“La gente están vendiendo sus tierras … Yo me pongo a pensar en mi, en mi caso pues, no fue por mala administración, yo tuve que deshacerme de mis tierras por las necesidades de mi familia.”

(People are selling their land … I’m thinking on myself, in my case it was not mismanagement, I had to get rid of the land for my family’s needs.)

—Jesús,¹ sugarcane producer in Plan Chontalpa

The introduction of credit is often hailed as a positive development strategy that empowers local producers. Many microfinance projects have successfully used credit to empower local people and spur economic development. However, the use of credit as a development strategy entails many risks for impoverished borrowers and does not automatically lead to economic empowerment.

In this article, we examine the use of credit as a development tool within Plan Chontalpa, a large-scale development project in Tabasco, Mexico. Jesús’s reflections above highlight a common experience that became obvious to us while doing research in Tabasco: numerous farmers were illegally selling their community-controlled landholdings, or ejido land. This type of landholding derived from the Mexican Revolution of 1910 (McMichael 2004: 141). They were usually created from expropriated lands from the haciendas (large estates) and almost always without compensation. The idea was to provide land to the landless majority in the major centers of development in the Mexican central plateau and the rest of the country (Barkin and King 1970).

The illegal sale of the community-controlled land became a focus of Gisela Lanzas’s research, and she gathered ethnographic data to understand the systemic and personal factors compelling farmers to liquidate their most valuable productive asset. She quickly learned that the proximate factor leading to most land sales was debt: farmers had taken loans they were unable to repay. Heavily indebted farmers often lack the ability to continue to invest in production, so the land becomes unproductive and is sold to repay loans, provide money to the household, or both. Land sales provide a short-term solution for household cash flow problems but inevitably result in increasing long-term vulnerability and marginalization.

Among the goals of the Plan Chontalpa were economic development and empowering local producers. The provision of credit is one tactic that has been deployed to achieve those goals. However, during our research in the area of Plan Chontalpa, it was very clear that credit was leading to the loss of land and economic vulnerability.

When examining the role of credit in any economic system, it is critical to recognize that the relationship between borrower and lender is asymmetrical: lenders have much more power than borrowers. When their goals are aligned, credit can be successfully used to empower local producers and generate economic development. However, the goals of lenders are often not perfectly aligned with the goals of borrowers. In such cases, borrowers are often disempowered as lenders use the power of the purse to manipulate them.

When borrowers cannot repay loans they agreed to take, they are often considered solely responsible for financial mismanagement and their resulting predicament. This is particularly the case when it is revealed that the borrowers had redirected the loan money from productive investments to consumption needs, which is the case with many families within Plan Chontalpa. However, within the past decade, systemic failures in credit markets in the United States and other developed economies have led many to emphasize the responsibility that lenders have for making bad loans. Both lenders and borrowers have responsibility, but given the systemic nature of the problem within Plan Chontalpa, and the asymmetrical balance of power that heavily favors the lenders, it is shortsighted to put the responsibility for the failure primarily on the individual borrower. In this article, we argue that the availability of credit has indeed had some positive impacts on production. However, it also has had some unintended and undesirable outcomes, as research in other areas has shown (Villarreal 2004b; Weaver et al. 2012).

Methodology

Our research was conducted in the state of Tabasco, Mexico, in a region that has been the focus of a large-scale development initiative called Plan Chontalpa (see Figure 1). While both authors have spent considerable time in Tabasco, the ethnographic material we address in this article was gathered by Lanzas during 15 months of fieldwork in Tabasco, Mexico. Lanzas conducted fieldwork beginning with 1 month in 2006, followed by 13 consecutive months from December 2007 to December 2008, and 1 month between June and July of 2009. In addition, she conducted follow-up interviews by phone.

