The Yaqui Project A 15-year Retrospective Look

by an Applied Economist

Wally Falcon

Asilomar, March 28, 2006

Perspective

“As a development economist who had focused on policy analysis and policy advice at the national level, and as CIMMYT’s Chairman.”

Past as Prologue

“The problem with history is that it is just one damned thing after another.”

George Bernard Shaw

The value of a 15-year involvement

Scope and Methods

• Interdisciplinary questions; Mostly disciplinary answers

• Site selection and the continuing issue of scale

• Valley versus national policy formation• Original motivations

--Studying farmer responsiveness --Evaluating effects of a suite of policy

changes

Policy reforms: 1991 to 1996

Mexican agriculture

Yaqui Valley agriculture

Policy Reforms: Shift towards privatized markets

• Trade liberalization: NAFTA (1994)

• PROCAMPO = decoupled payments

• Removal of factor and output price supports

• Decentralization of water market

• Land reform = amendment of Article 27

Major Findings

Role of shocks--macro policy, pests, water

Rapidly changing private and social profitability of crop activities

NAFTA and the livestock industry

Diversification dilemmas

Low price responsiveness of farmers

Valley Logo:

1992

20022003

Area Planted in the Yaqui Valley, by Crop

Maize

Wheat

Soy

Safflower

Policy reforms and exogenous shocks: 2001 to present

Mexican agriculture

Yaqui Valley agriculture

Policy Reforms:

• Environmental regulation of livestock waste

• Zero tariff levels on pork imports

• Emergency payments to farmers via grain prices

Exogenous Shocks:

• Continuing drought

• Wheat pests = Karnal bunt, aphids, rusts

World Market Commodity Prices: 1988 - 2002

Profits for major crops in the Yaqui Valley

Private vs. social costs

Government Support

Mexico (2002):Wheat Prod.--3.2 mmtGovernment Support$0.202 mil.Wheat PSE--34%

Maize Prod.--19.3 mmtGovernment Support$1,081 mil.Maize PSE--31%

United States (2002):

Wheat Prod.--44.1 mmt

Government Support

$2,611 mil.

Wheat PSE--30%

Maize Prod.--228.8 mmt

Government Support

$4,578 mil.

Maize PSE--17%

Uso de Nitrogeno en Trigo

0

50

100

150

200

250

300

1 2 3 4 5

Year - Ano

Kg

N/h

a

1956 1966 1981 1997 2002

100%

100%100%

84%

64%

Percentages represent the proportion of the area that is fertilized

And nitrogen use goes up, whatever!

Livestock and the effect of NAFTA

Linkages between the Wheat and Pork Sectors

Sonora produces 1.5 million tons of durum wheat

• 800,000 tons bought by the pork producers

• 200,000 – chicken producers

• 50,000 – cattle (feedlots)

The Valley in 2025?

Lessons/Surprises--Some Valley, Some Personal

• Unresponsiveness of farmers to prices (??)• Large role of the credit unions• Low levels of corruption• Reaffirmation of the importance of macro

policy• Difficulties of simultaneously doing first-

rate research and policy advice • Relative unimportance of Varietal Change• New respect for nitrogen pollution• New respect for GIS and spatial variation

Some Disappointments• Difficulty in funding a truly integrated set of

studies (especially for a full-time person in Cd. Obregon)

• Inability to measure/value all nitrogen externalities adequately

• Project’s limited impact on development• Difficulty in identifying diversification

options• Limited success in learning more about the ejido communitie, and about migration more generally

Overall

On a net basis, the positives greatly outweighed the disappointments at all levels--personal, project, and professional.