpful. We especially want to thank Bernardo Mendez and Sylvia Sevilla, of the Mexican Consulates in San Francisco and Los Angeles, respectively, for taking time out of their busy schedules to provide information and introductions.

Our Mexico-based researchers were most helpful in affording us a better understanding of the Mexican side of this transnational phenomenon. In Zacatecas, Dr. Rodolfo García Zamora, of the Univesidad Autónoma de Zacatecas, kindly arranged for two of his students to undertake data collection on our behalf. Eduardo Chávez gathered extensive information on charro gear while Delfina Martínez investigated tuna (prickly pear) production. Meanwhile, in Oaxaca City our colleague Dr. Maria Elena Martínez employed her considerable research skills and ingenuity to obtain information on the production and export of various Oaxacan food specialties.

Our colleague David Runsten, Associate Director of the North American Integration and Development Center at UCLA, has a longstanding familiarity with the Oaxacan transnational experience, and we are grateful to him for supplying the Ayoquesco Nopal Leaf Exports Case Study, which we have included in Section II. In the course of this work, we met with hard working Mexican immigrants whose devotion to improving conditions in their home regions was inspirational. We are grateful to the Rockefeller Foundation for requesting and supporting this study, and it is our sincere hope that this report will pave the way for positive changes in the migrants’ home communities in Mexico. El Mercado Paisano Mines and Nichols

INTRODUCTION: THE DILEMMA OF NOSTALGIA MARKETS

The small, often family-run businesses that produce goods to export to the Mexican émigré community in the United States are often bit players in the “nostalgia” market dominated by more powerful economic actors. These small-scale producers face steep barriers to deeper and wider participation in this potentially enormous market—these barriers are the familiar ones facing many small Third World firms that frequently operate outside the formal economy. The producers lack basic business capacity and education. Most have deficits in accounting and organizational skills, an inability to comply with official regulations both in Mexico and the United States, and a lack of inexpensive transportation to get their goods to market. Furthermore, these producers are largely unfamiliar with collaborating amongst themselves in order to gain protection from sophisticated and astute merchants and buyers. In effect, in most cases the intermediaries that take their goods to market—and large processors and manufacturers—are able to capture the majority of the benefits, leaving little for the small firms in the product or value chain. The benefits for small producers under current circumstances are minimal. As a result, the potential for improving living standards and of reinvestment by local actors leading to regional economic development for the areas of origin of the migrants is usually weak.

On the other hand, there are important exceptions to this general tendency. The problem for small producers is that they must accept the prices determined by others. Whether they are negotiating with firms that process goods they produce, with manufactures who buy their produce, or with intermediaries who ship and sell their goods, they usually have to accept the price dictated by stronger actors. However, we encountered cases in which the producers made specialty items desired by their paisanos north of the border that could not be easily duplicated by others. We also found cases where producers had organized among themselves to resist price exploitation. In these cases, the producers are able to set prices and capture a greater share of the benefits generated by these markets. (In Section II, we provide details of several instances of relatively successful undertakings that could serve as models.)

1 El Mercado Paisano Mines and Nichols

In Section I below, we give an overview of the nostalgia markets, defining the products and their importance. We further explain our focus on small producers as potential engines of local development. We attempt to delineate some organizational tools to help navigate this complex universe of economic activities that fall under nostalgia markets. Next, we tie together the context for the examples and case studies provided in a later section by using our tools of analysis. And, finally, we describe in some detail the obstacles facing small producers so the reader can appreciate the difficult economic and social environment that producers face.

In Section II, we present in detail various case studies and examples that are best suited for explaining our findings. These include descriptions of the locality specific markets, the Mexico-wide generic markets, and case studies and examples of a wide range of markets. Finally, we briefly cull certain policy and program recommendations from our work.

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SECTION I: BACKGROUND

OVERVIEW OF NOSTALGIA MARKETS

What are the Products?

Nostalgia markets (el mercado paisano) consist of products and services purchased in the United States that remind Mexican (and other Latino) immigrants of their life back home.1 These products and services are not only produced in Mexico. Many are produced in the United States and, at times, in third countries that seek to imitate these products.

Probably the largest single group is food and beverages. The many fresh fruits and vegetables, moles, sweets, tortilla products, cheeses, herbs, seeds, and specialty meat products have familiar tastes and are extremely popular in the immigrant community (See Appendix I for a detailed list). Also, familiar alcoholic beverages, soft drinks, and fruit juices are quite popular. Even Mexican cigarettes have a market north of the border. In addition, there are a series of clothes and embroidered products that remind people of their place of origin and affirm their identity, including blouses, embroidered dresses, rebozos (shawls), and charro (rodeo) outfits. Crafts such as jewelry, purses, wall hangings, and clay and wood products, including furniture, evoke familiar recollections for many immigrants. Services such as horse trainers, instructors (dance, horsemanship, language, etc.), music and video recordings, and live performances of visiting Mexican artists bring back memories for immigrants and strengthen cultural identity.2

Another category of goods and services could be considered a nostalgia product as well—the tourist and festival producing industry that targets visiting U.S. resident Mexicans. While we allude to the products people purchase on visits home in “Examples

1 In Spanish we use the terms mercado paisano and productos paisano because a number of informants expressed reservations about the use of the term nostalgia, with its suggestion of excessive sentimentality and a lack of stoicism. Paisano or countryman, on the other hand, has a congenial ring to it. 2 Many recent or even long-term immigrants to the United States feel alienated and isolated from friends and family and from experiences with which they are familiar. The products obtained from their home localities arouse strong feelings and emotions that help connect them to the life they left behind. 3 El Mercado Paisano Mines and Nichols of Locality-specific Products” (Section II), we did not gather information on the very large tourism sector.

How Important are These Markets?

The growth in the number of both undocumented and total Mexican-born individuals (first generation Mexicans) in the United States has been extraordinary in recent years. We can demonstrate this in two ways. First, we use administrative data. The number of Mexicans who were legalized during the 160 years from 1820 to 1980 was 2.2 million. In contrast, in the 25 recent years from 1981 to 2004, 4.6 million were legalized.3 In other words, on average 180,000 Mexicans were given legal papers every year during the last 25 years. But these administrative data are insufficient to show the true size of the expansion of the population living in the United States because much of the population (the majority in the last decade) is in the country without legal documents. To describe this population, we use estimates made by Pew Hispanic Trust. These data are calculations based mostly on Census data and Current Population Survey data. Pew estimates that the total population of Mexican-born individuals living in the United States in 1980, including both legal and illegal, was about 2.2 million people. Pew estimates that just 25 years later in 2004, the population of Mexicans rose to 10.6 million.4 These numbers do not include any children born in the United States and anyone else who is not a Mexican national.

If these estimates are true, the Mexican-born individuals living in the United States represent 9% of the total population of all Mexicans living in Mexico and elsewhere. Moreover, these Mexicans living north of the border have a disproportionate share of the purchasing power of all Mexican wage earners living in both countries. This is true because a very high proportion of the Mexican-born individuals living in the United States are employed adults.5 Perhaps 7 million Mexican-born individuals are

3 See: http://uscis.gov/graphics/shared/statistics/yearbook/2004/table2.xls 4 For more complete details see Passel, Jeffrey, “Unauthorized Migrants,” http://pewhispanic.org/files/reports/46.pdf. 5 At least two thirds of the children of Mexican immigrants to this country were born in the United States. See National Agricultural Workers Survey data. R. Mines, “Children in Immigrant and Nonimmigrant 4 El Mercado Paisano Mines and Nichols economically active in the United States, compared to 40 million in Mexico.6 And, since the income of Mexicans employed in the United States is far higher (perhaps seven times as much)7 than Mexicans employed in Mexico, a very high proportion of the purchasing power of all Mexican-born individuals (maybe as much as half) is held by those living north of the border.8

Born in Mexico Other Hispanics

45 40 35 30 25 20 15 10 5 0

The U.S.-based Mexican-born individuals with this large purchasing power also have characteristics that make them prone to buy Mexican or Mexican-style products. Nostalgia products have the largest appeal among first-generation immigrants.9 Namely, since the vast majority of first-generation Mexican-born individuals remain working class individuals, learn little English, and do not assimilate fully to U.S. culture, they retain

Farmworker Families,” in Children of Immigrants, D. Hernandez, editor, National Academy Press, Washington, DC, 1999, pp. 620-656. 6 See IMMS statistics: http://www.imss.gob.mx/NR/rdonlyres/BE18F965-8F4E-4236-8358- 9BD3CF9EFC32/0/1.pdf 7 See “Pequeñas Empresas, Productos Etnicos, y de Nostalgia, Oportunidades en el Mercado Internacional,” Marian Cruz, et al, CEPAL, 2004, Mexico, D.F. , p. 16, cuadro 3. 8 It can be argued that many second generation Mexicans are increasingly interested in Mexican products. The parent generation is trying to involve their native born children in alternatives to what is considered “destructive” behaviors. Charreria and the celebration of traditional holidays are two examples. Compared to a generation ago, many Mexican immigrant neighborhoods are predominantly Spanish speaking due to their size. This has obligated second generation Mexicans to retain their language and cultural skills opening them to an interest in nostalgia products. 9 This information came directly from two informants: one an executive for a large manufacturer specializing in products aimed at Hispanic consumers, the other a buyer for a large chain of Latino markets in southern California. 5 El Mercado Paisano Mines and Nichols their preferences for Mexican or, at least, Mexican-style products. In sum, a very large demand for Mexican-style products exists in the United States. And, since the population of Mexican-born individuals is predicted to continue to increase at a fast pace, the demand north of the border for these products will grow to even higher levels.

Why Focus on Small Producers?

The purpose of this study is to carry out a preliminary investigation into the possibility of stimulating local development in Mexico by encouraging small producers to benefit from the development of nostalgia markets in the United States. It is assumed (but not yet tested) that if the wealth created by small-scale producers (and their friends and relatives living in the United States) can be captured by community actors, then investment and job creation in the places of origin of the migrants will be enhanced. Below, in our case study presentations, the reader can see the potential for growth if the technology, marketing relationships, and infrastructure are appropriate for local growth.

TOOLS OF ANALYSIS TO DETERMINE THE BENEFITS TO SMALL AND MEDIUM PRODUCERS OF THE NOSTALGIA MARKET

The nostalgia market for products that evoke the familiar trappings of home can be analyzed in many ways. As we seek to determine how small-scale producers at the community level in Mexico can better benefit from these markets, it is useful to organize our thinking according to the following categories. These categories will allow us to systematize our analysis of various case studies elaborated below and facilitate their generalization to a wider set of examples.

Region Specificity

One important organizational tool is the degree of local appeal to the consumer market. Some products have appeal because they come from a very narrowly defined geographic area. For example, cheeses from a particular canyon or municipality (e.g., El Teul, Zacatecas) may have a very restricted market among the small group of natives from that area living in the United States. These are locality-specific products. Other products have an appeal for natives of a somewhat larger geographic area—these areas may stretch across state lines in Mexico. We can call these culture-specific products. Where the 6 El Mercado Paisano Mines and Nichols product comes from is less important than quality and design expectations, as in the case of charro gear and music aimed at a particular geographic audience in Mexico. Music sung in Mixteco would appeal only to people from certain areas of Oaxaca, Puebla, and Guerrero.

Another example is the tlayudas, large dried tortillas of the Zapotec region of Oaxaca. Demand for these tortillas applies almost exclusively to a large group of immigrants from Zapotec areas, most of whom live in California. The example of the charro attire, equipment and accessories fits into this category, too, since the sport appeals mostly to natives of Zacatecas, Durango, and Jalisco. A third type of product has appeal to many or most first-generation Mexicans regardless of where they are from. We can call these Mexico-wide products. These Mexico-wide (generic) products have national appeal within Mexico. Examples of these are canned jalapeño peppers, mole poblanos, bakery goods, and various cheeses that are now a staple in Mexican homes like Queso Cotija, Casero, and Oaxaca. What matters is price and brand recognition. Examples include Herdez, Bimbo, and El Mexicano canned and packaged goods, as well as fresh produce such as mangos, prickly pears, nopal, and chiles.

Specialized Products

Another way to look at nostalgia products is by the specialization of production. Some specialized products require a home or family-based processing procedure before shipping across the border. Examples of this are the tlayudas, moles, pinoles, home- made cheeses, many charro products, and much of the local music. The producers in these examples retain control over the quality and feel of the final product and, therefore, have the potential for retaining some control over the price they obtain. However, when the products are generic, if small producers supply the inputs, they do not control the traits of the final product and it is difficult for them to determine prices. These generic products can be of two types. Some are fresh agricultural products that are harvested and packed in low technology packinghouses and shipped north, such as mangos, prickly pears, and papayas. Others, like jalapeño peppers, are processed in sophisticated manufacturing plants before being shipped to the United States.

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High Costs of Entry

Another way to classify these products is by the sophistication of the manufacturing process. Many of the generic products mentioned above have very high costs of entry and require very elaborate and sophisticated manufacturing, storing, and shipping facilities. These include the canned goods and bottled drinks produced in Mexico and the large quantity of these goods produced in the United States and intended for the first- generation Mexican population. These products may represent the majority of all nostalgia products. Small producers cannot obtain a price setting position in these markets under current circumstances.

Product Chain

A final way to organize our thinking about the nostalgia product market is by the nature of the product chain through which the product moves before reaching the consumer. On one extreme, we have back-and-forth U.S. migrants who, on a yearly basis, fill their trunks in Mexico with cheeses, moles, and artisan products that they buy directly from producers and small retailers in their home regions. These buyers cross the international line with the product themselves. Once in the United States, they consume or give away the product to friends and relatives. Another form of the same type is when small producers ship products through small package services (paqueterías) to their friends, relatives, and customers in the United States. Other product chains are a bit more complicated but still quite simple. For example, in the charro product lines, many buyers go down to Mexico several times a year, buy their products from known producers, deal with the customs themselves, and sell the products at charreadas (rodeos). In many markets, producers or buyers ship the product to the border where a small-scale entrepreneur will come and pick up the product. We can call these chains hormiga transfers (transfers in the hands of individuals transporting small quantities).

But, there are also much more complicated product chains that we can call large-scale formal transfers. The fresh fruit producers must sell to packinghouses who then sell to distributors who buy and ship the product to retailers north of the border. The distributors usually hire customs brokers to manage the border and make sure that the

8 El Mercado Paisano Mines and Nichols proper inspections are done in Mexico by the U.S. Food and Drug Administration (FDA) and U.S. Department of Agriculture (USDA). In the canned, packaged and bottled goods that come from Mexico and are marketed in grocery stores, both large and small, usually distributors arrange for the purchase, transportation, customs brokering, and distribution of the products. And, of course, those firms that mass produce for the nostalgia market in the United States (e.g., Herdez with its canned goods and Bimbo with its bakery goods) work directly with retailers or sell to large distributors. The intermediaries in these chains of production, when they are large and sophisticated, are in a strong bargaining position when they purchase products from small-scale producers.

In order to understand the potential benefit to communities, we need to stay cognizant of the nature of product with respect to the localness of its appeal, the specialized nature of production, the sophistication of the manufacturing process that puts a high barrier to entry, and the nature of the product chain in which the product moves to market. These factors will determine what possible interventions might be effective in attempting to retain as large a share as possible of the wealth in the hands of the community-based small- and medium-scale producers.

THE WORKINGS OF NOSTALGIA MARKETS

The interest in nostalgia markets derives from its potential to bring rewards to the small- or medium-scale producer. Often small-scale producers, due to barriers such as lack of training, low education level, and lack of credit and information, find themselves as fragmented price-takers confronting well-organized, financially strong and astute middle men or processors who can manipulate prices to the disadvantage of the family, small-, or medium-scale enterprise. The assumption here is that the community is likely to benefit if the small-scale nostalgia product producer can keep a significant share of the wealth created by the production, processing, shipping, and selling of the product. The community-based entrepreneur is more likely, in the first instance, to be employing community members. He or she is also likely to re-invest whatever profits are made in the home region and thereby generate employment, spurring multiplier effects for the local economy. In this section, we look at some examples gathered from our interviews

9 El Mercado Paisano Mines and Nichols through the lens of our tools of analysis to describe how the profits in the nostalgia market industry are distributed. In a subsequent section, we will provide case studies giving detailed examples of the outline presented here.

The nostalgia consumer market perhaps has its most intense appeal at the local or small community production level. Namely, the appeal is strongest when the immigrant identifies the product as locality specific. And it is at this most localized level that the small producers are most likely to keep (and not share with others) the benefits of the production. The barriers to entry in these sectors are relatively small. One has to have access to animals, milk products, or food or raw material inputs. Many of the products can be made at home. For this reason, manufacturers or processors cannot lower prices to levels that undercut the small producers. Also, the product chains are very simple and are not subject to manipulation by ruthless intermediaries. The products are usually taken across the border in the trunks of cars or mailed to relatives or friends by paquetería. Unfortunately, this level of the consumer market—locality-specific—is quite small. It is limited in scope by the size of the network of people from a given locality. In addition, the quality of being from a specific village or town, while attractive to those from those localities, limits a product’s appeal to a wide-range of potential customers. As a result, although producers are likely to stimulate economic activity with whatever profits they make, the limited market restricts this positive impact.

Examples of this activity are the cheese producers of the Cañon de Tlatenango, Zacatecas. These cheeses are not inspected by the USDA, and the producers do not have to worry about price-gouging intermediaries. However, they can only sell what their fellow townsmen can take away in their trunks. As a result, although the profit may lead to the purchase or maintenance of more milking cows in the area and may produce some family employment in cheese production, it does not lead to investments in major dairies or in cheese processing plants. Another example can be found in the Nochistlán area of Zacatecas, where a woman has made a reputation as a maker of mole. She sells some of her product to U.S. émigrés returning home and has recently expanded to sell the mole in neighboring towns. Again, she has stimulated the local economy through the few jobs

10 El Mercado Paisano Mines and Nichols provided within her family circle, but she does not have a sufficient market to establish a processing plant that would stimulate employment on a large scale.

Turning to a higher level of broader geographic appeal—the culture-specific products—we can study how the production style and the nature of the product chains affect the ability of small-scale producers to retain a profit share from their work. At this level of the consumer market, the products have wider acceptance and the producers have a greater potential opportunity for profit. The problem is that the profit captured at this level of the consumer market may not be easily directed back to augment the production of small-scale producers. One example of this level of production is the tlayuda (a large tostada) produced out of the Oaxaca City area. The tlayuda has a strong consumer market in California, where large numbers of people from the Zapotec areas of Oaxaca crave the food products of their place of origin. Apparently, tlayudas made in Oaxaca have inimitable qualities for the consumers.

The production process requires limited but significant inputs. One needs a toasting comal (grill), a tortilla flattening implement, and access to wood, water, corn, and various other inputs. There are dozens, maybe hundreds, of small-scale producers, mostly women, in the Oaxaca city area toasting tlayudas. There are also small-scale intermediaries that ship the product (it lasts one month before spoiling) to Tijuana by airfreight. There are various people occupied in taking the product across the border in small quantities through hormiga transfers. And, finally, there are retailers in California who sell the product in stores, flea markets, and restaurants to a mostly native Zapotec consumer market. This mini-industry has produced employment and investment in the area of origin. However, the small-scale producers and intermediaries are not making a large profit. The Oaxacan retailers in California may be doing better. The benefit for the community may depend on how interested these California-based individuals are in investing back in their home community (see “Oaxaca Foods” case study below).

Another example at the culture-specific level can be found in the charro (rodeo) gear that is becoming very popular with immigrants from the West Central states of Mexico.

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Again, this sector has a broader appeal and potentially wider impact. The charro market is comprised of small- and medium-scale entrepreneurs that act as product purchasers, order takers, and small-scale retailers. Several of these entrepreneurs either travel frequently to Mexico to buy products that they distribute or have them delivered by express mailing services. They sell at charreada [rodeo] events or have retail stores. The scale of production in Mexico appears to be at a small level, with many producers responding to specific U.S.-based customer orders and to styles popular among Mexican immigrants. The “Made –in –Mexico” label and the higher quality of Mexican products appear to be nurturing a Mexico-based production of these products. This industry does stimulate investments in productive facilities on the Mexican side. We do not get a clear idea of who in Mexico benefits from this upsurge in demand but certainly many small- scale producers are favorably impacted and employment has been stimulated. The demand for a large variety of products and the crafts nature of the production has kept the production at a specialty level. Thus, most of the production enterprises have remained small- or medium-sized but at the same time the intermediation is hard to monopolize because of the craft nature of the product (see “Charro Gear” case study below).

When we turn to the highest level of the nostalgia consumer market—the generic products—we can see most clearly the limitations for capturing profit for the small enterprise. This is unfortunate since it is far-and-away the largest section of the nostalgia market. Products that take on a Mexico-wide appeal can be mass-produced in undifferentiated (non-specialized) product form. This makes it difficult for small- and medium-scale enterprises to maintain a share of the profit from their participation in these markets. The type of production (factory based) and/or the type of distribution (large- scale retailers) means that, in the first instance, barriers to entry bar small-scale enterprises and, in the second case, fragmented producers of a homogenous product are at the mercy of monopsonists who control prices. Even a product which is locality specific at the outset like mole poblano can be imitated and distributed as a generic product if the consumers will accept the diluted quality of the mass-manufactured good. In these cases, the original producers lose control of the enhanced profit potential to large-scale capital.

