NOTES AGRICULTURAL & RURAL DEVELOPMENT 40400 2nd Annual Golden Plough Award for Innovative Project Design Returning Young Mexican Farmers to the Land ISSUE 23 JUNE 2007 The 1917 Constitution, which formally ended the By the late 1990s, half of Mexico's rural population was Mexican Revolution, set into motion a gradual process age 20 or younger, while the mean age of ejidatarios was of land reform in which land was transferred from large 52. The generally older, less-educated ejidatarios with farms to common lands known as ejidos. User rights to secure tenure found very few options as to what to do ejidos was assigned to beneficiaries known as ejidatar- with the land they operated, and scant resources were ios who, together with indigenous farmers on common available to improve productivity. Investment lands (comunidades) under communal or customary levels on ejidos were extraordinarily low. By 1995, a study tenure arrangements (comuneros), comprised the so- found that being located on an ejido increased one's called "social sector" which accounted for more than probability of living in poverty by 50 percent (Velez 1995). 50 percent of Mexico's land. The transfer of user rights to ejidos was heavily restricted, and usufruct itself was In 1992, Article 27 of the Mexican Constitution was conditional on the ejidatarios' own active cultivation of modified and the agrarian legal framework was updated. the land, preventing the development of functioning The Government of Mexico began introducing a series of land or rental markets. More specifically, the restrictions legal and policy reforms including a program of land severely inhibited the transfer of land rights from one rights regularization targeting the "social sector"--the generation to another, leaving younger households to National Certification Program of Ejido Rights and Urban face chronic land shortages and insecure tenure. Many Lots, widely known by its Spanish abbreviation PRO- opted to migrate to urban areas or to the United States, CEDE--Programa Nacional de Certificacion de Derechos which deprived Mexican agriculture of many potential Ejidales y Solares Urbanos. The program set out to innovative and productive farmers. process individual certificates to all 2.5 million ejidatarios in Mexico, while related reforms empowered ejidatarios to determine the type of property rights regime that applied to their ejidos, and authorized them to form joint ventures with private companies. The prohibition of rent- ing land was lifted, and land sales were authorized with qualifications intended to keep the plot within the local community (Harvey 1996; Brizzi and Valdés 2001). Establishing property rights proved to be a necessary, but insufficient, condition in developing a fully func- tioning land market. Other constraints remained out- standing and limited investment in the social sector, including lack of access to credit, insurance, and tech- nical assistance. Policy makers regarded younger house- holds, who had a higher level of education, as having a higher propensity to invest and a greater likelihood of adopting productivity-enhancing innovations. However, THE WORLD BANK development in Mexico during the 1990s did not see any for Mexico and a variety of analytical work on rural significant transfer of land from older to younger house- poverty, land policy, land markets, and access to land on holds. By the early 2000s, the Government of Mexico and ejidos and indigenous comunidades. the Secretariat of Agrarian Reform, in particular, had come to see investment in "this more dynamic young seg- The Access to Land for Young Farmers Pilot Project was ment of the population endowed with more human cap- approved in July 2005 to support young farmers with ital" as the key to revitalizing the moribund rural econo- entrepreneurial potential in gaining access to land and other productive assets. It also facilitated access to social my of the country's social sector (World Bank 2005). welfare schemes by senior landholders. The project con- Approaching this objective programmatically would entail sisted of three components. The first provided partici- establishing a land fund from which to lend to young pating farmers with capacity building services to devel- farmers, and creating effective incentives for older land- op the practical knowledge and financial management holders to transfer their land. Careful analysis would be skills needed to carry out productive activities on the required, including examination of social welfare land and to function effectively in an expanding and schemes, to assure that senior landholders who transfer more dynamic rural economy. The second component their land to younger counterparts could do so without focused on access to land and land transactions and relinquishing their security. other complementary productive assets and technical assistance. The third component related to day-to-day project management, with special attention to coordi- nation with other programs targeting the social sector, and monitoring and evaluation. The project began with promotional dissemination of information about the project in the ejidos and comu- nidades selected for the pilot. Eligible young entrepre- neurs then attended workshops in which project details were laid out and options for different project activities in the local ejido or communidad were discussed. This preliminary subcomponent of capacity building dealt principally with the identification of viable market opportunities in the local economy. The Secretariat of Agrarian Reform was active in seeking to identify "clus- ters" of business opportunities around which groups of young rural entrepreneurs can one day organize. After introducing the project and identifying potential THE ACCESS TO LAND FOR income-increasing ventures in the local economy, the proj- YOUNG FARMERS PROJECT ect turned to capacity building. Some participants advanced to intensive, three-to-six month training pro- In 2003 the Mexican Ministry of Finance and Public grams in the business area identified in the previous work- Credit contacted the World Bank Country Director for shops, such as the construction and operation of a green- Mexico on behalf of the Secretariat of Agrarian Reform, house or fish breeding pond. Others were authorized to requesting Bank assistance to the Young Rural "fast track," bypassing the intensive month training peri- Entrepreneur and Land Fund Program. The Bank was in od to present a proposal directly to the National Trust an excellent position to provide support, having recently Fund for the Development of the Ejido Sector (FIFONAFE). approved its 2005-2008 Country Partnership Strategy FIFONAFE was established in 1992 to administer funds 2 belonging to ejidos and communidudes and served as the project's co-implementing