Throughout her research, Lanzas collaborated in recording the personal experiences and thoughts of Jesús, a sugarcane farmer, who lived in the region since before the implementation of Plan Chontalpa. Lanzas met Jesús in June 2006 during a preliminary research trip that took her to the community where he lives, the Poblado.² Poblado was one of the first five semi urban towns to be constructed by Plan Chontalpa in the 1960s. According to the 2008 census figures, the town had a population of 5,259 inhabitants. The entire population of Poblado occupies a little more than 100 hectares. The towns were built

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The Chontalpa region is located in a fertile floodplan irrigated by the Grijalva River, which meanders from the Chiapas mountains on its way to the Gulf of Mexico (© Instituto de Ingeniería, Universidad Autónoma de México)

Citation: Focaal 2017, 78; 10.3167/fcl.2017.780108

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In addition to personal interviews between Lanzas and Jesús, information was gathered from a variety of sources and has been used to corroborate the time line and certain details of Jesús’s life history. Information was collected from radio news, local newspapers, local scientific reports, interviews with local residents, local and state government officials, local university professors, health care providers, teachers, sugarcane producers and their families, mill workers, and sugarcane associations’ leaders. Nonetheless, most of the data gathered came from person-centered interviews about Jesús’s life history and the economic analysis of his household’s economy.

From the beginning of the discipline, anthropologists collected personal histories from the individuals in the cultures they studied. Eliciting accounts of individual experiences to obtain information about general practices was in the very nature of ethnographic fieldwork (Watson and Watson-Franke 1985). To Lawrence Watson and Maria Watson-Franke, life histories are inevitably subjective, and to fully exploit the potential contribution of a life history, the essential subjective nature of it must be not only acknowledged but also adopted as a major element in the interpretive process. It is its subjectivity that gives meaning to life experiences. In this context, a person’s social behavior is not conceived as the result of environmental pressures, stimuli, motives, and attitudes; instead, it arises from how these things are interpreted and dealt with in the actions and activities being performed (Hughes and Sharrock 2007). As a result, the role of qualitative research such as a life history should be to grasp the insider’s perspective—that is, the meanings narrators attribute to their life experiences as well as facts.

It was significant for this particular research to have a life historical account for two reasons. First, most of the research done about Plan Chontalpa addresses the more salient political and economic processes that impacted this region from a top-down approach. In contrast, our research seeks to present a bottom-up account of how the plan’s policies have actually impacted the life of people living in that area and stayed in that area with the promise of a better life. Jesús’s life history, and the meanings he attributes to his experiences and decisions, is an attempt to give voice to voices that are not usually accounted for (Thompson 1978). Second, while much ethnography is conceived as “bottom-up,” it is often limited by being synchronic. A life history provides a diachronic view, which can capture how residents have experienced the evolution of the plan through time. Jesús’s life history is particularly valuable since he was the only healthy resident who was originally from that same community and had lived through all the changes brought about by the plan.

We conceive Jesús’s subjective experiences as valuable phenomena of analysis in themselves and use them to understand the implications of Plan Chontalpa in the livelihoods of the rural families. Consequently, we focus more on experiences and decisions that individuals have or make to be able to engage and/or respond to the society to which they belong. In this sense, we deal with the different social, economic, and political changes and decisions an individual makes through life, highlighting the importance of the individual’s experiences in their society, and the impact of these personal choices in the context of social change (Glantz 1979).

We consider Jesús an ideal informant and respondent. He is rather shy and reflexive but has an exceptional memory and narrative skill. In terms of household economics, his family is representative of the typical families living in the region. They have an average economic position for the town, and Jesús is not a public figure. The economic challenges that Jesús wrestles with and the strategies he has developed to handle them are common to families attempting to make a living in the community. In their current situation, Jesús and his family are typical, but their history in the area is considerably longer than most. Jesús is one of the few residents who have lived continuously in the region since before Plan Chontalpa was implemented. Before Plan Chontalpa, he was a farmer and a rancher (vaquero), and today he is one of the small-scale landowners who produce sugarcane to sell to the mills. He has witnessed vast changes to both Plan Chontalpa and the town through the decades. These changes have completely transformed his town and the environment. His life history and the economic data about his household constitute a unique window to look at the social and economic implications of the plan. His experiences are a lens through which we can understand the evolution of the plan and the credit market (Mintz 1974; Raeff 1993).

Plan Chontalpa

In 1951, the Mexican federal government created the Grijalva Commission to promote what it called a regional comprehensive management of the Grijalva River watershed, the second largest watershed in Mexico. This comprehensive management initiative sought economic modernization and industrial development of the region through hydroelectric energy production and agricultural development, following the scheme of development modeled by the Tennessee Valley Authority in the United States, a very influential but controversial Depression-era, watershed development program (Arrieta 1994).