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Two examples are sufficient to demonstrate this weak potential for the nostalgia markets to be an engine of growth to small-scale community-based enterprises. First, a large U.S.-based producer of Mexican-style products (its owners are or were Mexican-born individuals) now produces its canned jalapeños in Mexico. It buys chiles from local producers but at prices insufficient to encourage local development. Since it controls a large endowment of shelf space in supermarkets of all kinds in Latino markets in the United States, this company can dictate terms to the many disorganized Mexican chile producers. Another example paints a similar picture for a product that does not have an elaborate production process—the mangos of Michoacán. First, the large international shippers who buy in Michoacán arrange for the transportation and border crossing and have big retail buyers in United States. These buyer-shippers bid down the price of mangos to unorganized growers in Michoacán. The packing sheds in their turn, although they are not highly technologically advanced, are controlled by a small number of owners. They charge the growers a fee favorable to themselves for boxing and labeling the fruit in a condition acceptable to the shippers. The mangueros who grow this “nostalgia product” on small plots are left with little or no profit. As a consequence, they do not have a surplus to improve production, lengthen the growing season, or make other investments to improve the capacity of the growing area (see “Fresh Produce Exports” case study below).

The application of our tools of analysis using the level of appeal of the product—the specialization of production, the barriers to entry, and the nature of the product chain (intermediation)—demonstrate that there are very significant challenges for using the nostalgia markets for the advancement of small-scale producers or the progress of underdeveloped communities. When products are limited to the appeal of the patria chica (local community), the returns are too small to generate large-scale growth. When small producers expand to a larger market, large manufacturers or distributors usually expropriate the profits. Our method did, however, as described below, unveil some examples of individuals and communities that demonstrate ways of overcoming these obstacles and utilize market niches.

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PROBLEMS WITH THE NOSTALGIA MARKET SMALL-SCALE PRODUCER MODEL AS A MOTOR FOR DEVELOPMENT

In order to plan implementation strategies that may help small-scale producers overcome the barriers to retaining their fair share of benefits from production, it is crucial to understand fully the obstacles they face. Below, we note the problems observed among small-scale producers and consumers with whom we spoke.

There is a lack of ability among small firms to assure quality and quantity required by large buyers, distributors, and retailers. Often the firms are caught in a vicious circle. They cannot maintain the quality and quantity of their product because their buyer does not pay promptly. This causes the shutdown of production, idling of machinery, and the discouragement of participant producers.10

The widespread low educational level of the producers leads to a series of problems. The producers are often unable to keep adequate books and so cannot tell how to improve their cost structure. They do not feel confident (often due to low levels of schooling) to confront astute sellers of inputs or buyers of their product who may be overcharging or underpaying them. They have inadequate bureaucratic skills to find, attract, and keep government support. The producers lack the skills and experience (such as how to run meetings and make group decisions) necessary to form successful collaborations. They also face major marketing problems.

Though hometown networks may support community improvement projects, their size is insufficient to constitute a viable market by itself that can spur local development. The town-based network model, so useful for information transfer for social (non-market) issues like improving the local church, is not easily transferable to market phenomena. To make a profit sufficient to spur development, it is necessary to have sales beyond the boundaries of hometown networks. At the same time, by definition, products that seek to expand their clientele beyond the limited number of co-townsmen (i.e. become more

10 One example is a small soccer ball factory in San Lorenzo, Michoacán (Taller Tzinkua). The Puréchepa- speaking producers have invested in machinery and have a skilled local manager and experienced crews. However, the buyers do not pay promptly, so production is often halted for lack of money to buy supplies. 14 El Mercado Paisano Mines and Nichols generic) can run into competition from low cost, well-advertised and familiar labels. For example, producers from a small town in Jalisco have named their brand of hot sauce after the name of their town—Yahualica. The producers have approached and marketed their brand in Mexican grocery chains in the Los Angeles area. However, one store manager who stocks the brand reports that he is willing to stock off-brands that small producers sell to him, but if these products do not sell at least one case per month, he takes them off the shelf.11 Large manufacturers are very competitive in these markets since they are able to keep costs down by putting their factories near the border on the Mexican side, assuring both low labor and transportation costs. Additionally, big firm labels have a powerful sales advantage given immigrants’ loyalty to the brands they knew in Mexico. 12

In addition, small firms face daunting structural problems. First, the infrastructure in the production areas is often a huge barrier. One manager of a producer-owned prickly pear corporation in La Victoria, Zacatecas complained that the biggest single obstacle for the corporation were bad roads in the area that prevented the delivery of product to the producer-owned packinghouse. A second issue is the lack of technical and financial support from the Mexican government. Our investigation revealed that small producers who also market their product were all self-financed with one exception (see the “Fresh Produce Exports” case study of the Mangueros of Lombardía below). There is also more evidence of technical support by the Mexican government. But, again, in most cases the producers were self-taught as well as being self-financed. Finally, the government support for small producers who were trying to figure out how to market their produce in the United States seemed to be very underdeveloped. The one exception is a prickly pear exporter who was advised by the Secretary of Agriculture (SAGARPA or Secretaría de Agricultura, Ganadería, Desarollo Rural, Pesca y Alimentación) regarding export rules. This grower-exporter, however, lives in the United States and had independently developed many contacts north of the border.

11 Reported by the manager of a large Latino supermarket. 12 According to an executive with a large grocery chain catering to the Latino market. 15 El Mercado Paisano Mines and Nichols

SECTION II: EXAMPLES AND CASE STUDIES

The universe of products for export appealing to Mexican émigrés is vast and complex. The field of examples does not lead to easy categorization and generalizations. However, there are definite lessons to learn from careful analysis of existing examples. As a result, we present, in narrative form, the most telling specific examples and case studies. The difference between examples and the case studies in this paper is that we were able to collect more complete information about what we call case studies than what we call examples.

EXAMPLES OF LOCALITY-SPECIFIC PRODUCTS

Appeal of Locality-specific Products

Ask anyone who grew up in provincial rural Mexico about the foods and flavors they miss and they will enthusiastically describe regional specialties not available in the United States. These are highly localized products that migrants acquire on visits home and bring back in their luggage, in the trunks of their cars, or have shipped via courier and small package services (paqueterías.) They include raw milk cheeses, mole sauces, sweets, candied fruits, baked goods, native varieties of corn, dried chiles and meats, squash seeds, herbs, spices, and dozens of other foods that are unique to a given local environment and its local traditions. To list them is to begin to appreciate the culinary diversity of Mexico, even within a single state.

The demand for these products by Mexicans living in the United States does generate some local economic activity. For example, Señora Guadalupe in El Teul, Zacatecas makes raw milk cheese from her husband’s herd of 250 cows. When migrants visit during the months of December and January, she sells more than a ton of her cheese, which is carried back to the United States in luggage or in the trunks of cars. Migrants from Las Animas, in southern Zacatecas, carry along gorditas de elote (a type of cornbread) and bags of mole paste they purchase from Doña Erlinda, whose version of that classic Mexican sauce is favored by those who grew up in the area. Similarly, natives of the municipality of Jerez, Zacatecas return with a variety of products unique to

16 El Mercado Paisano Mines and Nichols their region: cheeses made by women in nearby ranchos; locally-grown peaches canned in syrup; toasted squash seeds; dulce de tuna, a jam made from prickly pears; ezquite, a toasted and salted corn snack made with an indigenous variety of sweet corn; maiz colorado, another local variety of corn used in pozole and still grown by a few older farmers; hualasitas, a snack made from seeds collected from a wild plant; and chocolate blended by local resident Mr. Sabas, which is deemed superior to mainstream commercial brands like “Abuelita.” The public market in Jerez has numerous stalls that carry these local products, and sales increase dramatically during times when migrants are home visiting. In the case of Jerez, the two major migrant-return seasons are a couple of weeks in April for the Spring Fair and again in December for winter vacations. Merchants count on these times to make up for slow sales the rest of the year.

The same story applies to migrants visiting countless other home regions. In Nayarit people seek out dried shrimp; fruit jellies made from mango, guava, and quince; coconut candies (cocadas); and caramel paste. In Colima they purchase that region’s famous variant of cocadas; and among the specialties people from Jalisco bring back is cajeta de leche, a sweet spread made with milk from the native breed of cows. Natives of the state of Puebla bring back mole poblano; several varieties of locally produced chiles; sweets such as candied yams and palanqueta (made with peanuts); and embroidery and pottery characteristic of the region. People from Yucatán, meanwhile, bring back or arrange for relatives to send them the ingredients essential for Yucatán cuisine, such as achiote seeds used to prepare cochinita pibil (a traditional Mayan pork dish); tzo’tbochay–chaya, a green spinach-like leaf used in dishes eaten during Lent; and various kinds of chiles, whose distinctive flavor they maintain is not found in chiles grown outside of Yucatán.

This demand by migrants for the familiar goods of home results in an important source of income for local producers and intermediaries, but when the items cannot be shipped easily (such as cheese that is strictly regulated by the FDA), or where a paquetería system is not in place, then sales can be highly seasonal, occurring one or two times a year when migrants return for vacations. This issue raises an important question: if local producers had an efficient way to get their products to their customers living in the United States,

17 El Mercado Paisano Mines and Nichols would this allow them to increase production and sales during the rest of the year and thereby generate greater local economic activity? In addition, given that these are often family-owned enterprises, sometimes employing additional workers, and generally using local inputs, would expanding their market share be an attractive strategy for stimulating local economic development?

There are several major obstacles to this strategy of obtaining access to a year-round U.S. market. First, the size of the market of locality-specific products is by definition restricted to émigrés from one locality and is quite small. Next, the wages paid to local workers are generally quite low. And finally, complying with U.S. Customs and FDA food safety regulations, along with the paperwork and documentation, are onerous and usually beyond the capacities of small and poorly informed producers who have little formal education. The case of Señora Ofelia and her pinole illustrates the difficulties confronting a small producer seeking to place a nostalgia product in the U.S. market.

Pinole Jerezano

Pinole is a powdered mix made from a sweetened blend of ground corn, beans, rice, squash seeds, and spices. In the past, women in the villages prepared it in large batches to have on hand for adding to milk to make a nutritious drink or porridge. It’s a classic Mexican food item and in Jerez, Zacatecas, Señora Ofelia makes a pinole she considers to be far superior to the bland version produced by large manufacturers.

Most of her ingredients are locally produced, and she sells the finished product in half- kilo plastic bags through a variety of local grocery outlets and direct to migrants, who buy it by the case to take back to the United States for themselves and to give away as gifts. This has convinced her that there is a potential market among the U.S. Mexican immigrant community and inspired her to try exporting her pinole.

About a year and a half ago she set about learning how to do so, only to be confronted by obstacles and setbacks at every turn. She responds that her attempts to obtain government help from the planning and economic development agencies proved a costly

18 El Mercado Paisano Mines and Nichols and time-consuming waste of time, either because many government workers dismiss persons with little formal education, or because they are themselves unfamiliar with export procedures. When she turned to paid consultants to help her comply with U.S. Customs and FDA requirements, she found they cheated her. She has paid for expensive laboratory tests required by the FDA to meet food safety and labeling requirements, but found the lab work was sloppily done. Suppliers of packaging and printed labels delivered inferior materials. She has learned that she needs an “importer of record” on the U.S. side, but does not know anyone she can trust. In order to have sufficient capacity to export, she invested $20,000 on toasting and milling equipment, and when in full production, she employs two to three workers to produce a ton of pinole a week. Yet despite the fact that she is an efficient and skilled producer, she has had a difficult time keeping track of the costs and revenue in a way that will allow her to plan production and develop a business plan, another requirement for obtaining FDA approval for a commercial product. Thus after nearly two years, she is still not able to export her pinole and now finds herself in debt, discouraged, and not knowing where to turn.

Experts familiar with export procedures inform us that the simplest way to comply with U.S. regulations is to work with a reputable logistics service provider (and/or customs broker) who specializes in working with first-time exporters and is able to guide them through the process of complying with U.S. food and safety regulations, and who can handle shipping, paperwork, and U.S. Customs clearance at the border. Such was the case for a queso cotija (cheese) producer in Michoacán who was able to obtain all permits for his cheese with the help of a customs specialist in Tucson, Arizona.13 Yet as we have seen in the case of Señora Ofelia’s pinole, a wide gap separates the many small producers in provincial Mexico from the information and the specialists who could help them.

13 Interview with Commercial Attaché at Mexican Consulate in San Francisco, December 16, 2004. In the case of the Michoacán cotija cheese, the producer had to file a 3-5 year business plan and provide details on product classification, content analysis for product labels, details on sourcing of the milk—including USDA-approved inspection of dairy and herd—as well as additional assurances as required under the Anti Bio-terrorism Law enacted in the aftermath of the September 11 attacks. The entire process took about a year, with the import specialist in Arizona guiding the producer every step of the way. 19 El Mercado Paisano Mines and Nichols

Additional Challenges Facing Small Producers

Obtaining the necessary licenses and permits to export a product is only one piece of a much larger system that needs to be in place for a Mexican producer’s goods to reach consumers in the United States. As mentioned in the case of Señora Ofelia’s pinole, there must be an approved “importer of record” to receive the goods on the U.S. side. The producer often must obtain access to credit, obtain insurance, establish contractual arrangements with buyers, and set up international financial transfers for payments. The producer must have sufficient quantity of product to obtain the benefits of scale and keep shipping costs to a minimum. There must also be a location that receives and signs for the shipment, such as a warehouse, and there must be a distribution system for getting product to retail outlets. Distributors within the highly formalized world of retail grocery demand a minimum volume of sales to make it worth their while to stock a given item, and this involves gaining access to shelf-space, a prized form of real estate in the retail grocery business. Unless customers are already familiar with a given product and brand, they are not likely to purchase enough of it to justify valuable shelf space. The fundamental obstacle for producers of highly localized products is that the customer- immigrants from one particular region do not constitute a sufficient market to justify including the product in the distributor’s catalog or placing it in on the retailer’s shelf. In this extremely competitive and largest arena, it is the generic, mass-produced products that have the upper hand.

Expanding the U.S. Market for Localized Products

Does this mean that there is simply no way for small producers of localized goods to access the lucrative market for Mexican nostalgia products? Within the logic of international trade and the conventional grocery business, this would seem to be the case. Simply increasing production capacity and solving the logistics involved in exporting are important, but they are not enough in themselves to make profitable products that currently appeal only to a limited customer base. As a senior manager for a chain of Latino grocery stores told us: “If there’s any future for the smaller producers, the government needs to get involved and understand market realities and not waste time and

20 El Mercado Paisano Mines and Nichols money promoting product development and manufacturing without learning what the market wants.”

Notwithstanding the logic of mainstream business, might there be creative alternatives for expanding opportunities for the producers of highly localized nostalgia products? Are there inexpensive ways, short of expensive marketing campaigns, to test if a given localized product or group of products might be capable of broadening its appeal to a wider market and thus justify the cost of importing? In the final section of recommendations, we discuss some possible interventions.

MEXICO-WIDE GENERIC PRODUCTS

Manufactured generic products consist mostly of food and beverage items that line the shelves and refrigerated cases of Latino markets, under brand names such as Herdez, La Costeña, and El Mexicano, along with Bimbo, Jumex, and Jarrito. They are mass- market goods produced in industrial One in a chain of southern California supermarkets facilities, and they include the full range of catering to a predominantly Latino clientele. processed foods: canned vegetables, fruits, and chiles; salsas; juices and soft drinks; Mexican-style cheeses and chorizos; and familiar baked goods, snack foods, and sweets. Some (it seems a growing proportion) are imported from Mexico, their brands highly recognizable to anyone who grew up in Mexico. Others are manufactured in the United States, but in a style and presentation that appeals to the Mexican consumer. These products account for the largest segment of the nostalgia market, and are attracting large manufacturers and distributors, in both the United States and Mexico, who are all angling to increase their share of what is purported to be the fasted growing segment of the grocery business.

It is impossible to give exact numbers for the size of the “generic” nostalgia (or any other) nostalgia market. Many products that remind Mexicans of their experiences back

21 El Mercado Paisano Mines and Nichols in their home regions are also purchased by second generation Mexican-Americans and by many others who enjoy these products. But, there is no data on the consumer profile of purchasers of these products. As a result, we do not know the size of the second- generation market. Nevertheless, strictly limiting our focus to a group we know are heavy purchasers of these products—the approximately 7 million Mexican-born adults in the United States—we can see that the market even in this limited definition is enormous.

An El Mexicano delivery truck from the U.S.-based company of Marquez Brothers International.

Calculating very conservatively, if each of these adults spent $500 per year on manufactured nostalgia products, then they would be spending $3.5 billion a year.14

In 2004 and 2005 the Mexico City newspaper El Financiero published a series of articles that sought to awaken the Mexican business community’s interest in this rapidly growing market of Mexican-born individuals living in the United States. The migrants’ yearning for the familiar foods and drinks of home, combined with their newly found buying power, the paper argued, made them an ideal group of customers for entrepreneurs willing to make the effort to export their products. While some of the articles lamented

14 CEPAL estimates $3.5 billion of imports of nostalgia products to the United States from Mexico. It is not specified how the authors define nostalgia products. See “Pequeñas Empresas, Productos Etnicos, y de Nostalgia, Oportunidades en el Mercado Internacional,” Marian Cruz, et al, CEPAL, 2004, Mexico, D.F., p. 15 22 El Mercado Paisano Mines and Nichols that Mexican businesses were failing to take advantage of this lucrative market, others pointed to success stories. One of the most successful companies in this regard, it reported, was Grupo Bimbo, one of Mexico’s largest food manufacturers, producing a wide variety of well-known baked goods and snack foods.15

Grupo Bimbo began exporting and distributing its Mexican products in California and Texas in 1984. Subsequently the company expanded into the mainstream U.S. market by acquiring several U.S. baking companies (such as Oroweat, Mrs. Baird’s, and Entenmann’s), even as it continued to expand distribution of its popular Mexican brands of breads, tortillas, cookies, pastries, and snacks (Tía Rosa, Marinela, and Pan Bimbo). In 2004, its U.S. sales were over $1.3 billion, which accounted for 26% of the company’s overall sales. The company operates 13 plants in the United States and 47 in Mexico, but as with other Mexican firms seeking access to the U.S. market, it is also building plants close to the border to take advantage of lower labor costs in Mexico and a less regulated business environment, while achieving geographic proximity to U.S. markets.16

Grupo Herdez is another major Mexican food processor whose products appear on the shelves of U.S. Latino markets and mainline grocery stores. Its canned chiles, vegetables, fruits, juices, fish, and sauces are sold under brands that are highly recognizable to Mexican-born individuals, including Doña María, Búfalo, and Herdez. It employs 5,600 workers in 10 processing plants throughout Mexico, including one near the border in Ensenada, whose production is intended for export to the United States17

While Bimbo and Herdez are thoroughly Mexican enterprises that have been gaining ground in the United States, one of the most familiar and ubiquitous brands of Mexican

15 El Financiero: “La nostalgia del mexicano, gran mercado de empresas de alimentos” 24 June 2005; “Desaprovechan empresas mexicanas el mercado de la nostalgia en EU” 15 June 2005; “Poder adquisitivo de hispanos en EU, potencial de negocio para empresas mexicanas” 31 May, 2005; “Bimbo cura la nostalgia de connacionales en EU” 7 March 2005; “La nostalgia de mexicanos abre mercado de 12 mil mdd en EU” 8 June 2004. 16 El Financiero “Corporativo” 27 April, 2005; Grupo Bimbo Annual Report for 2004, on corporate website: www.grupobimbo.com.mx 17 Information obtained from their corporate website at http://www.grupoherdez.com.mx/corporativo/herdez.htm 23 El Mercado Paisano Mines and Nichols generic food products is El Mexicano, a label belonging to a U.S.-based manufacturing and distribution company, Marquez Brothers International, Inc. The company’s founders and owners, originally from the state of Jalisco, arrived in the States in the 1960s, and in 1981 began making Mexican style cheese in a small factory in San Jose, California. In 24 years they have grown to over 3,000 employees, with several manufacturing facilities in California and 13 distribution centers located throughout the western United States. The company markets hundreds of food items under their El Mexicano brand, which is sold in Latino supermarkets and mainline grocery stores across the country. Their products include Mexican-style cheeses, yogurt, and cream manufactured at their large plant in Hanford, California. The company also manufactures Mexican-style sausages at a facility in Los Angeles, and a full line of processed and packaged foods, including canned fruits, chiles, vegetables, juices and sodas; sauces and mole; baked goods; as well as other grocery items sought by Mexican consumers.18 A good deal of their manufacturing takes place within the United States; however, they do contract with Mexican manufacturers for some products and recently have begun to open their own factories inside Mexico to be closer to the source for inputs, such as jalapeño peppers and tropical fruits, and to take advantage of lower labor costs.

Naturally these large, sophisticated food manufacturers are better able to comply with all U.S. food safety and sanitary regulations, and to avail themselves of the services of professional customs brokers and logistics providers so as to ensure smooth and efficient movement of their goods across the border. Mexican-based manufacturers operating in this environment enter into formal agreements with U.S. importers and distributors, or, in the case of large companies like Grupo Herdez, they set up their own affiliate companies in the United States to handle importing, warehousing, and distribution. For companies operating at this scale, NAFTA has had beneficial results, facilitating access to their former customers who have moved north of the border.

