Regulating to Exclude or to Enable: Institution Building and Transnational Standard Adoption in Mexican Food Safety
- Open Access
- 27.07.2024
Erschienen in:
Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.
Wählen Sie Textabschnitte aus um mit Künstlicher Intelligenz passenden Patente zu finden. powered by
Markieren Sie Textabschnitte, um KI-gestützt weitere passende Inhalte zu finden. powered by (Link öffnet in neuem Fenster)
Abstract
Over the past twenty-five years, scholars of development have increasingly debated how semi-periphery countries may upgrade their economic and institutional capabilities by integrating themselves into transnational regulatory regimes and global value chains (GVCs) (Bruszt & McDermott 2014; Gereffi & Korzeniewicz 1994; Schrank 2013). This debate is particularly salient for Latin American agriculture, which represents significant components for growth and exports but are dominated historically by small and medium-sized firms (SMEs) (IDB 2014). The issue is whether the combination of economic incentives and the new food safety standards demanded by firms and governments from core, advanced nations would trigger broad-based upgrading of emerging market firms and their institutions or marginalize the majority of domestic firms and limit local institutional capacities (Henson & Reardon 2005; Lee et al 2012; Perez-Aleman 2011; Reardon et al. 2001).
Thus far, the rather mixed results reflect the opportunities and constraints that semi-periphery countries face, as noted in the introductory article. Consider, for instance, Mexico, a most likely case for standard diffusion and upgrading. Its incorporation into NAFTA brought great opportunities to take advantage of unique access to rich markets and to new international standards. NAFTA helped Mexico produce strong growth in exports and investment in general, including in fresh produce, and even compelled the government to pass laws mimicking US food safety regulations. Mexico also reveals the constraints of semi-periphery countries as rule takers with limited resources, weak institutions, and complex political legacies that can undermine the broad-based benefits of transnational integration. For instance, participation by SMEs in the GVCs remained very low, with considerable variation in capabilities upgrading, standards implementation, and institutional capacities across supply chains, products, and subnational regions (Bolio et al. 2014, Bruszt & McDermott 2012, FAO 2012, Fuentes & Pipkin 2017, OECD 2012).
Anzeige
These uneven trends challenge the typical views on the integration of the semi-periphery countries. Proponents of NAFTA and trade liberalization largely emphasize how economic incentives can lead developing country elites to build the modern regulatory institutions (Mansfield & Milner 1997, Jordana & Levi-Faur 2004), while domestic firms, as MNC suppliers or direct exporters, acquire advanced capabilities and standards, which then can spill over to other local firms and organizations (Doner 2009, Gereffi & Korzeniewicz 1994). Skeptics of rapid trade liberalization emphasize the ex ante need for strong national state capacities. The imposition of international rules for individuals, governments, and products could likely lead to an “uneven playing field,” since semi-periphery countries lack the capabilities to implement world standards (Stiglitz & Charlton 2006). Rather, modern regulation and upgrading can only occur when a coherent, strong national state builds the requisite capacities to define and enforce rules and directly facilitate technological upgrading (Amsden 1989, Evans 2004).
As different as these views appear, they share two common traits, in turn weaknesses. First, they share a relatively technocratic view of institutional change. Both believe that either the state or external actors can design optimal rules and incentives by which technologies and standards will be transferred sui generis to locals (Bartley 2011; Bruszt & McDermott 2012; Doner 2009). Second, they share the notion that implementation comes from a strong state, insulated from the particularistic interests of socio-economic actors. For instance, the new transnational regime or externally imposed rules of conditionality constrain elites from local demands and empower them to implant the new rules and incentives on society (McDermott 2002, Bartley 2011, Easterly 2006, Pevehouse 2005).
In identifying these weaknesses, an alternative approach to linking upgrading and regulation focuses on the ways in which firm adaptation and rulemaking are embedded in socio-political relationships often at the meso-level of society that can enable or constrain new development agency (Granovetter 2002, Locke & Samel 2018, Schrank 2013). First, this work understands the creation of new innovative and regulatory capacities as processes of relevant public and private actors seeking ways to adapt transnational standards by recombining existing resources and by coordinating production and regulatory experiments. Research on labor and environmental standards as well as technological change reveals that firms and regulators upgrade their capabilities and adapt international standards effectively through “learning communities” composed of institutions that pool and diffuse collective knowledge resources and promote collaborative relationships (Amengual 2010; Giuliani et al 2005; Locke et al 2009; McDermott 2007; Pietrobelli and Rabellotti 2011).