Geographically, this initiative impacted the upper watershed area, located in the state of Chiapas, through the construction of four dams to produce hydroelectricity. Downstream, in the state of Tabasco, an agricultural and social development program, Plan Chontalpa, was put into action in 1966.

Plan Chontalpa was initially designed to achieve three goals, which were conceived as interconnected and mutually reinforcing. One, increase staple food production using input-intensive crops, modern technology, and irrigated agriculture. Two, promote the “modernization” of the rural sector. And three, transform self-sufficient campesinos into commercial farmers. The plan was financed by the Mexican federal government (53 percent) and the Inter-American Development Bank (IADB) (47 percent) (Tudela 1989).

The initial work of Plan Chontalpa included the draining of more than 80,000 hectares of wetlands to reclaim the land for agricultural purposes. Once drained, the land was clear-cut and leveled to create a massive irrigated agricultural zone. The plan then built 22 communities to house local inhabitants and new settlers to the region. The Poblado where Jesús and his family live is one such community.

Plan Chontalpa and the Grijalva watershed management were meant to be a model for industrial, agricultural, and social development in humid tropical regions of the world. However, along with Mexico as a whole, in the late 1970s, it faced economic and political problems. As it was originally conceived, Plan Chontalpa fit well within the philosophy of import substitution industrialization that Mexico was following. However, under the pressure of international lenders following the Mexican debt crisis in the early 1980s, the national development philosophy shifted toward export-oriented growth. This shift to a neoliberal development philosophy accompanied the realization that the plan had not lived up to its expectations. Upstream, the dams did not generate the expected electrical power production. Downstream, the production of staple foods failed to be economically sustainable. Rather than abandoning the plan altogether, the government reconceived the plan’s goals and reoriented the local production. To strengthen the economics and bring the plan into alignment with the export-oriented development philosophy, the government stopped supporting the growth of staple foods and began encouraging farmers to grow a single cash crop, sugarcane.

Currently, the cultivation of sugarcane is the primary economic activity in the area impacted by Plan Chontalpa. Most producers are marginal and small-scale, and have rights to between one to six hectares of ejido land. Cultivating sugar on such small parcels does not allow most farmers to fully support their households. To make ends meet, most households must engage in a variety of other nonagricultural activities such as the preparation of food for local sale and migration to nearby cities.

A life history: Living under the plan

Jesús, a small-scale sugarcane farmer, is a resident of the Poblado and a self-identified mestizo. Like the rest of the residents in the region, he speaks Spanish. He lives with his wife, son, daughter, son-in-law, and granddaughter. He and his wife had a total seven children, six of whom are living. In addition to the two children who live at home, the couple has four children who live in cities, do nonagricultural jobs, and don’t have any interest in engaging in agricultural activities like their parents. Jesús is the only one in his household devoted primarily to agricultural activities. The rest of the household members, his wife, son, daughter, and son-in-law, engage in a variety of other nonagricultural activities, which supplements the household agricultural income and allows them to meet their economic needs.

Prior to Plan Chontalpa, Jesús was a self-sufficient subsistence farmer. Jesús’s family had developed an agrarian economy based on crop and livestock production that exceeded consumption needs. Together with his brother and father, Jesús worked the farmland through a common system used in tropical regions, swidden (slash-and-burn) cultivation, without any degree of mechanization. With this system, a fraction of the jungle is cut down, the land is cultivated for a period of time (two to three years), and then they move to exploit another parcel of land, leaving the previous parcel to recover its fertility naturally. According to Jesús, they planted annual crops such as corn, beans, squash, sweet potato, and rice with macana.³ They also planted perennial crops such as fruit trees, cacao, corozo palms, and a plantain known locally as macho. Products such as corn and rice were used primarily for household consumption, with the remainder sold to intermediaries or directly to consumers. Previous studies have shown that corn was and is the most important staple crop, and is typically consumed in the form of tortillas and pozol⁴ (Dewey 1981). Jesús’s family follows this pattern where corn is an integral part of their diet.