18 Sources: http://elmexicano.net/main_files/products.html and interview with a senior officer of the company. 24 El Mercado Paisano Mines and Nichols

While the mass-produced “generic” products account for the major share of the nostalgia market, it is unclear how their activities directly sustain local economic development in migrant-sending regions. A wide gulf separates small and medium producers discussed elsewhere in this report, and the professionals who manage the corporations that supply the bulk of the U.S. nostalgia market. The small Mexican producers of the inputs into the product chain controlled by the manufacturers are “price-takers” in the system and are unlikely to retain sufficient benefit to spark local economic development.

Lessons from the Mexico-wide Market

Interviewed Mexican managers and entrepreneurs in the United States have themselves expressed a desire to help improve conditions in poor, marginal areas “back home.” These Mexican immigrant entrepreneurs, many with successful businesses in both countries, point out that they understand the “rules” on both sides of the border and therefore are peculiarly well-placed to make export production, shipping, border brokering, and distribution happen. They are proposing to set up partnerships between themselves, as Mexican businessmen familiar with doing business on both sides of the border, and the small and medium producers in Mexico for whom the barriers to entry into the U.S. market appear both daunting and overwhelming.

In the Fresh Produce case study below, we mention the successful partnership between a Mexican produce broker and a cooperative producing humid tropical roots in Oaxaca and Veracruz. In this case, the producer cooperative is satisfied with the prices and level of support received from the produce broker (see “Fresh Produce Case Study, Edible Tubers from Tuxtepec, Oaxaca”). Another example can be found in the covered vegetable crop farmers in Puebla, who are being helped by a Poblano businessman who is manufacturing greenhouse materials and providing advice to prospective exporters (see “Fresh Produce Case Study, Vegetable Production in Isucar de Matamoros, Puebla”). In the closing recommendations section, we mention the possible shape of as yet untried support from successful Mexican immigrant businessmen for small producers in Mexico.

25 El Mercado Paisano Mines and Nichols

CASE STUDIES

Below, we elaborate on several cases, some referred to above, where we were able to collect data at somewhat more depth. We use our tools of analysis (region specificity, specialized products, costs of entry, and product chains) to help the reader keep track of the opportunities for small producers to retain benefits from the endeavor. In each case, we touch on a series of topics. However, given the difficulty of obtaining data on all aspects of each case study, we could not touch on all topics for all the examples. These topics include: the history of the demand for the products, the organization of the producers, the cost structure, the share of different participants in the product chain in the benefits, the role of government in supporting the projects, the methods of importing, the impact on the home region, and the role of U.S.-side actors. We attempt to draw lessons about opportunities to improve retention of benefits for small producers as well as point out the formidable barriers these producers face.

OAXACAN FOODS CASE STUDY

The state of Oaxaca possesses a distinctly regional cuisine that is the result of centuries of blending of local indigenous ingredients with others introduced with the arrival of Europeans. Signature elements of this cuisine include several kinds of mole,19 dry-cured meats (tasajo and cecina), roasted and seasoned grasshoppers (chapulines), its own style of cheeses (including quesillo made from unpasteurized milk), an assortment of chiles and herbs, together with several variations on the Mexican tortilla, most notably the

19 Mole is a complexSmall sauce stores usually in themade Los from Angeles a combination area selling of chiles, Oaxacan chocolate, food nuts, items. seeds, and spices. There are many regional variations of mole; the most usual Oaxacan versions are red, black, and yellow. 26 El Mercado Paisano Mines and Nichols tlayuda (sometimes spelled clayuda), a large toasted corn tortilla that can measure over 12 inches in diameter. Ingredients and methods of preparation vary according to locality and ethnicity (the Mixtecs, for example, favor wheat flour tortillas over the Zapotecs’ preference for the corn tlayudas), but there is general agreement among Oaxacans from the Northern Sierra and the Central Valleys of the state as to what consititutes Oaxacan cuisine.

Interestingly, few Mexicans outside of Oaxaca are familiar with these regional foods, and even well traveled Mexicans often have never heard of tlayudas. Oaxacans living away from home nevertheless seek out these foods, deemed an essential part of their diet, identity, and which afford them a comforting reminder of home. For immigrants enduring harsh conditions of living and working in an alien society, time spent in a restaurant enjoying familiar foods, music, and ambiance helps soften the sense of alienation and loneliness. The owner of one Oaxacan restaurant reported that her grateful customers tell her, “I feel like I’m back in my own land.” Oaxacans place a high value on good, authentic food, and as one community leader put it, “This food is central to our lives; we were born with it and we grew up with it. We crave Oaxacan foods.”

With the large number of Oaxacans now living in California, this yearning for the foods of home has translated into a significant consumer base, albeit one that is not evenly distributed geographically. No reliable information exists on either the size or the distribution of the Oaxacan population in the United States, but scholars and community activists agree that major concentrations exist in southern California (in northern San Diego County and in the greater Los Angeles area), in and around Fresno and Madera in the San Joaquin Valley, and in other pockets in Monterey and Ventura counties and the San Francisco Bay Area. Immigrants of Zapotec origin have tended to settle in urban areas where they find employment in services, while those of Mixtec origin, who are frequently employed as farm laborers, are concentrated in California’s Central Valley and in other agricultural regions. As to the size of the population, Felipe López, a UCLA

27 El Mercado Paisano Mines and Nichols researcher, estimates there are one million Oaxacans in the United States, with three quarters of them in California.20 These numbers are extremely uncertain.21.

Whatever the actual numbers of Oaxacan immigrants, researchers note that immigration from Oaxaca has grown steadily over the last 30 years, and with it has grown the demand for their distinctive foods from home, a demand that conventional Latino markets have so far failed to meet.22 While there is a substantial network of grocery stores and supermarkets catering to Mexican and Latino tastes, these markets carry mass-market products, what could be termed “generic Mexican” goods such as salsas, jalapeños, cactus leaves, spices, tortillas, etc. What they Announcement for the second annual Oaxacan foods and crafts fair, held at the Los Angeles do not carry are the specialized items of the Sports Arena, March 20, 2005. Source: El Oaxacan cuisine (nor, for that matter, do they Oaxaqueño, n. 148, February 19, 2005. carry regional specialties favored by other immigrant groups, such as those from the Yucatán, Veracruz, Puebla, etc.) To meet the demand for uniquely Oaxacan foods, there has emerged instead a separate, parallel product chain, with its own production, transportation, importing, and distribution system, and whose retail outlets include Oaxacan-owned bakeries, restaurants, specialty markets, together with vendors who sell at flea markets and door-to-door.

20 Felipe López quoted by Elena Goana in, El Oaxaqueño, 25 June 2005; “Awareness of Oaxacan Immigrants Being Urged,” San Diego Union Tribune, October 16, 2004. 21 The state of origin is not collected by the U.S. census. Also, it is hard to rely on the Mexican census data about numbers of Mexican citizens abroad since the Mexicans are by definition counting people who are not there at the time of the count. 22 See “Mixtecs and Zapotecs Working in California: Rural and Urban Experiences” by Felipe H. López and David Runsten in Indigenous Mexican Migrants in the United States, ed. by Jonathan Fox and Gaspar Rivera-Salgado. Center for U.S.-Mexican Studies and the Center for Comparative Immigration Studies, University of California, San Diego. 28 El Mercado Paisano Mines and Nichols

The following account of this specialty market, while describing features unique to the Oaxacan case, also addresses some of the preconditions for establishing any market that aims to sell specialty nostalgia products to a given immigrant population. Furthermore, it points to some of the challenges involved in ensuring that benefits of such a market remain within the particular transnational network, i.e., with members of the immigrant community and with producers in the home regions.

Emergence of Oaxacan Food Merchants

To meet the demand for Oaxacan foods in the greater Los Angeles region, there are now dozens of Oaxacan-owned bakeries, grocery stores, and restaurants, clustered in neighborhoods with significant Oaxacan settlement. Some of the products, such as bakery goods, are now made in the United States, but up to 75% of the ingredients, according to one restaurant owner, are imported from Oaxaca through an ingenious and highly decentralized hormiga system (described below). The emergence of these retail establishments is a fairly recent phenomenon—dating from the early 1990s—even though large-scale migration from Oaxaca to the Los Angeles area began earlier, in the 1970s. Of the 34 Oaxacan-owned restaurants identified in the Los Angeles region in 2003, most had opened over the prior nine years, and fourteen of them since 2000.23

To account for this 20-year lag time, López and Runsten argue that a period of incubation was necessary during which the following had to develop: (a) accumulation of sufficient capital to open small businesses (in their study López and Runsten focused on Oaxacan restaurants); (b) a commitment to permanent settlement and the arrival of women, both of which drive the desire to have familiar products from home; (c) a critical mass of immigrants from the home region in order to create a sufficient customer base; and (d) gaining legal status as well as the necessary knowledge for engaging in the legal transactions required to do business in California.

23 López and Runsten, 2004. Table 9.1, 268-9. 29 El Mercado Paisano Mines and Nichols

An interview conducted with a successful Oaxacan businessman confirms this assessment. He described how when he first arrived in California in the early 1990s he had no capital and began by selling door-to-door the food products he imported from Oaxaca. He traveled to the major Oaxacan settlement areas throughout the state selling his goods and saw first hand the unmet demand for Oaxacan food. In 1994, with $9,000 borrowed from a relative, he opened one of the very first restaurants to serve Oaxacan food in the Los Angeles area. In 2000, he opened another larger restaurant, and in addition sells a range of Oaxacan food items (wholesale and retail), alongside beverages, some crafts, music CDs, and videos. He expects the demand for Oaxacan food products to continue to grow. This businessman had the advantage of arriving with a secondary school education, a somewhat higher level of education than most poor immigrants, but still he points to a crucial process of re-learning. Although he had been engaged in business in Mexico, he spoke of having to “wipe the slate clean” and “re-invent himself” after arriving in California. It was an entirely new experience learning the rules, how to comply with them, and how not to be tempted by shortcuts in the rush to expand. These are lessons he believes his countrymen need to learn if they are to succeed in business, in Mexico as well as in the United States.

While these general conditions are likely to apply to most immigrant groups who arrive with few financial resources and no knowledge of how to function in the U.S. context, López and Runsten point to additional features that are unique to the Oaxacan case and facilitated their emergence as small business owners catering to the demand for nostalgia food products.

The Oaxacans who have become food merchants are for the most part Zapotec migrants. Unlike Mixtec migrants who found employment in California agriculture, the Zapotecs followed a different trajectory: they migrated to urban areas and found work in entry- level service jobs, most notably in Los Angeles area restaurants as dishwashers and janitors. The Zapotec immigration of the 1970s and 1980s coincided with a rapid growth in the Los Angeles restaurant industry, and in typical fashion the pioneer migrants helped newer arrivals get settled and find jobs in the same line of work. In time, some were able

30 El Mercado Paisano Mines and Nichols to move up to positions of greater responsibility and pay, including kitchen manager and chef, gaining valuable knowledge and experience along the way. In the early 1990s, by pooling their savings, some were able to strike out on their own. Of 28 Oaxacan restaurants López and Runsten studied, 27 were owned by Zapotecs. Compared to the Mixtecs employed in agriculture, the Zapotec immigrants have relatively higher levels of education, and have a reputation in Mexico as traders and entrepreneurs.

Growth in Demand for Oaxacan Foods

As the Oaxacan population in California has grown, so has its social, civic, and political organizations and activities, all of which have helped stimulate the demand for Oaxacan nostalgia products and the expansion of the Oaxacan business community catering to this demand. Indeed, Oaxacans have created a vibrant community life for themselves with large festivals, including the guelaguetzas—organized events that draw thousands of participants to enjoy traditional dances, music, and food. Similarly, at sports events, dances, religious celebrations, and social events they expect the music and food of their home region. Recently, on Sunday March 20, 2005, the FOCOICA and the OEPTOC, two major Oaxacan organizations in southern California,24 held their second annual Oaxacan Commercial Gastronomic and Crafts Fair at the Los Angeles Sports Arena.25 Over 10,000 attended the all-day event that featured Oaxacan musicians; folkloric dance troupes; and booths selling traditional foods, clothing, and crafts. The crowds were even larger two months later for the annual Guelaguetza U.S.A., a traditional dance festival the Oaxacan community in Los Angeles has been holding since 1986.26 As these events have served to disseminate information on the availability of Oaxacan nostalgia products, so too has their own alternative media, including Spanish and indigenous language radio

24 FOCOICA is Spanish acronym for the Oaxacan Federation of Communities and Indigenous Organizations of California (Federación Oaxaqueña de Comunidades y Organizaciones Indígenas de California), and OEPTOC stands for the Organization of Oaxacan Entrepreneurs, Professionals, and Technical Specialists in California (Organización de Empresarios, Profesionales y Técnicos Oaxaqueños en California), though the group is now considering abbreviating its name to OEO (Organización de Empresarios Oaxaqueños). 25 The event of March 20, 2005 was officially called “La Segunda Muestra Gastrómica Comercial y Artesanal Oaxaqueña.” For a description of the event see “Con Sabor Oaxaqueño,” in El Oaxaqueño, April 2, 2005, pp. 18-19. 26 “El Color de la Unidad,” in El Oaxaqueño, May 28, 2005, pp 4-7. 31 El Mercado Paisano Mines and Nichols programs and Spanish language newspapers like the bi-weekly El Oaxaqueño (founded in 1999) and the more recent Impulso de Oaxaca.

One immigrant, who arrived penniless in the early 1990s and began selling Oaxacan food on the street, is now one of the leading Oaxacan businessmen in Los Angeles. In a recent interview that appeared in a Mexican newspaper, he reported revenues of $2 million a year and employed 120 workers.27

The success of the Oaxacan food phenomenon has not escaped the attention of wider society. In 2002 the Los Angeles Times ran a feature article on the Oaxacan community and its distinctive cuisine, listing for its readers the shops and restaurants where it could be sampled.28 Earlier that same year, Martha Stewart visited a Oaxacan restaurant to tape the preparation of various Oaxacan specialties for her television show.29 Interest in Oaxacan food continues to gain momentum, to judge from restaurant reviews and guidebooks. As one food critic recently wrote for the LA Weekly: “Oaxacan cooking is among the most exciting cuisines in Los Angeles at the moment.”30 And a city guide noted that Guelaguetza, one of the better known Oaxacan restaurants, “draws culinary pilgrims from all over the city.”31

Should Oaxacan food continue to gain acceptance it could well achieve “cross-over” status and help introduce American consumers to the regional diversity of Mexican cuisine, just as the introduction of Szechuan and Hunan cooking has expanded the concept of Chinese cuisine beyond the familiar Cantonese of the first immigrants. While greater popularity can potentially benefit the small and medium producers of “authentic” Oaxacan food, it also invites greater scrutiny of production and importing methods, along with imitation and competition from large manufacturers.

27 “Triunfa oaxaqueño con comida mexicana en EU,” in Imagen de Zacatecas, May 4, 2005. 28 “The Oaxaca Connection,” by Barbara Hansen, Los Angeles Times, May 1, 2002. 29 Ibid. 30 “Jonathan Gold’s 99 Essential L.A. Restaurants,” LA Weekly, July 1-7, 2005. http://www.laweekly.com/ink/05/32/restguide-list.php 31 “Guelaguetza” at Citysearch: restaurants, http://losangeles.citysearch.com/profile/11312859/los_angeles_ca/guelaguetza.html. 32 El Mercado Paisano Mines and Nichols

Methods of Importing

As noted earlier, the great majority of Oaxacan food products are imported from the state of Oaxaca. These include fresh chiles de agua, fresh fruit, both fresh and dried herbs, cheeses made from unpasteurized milk, meats and sausages, roasted and seasoned grasshoppers, various kinds of mole sauces, candied fruits, specialty breads, and various kinds of tortillas (totopos, tlayudas, etc.). The FDA has developed a complex set of guidelines and compliance procedures governing the importing of foodstuffs, and the regulations have become stricter and the enforcement more rigorous with the introduction of the post-9-11 Bio-Terrorism Act. To the best of our knowledge, there is no strict compliance with FDA regulations in the case of Oaxacan food imports. Instead, the products are shipped, often via airfreight, from the City of Oaxaca to a Mexican border town where they are brought into the U.S. “estillo hormiguita,” that is, by intermediaries who organize teams of individuals to ferry the items across the border in small quantities, without any customs declarations. The goods are then delivered to major urban destinations and from there distributed to more dispersed locations. Customers can purchase a fairly broad array of Oaxacan food products from shops inside restaurants, as well as from small ethnic grocery stores, and at flea markets. Those with no access to these outlets are served by traveling salespersons or can have their orders shipped, sometimes by means of Greyhound Bus services.

The imported products themselves are produced and assembled for export by an array of small producers, agents, and intermediaries in Oaxaca. Our informants tell us that the products accounting for the bulk of imports are tlayudas, tasajo, chile de agua, quesillo, and mole. More detailed descriptions of the product chains for two important ingredients of Oaxacan cuisine, tlayudas and mole, are provided below.

Product Chains: Tlayudas

As noted earlier, tlayudas are large, thin corn tortillas that have been toasted crisp over a wood fire. They are handmade by women who have set up small-scale production in their own households. Production is concentrated in the villages and towns in the vicinity of the City of Oaxaca, and in some of these it is said a great many households are

33 El Mercado Paisano Mines and Nichols involved in tlayuda production. In one case we are familiar with, Señora Leticia, together with her mother and two sisters, makes between 400-500 tlayudas a day. Work begins between 1 AM and 3 AM, when the cooked corn is taken to the local mill to be ground into nixtamal, the tortilla dough. The dough is shaped into the large, round tortillas using a hand press and then cooked on clay griddles over a wood fire. Tlayudas intended for shipping are toasted to a crisper stage, ensuring that they will keep for up to a month. The finished tlayudas are packed in baskets or plastic bags and delivered by bus to an intermediary, who assembles a shipment to the United States.

Production inputs include many products that stimulate local production, such as corn, firewood, and, in Señora Leticia’s case, purified water. The local tap water is unreliable and of inferior quality, so she must purchase water from a tanker truck. She also seeks out high quality corn and is willing to pay more than twice the price of ordinary corn available in the market. Her other major expense is firewood, which she purchases by the cartload. In addition, she purchases from local merchants the aplastadores (hand presses for shaping the corn dough) and comales (the clay griddles used for cooking the tlayudas.) While we do not have sufficient data to calculate net earnings, it does appear that a good number of women are deriving considerable benefit from making tlayudas for export. Our researcher in Oaxaca reported that the women’s houses were well built, that in some communities tlayuda making appears to be the principal economic activity, and that the women report competition has increased significantly as others have jumped on the tlayuda-for-export bandwagon.

Certainly the overall magnitude of tlayuda production for export appears substantial and growing. One woman who works in Oaxaca’s Central Market and assembles twice- weekly food shipments for Los Angeles, purchases between 2,000 and 2,500 tlayudas a week from her regular suppliers. This intermediary receives orders by fax from her brother who owns a small Oaxacan grocery store in Los Angeles. She places her tlayuda requests with the women who make them for her and purchases the other items requested in the main market, including cheeses, chapulines, chiles de agua, dried shrimp, specialty breads, fresh herbs, etc. She packages it all up and takes is to the freight terminal at the

34 El Mercado Paisano Mines and Nichols airport. The flight leaves late afternoon, and by 9 PM is in Tijuana. There, an individual breaks the shipment down into small quantities and has a team of individuals ferry the goods across the border during the night, employing the so-called hormiga style of importing. The shipment is reassembled and the next day is delivered to Los Angeles, whereupon the shop owner calls his sister on her cell phone to confirm that the order has arrived, less than 24 hours after it left Oaxaca. In the past, the brother had gone to collect the goods himself in Tijuana, but on one occasion he was caught, his vehicle confiscated, and he nearly lost his papers. Since then he’s been paying someone else, at the rate of one dollar a kilo, to handle the logistics of getting his goods across the border.

An agent for Mexicana Airlines at the Oaxaca airport reported that they ship an average of two tons of cargo a day to Tijuana, the majority of it foodstuffs. Other airlines, including Azteca and Aviacsa, also handle significant volumes of food cargo shipments from Oaxaca to border cities. Based on one very rough calculation, we estimate that some 15,000 tlayudas are shipped per day from Oaxaca to Tijuana. If one woman, on average, produces 125 tlayudas in a day, then this could mean employment for some 120 women. Others involved in this trade assure us that the number is much larger.

We have insufficient information to describe the cost structure in detail. However, the market, if properly organized, appears capable of returning capital to the Oaxacan localities that produce the product.

Product Chains: Mole

We interviewed a mole producer in the City of Oaxaca who currently ships about a ton of his mole a week to the States. He began making mole in Oaxaca about 15 years ago, but it has only been in the last 4-5 years that he has been filling orders for customers in California, Arizona, Ohio, and Georgia. He does not currently have a license to export his product; instead he ships his mole, either via airfreight or overland, to border towns where his U.S. clients arrange to have it picked up and brought across the border. These U.S. clients handle distribution to restaurants and markets in California and other states.

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These U.S. sales account for about 20% of his total production volume; the bulk of his sales are still within Mexico, primarily wholesale in Oaxaca and Mexico City.