Second, this embeddedness view understands institutional change as a political process of layering and adapting existing rules and resources, delayed especially by legacies of institutional weakness and organized interests (Bartley 2011, Mair et al. 2012; Thelen 2003). As much as the central state may promote new rules and incentives, firms and social actors are embedded often in subnational organizations and institutions, which can be resources for experimentation or constraints to preserving past power (Faguet & Shami 2022, Dosek 2020, McDermott 2002). For students of Latin American, and especially Mexican, political economy, the key legacies are not only weak state capacities but especially a system of political control and policy implementation based on a corporatist structure that privileged a relatively small group of economic actors and their sectoral associations (Schneider 2013). Even with the formal dissolution of corporatism, this structure created great variation in subnational institutional capacities and left economic sectors bifurcated between a few large firms and a vast of array of fragmented, poorly organized SMEs (Aspinwall 2009; Schneider 2004; Shadlen 2004, Snyder 1999).
Anzeige
In building on these insights, this article attempts to show how the domestic development agency that can help firms adapt and implement international standards can be enabled and constrained by political and institutional legacies at the meso-level of analysis. The learning communities needed to forge a synthesis between regulation and upgrading depend largely on politics surrounding the refashioning of certain pre-existing producer associations and their empowerment by local public agencies. Without the expansion of these institutional actors, the use of standards as tools of upgrading becomes the realm of a privileged few. In turn, our argument contrasts and complements Schneider’s HME framework (Schneider 2013). As a contrast, our focus on SMEs and the subnational uncovers possible solutions to his formal institutional gridlock. Yet, we embrace his view that legacies of weak state capacities for regulations and skills development, of corporatism, and of corporate concentration constrain these opportunities for developmental agency.
We focus our inquiry on the export supply chains of fresh fruits and vegetables in Mexico during the formative period of 1999 to 2012 when the country was growing exports in aggregate and also overtly adopted US food safety regulations. In examining firm and government documents and conducting 37 interviews with Mexican and US industry leaders and regulators, we followed standard comparative methods of similarity and difference (Dosek 2020) and process tracing and ethnographic methods (Eisenhardt 1989; Thelen 2003). The variation within Mexico between supply chains, products, and regions allowed us to examine the institutional conditions for adaptation and exclusion attendant to national and subnational paths of reform over the critical period of the first 13 years when the national government adopted the new food safety regulations. Section I lays out the theoretical arguments for studying these two paths. Section II then describes the national path by which Mexico struggled to improve a poorly coordinated and under resourced decentralized system of regulation that prioritized export markets, largely ignored national regulatory capacities, and focused on large firms integrating themselves into private value chains. Section III analyzes the subnational paths, revealed through three case studies (Dosek 2020) that demonstrate how the reconversion of corporatist era sectoral associations both enables and constrains regulatory and upgrading experiments. Extended decline in a sector comes largely from the lack producer organizations to mobilize SMEs and engage with public actors. More promising but constrained learning communities emerge when a relatively small number of firms have refashioned their old associations to initiate collective solutions and work with Mexican and US public agencies to create certification and firm support resources. However, the de facto and de jure empowerment of these associations by the public institutions left the controlling firms as gatekeepers for the benefits of standards certification.
Rule Takers and Institutional Change
In fresh produce value chains, as with many other GVCs, countries on the semi-periphery are largely rule takers, forced to comply with the standards of more advanced countries via their own laws and the GVCs (Aspinwall 2009; Lee et al. 2012; Bruszt & McDermott 2012). The challenge for these countries is how to link the incorporation of new transnational regulations with the strengthening of domestic capacities in ways that could also increase the number and variety of firms to implement and benefit from the standards (Bruszt & McDermott 2014; Fuentes & Pipkin 2017). Much of the literature on externally induced institutional and firm changes focuses on the roles of political-economic incentives and asymmetric power. Scholars have emphasized how the combination of reputation effects and the threat of denial of trade and political benefits allows elite “reformists” to insulate themselves from particularistic interests in order to implant on society a set of new governance designs (Levitsky & Way 2010, Mansfield & Milner 1997, Pevehouse 2005). Recent research has refined the use of conditionality, arguing that institutional consolidation occurs via the use by external public and private actors of detailed goals, coupled with vigilant enforcement and the promise of continued economic benefits (Schimmelfennig & Sedelmeier 2005; Vachudova 2005). This view is complemented by the work on institutional isomorphism, which argues that the adoption of quality standards depends on the coercive and isomorphic pressures from MNCs (as global buyers or local FDI) and intense trade relations local firms have with advanced countries (Guler et al 2002; Perez-Aleman 2010).