When Plan Chontalpa came into place in late 1960s, Jesús explained that all the land was expropriated from local farmers and reclassified as ejido land. He and his birth family were given the option to move to another region or to participate in the agricultural food production system created by the plan on communal land. He and his family chose to stay. Like others who stayed and worked in the plan, they were allowed to live in one of the new communities and have access to farmland, in exchange for completing a certain amount of communal work (jornales) per year.

The implementation of Plan Chontalpa thus had a dramatic effect on the local mode of production and Jesús’s relation with it. He went from being a self-sufficient subsistence farmer to a laborer employed in agricultural and livestock work, which was established, managed, organized, and supervised by the plan’s representatives. Like many others, Jesús was unhappy about the new conditions but did not see any other option than to adjust to the new circumstances.

The implementation of Plan Chontalpa involved the radical restructuring of the land tenure in the target area as well as the resettlement of its inhabitants into the 22 residential and agricultural units. For Jesús the expropriation of his father’s land and the relocation of his birth family were also associated with the disarticulation of his family.⁵ After their lands were expropriated and their house was torn down, Jesús and his family went through a difficult period. Jesús estimates that he was 17 or 18 years old when they had to vacate their recently remodeled family home. The family moved into a provisional house built by the plan not far from where their original house was. While living in this provisional house, the internal relationships of the family became more complicated. His father used to drink, and Jesús, his mother, sisters, and brother were under constant physical abuse.⁶ This became more acute with the loss of his property and assets, as well as the move. Shortly after occupying the new house, his father decided to leave them and go live with one of his mistresses. The father built a new house for himself and his new partner with the money the family had received from the compensation awarded for the land and other expropriated assets.

During the following months, Jesús’s younger sister ran away from home with her first boyfriend, and his younger brother moved to the nearby city to live with other relatives. In the provisional casita (little house), as Jesús calls it, Jesús lived with his mother and his oldest sister. They lived there for about three years, until the plan evicted them again because the house was located on land needed for other plan projects. This first house provided by the plan was only temporary, until they could find a way to obtain their own solar (land for a house) within the plan housing project. With nowhere to go, they decided to occupy the abandoned house of a relative located on the perimeter of the plan area. The now small family sought to join the new way of life and labor organization introduced by the plan. Jesús, his mother, and his oldest sister worked in agricultural and livestock agroindustries established, managed, organized, and supervised by the plan operators. Eventually, his work as a jornalero (laborer) for the plan earned Jesús the rights of an ejidatario. He was given agricultural land to farm and the right to live in the plan’s housing project.

Plan Chontalpa introduced a new production process and labor organization in which people like Jesús lost control of the productive process and depended on the plan’s economy (and the market) for their livelihood. Jesús and his family became wage laborers working to supply raw materials to the agroindustries built, managed, organized, and supervised by the plan’s operators. In the process, these economic changes also affected the social makeup of his family and personal life. The destruction of the family’s assets, including their recently remodeled home and the loss of their land, created a crisis of self-definition, autonomy, and identity, which is common under these circumstances in peasant communities (Barth 1956; Mintz 1974). Plan Chontalpa disregarded the social and agricultural knowledge and practices commonly performed in the region. As Arturo Escobar eloquently says, “what happened to rural people (never mind what they thought) did not matter” (1995: 79).

The rise of neoliberal policies in the 1980s and the signing of the North American Free Trade Agreement (NAFTA) in 1994 led to significant changes in Mexico. Important state-owned companies, including the sugar mills and many banks, were privatized; markets and trade were liberalized; and many agricultural subsidies from the state were eliminated. For Plan Chontalpa, these neoliberal policies had several consequences: the labor system was completely reorganized, the land tenure was changed, and there was a withdrawal of state resources and attention from the region. Plan Chontalpa started to lose influence as the main regulator and promoter of economic and social development in the region. As a result, the collective work in ejido land ended, and farmers became independent sugarcane producers. According to Jesús, by the late 1980s the communal land system had changed and individuals claimed private usufruct rights for individual parcels.

