Agriculture and Transnational Corporations in the Bajio Region, Mexico

Geographical Review of Japan Vol. 66 (Ser. B), No. 1, 35-51, 1993 Agriculture and Transnational Corporations in the Bajio Region, Mexico Shizue KAMIKIHARA* Abstract The impact of transnational corporations on developing countries is particularly evident in agriculture and the food industry that is linked with it. These corporations have access to different markets, for different kinds of products; and to new technologies, incorporating different kinds of inputs, such as machinery, fertilizers and herbicides. They influence the prices of both agricultural products and their inputs, control the supply of investment capital and agricultural infrastructure, and influence government policies about trade and investment. In Mexico the `transnationalization' of agriculture includes both the transformation of the food industry and the impacts on agricultural production areas. The former can be studied at the national scale, on a sector by sector basis, including livestock, cereals and oilseeds, and fruit and vegetables. Each agricultural sector is linked with other industries which process and market the products or provide specialized inputs. The transnationalization of a rural area is examined in a case study of Bajio in the State of Guanajuato. Directly (with their own production) or indirectly (providing markets for local producers), the transnationals have shifted agricultural production away from basic grains such as corn, toward cereals and oilseeds and fruit and vegetables; integrating the region into a national and international food system. Key words: transnational corporations, livestock complex, cereal and oilseeds complex, fruit and vegetable complex, Bajio Region. tably has impacts on the rural areas in which it I. INTRODUCTION operates. The transnational corporations are not only Persistent malnutrition of the rural popula involved in agricultural and forest production; tion is a major problem in Mexico. To meet the they also participate in food processing and needs of a rapidly growing population, the gov marketing; and the production of seeds, fertiliz ernment has developed strategies to increase ers, insecticides, and machinery. They are able the agricultural productivity and to improve to attract such necessary services as financial the living conditions of the farmers. One strate credit and technical assistance. They also influ gy is the industrialization of rural areas, that is, ence the national policies regarding guaranteed the establishment of agroindustriesl). Success prices, subsidies, imports and exports of agri ful industrialization integrates farmland, food cultural products, and they determine which processers and consumers; requiring improved agricultural and livestock developments will food processing facilities, locally manufactured receive international investment. agricultural machinery and agrochemical prod The transnational corporations make invest ucts, and an efficient marketing system. In ments in the host country in order to obtain low Mexico this industrialization process requires cost raw materials. The head office in the home the participation of the government, interna country controls the capital investments as tional banks, transnational corporations, and well as the administrative and technological national enterprises as well as farmers. It inevi aspects of the corporation. Transnational cor * Institute of Geography , University of Mexico, Mexico City, Mexico. 36 S. KAMIKIHARA porations are defined as "...corporations where published sources. The third section of the the interest of the foreign capital reaches a paper focuses on Bajio region where the institu sufficient level so that the foreign ownership tional sources are supplemented by interviews can exert control on the policy and administra with government officials and corporations. In tion of the corporation established in Mexico" this section the emphasis is placed on the trans (FAJNZYLBERand MARTINEZ,1976). formation of rural land use in response to trans The transnational corporations have the ca national initiatives. pacity to transform agricultural production to satisfy their own interests. In Mexico, for exam II. TRANSNATIONAL CORPORATIONS IN ple, they largely control the production of ce MEXICAN AGRICULTURE reals, meat, soybeans, coffee, fruits and vegeta bles, and they play a significant role in the 1. The historical sequence of transnational domestic marketing and distribution systems ization in the main cities. They have also altered pat terns of food consumption. The penetration of the transnational corpora The transnational corporations are not con tions in the agriculture of Latin America coun cerned with the problems of malnutrition. On tries took place in three stages as shown in the contrary, these problems have become Table 1 (ARROYO,RAMA and RELLO,1985; MES worse because of the redirection of land, water, TRIES, 1979; MONTES de OcA and ESCUDERO, labour and agricultural resources away from 1981). In the first stage, beginning in the latter traditional foods. In supporting the activities of part of 19 th century and continuing to the transnational firms the government policies Second World War, the transnational corpora reduce Mexico's capacity to feed itself, while tions began, first, to exploit the land directly by increasing exports to wealthier countries like controlling the production and marketing of the United States. Mexico, in turn, must pur crops such as cereals, tropical products (sugar chase the grain surplus from the United States cane, coffee, cotton, cacao, rubber, spices); fruit and become increasingly dependent on a coun and livestock. Second, they extended their in try which attempts to monopolize the produc fluence on other agricultural producers through tion, processing and trade of the basic agricul the financing and the processing of raw materi tural products of the world. als. The agricultural products were sold in the This study examines the 'transnationaliza markets of the developed countries. Among the tion' of agriculture in Mexico, as exemplified by corporations established during this period the Bajio region. It describes the spatial, tempo were Swif t-Esmark (1885) in meat production; ral and sectoral on a national scale penetration United Fruit (1899) in banana farming in Cen of transnational corporations into the food in tral America; Castle and Cook (1894) in tropical dustry. Each agricultural sector is linked to a fruit production; Anderson Clayton (1904) in complex network of firms providing inputs to cotton, oil and grain production in South Amer production and to a variety of processing and ica; and Nestle (1905) in milk production. distribution activities. At the local level, the The second stage extends from the end of transnationals transform the land use, the econ World War II to approximately 1970. Transna omy, the way of life of the farmers, and the tional corporations, especially American firms, landscape. The products grown, the methods of continued to identify new opportunities for in production, and the scale of farming are neces vestments to supply the North American mar sarily changed. These changes are observed in kets. But the greater part of the investments the Bajio region in the state of Guanajuato, in were oriented to Latin American countries them the Central Mexican Highland. selves, where there were large internal markets The next section provides an overview of the for foodstuff consumption, plus established pol penetration of transnational corporations into icies to encourage the substitution of imports Mexican agriculture, by sector and by region, and to support industrial and urban develop based on a variety of governmental and other ment. Both conditions are necessary to support Agriculture and Transnational Corporations in Mexico 37 Table 1. The establishment of transnational corporations in Latin America Source: MESTRIES(1979), MONTESde OCA and ESCUDERO(1981), ARROYO,RAMA and RELLO(1985). the consumption of the manufactured food pro flower production and meat processing, in ducts of the transnational corporations. Mexico and Central America. In this `industrial' During this stage the green revolution trans stage a sequence of new products derived from formed commercial agriculture2), including the agriculture were introduced into both the home activities of transnationals, by improving countries (kiwi fruit, mangoes) and the hosts yields through the addition of better seeds, fer (cigarettes, beer, snacks). tilizers and cultivation techniques. These Transnational investments in agriculture and changes encouraged, first, imports, and subse food products came relatively late to Mexico, in quently, production of agricultural inputs, by the 1930s. Firms such as Anderson Clayton such transnationals as International Harvester, initially engaged in cotton exports to United Massey Ferguson, John Deere (agricultural ma States, and later, in vegetable oils and fodder chinery), and Purina de Mexico and Anderson obtained from cottonseed, but consumed in the Clayton (animal feed). home market. Productos Quaker de Mexico, The transnational corporations also diversi Productos de Maiz and Chiclets Adams were fied their activities into high value added food also established in this period (Table 2). During products such as meat and milk by-products, the 1940s Coca-Cola and Pepsicola (soft drinks), breakfast cereal, fast foods, oils and sauces, and Nestle and Carnation de Mexico (dairy prod candies and snacks; for the large part consumed ucts) and McCormick (condiments)

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