These mechanisms are very present in the development of food safety standards and regulations that reach across national boundaries and in NAFTA in particular. NAFTA as an inducement for regulatory and firm upgrading in Mexico fits largely within the mainstream compliance model as characterized by Locke et al. (2009). Scholars and policymakers argued that Mexico’s compliance with new trade, investment, labor, and environmental standards would help lock in ongoing neoliberal reforms and improvements in its political, economic, and social institutions (Cameron & Wise 2004, Duina 2007, p. 33).
NAFTA asserts food safety regulations through market mechanisms (foreign trade access to the US and Canadian markets and FDI into Mexico) within the framework of Article 722, which defined a full set of common international food standards. It phased out many subsidies and tariffs and established a new Committee on Sanitary and Phytosanitary Measures largely as an intergovernmental body to ensure non-discriminatory compliance with national regulatory standards for imports. As Caswell and Sparling (2005) emphasize, nearly all of the regulatory integration activities among the NAFTA countries on SPS standards fall into the category of “policy coordination,” as the countries aimed to gradually reduce differences in policy, often based on voluntary adherence to international codes of practice, and also facilitate technical cooperation in the development, application, and enforcement of the standards. For Mexico, the principal intergovernmental relationships were between the USDA and FDA, as the regulators of the largest market, and their Mexican counterparts in SAGARPA (the Ministry of Agriculture) and its food safety secretariat, SENASICA (Green et al 2006).
In turn, with the structure of its rules and Mexico’s growing reliance on the US market and FDI, Article 722 reinforced mechanisms of economic incentives and institutional isomorphism for the transmission of largely US standards and regulations into the Mexican food system. By the early 2000s, more than 85% of Mexican exports of fruits and vegetables and 65% of meat products relied on the US market. Mexico would also change its food safety laws to reflect new US standards. In many ways, Mexico was at the vanguard of semi-periphery countries trying to comply with new international food safety standard at the regulatory and GVC levels (Cafaggi and Janczuk 2010, Henson & Reardon 2005, Lee et al 2012, Reardon et al. 2001).
But there are strong reasons to be skeptical of the effectiveness of these mechanisms at both levels. First, the growing research in areas as varied as food safety, labor, and environmental standards reveals that transnational standards and rules rarely transcend domestic institutions but are layered upon local laws and configurations of public and private regulatory capacities and power (Bartley 2011; Locke 2013; Schrank 2013). Regardless of voluntary and market incentives created by MNCs and INGOs, the beneficial co-evolution of private and public and regulation in food safety often depends on a strong public regulatory framework (Cafaggi and Janczuk 2010). This is exactly what scholars of both development and transnational rulemaking have argued is lacking when it comes to semi-periphery countries. For instance, Abbott and Snidal (2009) note that governments from these countries often lack the capacities or interest to effectively participate in the supranational game let alone monitor, enforce, and implement the standards domestically.
Second, both the stricter import regulations and the private standards in supply chains push the cost of adoption onto emerging market firms, restricting the access of SMEs to more advanced markets and value chains. Large established firms of emerging market countries tend to have more resources and stronger international professional ties that aid them in adopting new practices and technology, while SMEs are often forced to exit the market or turn to local retailers with less standards and profit margins (Cafaggi and Janczuk 2010, Henson and Humphrey 2009, Lee et al. 2012, Perez-Aleman 2011). The transfer and compliance of practices demand adaptation and regular coordinated experiments involving local experiential knowledge (MacDuffie & Helper 2006). This is impeded by the relatively low skills and knowledge resources of local suppliers, a gap which can be very costly for any single firm, even an MNC, to overcome (Fuentes 2021; Fuentes & Pipkin 2017; Perez-Aleman 2010).