The credit system

Extending credit to producers has been a part of Plan Chontalpa from the beginning; however, the structure of the credit system has changed significantly. In the early stages of the plan, collective groups of farmers were allowed to apply for loans. The plan facilitated these limited lines of credit for farmers from national banks and institutions such as Banrural and Fertilizantes Mexicanos. Individuals could not apply for a loan because they generally had no collateral to guarantee the loans. Plan administrators sought to reduce the risk of loan default by making groups of farmers jointly and severally liable for the collective loans. However, this strategy proved unsuccessful. After years of implementation of these credit lines, an estimated 75 percent of the beneficiaries did not repay their loans. According to David Barkin (1990) and Pedro Arrieta (1994), the high rate of default was a result of the farmers’ dissatisfaction with how the credit program and the plan as a whole was being run. Jesús confirms Barkin and Arrieta’s conclusion that farmers were dissatisfied with the way their means of production were being increasingly controlled by the government.

As the development philosophy shifted toward neoliberalism and as the plan was reoriented toward sugarcane, the credit market was redesigned as well. The neoliberal development philosophy of the Mexican government, the World Bank, and others argues that limited access to financial services hinders economic development in rural areas (World Bank 1995). This philosophy conceives access to individual credit as instrumental for the overall improvement of the rural population’s welfare by promoting efficient production, poverty reduction, and empowerment. Individual credit is supposed to provide operating capital to small farmers and entrepreneurs to enable them to efficiently invest resources to maximize profits. In other words, the availability of credit is supposed to increase efficiency in regions characterized by low productivity by enabling producers to make optimum investments in their production. Additionally, since it is supposed to increase economic efficiency, many economists and others have argued that the availability of credit creates a path to poverty reduction. Finally, credit is supposed to provide farmers with autonomy in their decisions regarding their productive activities (Torres 2004).

Since the 1990s, the government has allowed the private sector to make agricultural loans available to individual small-scale sugarcane producers. In the current system, banks make the loans, but the mills administer them. Farmers apply for loans to the mill, and the mill is responsible for distributing and collecting funds. A fideicomiso, or trust fund, was established to guarantee these loans. The trust fund is managed jointly by the sugarcane producers’ associations, the sugar mills, and the federal Mexican government (through small social programs). The sugarcane producers’ associations are in charge of collecting between 1,000 and 1,500 Mexican pesos per hectare per harvest from each farmer. These funds are then used to cover debt payments that individual association members are unable to cover. Because the associations have exposure to potential losses due to default, the associations and the mills jointly decide which farmers are eligible for credit. These decisions are based on the farmer’s production, the payment of his contribution to the fund, and his credit history. Only with the approval of the associations and the mills will farmers receive loans. Any funds loaned are then deducted from the payment the mills make to the farmers at the end of the harvest.

Life history: Credit and household needs

Jesús explained that in the current system, when a farmer needs a loan, he must submit a request that accounts for each item he requires. Rather than lending the total sum in cash and entrusting the producers, the mills and producer associations coordinate to deliver the specific items needed. If the loan includes money for the hiring of jornaleros (laborers), the associations and the mills are in charge of hiring and paying the laborers. The same is done during zafra (harvest time) when the sugar mills hire the required laborers, pay them, and provide whatever other implements or equipment is necessary. The cost of all this is deducted from the mills’ payment to producers.

Although the structure of the credit market has changed, the vulnerabilities farmers face remain. In the face of this new strategy, farmers in need of money have developed new subversive strategies to acquire it. Jesús explains they now request inputs from the mills and sell them on the black market to get money for their household needs. As a result, farmers need to borrow more than they actually need, since they lose money-selling inputs on the black market. Jesús confessed he would often sell whatever he could from the agricultural implements and inputs he received to get money to buy food, medicine, or to pay for other household needs. On occasion, he also used such funds to repay small debts he had incurred with the local moneylenders.

Like other families in similar situations, Jesús was not misusing credit because he is irrational or ignorant. He understood that this strategy will lead to long-term problems, but the current needs of his family required prioritization. It did not take too long before Jesús found himself having difficulties keeping up with the payments for the increased debts. Unable to repay his debts, Jesús started to do what many in his community have been doing: illegally selling ejido land. Initially his family had 13 hectares under sugarcane production; today he has just one.

