The Yaqui Project A 15-year Retrospective Look by an Applied Economist

1. The Yaqui ProjectA 15-year Retrospective Look by an Applied Economist Wally Falcon Asilomar, March 28, 2006

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

3. 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

4. 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

5. Mexican agriculture Yaqui Valley agriculture Policy reforms: 1991 to 1996 • 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

6. 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

8. Valley Logo: 1992 2002 2003

9. Area Planted in the Yaqui Valley, by Crop Soy Wheat Safflower Maize

10. Mexican agriculture Yaqui Valley agriculture Policy reforms and exogenous shocks: 2001 to present • 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

11. World Market Commodity Prices: 1988 - 2002

12. Private vs. social costs Profits for major crops in the Yaqui Valley

13. Mexico (2002): Wheat Prod.--3.2 mmt Government Support $0.202 mil. Wheat PSE--34% Maize Prod.--19.3 mmt Government 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% Government Support

14. And nitrogen use goes up, whatever! 100% 100% 100% 84% 64% 1956 1966 1981 1997 2002 Percentages represent the proportion of the area that is fertilized

15. Livestock and the effect of NAFTA

16. 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)

17. The Valley in 2025?

18. 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

19. 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

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