He produces several versions of mole, which have found good acceptance in Mexico and increasingly in the United States as well. His moles are specialty niche products, with more complex and sophisticated Advertisement for regional mole and chocolate products aimed at the Oaxacan niche market in the United States. flavors than the widely Source: El Oaxaqueño, n. 162, September 3, 2005, p. 17. available Mole Doña Maria, which is a mass-market, generic version of mole commonly found on supermarket shelves. Most of the ingredients are Mexican, though only a few are actually grown in the state of Oaxaca; the cinnamon is imported from Sri Lanka and almonds from California. His business has grown tenfold in the last six years and he sees strong prospects for continued expansion; he has had requests to export his mole to the Caribbean and Europe. For the moment, Los Angeles represents his largest foreign market and he would like to obtain an export license in order to sell directly to U.S. customers instead of through intermediaries who, he claims, capture a larger share of the profit than he. He has attended several food fairs in California, but has yet to find someone who can give him proper advice for entering the U.S. market on his own. His brand is registered in Mexico and he complies with all Mexican tax and health and safety regulations; however, he notes that the FDA’s requirements are stricter than those of Mexico, and he has not himself gone through the process of registering and obtaining the necessary permits. He claims that one of his U.S. customers has obtained permission to import his mole, but this could not be verified.

Just as in the case of tlayudas described above, mole from this producer can be purchased in southern and central California in many of the Oaxacan restaurants, bakeries, and specialty grocery stores, though it is not found in the large Mexican/Latino grocery

36 El Mercado Paisano Mines and Nichols chains or conventional Mexican markets. For the most part it is sold in half-kilo packages, and carries the producer’s own brand name. In fact, he has even taken out ads in the Oaxacan newspaper to advertise the product and inform readers where they can purchase it. In one Oaxacan store in Los Angeles, a 500 gram package of the black (chocolate) mole was selling for $6, which represents a markup of over 100%, after allowing for transportation costs. The producer believes he could capture a larger share of the profits from U.S. sales if he were able to take charge of the exporting and distribution, or at least negotiate a more favorable arrangement if he had a trustworthy agent in the United States. However, the producer is not familiar with the costs involved in obtaining FDA approval, export paperwork, broker fees, warehousing, and distribution, etc. While complying with U.S. import and customs regulations would certainly guarantee his ability to continue exporting his product, it is not clear how much more of a profit he could actually capture by assuming control of a greater portion of the product chain. A careful market study would help him make an informed decision, but he does not know how to go about obtaining such a study.

Currently 18 workers are employed making the mole together with some ancillary products; the entry-level wage he pays is 700 pesos a week, more than three times the minimum wage in Oaxaca of 45 pesos a day. His highest paid employees can earn up to $1,350 a week depending on seniority. While he personally earns a good living from his business, and is not interested in emigrating to the United States, he acknowledged that some of his workers are tempted to try their luck “on the other side,” given what they hear from relatives and friends, and the dream that they might strike it rich like some of the more successful Oaxacans who currently own restaurants and businesses in Los Angeles. Since the beginning of 2005, four of his workers have emigrated, though three of the replacements he hired had just returned from the United States.

The mole producer is currently building a larger facility and plans to increase his production by 75% over the next two years. He would like to respond to requests he has had to export his mole to Greece, Puerto Rico, and Spain. He would also like to lower the cost of his mole for U.S. consumers, and believes he can do this, plus capture more of

37 El Mercado Paisano Mines and Nichols the profits for himself, by taking control of the entire product chain, from factory to consumer. He has received advice and technical assistance from the Universidad Tecnológica in Oaxaca on the mechanical aspects of expanding his production, but he is still not able to get the advice and guidance he needs to export his product. He has tried repeatedly to obtain an export license, but has been given a run around; and as far as becoming registered to do business in the United States, he does not speak English and does not know where to turn. Government offices that are supposed to assist small businesses like his have not been helpful. He continues to look for experts to assist him, both in Mexico and the United States.

Other Oaxacan Products

Cheese produced in Oaxaca is another nostalgia product imported in significant quantities. One entrepreneur reported importing around 1,000 pounds of cheese a week, which she sells both wholesale and retail. Her agent in Oaxaca City purchases the cheese in the Central Market, packages it with the rest of her weekly order, and ships it via airfreight to Tijuana where another agent transports it across the border, again circumventing inspection by U.S. Customs. Most Oaxacan restaurants, bakeries, and grocery stores feature cheeses imported from Oaxaca, and a large section of the Central Market in the City of Oaxaca is devoted to cheese dealers. When local cheese production is insufficient to meet the demand, Oaxaca-style cheeses are brought in from the neighboring states of Chiapas and Puebla. Cheese is one of those products that is highly regulated for food safety by both the USDA as well as FDA, and some of the importers worry about the inability, or unwillingness, of Mexican producers to make an effort to comply with U.S. regulations. Some importers report having urged local producers and dealers to address this problem, but there appears to be little motivation given the current high demand for their cheeses. Should U.S. border enforcement become more rigorous, it could have an adverse impact on the incomes of those dairies, cheese producers, and cheese dealers.

Chapulines, the roasted and chile-seasoned grasshoppers, are a prized snack and the demand among Oaxacans in the U.S. exceeds the supply. Chapulines, too, are purchased

38 El Mercado Paisano Mines and Nichols from dealers at the central market in Oaxaca City and shipped to border towns and then brought across the border and delivered to U.S. distributors. Since grasshoppers are a seasonal product in Oaxaca, enterprising farmers in Puebla have set up nurseries to raise and process them for the Oaxaca market. One informant reported that an attempt to gain FDA approval to import chapulines was rejected due to high levels of lead revealed by a laboratory analysis.

Clothing and Crafts

Many Oaxacan markets, restaurants, and paquetería shops also carry embroidered dresses, blouses, and shawls, along with other clothing, footwear, and craft items for sale to the U.S. Oaxacan community. However, profits from the sale of these goods are far below what is possible selling food products. One entrepreneur selling imported crafts could barely make ends meet until he began importing and selling cheese and saw his business take off. He now has a restaurant and a grocery store carrying a full line of Oaxacan food products, with clothing and crafts as a sideline.

Impact on Home Regions

While it is beyond the scope of this study to calculate the economic impact of production for nostalgia markets on local communities, it is clear that there are a significant number of people who are actively engaged in meeting the demand for these products. In the case of the women who make tlayudas, all indications are that this activity has expanded in recent years to involve more households, and possibly whole villages. Tlayuda production also has implications for the suppliers of corn, the owners of mills, and the providers of other inputs, such as filtered water and fuelwood, as well as the tool-makers who produce the clay griddles and metal presses. However, closer study of this production activity is needed to assess its impact on household incomes and any possible multiplier effect in the local community. Additionally, one would want to seek answers to questions such as: What changes are needed for the tlayuda makers to come into compliance with FDA regulations? Are the higher prices the women pay for top quality corn passed on to farmers or captured by middlemen? What is the source of firewood and is it being harvested sustainably or is the demand contributing to deforestation?

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What is the likelihood, and the risk, that tlayudas can be mass-produced in a factory setting in Oaxaca and/or the United States, thereby undermining this household-based economic activity?

In the case of mole, only about one-fifth of one producer’s output is destined for the United States. However, the product already has found a foothold there, and the producer sees considerable potential for expansion, which in turn would create more employment. But while wages are higher than the minimum for the area, it does not appear that they are sufficient to offer a viable alternative to emigration. This points to a broader issue with regard to production for nostalgia markets and its potential to offer attractive local employment. While the mole producer himself may have a sufficient profit margin to benefit economically from the sale of his product, there is really no incentive for him to pay substantially higher wages to his employees. The factory work is easily learned on the job and so worker retention, particularly at the lower levels, does not concern him; those who leave are easily replaced. In this small factory setting it would be worth trying to identify a salary threshold, including perhaps a benefit package, that would offer sufficient incentive for remaining with the company.

A similar situation regarding local wage scales was observed with a food importer’s purchasing agent. In this case, the agent in Oaxaca City receives a fax from the food merchant in Los Angeles and devotes the day to purchasing the requested items, packing them up, and delivering the order to the airport. On the two days a week she works assembling shipments—work she reported as being fairly easy—she is paid 600 pesos for each day, resulting in weekly earnings of 1200 pesos (about $109), which is in addition to what she earns the other three days selling chiles at her market stall. Her shipping activities alone yield her more than five times the minimum wage in Oaxaca. Nevertheless, she considered going to the United States where she believed she could earn more, even though the trip would involve paying a smuggler to take her and her young daughter across the border.

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Though we did not examine cheese production, since this is a significant import, it would be useful to look at Oaxaca’s milk and cheese producing regions to determine their degree of dependence on exports and to devise strategies for coming into compliance with U.S. health and safety standards, so as not to risk the adverse economic impact of loosing access to the U.S. market.

Opportunities

The demand for Oaxacan food products in the U.S. appears strong and growing. Food merchants serving this market concur that considerable unmet demand exists in California, particularly in areas beyond the main settlement regions of greater Los Angeles and the San Joaquin Valley, in places such as Oakland, San Jose, San Francisco, Seaside, Santa Cruz, Oxnard, and San Bernardino. Beyond California they point to concentrations of Oaxacans in Oregon, Nevada, Montana, Georgia, and North Carolina.

Unlike the generic Mexican products that are produced on an industrial scale, Oaxacan foods are still produced on a small, artisan scale, and hence an expansion in this market could potentially benefit micro, small, and medium producers. On the U.S. side, the distribution and sales are in the hands of Oaxacan food merchants so that benefits at present remain within the transnational Oaxacan community. Additionally, there is the possibility that Oaxacan food will crossover and find appeal among a wider population in search of new food experiences, as has begun to happen in Los Angeles. Meanwhile, Oaxacans themselves exhibit considerable customer loyalty, as they prefer doing business with merchants they already know and trust. Indeed, many of the Oaxacan businesses are mini community centers, offering information on community events, referrals, and wire transfer services.

However, the very qualities that enable the benefits to be spread horizontally are also its constraints: namely the small-scale, rudimentary production methods, lack of quality control, and non-compliance with U.S. health and safety standards.

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Constraints and Challenges

Small and medium Oaxacan producers of nostalgia foods currently have a niche market largely to themselves. However, it is not clear how long they will be able to retain their advantage. Non-compliance with U.S. health and safety and import regulations represents a major vulnerability, and one that can potentially affect the incomes and livelihoods of those presently engaged in the production and trade of these products. Importers have had shipments confiscated and incinerated at the border and now worry about future disruption of supply due to lengthy border delays and greater vigilance and enforcement by U.S. officials. Some have expressed an interest in learning how to import legally but do not know where to begin.

Competition from large-scale industrial producers, or even from smaller manufacturers who are able to comply with U.S. regulations, threaten the current producers of Oaxacan nostalgia food products. Oaxacan cheese production is particularly vulnerable in this regard. One successful Oaxacan immigrant is setting up a cheese production facility in the United States. He intends to produce high quality cheeses in the Oaxacan style, in full compliance with all U.S. health and sanitation regulations, and in this way avoid the risks associated with importing non-compliance cheese from Oaxaca and ensure that his business is operating legitimately. Given his existing wholesale and retail activities, he has a ready means of distributing and selling his product.

Another possible source of competition are industrial producers in Mexico who are able to obtain U.S. certification; one such cheese producer is La Villita, located in Lagos de Moreno, Jalisco. Their Oaxaca style cheese is already available at a competitive price in at least one major super market chain that caters to the Mexican community. If producers outside of Oaxaca are able to replicate the taste and texture of cheese produced in Oaxaca, on a larger scale and in compliance with U.S. regulations, this would then undermine the advantage Oaxacan cheesemakers currently hold in this nostalgia market. As seen in Table 1, the importation of fresh cheese from Mexico beginning in 1996 has gone up and down in a volatile fashion but with a continual upward trend.

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Cheesemakers are not the only producers at risk. The mole manufacturer described earlier will soon have to contend with competition from a new factory in Oaxaca that is being built from the ground up to comply with U.S. regulations. The factory owner is a successful Oaxacan businessman in the United States and an experienced importer, and has a ready market for his product.

TABLE 1. FRESH CHEESE FROM MEXICO (IN THOUSANDS OF DOLLARS) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Total 92 89 234 2,360 463 531 870 1,008 430 1,483 Source: U.S. International Trade Commission

The examples of the women making tlayuda and the mole manufacturer point to a number of barriers facing small-scale producers who may wish to retain their market share, and possibly expand it. Our research suggests that while these producers may be benefiting from the current demand for their products, they lack business skills, have no organization to give them bargaining power, and are unable to obtain assistance or advice from government agencies, assistance they would need in order to enter the U.S. market in compliance with all the rules.

Finally, though closer scrutiny is needed of the relationship between production for nostalgia markets and local well-being, our preliminary findings suggest that small and medium producers will need to capture a larger share of the wealth and pay their workers higher wages in order to stimulate local economic development and retain their workforce.

CHARRO GEAR CASE STUDY

The Charro and the Sport of Charrería

Whereas regional foods help create the sense of home for immigrants from Oaxaca, for those from the north central states where cattle ranching was a major economic activity,

43 El Mercado Paisano Mines and Nichols nothing provokes the nostalgia of home more powerfully than the sport of charrería. On any given weekend from April to October, in hundreds of arenas (lienzos) throughout

A charro practicing a suerte at a lienzo (arena) in the Los Angeles area.

Mexico and the American West, charros gather with their horses to participate in charreadas (rodeos). Charrería has been dubbed the national sport of Mexico, with teams of well-dressed charros competing to put on the best display of horsemanship, rope work, and animal control.

The charro is a quintessentially Mexican figure, as iconic and steeped in folklore as the American cowboy and the Argentinean gaucho; charrería’s roots reach back to colonial times when large haciendas employed men on horseback to manage the vast herds of cattle. The work required superb horsemanship, strength, endurance, and daring. At roundups and branding times, the men would seek to outdo each other in displays of their abilities. Today those working competitions survive in the form of charrería tournaments, consisting of nine distinct events, or suertes, with contestants judged on both skill and style.

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Yet a charreada is more than an athletic competition. These rodeo-type contests are both formal and festive gatherings: they open with the participants in solemn procession on horseback, carrying banners and flags, often accompanied by a Mariachi band playing the familiar “Marcha de Zacatecas.” Participants are expected to abide by the charro dress code, wearing only prescribed charro attire in “serious” colors (bright colors are considered vulgar); their boots (botines) must be low cut and made from a single piece of leather, and their accessories must only bear acceptable charro designs (standard western and cowboy motifs are not permitted). Judges who are officially recognized by the local charro association preside over the nine suertes, and award points based on established performance standards. Many charreadas also include escaramuzas, teams of women and girls who display their horsemanship by riding side-saddle, dressed in colorful costumes with wide ruffled skirts, and wearing the classic wide-brim charro hat. A charreada is an all-day or all-weekend festive occasion during which family and spectators can socialize, enjoy the music and food, and later stay on into the evening hours and dance to the music of a popular Mexican band. U.S. immigrants from the northern and central states of Mexico find that a charreada is a chance to reconnect with their roots; it’s a respite from the grind of living and working in the modern, hurried world of the “Anglo.” Indeed, one of its major attractions for Mexican families is the opportunity to bring the whole family together for activities that bridge the generations, as they celebrate and affirm their Mexican identity and solidarity. Long-time immigrants and even Mexican Americans spending the day at a charreada will say “Me siento que estoy en mi México” (“I feel like I’m home in Mexico”).

Charro Equipment and Attire

For the participants, charrería is an expensive hobby. Becoming a charro requires a considerable investment of time and money. Besides the training and boarding of one’s horse, there is the equipment, including saddle, tack, and riding accessories, along with the requisite charro outfit: tailored pants, shirt, jacket, and bow; belt and fancy buckle; boots and spurs; and the characteristic wide-brimmed charro hat. The charro ensemble can range from fairly plain and basic to highly ornate, including saddles and belts embroidered with cactus thread, highly crafted silver buckles and spurs, cashmere suits

45 El Mercado Paisano Mines and Nichols with elaborate designs in suede appliqué, and intricately designed hats festooned in gold and silver thread. The least expensive charro hat, made of woven reeds, can sell for $150, while a standard felt hat with a modest amount of decoration costs $350, and a fully decorated one with silver and gold thread can cost from $1,000 to $1,500. A newcomer to the sport in the United States can expect to spend over $4000 getting started with a saddle, accessories, and an outfit of medium quality; this is over and above acquiring a horse, whose cost can begin around $800.32 For the truly dedicated charro, A hand made charro hat, festooned with gold and silver thread. physical prowess must always be complemented with elegant and well-tailored attire, and those with the means will own multiple charro suits appropriate for different situations, from ordinary use in the arena to highly formal outfits to wear on ceremonial occasions.

Most of the equipment and clothing used in charrería is produced in Mexico, principally by skilled artisans in small, family-owned workshops.33 These workshops are regionally clustered, primarily in the states of Jalisco, Zacatecas, Mexico, Guanajuato, Aguascalientes, and Hidalgo. A few items, such as botines, can be produced on a larger scale, though even when made in the shoe manufacturing centers of Guanajuato, they remain a specialty item. An increase in demand for charro goods thus has the potential to attract revenue and generate employment in these areas, most of which experience very high rates of labor migration to the United States.

32 Estimate provided by the owner of a shop in southern California that specializes in charro gear. 33 There are a few leatherworkers, saddle-makers, and tailors in the U.S. producing charro-style goods, but our informants tell us that this accounts for a minor share of the charro goods market, given the high cost of production in the United States, and the high quality and lower prices of the Mexican-made goods. 46 El Mercado Paisano Mines and Nichols

Below we discuss first the growing popularity of U.S. charrería that has sparked demand for charro products from Mexico. We then describe the production of charro goods, and how they are imported and sold in the United States. We conclude with a brief assessment of the impacts of this nostalgia market on the home regions and the role of government and others in assisting the producers of charro goods.

Growth of U.S. Charrería

Until fairly recently, involvement in the sport of charrería was the domain of those with considerable financial means or of professional charros. The Mexican upper classes descended from the old hacienda-owning families sought to maintain the tradition for themselves after the Mexican Revolution and the break up of the hacienda system. Wealthy businessmen and politicians joined them in promoting the sport. Those with ability but not the means to afford this expensive hobby might become professional charros and try to get hired with the teams owned by wealthy patrons. However, in recent years two new types of participants have been swelling the ranks of the sport: successful Mexicans immigrants living in the United States and second and third generation Mexican Americans.

While there have been charrería enthusiasts in Texas and California for several decades, it is only in the last decade that participation in the sport has expanded significantly there and in other states. An important source of new recruits has been once-poor migrants from rural Mexico who have settled and gradually moved into steady, well-paying work. Many had grown up tending livestock on their ranchos in Mexico, acquiring the skills involved in charrería and competing in informal competitions in their native areas. Participating in the formal version of the sport was initially beyond their financial means, but as they became established and their earning power increased, they sought not the symbols of success in U.S. society, but instead those associated with success in their home regions in Mexico. Most don’t speak English nor seek to climb socially in U.S. society but prefer to augment their prestige among their own community. In southern California, migrants who began working in low-wage construction, gardening, and

47 El Mercado Paisano Mines and Nichols restaurant jobs moved on to owning their own construction and landscaping businesses, restaurants, and grocery stores, all of which enabled them for the first time to afford the sport of charrería with all of its expensive trappings. Becoming charros was not only a sign of their hard-earned success in the United States, it was also an affirmation of identity, a display of pride in their Mexican roots, and an opportunity to stand out in their communities.

One measure of the growth of charrería is the number of lienzos, or competition arenas that exist. According to one lienzo operator in the greater Los Angeles area, his arena was the only one in existence when he purchased it seven years ago; since then six more have opened in the region. In addition, a charrería school for children and youths has been established at Pico Rivera, east of downtown Los Angeles, to train aspiring charros and escaramuzas.

The sport is overseen by the Federación Mexicana de Charrería, headquartered in Mexico City. The Federation establishes the rules and regulations governing the sport and selects the date and location for the annual federal “Congreso,” the culmination of the charro season when the most accomplished individuals and teams compete for top honors in what is the Superbowl of charreria. Currently, the two largest charro associations are from the Mexican states of Jalisco, Zacatecas, while the third largest is from California, reflecting the sport’s popularity in the United States.

Currently there are some 2,300 charros in the United States officially registered with the Mexican Federation, and the numbers are increasing by 150 to 200 new members every year.34 Of the more than 150 registered teams in the United States, the majority are in California, where they have grown from 35 teams in 2000 to 80 in 2005.35 Other teams are based in Texas, Illinois, New Mexico, and Colorado, all states with significant

34 This information was provided by an official of the Mexican Federation of Charrería based in Mexico City (telephone interview, August 3, 2005). 35 A charro team has between 8 and 20 members. 48 El Mercado Paisano Mines and Nichols

Mexican-origin populations.36 In addition to the dues-paying charros affiliated with the Mexican Federation, there are countless other charros practicing the sport independently. Unaffiliated charros in Nevada, Oklahoma, Georgia, New York, and Florida have recently expressed a desire to form teams and affiliate with the Mexican Federation.37

A further indication of the sport’s growing appeal is participation by second- and third- generation Mexican American youth. The older generation of charrería enthusiasts have seen the sport as a means of promoting family unity, pride in their Mexican heritage, and an identity-affirming alternative to the allure of drugs and gangs. Those who could afford it involved their children from an early age, providing them with charro uniforms, teaching their sons to ride and perform rope feats, and having their daughters join an escaramuza team. According to the Federation’s U.S. representative for charrería, participation by An infant dressed in a charro outfit for his baptism party in Napa, California. Mexican American youth has increased dramatically in recent years: whereas 10 to 15 years ago most participants were in their forties, now the majority are between the ages of 17 and 25.