These criticisms have led to an alternative approach that specifies three conditions under which existing institutions, largely at the subnational level, can be reconfigured to promote the development agency of public–private learning communities that enhance formal regulatory capacities and firm upgrading capabilities (Faguet & Shami 2022, Mair et al. 2012, Schrank 2013). It builds on work in economic sociology to identify the types of knowledge and relationships involved in building new firm capabilities and on historical institutionalism to clarify the political and institutional constraints in empowering a variety of local state and non-state actors to build administrative capacities to access resources and certification (Evans 2004; McDermott 2007; Tendler 1997).
First, the work on upgrading in GVCs argues that emerging market firms meet international standards through incremental experiments of adaptation with practical examples from the local context (Pietrobelli & Rabellotti 2011, Perez-Aleman 210). Similarly, the work on labor regulation stresses how labor standards tend to take hold through incremental joint problem-solving of root-causes between “inspectors as teachers,” managers, and workers (Amengual 2010; Locke et al 2009; Locke & Samel 2018). The different public and private actors have complementary skills, knowledge, and resources to be recombined. The implementation of international standards is a process of multi-party experimentation and learning to adapt them to local conditions.
Second, effective broad-based recombination and implementation emerge through learning communities grounded in producer organizations supported by public certification and upgrading institutions. The recent work on upgrading stresses how learning comes from multiple actors recombining knowledge and resources through a network of complementary, previously isolated firms or organizations that together create collective knowledge resources and collaborative ties (Breznitz 2005; Perez-Aleman 2010; McDermott et al 2009). Here, the adaptation of practices does not necessarily emerge from MNC commitment to knowledge transfer, but rather from the existing knowledge resources of producer associations and public extension and certification services being put to new uses (Schrank 2011; Tendler 1997).
Third, reflecting the process of institutional layering (Bartley 2011, Faguet & Shami 2022, Thelen 2003), the contours of potential learning communities are greatly shaped by institutional legacies and formal government power and laws. Ultimately, learning communities have membership and borders, which are determined by public certifications and resources. Both are the domains of government, especially in emerging markets, where authority and resources are scarce and closely guarded. Governments delegate the resources and authority to different public and private institutions in standards implementation and certification. The work on Latin American political economy has stressed that economic reforms in the 1990s were often mediated by the vestiges of the corporatist system, which offered certain business associations, related firms, and subnational politicians critical institutional resources (Shadlen 2004; Schneider 2013, Snyder 1999). To the extent that upgrading and regulation are localized collective actions, the old associations, even if the corporatist laws are removed, can constrain broad-based standards implementation by offering certain firms upgrading and certification resources. These associations can become exclusionary gate keepers for the ways in which rules are adapted and learning communities are developed.
In combining these three factors, we attempt to show how the domestic institutional conditions can both constrain and enable the emerging learning communities in food safety standards in Mexico. With NAFTA, the incentives of the US market and the regulations of the US government spurred upgrading and imitation by both Mexican firms and government agencies. But they also reinforced significant domestic economic and political constraints to their broad adoption. The next section shows how despite Mexican adoption of US regulations into laws, implementation was left to an existing decentralized system of public institutions with little coordination. The result was a bifurcated industry structure with large firms implementing the new standards and fragmented SMEs marginalized. Section III then presents three cases of institutional experiments at the subnational levels to overcome these constraints.
Mexico’s Approach to Food Safety Regulation and the General Impact
The 1990s ushered into Mexico market-based and legal mechanisms of food safety regulatory change via the country’s overall market liberalization reforms and the NAFTA agreement. Its first priority was deregulating the market—undoing a system of price controls, subsidies, and production and transport permits for private and communal producers administered by several federal agencies, state-owned firms (large buyers and producers), and a corporatist structure of industry confederations and associations (Schneider 2004, Snyder 1999).