Analysis

The practice of redirecting loans from production to consumption is commonly interpreted in terms of stereotypes that emphasize that rural people live in the present, squeezing what they can get at the time, with little to no concern about the future (Villarreal 2004a). This stereotype suggests that the behavior of rural people is irrational and backward. However, our findings agree with other scholars who have argued that their decisions to redirect borrowed money to pay household expenses are completely rational. Small-scale producers with very low incomes, like Jesús, have high discount rates. They have acute short-term needs and are forced to decide to satisfy their immediate needs at the expense of future income (Hoekstra 1985; Torres 2004). They make these decisions because their livelihoods are constrained by insecurities, asymmetries, and precariousness that compel them to prioritize present needs.

When loans are used to invest in the productivity of sugarcane land, it can greatly improve production and the income that farmers earn. Jesús knows this, since he had that experience when he requested one of the first loans to invest in his newly acquired sugarcane field. His production that year was high and he was able to repay his loan and have enough money for the family. However, when farmers are compelled to use the loan for household needs, it resolves the immediate necessity, but the land is neglected, its productivity declines, and the quality of the sugarcane goes down. Since the price paid for the sugarcane is tied to its quality, lower-quality cane means smaller payments to farmers and lower profits for the mills.

What we observed in the field contradicts the discourse of empowerment coming from the promoters of credit to individual small-scale producers. On paper, this policy intended to empower producers and improve their economic welfare. However, the case of Jesús, which is representative of many others in his community, shows that farmers have become dependent on and indebted to more powerful institutions. Furthermore, the strategy implemented by the mills and the associations to prevent producers from spending the cash loans has created a paternalistic environment in which producers like Jesús are no longer considered capable of managing their own economic activity. They are not fully in control of their production and have had to resort to subversive and expensive strategies, like selling agricultural inputs and borrowing from local moneylenders, to make ends meet. Individual producers must face all of the risks and uncertainty of growing sugarcane, while powerful outsiders receive the vast majority of the wealth being produced.

For many small-scale producers like Jesús, this credit system has created a cycle of debt that often culminates in farmers having to illegally sell ejido lands and losing access to their most important means of production. In the community where Jesús lives, speculators from other parts of the country have found an opportunity to profit by buying ejidal sugarcane land from bankrupt farmers for personal gain. This is re-creating a pattern of land concentration in the hands of few. Rather than recognizing the economic vulnerability in which small-scale sugarcane producers live, development planners blame locals for their livelihood decisions and create circumstances that increase the precariousness of their situation.

Conclusions

Many of the families living under Plan Chontalpa face the same challenging situation that Jesús and his family faced. They have significant needs in the present and few options for how to satisfy them. In this context, they will predictably redirect whatever resources they control toward satisfying their family’s pressing needs. Far from being economically irrational, such decisions are rational and predictable. The problem with the credit system under Plan Chontalpa is not the availability of credit per se but rather the availability of credit for investment in a context of poverty and economic insecurity. Rather than blaming locals for misusing credit, we argue that the plan itself misused credit. It is immoral and counterproductive to lend money to people for investment when they have pressing current needs that are unaddressed.

Jesús and his family are compelled to find whatever way they can to ensure their survival. Their precariousness means they often have to sacrifice long-term goals for short-term needs. In the current system, loans are given to desperate people who get into debt and then lose their land. This is not a development strategy. This credit system is not unlike predatory lenders in developed economies that target low-income borrowers. Large investors, mill owners, and bankers are profiting while local farmers are caught in a cycle of debt and impoverishment.

Our research shows that development policies such as agricultural loan programs for small-scale producers must be informed by ethnographic knowledge of local livelihood strategies. When people have high discount rates, we should not expect them to invest money in agricultural inputs until their pressing needs are satisfied. As Eric Wolf famously put it, “The peasant does not operate an enterprise in the economic sense; he runs a household, not a business concern” (Wolf 1966: 2). Planners must understand and appreciate both the potential economic benefit of investment as well as the current economic situation of the household.

Loans may be a useful tool to increase economic productivity but only once the basic needs of the family are met and a social safety net is in place. Otherwise, the loans become the safety net. When farm families are compelled to redirect loan money to household expenses, there is no increase in productivity, farmers fall into a cycle of debt, and eventually they lose their land. Rather than blaming individuals for poor management of their household budgets, we need to recognize that their decisions are rational and predictable. The untenable position in which many farming families find themselves is not a result of bad decisions; rather, we argue it is a result of bad options. Institutional players, including the government, lenders, and the mills, share responsibility for the results of the programs they put in place.