Another new category of participants is men unaccompanied by their families who have migrated to the United States to find work in agriculture, construction, or other unskilled jobs. During the week they may be low-wage laborers, but, with hard work and sufficient savings, on the weekends they transform themselves into accomplished charros, gaining the approval of their elders and the admiration of eligible young women. Among migrants from the northern cattle-ranching states of Jalisco, Durango, and Zacatecas,

36 This information was supplied by an official representing the Federación Mexicana de Charrería in the United States (telephone interview, August 3, 2005). 37 Ibid. 49 El Mercado Paisano Mines and Nichols aspiring to be a charro has become a source of prestige, like owning a fancy car or pickup truck.

The expansion of charrería in the United States is naturally fueling the demand for charro gear: saddles, accessories, and all the wardrobe elements of the well-equipped and well- dressed charro. And as the sport grows, so too does the fashion for things charro: there are charro-themed weddings, quinceañeras (15th birthday parties), and baptisms and anniversary celebrations, all requiring elaborate, and often expensive, made-to-order charro suits, as well as charro-style outfits for infants, children, and women.

Production of Charro Goods

Many of the goods sought by the charro are handmade in small family-owned workshops in many states of Mexico. Skills are often handed down from father to son, or taught to employees through a system of apprenticeship. Larger workshops will hire additional help, often on a piece rate basis, when A workshop that produces charro belts and other leather goods. Jerez, Zacatecas. Photo: Eduardo Chávez. demand is high.

Our informants report that the majority of the workshops are located in the states of Jalisco, Zacatecas, and Mexico; additional specialty artisans are located in Aguascalientes, Puebla, Hidalgo, and Guerrero. Guadalajara is a major center of production, while the town of Colotlán, Jalisco is famous for its skilled leatherworkers, who produce saddles and belts decorated with cactus fiber (piteado). Zacatecas, too, has many small leather artisans, as well as small tailor shops producing charro suits. Hat making tends to be concentrated in the state of Mexico, while artisans in Puebla produce charro belt buckles, and silversmiths in Taxco, Guerrero make sought-after silver spurs.

50 El Mercado Paisano Mines and Nichols

There’s a small factory in Nochistlán, Zacatecas that makes botines, while larger-scale production of the footwear occurs in León, Guanajuato.

A Case of Local Production

Jerez is a provincial town in Zacatecas with a strong tradition of artisans producing charro gear. Here 11 small producers were interviewed for this study, and most fall in one of two categories: they are either tailors producing charro outfits, or leatherworkers producing saddles, belts, chaps, and other leather items, which are hand tooled as well as embroidered with piteado. The workshops are mostly self-financed, family- owned-and-operated businesses, with some employing additional Advertisement for a southern California business selling western wear artisans, especially for the and charro gear, including custom-made charro outfits. Source: Annual magazine of the Federación de Clubes Zacatecanos del Sur de piteado work. In general, California, n. 14, 2004: p. 48. the sewing machines, equipment, and tools are old and rudimentary. While nearly half of the producers interviewed reported that their sales had increased by a third in the last 2-5 years, the other half reported close to a two-thirds decline, complaining of the highly seasonal nature of the demand tied to the times when migrants return to visit. Nevertheless, they all reported sufficient sales to remain in business.

While none of these small businesses exports goods directly to the United States, the Jerez émigré community nevertheless constitutes an important customer base. Jerez has a high rate of out-migration, indeed one of the highest in Mexico, and over the years significant settlements have occurred in California, as well as in Nevada, Colorado, Illinois, and Oklahoma. Charrería is an extremely popular activity among Jerezanos, both locally and in the United States. When emigrants return en masse for home visits,

51 El Mercado Paisano Mines and Nichols especially in December for Christmas vacations, and in April for the week-long Jerez Spring Fair, the many lienzos throughout the region come alive with coleadero38 and charreada events, and the local charro artisans experience their busiest times as visiting migrants order new custom-made suits and accessories. At other times the artisans receive orders to ship goods via paquetería to the United States, to all the locations where Jerezanos have settled. The shipping is done piecemeal, none of the artisans have export licenses, and shipping costs are paid by the customer or the dealer.

Charro Goods in the United States

Charrería enthusiasts will sometimes purchase their charro gear direct from the artisan, or in specialty jarcería (rodeo gear) stores while on visits home to Mexico. However a full range of authentic charro gear can now be purchased in California from charro

Independent dealer in charro gear, displaying his goods at a Los Angeles area lienzo charro. dealers—generally small businesses and independent entrepreneurs who import the items directly from Mexico. These dealers complement their specialty items with some more generic cowboy items imported from Mexico by wholesalers.39

38 The coleadero is one of the events or suertes of the Charreada. It involves felling cattle by grabbing the tail of the animal. 39 Many of these items (including cowboy boots, hats, and attire) can be purchased from importers with warehouses and showrooms on Garfield Avenue, near Rosecrans in Los Angeles, where many dealers obtain their generic products. 52 El Mercado Paisano Mines and Nichols

Owners of “western wear” stores are one type of dealer. While western wear is a generic category that includes cowboy style gear such as Stetson hats, high-cut cowboy boots, and both American and Mexican-style cowboy shirts, pants, and suits, charro gear is in a category of its own. The stores carrying charro equipment are Mexican-owned businesses, and they import these goods for customers seeking “authentic” charro items. The annual magazine of the Federation of Zacatecas Clubs of Southern California often carries advertisements for these establishments, and photographs of their goods are displayed on charro-oriented websites.40

Another type of merchant selling these goods are the independent dealers who travel to charro events. Many established dealers got their start this way, selling charro goods out of the trunk of their car on the weekends, gradually building up their stock and sales. One successful dealer now has two large trailers to transport his goods, and is able to offer a wide selection of hats, belts, and accessories in sophisticated displays adjacent to the lienzo where participants are competing. These independent dealers also sell by appointment and can take orders for custom suits and hats.

Methods of Importing

Dealers who import and sell charro gear are themselves devoted fans of the sport, and most were actual practitioners. They start out on a small scale, personally traveling to Mexico to purchase goods direct from the craftsmen and transporting them across the border in their own cars or pickups. One dealer whose business has grown in tandem with the sport in the United States, now undertakes several buying trips a year to Mexico to purchase or place orders for his goods, visiting the small workshops of Jalisco, Zacatecas, and Guanajuato. He has obtained a license to import and now complies with all U.S. Customs regulations. Others who are just getting started in the business make the rounds of the workshops, but rely on the “hormiga” style of importing, that is they bring

40 See www.jerezcowboys.com for advertisements for three western wear stores in Southern California that feature charro gear: Pedley Vet, El Zacatecano and Herradura de Oro. 53 El Mercado Paisano Mines and Nichols the goods across the border in small quantities without an import license or a formal declaration for Customs.

Once these dealers develop a relationship with the producers of charro goods, they will place their orders via telephone or fax, requesting particular items; this practice now includes sending the customer’s measurements to order custom-made hats and suits. The producers will then ship the goods to the dealer through a small package service, i.e., a paquetería. If the dealer is in a hurry for the goods, and can afford it, they can be shipped via FedEx, complete with a Declaration for Customs and paying any import duties that may apply. More often the packages are sent by bus or air to a border town, such as Tijuana, where the dealer either personally picks them up or arranges for a third party to do so and transports them across the border, some complying with U.S. Customs regulations and others not.

As demand for charro goods has grown, informants report that mass-produced items, such as simpler outfits and botines, are becoming available through commercial importers and wholesalers in Los Angeles. Enthusiasts insist that these factory-produced goods are of inferior quality and that true charro prefers high-quality “authentic” goods. However, given the popularity of the charro look for everything from baptisms to birthdays, weddings, and anniversaries, it is not surprising to see an increase in mass-produced charro-style clothing and footwear, catering to those seeking the look but not willing or able to pay the price. One dealer in charro goods reported that the Chinese are now attempting to make charro suits and botines, and sees this as a threat, at least for lower- end goods.

Impacts on Home Region

While the principal market for charro goods remains within Mexico, the growth of the sport in the United States, combined with the identity-affirming appeal of charro-themed products among fans, generates local employment for small-scale producers in many migrant-exporting communities. Additionally, this demand is helping to preserve a uniquely Mexican craft that uses Mexican inputs. Given the highly specialized nature of

54 El Mercado Paisano Mines and Nichols production intended for a niche market demanding “authentic” craftsmanship, these small-scale producers do not presently appear to be at risk of displacement by large-scale manufacturers or Chinese imports.

Constraints to Growth

Most of these artisan producers possess limited formal education and report being constrained from expanding their enterprises by antiquated equipment, lack of credit, lack of business skills, and lack of knowledge of how to engage in direct export for the U.S. market.

External Intervention

Role of the government

In Jerez only two out of eleven producers reported ever receiving government assistance in the form of commercial and administrative advice. Most of the others indicated that they would welcome advice and assistance, whether from the government, from a bank, or from a commercial or private organization in order to improve their sales and marketing, and to be able to export directly to the U.S. market.

Role of the Federación Mexicana de Charrería

The Mexican Federation of Charrería has taken an interest in the well-being of the artisans producing the specialized items used in charrería and sponsors fairs where artisans can learn new techniques and display and sell their own work. However, it is not clear how many of the smaller artisans scattered across many Mexican states are aware of these fairs or are able to attend. The Federation does not presently sponsor programs aimed at strengthening the artisans’ business skills, nor does it provide advice or assistance for exporting their goods.

Producer organizations

While the charro craftsmen are price-setters, they are small businesses that operate independently of each other. We are not aware of any guild or association that might work on behalf of their collective interest, be it to seek appellation of origin designation

55 El Mercado Paisano Mines and Nichols for their products, negotiate better prices for inputs, or assist members with the logistics of exporting their goods.

FRESH PRODUCE EXPORTS CASE STUDY—MODELS FOR SMALL PRODUCER WEALTH CAPTURE BY HEAVILY MIGRANT AND REMITTANCE-RICH AREAS IN RURAL MEXICO

Introduction

In studying nostalgia markets, we came across various examples of export-oriented small- and medium-sized fresh fruit and vegetable producers who, if successful, could expand the employment and wealth generating capacities of their home area. In each of these cases, the producers were from areas of heavy migration to the United States and were hoping to use their U.S.-side contacts for investment in the enterprises or for help in obtaining marketing clout in the United States. All the producers face similar challenges. First, they have to produce a high quality product and maintain a constant production. They have to meet inspection standards required by the FDA and USDA. Next, they have to arrange for or hire someone else to arrange for transportation to the border and broker the border crossing. Finally, and perhaps the most difficult and challenging, they have to arrange for or hire someone to assure that the product is placed in stores where the consumer can purchase them. All these steps must be taken in a way that allows for them to recover their costs and make a profit.

Among the many observed attempts at tapping into the cross-border fresh produce market, we have chosen four examples that exemplify the challenges and opportunities facing small producers who wish to capture some of the wealth of their efforts for improvement of their lives and home regions. The four are: production of prickly pear (tuna) in Zacatecas (in the municipalities of Pinos and Jerez), of mangos in Lombardía, Michoacán, of edible tropical tubers in Tuxtepan, Oaxaca, and the production of vegetables under cover in Izúcar de Matamoros, Puebla. By discussing the four cases with respect to the methods and costs of production, the types of administrative organization, the control of prices at the different stages of the product chain, the support derived from U.S.-side contacts and investors, and the role of the Mexican government, we hope to identify the opportunities for small producers to keep a significant share of

56 El Mercado Paisano Mines and Nichols the wealth they are producing. Below, we review for each case study the basic elements mentioned above. Finally, we compare across case studies to draw out lessons about how small producers can enhance their share of the wealth created by their efforts.

Prickly Pears (Tunas) in Zacatecas

History of exports to the United States

The prickly pear is a crop that can contribute to a livelihood in semi-arid areas where rain-fed corn and bean crops are much less reliable. Unfortunately, we were unable to find export or import data on the prickly pear from Mexico to the United States. The production data indicate that cultivated acreage went up in the 1980s and then has been flat since then. Data available for 2001 from the Mexican government indicate about 50,000 cultivated hectares in all of Mexico. This is very similar to area by hectare data reported in the late 1980s.41 We know from speaking to produce buyers for U.S.-based Latino supermarkets that considerable fruit has been purchased for some time from Mexico. These buyers point out that the population of Mexican-born individuals has been ballooning in recent years and that the market for Mexican products is increasing.42 According to these sources, there is not a U.S.-grown prickly pear that is acceptable for the immigrant market.43

Organization of producers Prickly pears on display at a southern California The prickly pear (or tuna) producers of supermarket in a Latino neighborhood. Zacatecas are located in two areas. In Pinos, the largest production area in the country, there are two producer-owned

41 See Hectares, Valor de Nopal Tunero, Sagarpa (Secretaria de Agricultura, Ganaderia, Desarollo Rural, Pesca y Alimentacion) Reporte Anuario 2001 (http://www.siap.sagarpa.gob.mx/integra/AnDDR2000.html). For earlier numbers see “El Nopal Tunero,” Eulogio Pimienta Barrios, Universidad de Guadalajara, Guadalajara, Jalisco, Mexico, 1990. 42 The estimated numbers of Mexican-born individuals in the last 25 years has grown from 2.2 million to 10.6 million (see Passel, p. 37). 43 Interview with the produce buyer for a supermarket chain catering to Latinos in southern California. 57 El Mercado Paisano Mines and Nichols corporations, Inprotuna (Integradora Estatal de Tuna) and Tunavic (Integradora Tunavic). The producers in each of these corporations produce about 5,000 tons of the crop a year. They both have packinghouses and storage facilities in La Victoria, Zacatecas. A third entity is a private firm Nava Enterprises near Jerez, Zacatecas. Nava produces about 200- 250 tons a year on his 40 hectares of cultivated land. Together, they control most of the exports to the United States from Zacatecas.

The two corporations in Pinos are owned by small producers. The output per producer seems to be a bit larger in Inprotuna than in Tunavic. Tunavic has 79 members who have 910 hectares among them or about 12 hectares each. Each member produces about 63 tons or about 5 tons per hectare. Inprotuna has fewer owner producers (40), but each produces about 125 tons. Inprotuna’s area per member is a bit larger. Across the prickly pear-producing southeast region of Zacatecas, the 3,500 producers tend to have smaller plots on average than the owners of the two intergradores—3.8 hectares each. It is safe to assume that the 120 member-owners of the two corporations are among the medium- sized, though still small, producers in the area.

In each firm there is a general manager who reports to a board chosen by the owners. The manager handles all the tasks needed for the processing, storing, and selling of the product, including arranging for exports.

Nava enterprises is owned and managed by one family. It produces also about 5-6 tons per hectare on its land. Nava also has a packinghouse on his property.

Role of the government

The state of Zacatecas has helped with technical support with all three firms and has helped with the design of the cultural practices. Mr. Nava reports that SAGARPA also helped him with preparing for paperwork requirements of exporting goods. Inprotuna also reports that the state helped with crucial support for the cold storage (apaceramiento) system. This off-season cool storage system has been critical to their ability to achieve a higher price for their product.

58 El Mercado Paisano Mines and Nichols

Cost structure

The costs of production for the farmer are significant. One manager spelled out these costs in detail (see Table 2). Prickly pears are sold by the 20-kilogram box (50 boxes per metric ton). If we assume that the average grower produces 5 metric tons per hectare, then he would be selling 250 boxes per hectare.44 The price varies wildly between

TABLE 2. COSTS PER HECTARE OF PRODUCING PRICKLY PEAR Inputs (materials/labor) Pesos/Hectare

Chemical fertilizer 800

Pruning 240

Weeding 900

Machine-prep land 700

Make rows (machine) 200

Pesticide fumigate (3x) 1800

Chicken fertilizer 500

Irrigation Drip 600

Total 5,740

approximately 20 pesos a box in August to 100 pesos in January. His on-farm costs are 5,740 pesos per hectare; therefore, in order to break even (with respect to his variable costs) he must obtain about 23 pesos per box.45 In order to make a profit over the long run, he must earn more than 23 pesos to cover his fixed costs, including the cost of land, vehicles, and tools. Also, this does not include the costs of packing and storage. Therefore, at peak season at 20 pesos per box, the grower stands to lose money. However, the price often rises above 20 pesos as the season progresses. In addition, both corporations are instituting a system of cold storage that is extremely promising. Behind one-foot thick adobe walls and buried in sand, the harvested crop can be stored at 12 degrees Centigrade for up to six months while losing only 5% of their weight and

44 The manager of Tunavic estimates that production averages between 4 and 5 metric tons per hectare. 45 5740 pesos/250 boxes per hectare = 23.0 pesos. 59 El Mercado Paisano Mines and Nichols experiencing some skin discoloration.46 However, the sugar content is not affected. Inprotuna is already selling 50% of its production off-season for higher prices.47 Tunavic also has a nascent cold-storage system but has much less of its production under temperature protection.

Both corporations have packinghouses. At Tunavic, they use about 25 people in dethorning, packing, and loading of the fruit. They are paid about 120 pesos a day. Tunavic producers sell only about 2,000 tons through the corporation, while owner- producers sell the other 3,000 tons to traditional middlemen who have or have access to packing facilities. (Tunavic would like to enlarge its packing facilities.) Inprotuna employs 200 workers. However, this includes the harvesters. They earn 100 pesos a day at the entry level. In both cases, most employees are relatives of the owner-producers of the corporations. Nava Enterprises also has a packinghouse, although there is no mention of cold storage. The owner now pays 200 pesos a day to about 50 workers, which include cutters, dethorners, packers, and loaders. The higher wage in Jerez may be due to the extreme rate of out migration from that area to the United States. Nava began paying 50 pesos a day only 4 years ago, but has had to up his wages to retain workers due to a shortage of labor.

Export methods

The export methods and the potential profit to be derived from exporting vary among the three firms. First, it should be kept in mind that the price of prickly pear in the United States can be quite low during the peak season from July to November. Moreover, the price may have gone down on average over the last few years according to an importer in Los Angeles. Tunavic has sold only small quantities of its production for consumption in the United States. They mostly send their product to Reynosa, Tamaulipas, where it is sold to a Mexican buyer who arranges for it to be sent across the border and sold in the U.S. market. Tunavic reports that it would like to be able to place its product directly north of the border since it is not satisfied with the price obtained by this indirect method.

46 See “Avances Sobre Las Respuestas de Tuna Variedad Burrona, Apacerada Comercialmente,” Barrios, R.G. et al, Profesores Ingeneria de agroindustrial, Universidad de Chapingo, 2004. 47 According to a newspaper article the capacity for cold storage is 500 tons (see Imagen de Zacatecas, 10/11/04). 60 El Mercado Paisano Mines and Nichols

Inprotuna had a high export year in 2003, with 50% of its production sold in the international market. In 2004, this quantity dropped back to 20%. Inprotuna places its product through a U.S.-based Mexican buyer who supplies all the crop for a large Latino- oriented supermarket chain in southern California. The buyer reported that at the peak he was getting three truckloads (containers) of pear per week from the Zacatecano corporation. The Inprotuna manager could not say how much he will export in 2005 since he did not yet know the price.

Nava uses a totally different and direct system for his exports. He has three of his sons placed strategically in the United States. One is in California and handles the Los Angeles and San Francisco regions, a second is in Denver and handles the mountain area, a third is in Chicago. Mr. Nava took classes in how to fulfill the requirements of inspection and the passing of produce across the border. He usually can get his trucks passed with a phone call. Also, Mr. Nava lives in the United States (Ventura, California) for most of the year and returns to Mexico mostly for the harvest season. In this way, he can keep a personal watch on the marketing of the product in the various regions in the United States and Canada. However, despite this direct marketing and personal supervision of the enterprise north of the border, he reports that at times there is not a very good profit in some of the U.S. markets, and he has to depend on other markets in the United States and Canada to show an overall profit.

Packers’ share

In all three firms, the companies do some or all of the processing, i.e., the dethorning, packing, and loading of the product. Tunavic’s producer-owners still have to have most of their production packed extramurally due to lack of packing space. For these sales, the Tunavic growers bargain individually with buyers to set a price.

Investment and help from the U.S. side

The Pinos area has definitely benefited from the remittances of family members in both of the producer-owner corporations. They are both self-financed (partially from U.S. earnings) and have received very little in financial support either from the government or

61 El Mercado Paisano Mines and Nichols from banks. Mr. Nava is also self-financed in part from U.S. earnings. He earned his money as a worker and self-employed fruit merchant in the United States before embarking on his prickly pear enterprise in 2000. The U.S.-based Mexican buyer that Inprotuna uses has provided extensive services to the corporation. He sends his trucks to Guadalajara to pick up the boxes to pack the crop, delivers them to Pinos, and arranges for the transportation, border brokering, and placement of product in supermarkets.

An independent Los Angeles–based immigrant from the southeast region of Zacatecas, who has land in Zacatecas planted in prickly pear, is actively pursuing a strategy of improving the presentation of the product for the U.S. market. He is trying to obtain interest in supermarkets near where he lives in Los Angeles for prickly pears presented in baskets like strawberries. He is working with Tunavic on the project but has yet to import any tunas.

Impact on the home region

In all three firms, employment generation has clearly been stimulated by the expansion of the market north of the border. The better prices generated by the cold storage system and by the opening of the international market have allowed for investment in drip irrigation, fertilizers, and other methods of improving output per hectare. The managers of the two producer-owned corporations said that the two most important issues to improve their business was for the government to improve the roads between the packinghouse and the fields and for help obtaining better prices for their product.