In the past corporatist system, the confederations were the vehicles through which government coordinated policy and firms were obligated to join if they were to receive government benefits and permits. Larger firms were able to create within the confederations semi-autonomous sectoral associations (Schneider 2004, 2013; Shadlen 2004). In the mid-1990s, the supreme court ordered that firms were not required to be members of industry confederations. While we discuss in greater detail below the implications of this change, there were three key immediate legacies of the reforms. First, the government would lack the institutional capacities to implement and coordinate micro-level policies and regulations (Schneider 2013). This was compounded by fact that regulation of domestically sold and exported products was antiquated, with little focus on food safety issues, especially the emerging international SPS (Sanitary and Phytosanitary) rules and protocols (Avendano et al 2006). Second, although the confederations and associations could still exist, most SMEs abandoned them, leaving a limited number with their organizational resources in the hands of some larger firms. Third, sectors like fruits and vegetables, comprising over 65% of agricultural production, remained highly fragmented, with millions of small producers and a few large firms (Avendano et al 2006; Rivera et al. 2009; Snyder 1999).
In this section, we first analyze how the efforts by the Mexican government to reform food safety regulation led to new laws but also a system of regulatory and support institutions that lacked cohesion and coordination. We then show its general implications—a reliance on large firms and MNCs to use market forces to implement food safety standards.1
Federal Government Attempts to Reform Regulation and Firm Support
Although the use of international standards like SPS and HAACP was designed to eliminate discriminatory trade practices (Knutson & Ochoa 2007; Caswell & Sparling 2005), Mexico’s federal government and the peak level agriculture confederation (CNA) did not view food safety regulations as strategic for Mexico in NAFTA negotiations, other than try to limit their effects as barriers for entry to the US market for some of the most concentrated sectors (Hufbauer & Schott 2005). Indeed, as one outside expert noted, “the concept of safe domestic food supply for the Mexican people does not appear to exist as an explicit policy” (Knutson 2009, p. 13). For instance, COFEPRIS, the domestic food safety agency under the Ministry of Health, had about only 30 employees in the national office (FAO 2005).
The turning point for the government came at the end of the 1990s in response to US government actions. In 1997, the US passed the US Produce and Imported Food Safety Initiative, which heightened enforcement of imported food standards and also placed greater emphasis on producers using international guidelines like the Good Agricultural Practices (GAPs) and Good Management Practices (GMPs). An ongoing concern from the US was concerns over recurring problems of pestilence and food-borne disease outbreaks linked to imported Mexican fresh fruits and vegetables, some of which were suspended by the USDA and FDA over the following years.2 The Mexican government passed two sets of legislation between 1999 and 2001 that aimed to bring food safety laws, their regulation, and implementation to meet US standards. Indeed, outside experts have noted that the related reorganization of SAGARPA and SENASICA was based in many was on mimicking the USDA and FDA (FAO 2005, Knutson 2009). The challenge was daunting. A government study revealed at the time that less than 53% of firms in fruits and vegetables identified the need to establish a system of GAPs and GMPs, 34% had the minimal infrastructure to implement these practices, and only 11% had adapted international practices (Avendano et al 2006, p. 63).
The Mexican government’s “Master Plan” for food safety explicitly emphasized export value chains, thinking that broader regulatory implementation would later spillover into the domestic market via economic incentives (FAO 2005; Knutson & Ochoa 2007). Leaders from major confederations involved the legislation, like CNA and CAADES, confirming that this was consistent with their view at the time, as standards still meant barriers.3 The most complete discussion of the “Master Plan” has argued that this approach created conflicting forces for the broad-based implementation of standards. Most of the legal authority and resources for monitoring and implementation relied on state and local actors, which varied greatly in their capabilities, allowing such problems as biological and pest hazards to spread across jurisdictions.
This lack of coherence and regulatory capacity is reflected in both the budgets and organizational structure of the related public programs and regulations. The Mexican budget for agriculture declined by 50% from 1994 to 2001 and then slightly increased and stabilized to about 10% of total government outlays with the Fox administration (Gomez-Cruz et al. 2009). Alianza Para el Campo contained the main programs to aid the capacities of the agricultural industry. The overarching program for food safety and SPS monitoring and support was the Programa de Sanidad e Inocuidad Agroalimentaria or PSIA. Plant health and food safety practices were legislated as norms in 2002, and its subprogram accounted for less than 5% of the PSIA budget (FAO 2005).