agency, along with the Secretariat of Agrarian Reform. The project also piloted additional land fund mechanisms, including rural devel- opment financial partners, both public and private. Guaranteeing the legality of land transactions was essen- tial to long-term tenure security, and required landholders to have a working understanding of how the land market functions and how to formalize contracts. Legal advice for land transactions is, therefore, provided, along with work- shops conducted together with the Agrarian Juridical Bureau and the National Agrarian Registry. Those partici- pants accredited with completing the succession of work- shops and steps could then become eligible for a combi- nation of grants and credits. The National Trust Fund for the Development of the Ejido Sector and other rural development financial partners offer credits for land transactions or rentals, as well as grants and credits for SUSTAINABILITY the actual productive projects undertaken, followed by The capacity of young rural entrepreneurs is in itself a technical assistance that is partly covered by grants. matter of long-term sustainability, far more extensive than INNOVATION the life of the project. The knowledge and abilities young farmers gain by participating in project activities are appli- The project pilots an innovative approach in Mexico and cable to land-related production more generally. Their in Latin America and Caribbean (LAC) that supports the project experience also, notably, entails operating in a access of young rural entrepreneurs to land, other pro- market environment and understanding and responding ductive assets, training, and technical assistance, through to signals of supply and demand. The skills cultivated by the establishment of a beneficiary-driven, efficient land the project are the same ones instrumental to participat- transaction model, while at the same time facilitating the ing in and contributing to a diversifying rural and peri- access of senior landholders to social welfare schemes. urban economy with functioning credit markets and a variety of specialized financial services. The project supports mechanisms that allow landless young rural entrepreneurs in poor marginal areas to The welfare and livelihoods of older ejidatarios who sell receive training and technical assistance, to acquire or their user rights is likewise relevant to the sustainability of rent underutilized and potentially more productive land, project outcomes. Social welfare systems that reliably serve and implement productive and environmentally sustain- people during their retirements are an invaluable asset for able on- and off-farm investment projects that signifi- a form of rural development that utilizes the human capi- cantly increase their income and welfare. It also assists tal of its most productive citizens while providing sufficient older landholders who transfer their lands to young farm- security that households can invest their resources instead ers to access social welfare schemes for their retirement. of saving for an utterly uncertain old age. By late 2006 mechanisms were already being successfully piloted in ten states of the country, and were slated to be In terms of financial sustainability at the project level, a scaled up to reach a broader range of beneficiaries under new institutional arrangement is being piloted that the incoming Calderón Government. should provide effective mechanisms for sharing risks and 3 a sophisticated system of guarantees. This arrangement prevail throughout much of Latin America and the has the Secretariat of Agrarian Reform and the National developing world. Trust Fund for the Development of the Ejido Sector col- laborating with a variety of experienced financial agen- ˇ High levels of migration of young rural people who cies, both public and private and will ensure the recovery have no alternatives in the places where they live and, of credits in the medium term. At the farm level, the eco- therefore, opt to migrate to cities or emigrate in order nomic and financial sustainability of project activities have to find livelihoods. been confirmed by financial analysis--assuming that ˇ Increasing numbers of elderly people left alone in the effective screening mechanisms are employed to monitor rural areas with very low levels of productivity. for quality, outreach, and environmental sustainability. ˇ Complex land tenure situations with the eldest in REPLICABILITY charge of the land and difficult mechanisms for trans- ferring tenure to younger generations. In 2007, they reduced the number of states at the demand of the Bank who did not want scaling up too RECOGNITION quickly. The incoming government included the program In November 2006, the Access to Land for Young Farmers among its 100 priority actions for the next six years. Pilot Project received the World Bank's Golden Plough Building in the project, the Government is designing a Award for Innovative Project Design. The community-level National Program and Public Policy, aiming to increase its land-market mechanisms developed represent a set of present annual target from an average of 1,000 benefici- innovations of direct relevance to the Bank's rural devel- aries to tens of thousands beneficiaries. This will be done opment strategy. These contribute directly to the Country progressively, learning from the experience of the pilot. Partnership Strategy for Mexico, which sees a revitalized The success of the Project carries enormous potential private sector and access to assets, markets, and financial for replication elsewhere in countries and regions services as important conditions for increasing rural facing similar conditions. These conditions, indeed, incomes and reducing rural poverty. SOURCES World Bank. 2005. Project Appraisal Document on a Proposed Loan in the Amount of US$100 Million to the United Mexican States for an Access to Land for Young Farmers Pilot Project. June 24, 20005. Report No. 32666-MX. World Bank. 2001. "Mexico Land Policy: A Decade After the Ejido Reform." Report No. 22187-ME. 15 June. Brizzi, Adolfo, and Alberto Valdés. 2001. "Rural Development and Agriculture" in Mexico: A Comprehensive Development Agenda for the New Era. The World Bank, Washington, DC 2001. Velez, F. 1995. "Los Desafios que Enfrneta el Campo en Mexico" in Mexico a la hora del cambio. L. Rubio and A. Fernandez (editors) Cal y Arena, Mexico. Frederic de Dinechin is the Senior Land Administration Specialist in the Latin America and Caribbean region, Agriculture and Rural Development. Gunnar Larson, who wrote and coordinated the finalized text, is a consultant for the Agriculture and Rural Development Department. This Note is based on the FY 2006 Golden Plough Award for Innovative Project Design. 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