Mangos of Lombardía, Michoacán

History of exports to the United States

Although the market for mangos in the United States is largely Latino and quite substantial, the importation of fruit from Mexico to the United States only began in recent years. Mexicans entered the market only in 1993 (see Table 3). And, due to competition from other areas such as Peru, they have actually suffered a relative decline in recent years. It is interesting that export to California actually went up in 2004, the year in which our case study investigation took place (see Table 4).

62 El Mercado Paisano Mines and Nichols

TABLE 3. MEXICAN MANGO EXPORTS TO THE UNITED STATES (IN MILLIONS OF DOLLARS) 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 0.0 39.2 43.1 43.9 47.6 55.1 46.7 47.9 41.1 42.9 44.1 38.6 34.6 Source: U.S. International Trade Commission (http://dataweb.usitc.gov/scripts/user_set.asp

Organization of producers

There are 1,200 mango producers in the Lombardía (municipio Gabriel Zamora) region of Michoacán. Their trees cover about 4,000 hectares so that the average orchardist has about 3.3 hectares. The producers have traditionally (since 1993) been independent farmers who have dealt directly with packers and exporters as individual units. There is a similar organization of orchardists throughout the 12 mango producing municipios of Michoacán.

An important transaction for them is to deal with the packers. At present, there are three private packers in the municipio. The packers charge a per-box fee for cleaning, sorting, and boxing the fruit for shipment. Most of the fruit from Lombardía has been entering the international market for some time.

TABLE 4. MEXICAN MANGO EXPORTS TO U.S. (IN DOLLARS) 2001 2002 2003 2004 Percent increase 2003-2004 CA 80,322 37,215 512,529 1,237,832 141.5 TX 18,523,780 19,203,169 16,871,947 16,317,655 -3.3

AZ 24,274,623 24,846,250 21,158,131 16,999,789 -19.7

Source: U.S. International Trade Commission (http://dataweb.usitc.gov/scripts/user_set.asp)

Traditionally, large-scale buyer-shippers (intermediaries) of the fruit pay a price that they set directly and impose on the producers. The buyer-shippers have handled (since 1993)

63 El Mercado Paisano Mines and Nichols all the subsequent steps of transportation, border transactions, and placement of the product at the retail level in the United States.

In 2003, the growers organized a cooperative in the area (Los Mangueros de Lombardía) to try to set up a grower-run packinghouse. They also began steps to create a company north of the border that would be able to bypass the intermediaries. The cooperative in the Lombardía area has not yet been able to put up a packinghouse. The directors of the cooperative in Lombardía say that the state government that was going to subsidize the endeavor has not been able to find the resources to follow through on its promise. However, the company (Lombardía Produce) that was to ship and sell fruit in the United States did get off the ground in 2004.

Lombardía Produce (LP) was an idea created jointly by people living in the town and those living in Los Angeles, where the biggest group of townspeople has settled north of the border. The Hometown Club of Lombardía-origin people became actively engaged in the process. On the Michoacano side a Sociedad Productivo Rural (SPR) was formed to handle the selling of produce from cooperative members to LP. This entity came to be referred to as “la cooperativa” by those involved. On the U.S. side, LP was set up as a private company. A native son of Lombardía and brother to three mango growers became the general manager of the company. There was a trial run in 2003 when the future general manager successfully distributed seven truckloads of fruit to supermarkets in the Los Angeles area.

The Mexican SPR was headed by a former presidente municipal (town mayor) of Lombardía and a mango grower with 14 hectares of land; he had finished his high school education and had done some further study. The general manager of LP is a charismatic figure and an advocate for fair treatment to his fellow townsmen in Lombardía. He was a very successful tire and rim salesman in Los Angeles who has not completed primary school.

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Role of the government

The state government has played a crucial role in the functioning of both the Lombardía- based cooperative and in the launching of LP. On the one hand, the government came through with remarkable generosity. The head of the Mexican SPR reported that the state government provided 4 million pesos to get LP off the ground and 4 million pesos to bail out the losses at the end of the process. He was not sure whether it was all given as a grant or whether some was intended to be a loan. This subsidy from the government sparked widespread interest in the cooperative and most of the 1,200 growers in the area subsequently joined it. On the other hand, according to the growers, the government did not come through on promises of providing support for building the packinghouse.

Cost structure, packers’ share, investment from U.S. side, and methods of export

We were not able to get a full accounting of on-farm costs of production. However, the grower leadership in Lombardía complained bitterly about two cost drains on their ability to make a decent return on their production. The first drain is the packinghouse and the second is the international intermediary. The packinghouses charge 6 pesos about 60 U.S. cents for packing a 4.5-kilogram box. The prices paid for the fruit to the growers vary wildly from 80 centavos to 5 pesos per box depending on the season, the size of the harvest, and the level of demand. However, the intermediaries usually pay the growers close to the bottom of the price range for a box of fruit. The growers report that these two price setters, the packers and intermediaries, squeeze the grower to the point where there is hardly any profit left. The grower-informants maintained that in Lombardía, if the growers could make a decent profit and invest properly in their orchards, they could produce considerably higher yields than the 6 tons per hectare, which is their current level. Also, the greater input utilization would allow them to produce in January, February, and early March, allowing them to catch a more lucrative market window.

The 4 million peso subsidy from the government allowed LP to get off the ground running in the 2004 season. The minimal costs of the packing and shipping of the product are high and the initial cost of obtaining the trucks, boxes, and paying for the pack were covered by this initial government subsidy.

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TABLE 5. OFF-FARM COST OF MANGO TRUCKLOAD (4,500 BOXES) SENT TO LOS ANGELES (ESTIMATES IN DOLLARS—NOT INCLUDING ADMINISTRATIVE COSTS IN LA) Activity Amount/box Per truckload

Packing .60 2,700

Purchase of box .60 2,700

Cost of truck .78 3,500

Total 1.98 8,900

The costs listed in Table 5 do not include the costs paid to the producer nor the administrative costs in Los Angeles. In addition to paying almost $9,000 to get the shipment to Los Angeles, the general manager arranged for the rent of a large warehouse in Los Angeles in the produce district and paid the growers very high prices for the product. He also had high administrative costs in Los Angeles. At one point, LP had 16 employees in Los Angeles.

The general manager was determined to put the middleman out of business in the Lombardía area by paying a high price for the fruit. The low price paid by the middleman is, of course, one of the major complaints of the growers. Since it cost the general manager about $2 a box just to get the truck to Los Angeles, every dollar he paid the growers cut into any margin made by LP. The wholesale market in Los Angeles oscillates through the season starting at perhaps $6 a box in March and dropping to $2.50 by May. However, the general manager paid $4 a box to the growers consistently. Since the average per box wholesale price in Los Angeles may have been closer to $4 a box, he was suffering an average loss of $2 a box.48 This subsidy that was paid for by the Michoacano government had a big impact on the overall Mexican mango market. The price paid to the growers stayed high and the middlemen competitors were negatively

48 One employee of Lombardía Produce reported that the manager continued to pay the growers $4 a box in Lombardía while the wholesale price in Los Angeles had fallen to $2.50 a box. 66 El Mercado Paisano Mines and Nichols affected by having to pay high prices for the fruit. As seen in Table 4 above, the amount of fruit moving to California jumped that year due in part to the activity of LP and its indirect impact on prices.

According to the local growers, the middlemen retaliated against the cooperative effort. They managed to pull strings to deny boxes to the cooperative and to make the USDA inspection process difficult for cooperative fruit growers; both of which delayed shipments. In addition, the packinghouses collaborated with the middlemen and accepted immature, low-quality fruit that demoralized the market.

The LP general manager fought back on the Los Angeles side. When a truckload of fruit came in over mature and he could not place it in the wholesale market, he went straight to supermarkets and to hometown clubs to sell the product. With the help of sympathetic Latino television reporters, he launched a publicity campaign to the Latino market stressing the cooperative venture of LP and the fact that organized small growers were bypassing abusive, price-setting middlemen through the venture. The campaign had considerable success and he was able to sell most of the shipment, plus many consumers began requesting Lombardía mangos by name.

In addition to the fact that the manager was paying the growers a price that assured the enterprise a loss, other problems plagued the nascent attempt to bring economic justice to the growers. The general manager himself admits that the company had severe administrative problems. He took on two non-Michoacano Mexican partners with experience in Los Angeles produce markets. Unfortunately, they reportedly cheated him. One allegedly embezzled $50,000 from the firm by manipulating a deposit for the locale in Los Angeles. Adequate accounting of flows of product and supplies were not kept. The company was overcharged for used equipment that they bought at new equipment prices. One of the biggest problems was an inadequate effort to charge for the fruit they sold. At one point, he sold five truckloads of fruit to a buyer in Chicago who never paid a penny for the shipments. These five truckloads probably represented a cost of over $100,000.

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Impacts on the home region

The observers of LP agree on many points. The motives and charisma of the general manager are universally admired. In order to fund LP and to pay off its debts, he made large personal financial sacrifices. The original concept of helping the mangueros of Lombardía, and eventually other growers, to avoid the abusive behavior of middlemen was a noble cause. The government subsidy was crucial to get the project off the ground. Many individual growers benefited during the 2004 season from the high prices sparked by Lombardía’s purchase price, but they point out that many errors were committed. For example, the project began without an adequate business plan. The general manager, although charismatic and an experienced salesman, lacked the proper business training to be in charge of business decisions. The firm also did not seek adequate advice nor receive sufficient technical assistance from people experienced in business practices. At one time, the firm was paying employees without deducting for social security. The firm did not put into practice a coherent accounting system that required prompt payment of and collection of bills. When the auditors from the Michoacano government showed up in Los Angeles in the late summer of 2004, they were appalled by the mess.

Despite the apparent failure of LP, it has already become a legendary case of good intentions gone awry. It could be a useful model of how to avoid the pitfalls that sunk a noble effort.

Another attempt to bring in Michoacano mangos

In the 2005 season, a U.S.-based Michoacana entrepreneur made an attempt to bring in mangos from Nueva Italia, Michoacán. This is a town just south of Lombardía. She had heard of the problems of LP but had experience importing dry goods from Jalisco and was certain that she knew how to pull it off. She got all her papers in order. She registered under the Perishable Agricultural Commodities Act (PACA). She managed to obtain a contract for delivery of mangos with Ralph’s grocery stores and arranged to be paid as a corporate account through the Electronic Data Interchange (EDI) system. Next, she arranged for transportation, found a broker at the border, and went down to Nueva Italia to arrange for the fruit to be loaded onto her trucks. Unfortunately, she had nothing

68 El Mercado Paisano Mines and Nichols but problems with the packinghouse. They forgot to label the fruit and the boxes packed in the middle of the truck contained spoiled fruit. She could not market the fruit and ended up losing $20,000 and harming her reputation with Ralph’s. However, she is determined to try again. This time she will hire her own agents in Michoacán to monitor the quality of the fruit. She thought she had full insurance coverage but realized that it was not complete. She says the Michoacano packinghouse can supply fruit all year (of different types) and she wants to be part of the product chain. She would like to be part of a system in which the growers were guaranteed a fair price for their product by developing the right protocols that protect all the participants in the market.

Edible Tubers from Tuxtepec, Oaxaca

History of exports to the United States

The importation from Mexico to the United States of humid tropical roots like taros, mandiocas, and yuccas actually began only recently according to U.S. International Trade Commission data. Very large quantities have been coming for many years from other

TABLE 6. EXPORTS OF FRESH AND DRIED TROPICAL TUBERS FROM MEXICO TO THE UNITED STATES 2002 2003 2004 Percent change 0 81,080 182,290 124.80% Source: U.S. International Trade Commission countries to the United States.49 However, all Mexican imports are to California and they began recently. The total importation of the Mexican product appears to have occurred as a result of the case study participants that we mention below.

Organization of producers

The producers are organized in a cooperative venture called Agroempresarios de Paploapan S.P.R. de R.L. (AP). The firm has three semi-autonomous but interrelated parts. The administration and technical direction is in the hands of a technical service

49 The importation from all countries to the United States of fresh and dried tropical tubers has oscillated around $20 million since 1996. 69 El Mercado Paisano Mines and Nichols firm. This group, made up of eight individuals, includes accountants, specialists in pest management, a specialist in rural development, and an expert in humid tropical plants. A second group forms a marketing firm. A third firm consists of about 50 producers. The exact relationship among the firms was still being worked out at the time of the interviews.

Role of the government

Up to this point, the only involvement of Mexican government agencies in the activities of the AP seems to have been a study done by Bancomext on the potential export markets for tubers.

Cost structure and export methods

We do not have detailed data on the costs of production in the states of Oaxaca and Veracruz. The operation straddles the two states: about a third of the production occurs in Veracruz, and two-thirds in Oaxaca.

The cooperative manager, who is the son of a local farmer and has a Master’s degree in rural development, explained how the cooperative has developed. First, he pointed out that his home area has an ideal climate for growing humid tropical plants. There is ample land, water, and people to successfully raise output for export. He said that in the 1990s, a small group of growers from the area tried to sell tubers both nationally and for export. They soon found that the intermediaries did not leave them a sufficient profit either to make a living or to improve and expand their production. They were able to involve Bancomext in a study that was paid in part by the government bank and in part by the growers in Oaxaca. The results covered markets in New York, Miami, Chicago, Los Angeles, and Canada. There appeared to be substantial markets, especially among the Asian and Caribbean immigrant populations of these areas, for humid tropical crops. To avoid the problem of the abusive pricing practices of some intermediaries, the manager

70 El Mercado Paisano Mines and Nichols went directly to produce marketing association meetings in the United States and to similar meetings in Canada. He carefully interviewed potential intermediaries. He says that at first the prices he received “were laughable.” He insists that a good relationship with people who can be trusted is absolutely essential to success in the export business. He found a U.S.-based Mexican importer at one of these meetings and forged such a

Growers and technical advisors of the Oaxaca tuber-growing cooperative, Agroempresarios Papaloapan (AP). Photo: Courtesy Sergio Rodriguez. relationship. After receiving quality deliveries, the intermediary has traveled to Oaxaca to visit the production area and has loaned the AP money to expand its acreage and output. In effect, the intermediary has become an engine of rural development for this region of Oaxaca.

The production had started out small due in part to a lack of seeds. However, the opportunity appears very promising. The price of a 50 pound sack of big taro that the

71 El Mercado Paisano Mines and Nichols intermediary sold for $12 a few years ago now gets $50 in Los Angeles (wholesale price). This is due to a shortage of the crop as a result of a major disease epidemic in the Dominican Republic, the original source of the product for the Los Angeles–based buyer. At present the AP is shipping only one truck a month to Los Angeles. The buyer sends down a truck at a cost of $4,000 to pick up the product. However, the production is expanding as more seed is produced and neighbors of the cooperative are beginning to join the project. The cooperative has a contract to deliver 50 truckloads of product between September of 2005 and April of 2006 with the same intermediary. They are getting between $25 and $32 per 50-pound sack, which is much greater than obtained from his previous middlemen. The current buyer pays promptly upon arrival and checking of the product.

The manager is expanding his cooperative slowly and carefully. Only qualified growers are gaining entry into the potentially lucrative association that the cooperative has with the international market. He distributes seeds to perhaps 50 growers at a time in the area and chooses only the most qualified five as future members of the cooperative and recipients of more seeds. He is careful to exclude people who are not committed to producing high-quality product at adequate levels.

Packers’ share

At present, the cooperative has inadequate packing facilities. They hope to be able to improve these so that they can create a more value-added product. For example, drying the product before sale has potential.

Investment and help from the U.S. side

The AP has benefited from the remittance income of U.S. migrants who have joined the cooperative. However, the main potential for marketing the product has come from a non-Oaxacan Mexican intermediary with excellent marketing contacts on the West Coast of the United States and Canada. The intermediary, at present, handles all the prerequisites for inspections, border-brokering, and marketing. The intermediary may send a qualified person to train the locals on how to prepare for the USDA inspections.

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Impact on the home region

The AP has passed beyond the stage of being a pilot project to one of being a model for other crops in the area. There is great interest in joining the cooperative among local residents. The administrative structure that includes experts in accounting, technical topics, and marketing has demonstrated great potential for future growth and employment generation that will retard international migration.

Vegetable Production Under Cover in Izúcar de Matamoros, Puebla

History of exports to the United States

The importation from Mexico to the United States of vegetables under cover is substantial, but official import data does not provide information for this category. In any case, our case study producers from Puebla would not be included in these numbers, since they are seeking but have yet to place their product in the international market.

Organization of producers

In the Mixteca Poblana area near the border of Guerrero and Morelos on the Pan American highway is the city of Izúcar de Matamoros. It has the benefit of having ample water and fertile soil. In recent years, the flow of migrants north to the United States has increased markedly.

In the last few years the nascent industry of producing vegetables under cover has been expanding in the region. One native son who has become a successful businessman in the United States is a prime driver of this development. He has bought 120 hectares of land in the area of Izúcar and converted 20 hectares to covered vegetable crops. He has created an assembly plant for the greenhouses (invernaderos) and is selling them to his neighbors. He has hired three agricultural engineers to help him with his production. One of them is a partner in the greenhouse production business. One of the engineers is a manager, one handles the mechanical issues, and one is a specialist in diseases and insects. The firm has a packinghouse for the fruit and a storage facility on the farm. There is excess capacity available for neighbors’ production when this occurs. The firm, which we will call “RG,” is privately owned and run.

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Role of the government

The Puebla state government has begun a program that it calls “Ayuda al Campesino.” As part of this program, the government will pay one-half of the cost of 3,000 square meters of greenhouse cover if the farmer agrees to pay the other half, has legal title to his land, and has sufficient water to irrigate. The program is enlisting 27 growers at a time into the program. The first 27 are already signed up, but it is too early to measure any results. Unfortunately, there appears to be little or no technical advice accompanying this government program. The pest engineer working for RG was interested in advising the small growers, but it was not feasible without a government subsidy or an effort by growers to form a cooperative arrangement to seek advice as a group.

Cost structure

At present, RG is planting sweet peppers, tomatoes, and other products. They say that the greenhouse conditions would allow them to shift to organic production if a market appeared. The firm hopes to expand into cucumbers. The firm’s pest control engineer reports that the greenhouse design, which he has worked on for over eight years, is able to produce output that obtains a 30% price premium in the market.

The metal or fabric cloth (malla) used to cover the greenhouses has a mosquito netting density and, though it allows in sunlight and some moisture, keeps out harmful pests. The installation of the greenhouse does not demand high skill levels. The leveling of the ground by tractor requires a skilled machine operator but the installation of the green house comes as a kit and is put together with screws without soldering.

The inputs for the greenhouses come predominantly from Mexican suppliers—the steel from Monterey, the cloth from Michoacán, and the irrigation equipment from another Mexican firm (Rex Irigación).

Export methods

The company has been looking for ways to export the crop but cannot identify an intermediary that will provide an adequate price. One intermediary-buyer in Los Angeles

74 El Mercado Paisano Mines and Nichols with a large vegetable and fruit import business stressed to us that covered vegetables from Mexico have a good future in the U.S. market.

Investment and help from the U.S. side

The owner of the RG company—a man with deep contacts to the Poblano immigrant business community in the United States—believes that there are potentially 40-100 Poblanos who might be willing to invest in the covered greenhouse project if markets could be assured for the output.

Packers’ share

At present there is ample packing capacity in the firm RG to pack local production. If the program expands, then more capacity will need to be acquired.

Impact on the home region

The RG firm is blazing a trail towards an export potential. The government of the state is supporting the effort with subsidies to greenhouse farmers. Export of greenhouse products are viewed by knowledgeable observers as a real option. The effort, if successful, could provide employment and alternatives to migration north of the border.

Comparisons Across the Fresh Produce Case Studies

The case studies demonstrate that remittance income can help finance export-oriented business among small producers in rural Mexico. This observation, however, does not guarantee that the wealth generated by this infusion of resources will necessarily redound to the small producers or benefit the local areas. The relative share of the wealth remaining with the producers determines in large measure how much local development is stimulated. The producers of prickly pear, mangos, roots, and covered vegetables all report that obtaining a fair price for their produce is a fundamental problem because they face price-setting packers and buyers.

The example of the Agroempresarios de Papaloapan (AP) is perhaps the clearest example of an apparently successful way to achieve this end. The manager actually attended produce marketing association meetings in the United States and sought a “fair” buyer for the products of the small producers in Oaxaca/Veracruz. Another example of a

75 El Mercado Paisano Mines and Nichols successful attempt to avoid the middleman is the private prickly pear producer in Jerez, Nava, who has been astute in using his own and his children’s presence in the United States to move the product across the border and market it north of the border. Another effort to avoid middlemen is found in the Mangueros de Lombardía who sought through government help to build a producer-owned packinghouse. Unfortunately, they are still working to make this a reality.

There were innovative approaches among the case study examples both in technical and administrative approaches that allowed the small producers to retain price-setting power in the face of sometimes fierce market partners. The prickly pear producers in Pinos, especially at Inprotuna, have had considerable success keeping the fruit in cold storage until the price improves after the harvest season concludes. The Zacatecano government has apparently played a key role in this success. In Puebla, the use of cloth-covered greenhouses has taken advantage of the hot tropical climate of the area, and maintained control over the severe insect infestation that can damage the price obtained for the product. Again, the state government along with one innovative Poblano expatriate has pushed along this promising process.

There are also been important administrative lessons to be learned from the case studies. The prickly pear producers in Pinos have used a producer-owned private corporation with a professional manager to efficiently run and expand their businesses. The business design of the tuber-growing cooperative in Oaxaca (AP) offers an interesting design for administration. The producers, who have little education and experience with management, are left to do what they do best—produce. At the same time, technical and administrative functions are left in the hands of trained professionals in a separate entity, and the marketing functions are assigned to specialists in a third firm. Perhaps the most instructive administrative lesson of all is the case of Lombardía Produce. The advantage of bypassing the middleman was quite clear. The market for the product was evident. The support of the state government was present. Yet the inability to put in place a business plan run by experienced administrators and accountants doomed a noble undertaking.

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Ayoquesco Nopal Leaf Exports Case Study

Background

Ayoquezco de Aldama is a community of approximately 6,000 located just south of Zimatlán de Alvarez in the central valleys of Oaxaca. Its name is Nahuatl for “place where the turtles come from,” and bright green turtles populated the area until the local lake was drained. About 500 older residents still speak a variant of the Zapotec language, although its use has been dying out. The town is on a major paved road and has electricity, a water system, and a secondary school.

Of the 6,000 residents, approximately half are in the United States, primarily in California, with another group in Mexico City. Migration began with the Bracero Program in the 1940s, and members from this community had apparently already settled in the United States in the 1950s; there are some families in East Los Angeles and Montebello who have been settled there for 40 years. People have traditionally worked in agriculture in California and there was considerable back-and-forth migration. Ayoquezco had an important tobacco industry, in which more than 1,000 residents worked. It was shut down in the late 1970s, and this led to large-scale migration to the United States. About 80% of the migrants in the United States are men.

Demographic characteristics of the region were obtained from a survey of 75 typical households.50 It showed that 65 households (87%) had family members in the United States (or that these 65 households had 243 members in the United States) with 90 percent in California—61% were in the Salinas-Castroville area; 12% in the San Jose- Gilroy area; 7% in Fresno; 7% in Los Angeles; 9% in the state of Washington; 2% in north county San Diego; and 1% each in Oakland, Oxnard, and Cincinnati, Ohio. Over 78% of the migrants were working in agriculture, principally lettuce and berries along the Central Coast, and 76% were without documents. In fact, 80% had migrated after 1990. Two-thirds of the people interviewed in Ayoquezco expressed the desire to migrate to the United States.

50 These families are members of the Mujeres Envasadores de Nopales de Ayoquesco (MENA). The structure of the organization is explained below. 77 El Mercado Paisano Mines and Nichols

Project to produce Oaxacan food products

Ayoquezco is well known in the central valleys of Oaxaca for producing the best nopales (cactus leaves), which has been an important activity in the village for almost 100 years. Most of the households in the town engage in traspatio (backyard) production of nopal. Women harvest nopales twice a week and sell them individually in the market in Oaxaca. They produce a variety of nopal called lenguita or “San Gabriel,” which is less thick than many nopales.

As more and more men migrated to the United States, the women who remained in the village came to depend on selling nopales and other food products (chocolate, tlayudas, and mole) to sustain themselves. Sixty percent of the interviewed families received remittances, but 40% did not, demonstrating the importance of the vendor activities of the women.

• The mole has been produced in homes and is sold locally in the region in small villages. The women had the idea to sell it to migrants in San Quintín. • The chocolate is also produced in homes and sold locally. Some 37 women were involved in the early stages of upgrading this production, with the intention of producing about 1,110 kg. per week. • The tlayudas involved a group of 27 women, with the intention of producing about 200 tortillas a day. Again, the intention was to market some in San Quintín.

One of the older women (Francisca), who did not have relatives in the United States, decided that they should organize themselves in order to cooperate and to seek assistance. The proximate cause was the periodic arrival of nopales from Puebla, which would drive down the price in the Oaxaca market to almost nothing, as opposed to a normal price of 5-10 pesos/kg., and a high price of 15 pesos/kg. in the winter. They formed an informal cooperative in 1999, which was formalized in April 2002 as SSS Mujeres Envasadores de Nopales de Ayoquezco (MENA). The organization has sub-groups corresponding to the different food products. There were 67 initial members, almost all women, with another 60 scheduled to join once a federal birth certificate requirement was waived. On average,

78 El Mercado Paisano Mines and Nichols three additional family members work with them in the individual enterprises, so the cooperative potentially encompasses about 500 people.

The MENA women had gotten the idea of preserving nopales in jars from a migrant who had seen this at work in Salinas, California. They approached various state government agencies in Oaxaca in 2000—Coordinación Estatal de Atención al Migrante Oaxaqueño (CEAMO) and the Secretaría de Desarrollo Agropecuario y Forestal (SEDAF)—looking for support for their project. They received financing of 75,000 pesos from Alianza para el Campo in 2001 to purchase canning equipment and jars. CEAMO contacted the Fundación para la Productividad en el Campo (FPPC), a Mexico City non-profit, and they started working with MENA to create a building where the various food products could be elaborated by the groups of women. FPPC secured a grant from Oxfam to buy and donate the land for the food processing facility in 2002. However, it was later decided that the land was too close to a highly polluted river and too small to generate large-scale growth, so another site on the highway was chosen, which was much more expensive. The Centro Promotor de Diseño and Bancomext were also invited to provide technical assistance and training. FPPC included the Ayoquezco project in an Inter- American Development Bank contract, and the NAID Center at UCLA began to work with the Ayoquezco migrants in California as part of this contract.

Much of the technical assistance effort in the early stages was oriented at raising the value and yield of the nopal. The traspatio production of nopal was expanded and replanted in a more intensive manner. The women were trained in organic techniques, such as composting, and certified organic by the Organic Crop Improvement Association. The Pan American Foundation donated $50,000 for irrigation systems.51 The women were trained to cut the nopal pads with shears, rather than break them off, in order to reduce pest problems.

It was decided to create an installation that would allow a level of sanitation satisfactory for export to the United States. This vastly increased the cost of the project. Roberto

51 Apparently, not all of this money was actually transferred to FPPC. 79 El Mercado Paisano Mines and Nichols

Ramírez, the director of FPPC, said in a meeting with migrants in August 2005 that they expected the total investment would be $1.35 million, and the plant would not be expected to be finished before the end of 2005—in fact they are still searching for $600,000 they need to finish it. This is two years past the original completion date. Most of the money for the plant was to have come from the Mexican government, especially the Secretary of Agriculture (SAGARPA), through the Fondo de Capacitación e Inversión Rural (FOCIR), but apparently the deal fell through. It seems dubious that the project could ever generate a return on the total investment.

The plant was designed and built by Industrias TONALY, from Michoacán. The firm also designed machinery to mechanically sort, peel, slice, and cook the nopales. The plant has a projected capacity of 40 metric tons of nopales per week, 20 fresh and 20 jarred.

At present, the women of MENA are sending weekly shipments of approximately 80 boxes containing twelve 30-ounce jars of nopales en escabeche y salmuera to their relatives in California, who sell them for a reported $2.90 per jar. The most common brand of jarred nopales in California, Doña María, sells normally at retail for $2.50 for a 30-ounce jar.

Role of migrants

FPPC has been looking for collaboration by migrants from the village from the start. An informal hometown association, Migrantes por Ayoquezco (MPA), had been formed in February 2001. Based in Oceanside, California, and associated with the Coalición de Comunidades Indígenas de Oaxaca in that area, the board of directors included migrants from Oceanside, Los Angeles, Fresno, San Jose, and Salinas. The organization has a general meeting every six months. It has had strained relations with the municipal government of Ayoquezco, as the migrants appear to distrust the people who run Ayoquezco.

MPA set as their initial goal to raise money for a parque recreativo in Ayoquezco, as there was no place for youth to practice sports. They have been raising money with the 80 El Mercado Paisano Mines and Nichols intention of having it matched by the Oaxaca state government’s “3x1 Program.” They are also interested in cleaning up the Atoyac River, which is being contaminated by aguas negras (sewage) from Oaxaca city.

When MPA learned of the nopal project from MENA, they were interested in finding a way to support it. Past agricultural and floricultural projects in Ayoquezco had failed due to poor technical assistance, but they were impressed with the commitment of FPPC. Several migrant leaders, such as Candida Hernandez of Los Angeles and Felix Cruz of San Diego, took it upon themselves to organize migrants interested in the business. They showed groups in Fresno, Salinas, and Carlsbad a video that FPPC had made, and they solicited interest in purchasing the products (which were widespread), marketing the products (in which a number of people were willing to participate), and investing in the business (more limited). By early 2004, some 35 migrants had expressed interest in investing in the business, 20 in San Marcos and a few each in Salinas, Fresno, and Los Angeles. The San Marcos group included some flower distributors, including brothers who owned a refrigerated truck that could potentially make the trip to and from Ayoquesco. By 2005, 39 migrants were contributing $100 per month, and the goal for the migrants’ contribution according to a newspaper report was now $500,000, up from $70-80,000 in early 2004 and $25,000 in 2003.52

The migrants decided to form a business (limited liability company) in the United States to import and distribute the food products. Called El Chapulin Promotion and Distribution Services, it was set up in 2004 in such a way as to limit the amount any one individual could own. The migrants were to own one-third of the processing plant, MENA would own 62%, and the FPPC would own 5% for at least 5 years. It was also proposed that MENA own part of El Chapulin, although this has not been agreed upon.

The plan is to market at least a part of the production to Oaxacan migrants in the United States, and some products to migrants in San Quintín, Baja Calfornia. The U.S. migrants are optimistic that they can import all of the MENA products and perhaps others. While

52 Martínez, Verónica, “Exporta Oaxaca a EU ‘mojados’…y nopales.” Noticias (Oaxaca). 28 May 2005. 81 El Mercado Paisano Mines and Nichols tlayudas and nopales have a year-round demand, the use of chocolate and mole is more seasonal, especially for holidays such as Dia de los Muertos (Day of the Dead), Christmas, or the day celebrating a village’s patron saint.

At a meeting of Ayoquezco migrants in Fresno in late 2002, people expressed enthusiasm for importing the products of MENA. Although many traditional products are available in the community, they are hard to find, expensive, illegally imported, and limited in quantity. At a swap meet in Madera, migrants identified four vendors with various Oaxacan products for sale, including dried fish, meat, herbs, chiles, corn, beans and grains, tlayudas, and a large assortment of music.

A survey of Oaxacan stores and restaurants in Los Angeles revealed that every one had nopales. However, there is only one variety of nopal available, a medium-sized variety. Oaxacan cuisine also uses a large, thick nopal that is cooked and mashed with chickpeas, as well as the lenguita variety produced in Ayoquezco, a longer, more tender, more slender nopal variety.

In mid-2004, the migrants were complaining that they had not been consulted sufficiently in the decision-making surrounding the construction of the plant. Some MPA members complained that a Oaxacan business that could have designed and built the plant was passed over for the Michoacán TONALY firm.

One resident of Ayoquezco, a relative of one of the migrant organizers, explained that the local government did not provide any support to MENA for political reasons. Some of the leaders of Ayoquezco had wanted to use MENA for political purposes, but the women had resisted this. The migrants themselves distrusted the local government.

Some lessons from the Ayoquezco case

There are several positive aspects of the project that have emerged over the last few years.

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First, the women of MENA, who were engaged in their own productive activities, organized themselves and sought assistance. The project idea was their own. The project is therefore based on the skills and resources of the cooperative members. They will require training to meet sanitation and other standards, but they are highly competent producers of the products in question. This stands in contrast to many development projects that attempt to teach people to do things they know nothing about. A number of such projects had already failed in Ayoquezco.

Second, MENA was lucky to eventually find FPPC to assist them. FPPC has organized significant technical assistance to convert nopales to organic production, to teach the women more sanitary techniques in the production of food products, and to shepherd the construction of a processing facility. This seguimiento is something that many projects in the region have lacked, and has often led to failure. Oaxacan government projects often use students from local technical universities to provide technical assistance, but this has proven almost useless.

Third, through the efforts of FPPC and others, the MENA project has become a type of showcase project for the idea of migration-related development in Mexican sending communities. The Mexican government, the U.S. government (USAID, Inter-American Foundation), private foundations, and international agencies (Inter-American Development Bank) have all contributed to the project. This has allowed the project to become quite expensive, probably beyond a rational investment level, and will not be easily replicated elsewhere. Nevertheless, it will allow for an interesting experiment with the marketing of products in the United States by the migrants, which may well be replicable.

Finally, the project is fairly unique in that it has a good number of migrants actually investing money in the venture and planning to work cooperatively with it. This is possible both because a number of Ayoquezco migrants have become successful business people in California and because the MENA organization is large enough to cover a significant share of households in the village.

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Nevertheless, there are also several challenges that may yet affect the outcomes.

First, MENA refused to allow itself to be used by local politicians and so has received no local government support. The migrants are openly distrustful of the local government, and the presidente municipal has not been involved in any of the dealings with the migrants, nor are the associations of migrants officially sanctioned. Whether this will lead to problems for MENA in the future is an open question.

Second, it is unclear if MENA has the capacity to run the project. FPPC has made many of the decisions and has provided a broad array of technical experts. FPPC has raised all of the funds that have not come from the migrants. FPPC plans to retain a 5% investment in the project for five years. Will this mean that they essentially have to continue to run it?

Third, tightening of U.S. food import regulations (under the guise of anti-terrorism efforts) could actually benefit the project, as MENA will be in a much better position to comply with U.S. regulations, possessing an FDA-sanctioned facility, than almost anyone in Oaxaca producing similar products.

Finally, however, the marketing plan is still dubious. There is clearly a nostalgia market among Oaxacans in the United States for these products. But no one knows how big this market is, or if poor Oaxacan workers are willing to pay higher prices for quality products. It is unclear if the MENA products can compete in the broader Latino foods market with well-known brands of jarred nopales, mole, and chocolate, particularly since these commercial brands are likely to be cheaper. The MENA nopales will be jarred with epazote, something that makes them different from their competitors, but to how many migrants will this matter? And though the nopales have been certified organic, the organic nopal market in the United States is surely very small. It is possible that the organic nopal market could be enlarged with sufficient promotion, since the product has clear health benefits, but what is the source of funds for this purpose?

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The idea of certifying the products as “fair trade” merchandise is also feasible, since they are produced by a cooperative of low-income households, but this would require an expansion of fair trade certification into these types of products, which has not yet occurred. In general, the idea of exporting these village products to the United States or Europe likely needs to follow the fair trade model pioneered in coffee, cacao, and handicrafts. Exporting to the "nostalgia" market of Oaxacans in the United States will be very limiting, but including the socially conscious market or the organic market could significantly expand opportunities.

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SECTION III: RECOMMENDATIONS

The following recommended interventions emerge in part from the interviews and focus groups conducted for this research, while others build on existing activities by migrant organizations. Our interviewees consisted of consumers of the products, community leaders and club leaders, small producers, intermediaries, larger manufacturers, businesspersons, specialists in trade, and government officials. From the case studies presented above, it should be clear that any effort aimed at improving the market share of producers of highly localized products must address shortcomings along the entire product chain, from the needs of the producers themselves, through the logistics of export/import, distribution and retail, and including the additional challenge of increasing demand beyond the current limited customer base. The following suggestions consider possible interventions at different points along the product chain, as they emerged from the economic participants themselves. Where possible, we give examples from our research to ground the suggestions.

Types of Assistance

There is an obvious the need for assistance and advice regarding export procedures and, in the case of food products, complying with U.S. food safety and labeling requirements. However, at an even more basic level, we repeatedly heard and observed the need to strengthen the capacity of small producers, both with production techniques and with basic business skills. Better accounting procedures and assistance to develop business plans and marketing strategies would greatly enhance their capacity to grow their businesses and plan for the future. The case of the Agroempresas de Papaloapan (AP) in Oaxaca indicates one successful model in which a cooperative designed its organization to include parallel firms of administratively and technically qualified staff.

While the focus of this study has been on accessing markets in the United States, an important consideration for these small producers, as a first step, is to focus on strengthening sales in local and national markets, which offers the advantage of ensuring a diversity of outlets and not becoming overly dependent on export sales to the United

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States. Doña Ofelia, the pinole maker of Jerez, Zacatecas, appeared to be jumping prematurely into the international market before practicing her business acumen on local consumers.

Mexican immigrant entrepreneurs in Los Angeles stressed in a focus group that import- substituting production in Mexico may be as or more important than developing export markets for the small producers who are the focus of this study. They mentioned that Mexico imports much of its fresh beef from Central America and its turkey from the United States—two products that Mexican producers could develop with the proper incentives.

Business development services

There is a lack of advice, credit, and technical assistance that is carefully tailored for small and medium producers, many of whom have a limited education and are often part of the informal economy. Experienced advisors are needed for first-time exporters to help them comply with U.S. import regulations. A number of export-promotion programs already exist at federal and state levels in Mexico, but informants state that they tend to be aimed at established businesses already operating within the formal economy. The Oaxacan mole producer discussed above described being caught in a Catch-22 situation. According to him, when he approached Bancomext for an export permit he was told that he first needed to demonstrate experience as an exporter, and while his product was already being exported to the States (albeit by intermediaries) this did not qualify him as an exporter.

One successful Mexican importer stressed that support should be directed first to projects that are already off the ground and are being built on a firm basis. He mentioned the Papaloapan (AP) project in Oaxaca as an example. However, the project is still in need of advice and financial support to build a packing and drying facility in Tuxtepec, Oaxaca. He feels that many projects that are already encaminados (launched) could be identified.

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Logistics of exporting and importing

From importers and experts in the field of logistics, we have learned that one trailer- container is the minimum shipment size to achieve the benefits of scale for transportation and customs brokerage costs. In the case of Señora Ofelia’s pinole this would mean shipping about 42,500 pounds at a time in order to fill a trailer and obtain the most advantageous shipping rate of approximately $3,200 from Zacatecas to southern California. At her current capacity of about 2,200 pounds a week, it would take Señora Ofelia close to five months to produce the required amount of product. Individually, it is impossible for small producers to have sufficient product ready at one time to fill a trailer, and to negotiate with shippers and brokers in order to obtain the benefits of scale. However, as one logistics expert proposed, a way to address this problem is by establishing a “consolidation center” for a group of small producers. The center would place the product on pallets, stretch wrap the pallets as required by trucking firms, and assemble sufficient pallets to fill a trailer destined for a warehouse in the United States.53

The consolidation center, similar in concept to a packinghouse for fresh produce, could be an independent entity or a cooperative owned and operated by a group of producers in a given region. The producers would not need to involve themselves in all the details of exporting, but to retain bargaining power they would benefit from an organization that could forge relationships with an importer of record, with appropriate distributors in the United States, and that could retain the services of a reputable “3PLS,” or third party logistics services to handle the actual details of exporting.54 Setting up such a small producer exporting cooperative would require a feasibility study to ensure sufficient production for export in a given region, and eventually the advice and assistance of a

53 A standard truckload consists of 22 pallets, preferably all going to the same destination. Costs soar when shipping fewer pallets to multiple destinations; in one example given, the cost to ship two pallets to a destination different from the rest of the load cost more than shipping an entire truckload to a single destination. 54 There are considerable advantages to dealing with a third-party freight forwarder or 3PLS. They have links to all forms of transportation (trucking, rail, sea, and air) and manage the entire chain from origin to destination: they co-ordinate and track the movement of the goods and handle all administration and processing and expedite FDA and Customs clearances. It is a specialty that has gained in prominence over the last 20 years as global trade has accelerated. Pioneers in the field of global logistics include Schenkers International (headquartered in Germany) and the Fritz Company of San Francisco (recently purchased by UPS.)

88 El Mercado Paisano Mines and Nichols dedicated individual or organization with community organizing skills, the willingness to blaze a new trail in Mexico-U.S. trade, and capable of the sustained effort required to set the entire process in motion. Essentially it would be an attempt to access the resources available to large businesses involved in global trade and make them work for the benefit of an organized group of small businesses. But just as in the case of large enterprises, once the “product lane” is set up, exporting becomes straightforward, efficient, and cost- effective.

Growing the Market for Localized Products

If the demand for localized products is currently insufficient to justify the costs of importing the goods, is there a way to expand their appeal? Our research suggests several low-cost ways this might be tested. The most obvious is by introducing the products to a wider public through fairs and public events, such as those sponsored by several Oaxacan organizations in Southern California. The numerous guelaguetzas, and in particular the “Muestra Gastronómica y Artesanal Oaxaqueña en Los Angeles” carried out for two years in a row, have featured foods and crafts from Oaxaca, and have succeeding in garnering considerable press attention and drawing crowds numbering in the thousands. Migrants from other states in Mexico have also organized their own public events, often making available specialties from their home regions. When migrants from the Mexican state of Nayarit held their third annual gathering in Los Angeles in April 2005, besides music and folkloric dances, they had booths selling local favorites such as dried shrimp; jellies made from mango, quince and guava; honey and coconut candies, all of which sold out quickly. Similarly, migrants from Puebla and Yucatán hold fairs with their own hometown specialties, making them available for natives who miss them, and providing an opportunity for others to sample them and for salespersons to gauge acceptance.

While sales at annual gatherings are not sufficient in themselves to generate sustained, year-round demand, individuals in focus groups put forth the idea of “Clubes de Consumo” or consumer clubs. Similar in concept to “community supported agriculture” in the United States, migrants from a given home region would personally commit to purchasing a minimum amount of product on a regular basis, thereby assuring the

89 El Mercado Paisano Mines and Nichols producer of a steady market. Initially demand would be small, but such an activity could be merely the first step in a long-range plan to introduce the products to friends and acquaintances and attempt to “grow” the customer base beyond the hometown network. Those already partial to the products would become distributors and salespersons of the product, earning a commission from the sales, which could serve either as a club fund raising activity or as a personal income-generating activity. The Ayoquesco immigrant community in California is actually experimenting with the idea of enlisting community émigrés in an effort to consume, distribute, and popularize a product from the home community. A very similar suggestion from the president of a federation of clubs was for hometown clubs and federations to take on a proyecto productivo, the importing and marketing of hometown products, eventually aiming to place them with local grocery stores.

Finally, there is the possibility of free media to raise interest, awareness, and demand among the Latino immigrant community of these localized, specialty products. Spanish- language radio and TV stations regularly carry reports on community activities and some programs feature stories about migrants’ hometowns.55 Projects that have as their goal improving conditions in the home regions have in the past generated sympathy and support, and focus group informants tell us that the Mexican-born community in general is willing to patronize products when they know the profits are destined for a worthy cause. One example from our study was the successful effort of the general manager of Lombardía Produce to generate consumer interest in the Latino immigrant community for Lombardía mangos.

Protecting Localized Products from Generic Competition

Should some of these products achieve the hoped-for wider appeal, it will be important for the producers to have some degree of protection from others outside their region who might seek to compete with imitation products. It was therefore suggested that Appellation of Origin Certification (AOC) be sought for these regional specialties.

55 One such TV program that has been very supportive of HTAs is “México de Mis Amores” with David Herrera, broadcast in Southern California, 5-6pm Sundays. 90 El Mercado Paisano Mines and Nichols

Besides affording protection for the producers of a given region, it would have the added advantage of providing an incentive to cooperate amongst themselves to maintain quality and price of their product.

A Mexican official familiar with trade issues believes that the Mexican government should seek AOC for regional products, and at the same time undertake a vigorous “Buy Mexican” campaign targeting the U.S. Mexican community. He argued that seeking AOC designation for their products is a way for small producers to ensure recognition for the uniqueness for their product, protect them from appropriation by producers of generic products, and at the same time enhance cooperation among producers. A “fair trade” type of certification could be added to AOC in order to ensure environmentally sound production processes and fair wages and treatment of workers. Certification can be sought for cheeses, tlayudas, moles, cocadas, and many other well-known local specialties.

Producer Associations

Most small producers operate independently and are therefore at a disadvantage with regard to the cost of inputs and setting the price of their product. Organizing a cooperative of, for example, tlayuda makers could offer a number of advantages, such as reducing their cost of corn through purchasing in volume direct from farmers; a cooperative could negotiate better rates for purified water and ensure that firewood is only obtained from responsible harvesters. Also, they could reduce transportation cost by negotiating at higher levels of volume. As a cooperative they could also exercise greater leverage in setting the product price with retailers. The case of the prickly pear growers of La Victoria, Zacatecas is a successful model where producers have pooled resources in order to get a better price from intermediaries. The case of the Lombardía mangueros is also a model that succeeded albeit temporarily in the objective of lowering the share taken by intermediaries. The Lombardía case also is exemplary of how producer cooperatives could lower packing costs. Again, the group has so far not attained the goal of creating its own packing shed.

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Another possibility for associations of small producers is to obtain technical and business advice across many producers. The cooperative in Papaloapan has hired in-house experts to provide technical support across many producers. The green house project in Puebla has identified the problem of the inaccessibility of advice to many small independent growers. However, the growers are yet to organize to take advantage of economies of scale in technical support.

Fair Intermediaries

The small producers in Mexico that produce either generic or specialized products can benefit by carefully choosing buyers that they can trust. Investments of time and effort to find the right intermediary may be crucial to the success of the exporting enterprise. The Agroempresas of Papaloapan model is very instructive here. The leader of the cooperative actually took several trips to the United States and Canada in pursuit of the right buyers.

Unique Marketing Opportunities

The Mexican exporters could benefit by keeping informed about marketing opportunities in the United States for nostalgia products. They could make the proper adaptations to provide these markets. The prickly pear producers of La Victoria have adapted to off- season demand for their crop in the United States by implementing a cold storage system. The market for cactus leaves (pencas) appears large but usually goes unfulfilled because Mexican exporters have not devised a system of getting fresh product to market.

The Oaxacan food product market is quite unique. The customers insist on authentic products made in their home state. Moreover, the distribution of these products is almost entirely in the hands of émigrés from Oaxaca. The potential for collaboration between the organized sellers in Mexico and the organized buyers in the United States could save on transportation costs, simplify the border crossing of the product, and yield more dividends for all involved. On the Oaxacan side, a decentralized structure built on village-based buying and selling groups might be necessary to avoid inter-town rivalries.

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Mexican Immigrant Businessmen Mentoring Program

Mexican businessmen in Los Angeles mentioned that since they understand the business and paperwork challenges on both sides of the border that they are well placed to help producers (either for export or the local market) in Mexico. The U.S.-based businessmen and professionals have extensive experience with obtaining credit, supervising employees, maintaining adequate cost monitoring systems, and in importing product from Mexico. A mentoring program in which U.S. immigrant Mexican businessmen could develop relationships with protégés in Mexico could be quite useful.

Opportunities for Government, Business, and Philanthropy

There is the opportunity for large manufacturing and distribution corporations to demonstrate socially responsible behavior. Firms with enormous access to shelf space in the United States could “sponsor” small firms that are trying to get off the ground with their products. They could then advertise that they are carrying out socially beneficial activities to their customers.

Philanthropies could identify pilot projects that they could catalyze. For example, the Agroempresarios de Papaloapan, the tlayuda makers of Oaxaca, the greenhouse growers of Puebla, and other examples unearthed by this study could be studied, piloted, and reproduced in other parts of Mexico. Though well-intentioned, many Mexican hometown organizations and potential investors lack models for what constitutes a viable business undertaking. Dissemination of best practices (through audio-visual presentations and leadership training programs) could help these groups better analyze criteria for success and make more judicious investment decisions.

Philanthropies and government could get deeply involved in providing the business and technical support needed to get these firms’ export businesses off the ground. We observed that the local businesses and growers were often good at producing the product but had difficulties in cost accounting, making business plans, figuring out customs requirements, and the retail distribution system. Above all they have trouble with following through on details that are often beyond their experience. Concrete business

93 El Mercado Paisano Mines and Nichols and technical advice to firms seeking to export could prove useful for outsiders with a sincere interest to help.

Finally, the idea of fair traded items with a focus on working class Latino immigrant consumers is something that philanthropies could sponsor. We found that immigrants in focus groups support the idea of buying from firms that help small producers in their home country even if there is a cost disadvantage. There was great interest among the Mexican immigrants themselves in choosing a product that already was popular among the émigré population instead of one (like organic coffee) that is not much utilized by the community.

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BIBLIOGRAPHY

Alvarado-Avalos, Mariana. “El Color de la Unidad.” El Oaxaqueño. May 28, 2005.

Barrios, R.G., et al. “Avances Sobre Las Respuestas de Tuna Variedad Burrona, Apacerada Comercialmente.” Mexico: Universidad de Chapingo, Ingeneria Agroindustrial. 2004.

Becerril, Isabel. “Desaprovechan empresas mexicanas el mercado de la nostalgia en EU,” El Financiero. June 15, 2005.

Bouza, Teresa and Gabriel Sama. “Mexican Soft-Drink Firms Bank On Nostalgia to Gain U.S. Niche.” New York: The Wall Street Journal. May 28, 2003.

Cadena, Guadalupe. “La nostalgia de mexicanos abre mercado de 12 mil mdd en EU,” El Financiero. June 8, 2004.

Colín, Marvella. “Poder adquisitivo de hispanos en EU, potencial de negocio para empresas mexicanas,” El Financiero. May 31, 2005.

Cruz, Marian et. al. “Pequeñas Empresas, Productos Etnicos, y de Nostalgia, Oportunidades en el Mercado Internacional.” Mexico, D.F.: Centro de Estudios para América Latina (CEPAL). 2004.

Elliott, Andrea. “For Mom's Cooking, 2,200 Miles Isn't Too Far,” New York Times. Aug. 11, 2003.

Gaona, Elena. “Awareness of Oaxacan Immigrants being urged,” San Diego Union Tribune. Oct. 16, 2004.

Gold, Jonathan. “Jonathan Gold’s 99 Essential L.A. Restaurants.” LA Weekly. Jul. 1-7, 2005. http://www.laweekly.com/ink/05/32/restguide-list.php

Hansen, Barbara. “The Oaxaca Connection.” Los Angeles Times. May 1, 2002.

Juarez, Isabella. “Con Sabor Oaxaqueño,” El Oaxaqueño. Apr. 2, 2005.

López, Alma. “Bimbo cura la nostalgia de connacionales en EU,” El Financiero. March 7, 2005.

López, Felipe H. and David Runsten. “Mixtecs and Zapotecs Working in California: Rural and Urban Experiences” in Indigenous Mexican Migrants in the United States, ed. by Jonathan Fox and Gaspar Rivera-Salgado. La Jolla: Center for U.S.-Mexican Studies and the Center for Comparative Immigration Studies, University of California, San Diego. 2004.

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Martínez, Verónica. “Exporta Oaxaca a EU ‘mojados’…y nopales.” Noticias (Oaxaca). May, 28 2005.

Mines, Richard. “Children in Immigrant and Nonimmigrant Farmworker Families,” in Children of Immigrants. D. Hernandez, ed., Washington D.C.: National Academy Press. 1999.

Nájera-Ramírez, Olga. Engendering Nationalism: identity, discourse and the Mexican charro. Santa Cruz: Chicano/Latino Research Center, UC Santa Cruz. 1993.

Nájera-Ramírez, Olga. Haciendo Patria: charrería and the formation of a transnational Mexican community. Santa Cruz: Chicano/Latino Research Center, UC Santa Cruz. 1997.

Overby, Rorie. Coordination of Migrant Associations, Hometowns, and Governments in Transnational Small-Scale Export Enterprises: Exporting Nopales from Ayoquezco, Oaxaca, to Los Angeles, California. Los Angeles: UCLA Urban Planning Department. June 16, 2003.

Overby, Rorie. Exporting Oaxacan Flavors: A Feasibility Study on Importing Oaxacan Food Products to Southern California. A client project prepared for Migrantes por Ayoquezco. MA project in Urban Planning. Los Angeles: UCLA. 2004.

Passel, Jeffrey. “Unauthorized Migrants: Numbers and Characteristics.” Washington, D.C.: Pew Hispanic Center. 2005. http://pewhispanic.org/files/reports/46.pdf

Pimienta Barrios, Eulogio. “El Nopal Tunero.” Mexico: Universidad de Guadalajara. 1990.

Sands, Kathleen Mullen. Charrería mexicana: an equestrian folk tradition. Tucson: University of Arizona Press. 1993.

Other

“Industrialización del nopal, mole, chocolate, y tlayudas en la comunidad de Ayoquezco de Aldama, en Valles Centrales, Oaxaca.” Fundación para la Productividad en el Campo, AC. México, D.F., n.d.

Various field notes and interviews (Josh Kirshner, Rorie Overby, Felipe Lopez, David Runsten). North American Integration and Development Center. Los Angeles: UCLA. 2001-2004.

“Triunfa oaxaqueño con comida mexicana en EU.” Imagen de Zacatecas. May 4, 2005.

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SAGARPA. “Valor de Nopal Tunero.” Reporte Anuario. Mexico: Secretaría de Agricultura, Ganadería, Desarollo Rural, Pesca y Alimentación. 2001. http://www.siap.sagarpa.gob.mx/integra/AnDDR2000.html

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APPENDIX I. NOSTALGIA PRODUCTS AND SERVICES

1. FOOD PRODUCTS

Oaxaca:

Tlayudas (or: “clayudas”- very large, thin corn tortillas favored by Zapotecs) Tasajo seco (beef jerky-like dried meat) Chile de agua (a fresh chile grown in the region) Quesillo (fresh cheese) Chapulines (chile-flavored grasshoppers, a prized snack) Pan de yema (anise-flavored bread) Mole (various types, including black, red, and yellow) Chocolate Dried herbs: hierba santa, hoja de aguacate, hierba de conejo, chepil, hierba de olor. Garbanzo molido (toasted and ground) Frijol molido (dried and ground beans) Semilla de calabaza (Toasted squash seed) Wheat flour tortillas (favored by the Mixtecos) Tamarind candy Pozontle (chocolate mixed with the pozontle plant; a specialty from Yalálag, a Zapotec highland village) Totopos Chile seco de la costa Semillas de huaje (arbol) de chilacayote y calabaza Tejocote (fresh fruit; a small yellow stone fruit)

Puebla:

Pinole Traditional sweets (e.g. camote or candied yam) Palanqueta: peanut candy Chile poblano Chocolate (handmade and sold by women at local markets) Mole poblano

Zacatecas:

(processed/dried):

Various local cheeses (añejo, fresco, de Monte Escobedo) Pinole (a drink mix of toasted and ground corn, rice, beans, cinnamon, sugar, etc.) Miel de maguey (honey made from the maguey cactus juice)

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Dried chiles Toasted squash seeds Garampiñados (Candied peanuts made in Jerez) Chocolate “Sabas” (blended and packaged in Jerez, for mole and hot chocolate) Dulce de Tuna (sweet paste made from prickly pears) Mole (a thick paste use as a base for a cooking sauce) Pipian (another paste for a cooking sauce) Guayaba (a tropical fruit) preserves Nopales (cactus leaves) pickled in brine Tamales** Gorditas del rancho (whole wheat sweet rolls baked in clay ovens) Birria (roasted and seasoned goat) Frijol (local varieties of beans) Durazno en almíbar (peaches in syrup) Cecina (dried beef jerky) Maiz prieto/negro (purple corn from Atolinga) Ezquite de maiz dulce (toasted and salted kernels of a local variety of corn, a snack) Maiz colorado (another local variety of corn from Jerez, used in pozole) Hualaista de Jerez (seeds, similar to squash; from a plant that grows wild) (fresh):

Tunas (prickly pears) Guayaba Nopalitos (cactus leaves)

2. Clothing and embroidery

Oaxaca:

Blouses with hand embroidery Shawls, hand made Napkins and tablecloths with hand embroidery Huipiles (women’s traditional dress among Triquis) Woven wristbands for men and women (Triquis) Puebla:

Traditional embroidered blouses and dresses (e.g. for china poblana outfits)

Zacatecas:

Charro outfits Men’s cowboy shirts

3. Crafts

Oaxaca:

Hand bags, hand woven (Triquis)

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Wall hangings Jewelry Puebla:

Cooking utensils, including clay pots (which impart a unique flavor.)

Zacatecas:

Charro gear Leatherwork, including belts and saddles woven with cactus thread Embroidered items Woven blankets Arracadas jerezanas, gold earrings unique to Jerez

4. Alcohol, beverages and Cigarettes

Oaxaca:

Mezcal Mexican cigarettes Zacatecas:

Mezcal Agua miel

5. Services

Oaxaca /Puebla:

Music (live performance and recordings) Indigenous language, music, and folk dance instruction Zacatecas:

Horse trainers (for charrería) Riding instructors (for charros and escaramuza) Music (live performance and recordings)

6. Building Supplies, Home and Garden Decor

Various states:

Floor tile Planter pots Wrought iron objects Wooden and leather furniture

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APPENDIX II: METHODS

The data-gathering work was done primarily by in-person and telephone interviews both to assess the consumer tastes of immigrants and to investigate the business issues surrounding the production and distribution of products. Much of the consumer taste information is based on expressed attitudes of the Mexican immigrants and their families back home. The case studies and business examples were enriched by documentary research but again were principally based on interviews with the economic participants in the business ventures. More than 60 Mexican immigrants and business people were interviewed for the study.

We gathered information about the products that immigrants miss when north of the border from key informant interviews and by focus groups among working class Mexicans on both sides of the border. We did two focus groups in the United States. One was done in Los Angeles with a group of immigrants from Las Animas, a small village in the south of Zacatecas. We also did a focus group in Napa, California among women from Los Haro, a village near Jerez, Zacatecas. In both cases, we collected information about the methods of receiving products and services from Mexico and about their desires for ones that were unavailable. In addition, the focus groups served to query the immigrants’ views about how to take advantage of these “nostalgia products” to spur development in their home areas.

To collect information about products themselves, key informant interviews were done in various places in California and Mexico. Mines did one with a non-migrant, with many migrant relatives, in the village of Huitzilla, Zacatecas. He also did one with a leader of an Oaxacan community organization in Fresno. Nichols did several with Zacatecanos, both men and women, in Napa, California, and with Oaxacans in Fresno and Los Angeles. She also interviewed leaders of Poblano organizations in Los Angeles to collect information about the tastes of people from Puebla. During a visit to Zacatecas, Nichols gathered information on producers and vendors of nostalgia products, including jewelers, a pinole maker and other local food items. In California, Mines and Nichols attended several hometown club events. They went to the “Dia del Zacatecano” in Los Angeles 101 El Mercado Paisano Mines and Nichols and spoke with many Zacatecanos about the products they missed from back home while in the United States. They also went to a meeting of the Federation of Hometown Clubs of Michoacán in Los Angeles and heard comments about both the products missed by immigrants and about ways to develop the home villages and towns. Nichols went to a northern California Zacatecas federation event in San Jose, and met with a group of leaders from Yucatán in San Francisco. Nichols and Mines visited several flea markets and product fairs (Oakland, Napa and Madera among others) and collected information from vendors and shoppers about products that reminded people of home. In addition, the team visited various Latino markets of all sizes to assess products on the shelves.

The researchers also interviewed a series of U.S.-based Mexican business entrepreneurs, large and small, who had information about or direct business dealings with nostalgia products and/or small producers in Mexico. Our investigation of these products at times included ones that were not strictly nostalgia products according to our definition. However, the need to study the link to economic betterment of small producers in Mexico compelled us not to limit ourselves to a strict definition of nostalgia products in order to collect full information about issues of fomenting development. We interviewed an executive of a large manufacturer of Mexican style food products, a furniture importer, an executive in a picture-framing factory with a keen interest in importing Mexican products, an importer of alcoholic beverages, a tile importer, and a large scale intermediary in the fresh food import business.

We also spoke to small businessmen. We interviewed a producer and vendor of Oaxacan music, various retailers that sold nostalgic goods including charrería and food products. We interviewed store managers and fresh food buyers for large Mexican supermarket chains and operators of small “Mexican” corner grocery stores. Some of these were run by non-Mexicans, including Sikhs who had learned the products demanded by Mexican immigrants.

To carry out some of the business interviews, we hired Mexico-based researchers. For example, to collect information about the product chain of products like Oaxacan

102 El Mercado Paisano Mines and Nichols tlayudas and moles, a Mexican scholar spoke to producers of tlayudas in Oaxaca and to ‘informal’ intermediaries. We, on this side of the border, spoke to retailers in stores, restaurants, and flea markets to complement the data she gathered. For the nopal and charrería studies, Zacatecano researchers interviewed producers of these products in Mexico. We followed up on this side to talk to marketers and consumers of these products. The researchers in Mexico followed a protocol designed by Mines and Nichols when they interviewed Mexican-based producers.

We also decided that the project, because of its focus on rural development in Mexico, could not be accomplished without some interviews with Mexican actors. Mines took advantage of a trip to Mexico to visit four communities in Michoacán and one in Zacatecas with specific development projects that they are trying to develop. These were Ocumicho, Lombardía, Atacheo, and La Palma in Michoacán and Los Haro in Zacatecas. Nichols also visited Los Haro and Jerez, Zacatecas during the project’s data gathering period. The challenges and activities of these communities greatly deepened the researcher’s insights into the issues around rural development in Mexico and its relationship to exporting goods to the United States. While Mines was in Mexico, he visited various development, planning, migrant, and social service agencies in Michoacán and Zacatecas and spoke to the leaders of these state agencies. The input from the heads of these agencies made clear that the cooperation of the Mexican government is crucial for any successful programs fomenting rural development. Since Mines was discussing development projects with community leaders, it was possible to obtain direct reactions and insights from government officials who were often aware of these projects.

The case study research was conducted by following one lead to another. On rare occasions we found scholarly work or administrative data that we could consult. But in most cases we were obliged to balance the accounts of various economic participants to paint a picture of the sector in question. For example, the study of Lombardía mangos involved talking to the general manager of the project, one of his principal employees, a business consultant to the project, and to several producers during a visit to Lombardía by Mines. The export data on mango imports from Mexico to the United States based on

103 El Mercado Paisano Mines and Nichols information from the U.S. International Trade Commission (USITC) was reviewed. The charrería case study involved speaking to various retailers with and without stores who imported products from Mexico, reading press reports, speaking to owners of the lienzos (rodeo arenas), interviewing association leaders, and attending charreadas. The other case studies also were based on interviews with as many economic participants as possible. Where relevant the USITC data was used to obtain some understanding of the size of the markets. The newspapers of Michoacán, Zacatecas and Oaxaca, together with binational community publications, were regularly read. In cases when we dealt with large corporations, annual reports and catalogues of products proved useful.

Interviews with a Written Report*

No. in United No. in Type of interview Total States Mexico Businessmen and 30 20 50 consumers Club or government 6 5 11 officials Total 36 25 61

* Many other people were interviewed but the notes were not recorded on interview protocols.

The conclusions of this report were shared with two focus groups of businessmen and professionals in Los Angeles and with other observer informants. The recommendation ideas are largely based on the opinions of economic participants in the nostalgia markets.

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