Key weaknesses in the public regulatory infrastructure capacities were rooted in the decentralized nature of financing and operationalizing the laws, especially PSIA. The majority of PSIA financing came from state governments and producer fees, creating both great regional variation and weak national capacities.4 SENASICA was left with limited resources and legal authority to coordinate and supervise subnational actors, let alone build the infrastructure for testing, trace-back, certification, and training (FAO 2005, 2006). As late as 2012, the central unit for phytosanitary regulation of SENASICA had only 250 employees at the central office, while the unit for food safety practices had 40 employees. The former had legal authority to issue obligatory norms for controlling the eradication of harmful pests, such as fruit flies, and had certified to date 12 third party laboratories for testing on its behalf. The latter had no legal obligatory powers with their norms for food safety being voluntary.
Both SENASICA units relied on two decentralized organizations for operations and manpower. First, they relied on the offices and personnel of SAGARPA, located in each of the 32 Mexican states. The designated SAGARPA employees handled several policy portfolios, causing SENASICA to lack dedicated experts at the state level. Second, each state had an OAS (auxiliary sanitary organism), comprised of a SENASICA representative and representatives of the given state government and the local producers. The latter were elected from local/municipal juntas (JLSVs), of which there were 224 in the whole country. (This number declined by half during 2005–15.) JLSV boards were comprised of local producers and municipal functionaries. Although SENASICA set overarching priorities and rules for campaigns of prevention, testing, certification, and training of producers in new practices, it relied heavily on the OAS and JLSV to set annual goals and operational plans, including reliance on funding from the states—the governments and producers.
These conflicting lines of authority caused the FAO (2005, 2006) to identify significant flaws in SENASICA’s ability to create a consistent, coherent implementation strategy for monitoring and standards adoption at the level of the firm. State governments, which historically had limited resources and varied tremendously in wealth, were unlikely to put in more resources for the PSIA while the main legal competencies for rulemaking and enforcement were held federally. This structure left SENASICA relying on the poorly resourced OAS and JLSV to implement and monitor programs. Both the sanitary and food safety units relied on about 350 third party, contracted auditors, and certifiers, who were paid mainly from local OAS budgets and represented a significantly weak capacity for coverage of such a large country (FAO 2006, p 48). SENASICA was also constrained to conduct follow-up analyses of compliance for certified firms and regions, and it lacked the mechanisms to have the OAS coordinate broader priorities, such as the recurring problems of pests that naturally can cross state borders. Finally, besides having the authority to order and finance campaigns to fight pests once an outbreak was detected, SENASICA often was in conflict with the OAS priorities, which have attended largely to local interests and funds—i.e., mainly the interests of large local firms (FAO 2006).
Because of the need for the local public and private actors to coordinate the creation of systems to prevent and monitor pest and microbial hazards, the gains were ad hoc, coming via firms and regions with relative resource advantages (Knutson 2009, FAO 2006). For instance, in its extensive review of plant safety programs, the FAO (2006, 2012) noted that SENASICA made important gains in their campaigns to eradicate pests and flies that historically plagued many regions, but most consistently in the more advanced north than the poorer south and in targeted export value chains. SENASICA also gradually expanded its best practice certification programs, at times working with large retailers like Costco and Walmart. Nonetheless, by 2008, only about 240 fruit and vegetable producers were certified and maintained compliance in GAPs while a limited number large firms, with the resources and foreign commercial ties, dominated export value chains.5
Private Regulation and the Constraints to Upgrading
The foregoing discussion showed that despite the adoption of new laws and efforts to launch certification programs, the reforms resulted in an incoherent national regulatory capacity. This subsection reveals how this approach created a default system of standards implementation via private sector value chains that would largely exclude the vast majority of producers. The next section then shows how it also spurred subnational experiments that attempted to overcome these problems.
Common to other developing countries, these reforms allowed the transmission of new standards to occur largely through private retail value chains, run mainly by MNCs—as global buyers sourcing Mexican products for the US market and as local buyers establishing new, modern supermarket chains in Mexico (Lee et al 2012; Henson & Humphrey 2009, Reardon et al. 2001). In both types of value chains, suppliers were required to comply with a mix of private standards and public regulations. At a minimum, compliance to supply large Mexican supermarkets and the US market effectively meant complying with international, namely, US food safety regulations. These required the product to be free of certain diseases, microbial and chemical contaminants, pests, etc., which in turn requires that the supplier makes significant investments in new practices of quality control and transportation as well as growing and harvesting processes, such as systems of refrigeration, storage, and pest control.
The force of these avenues has been noteworthy in Mexico. Exports of their food products grew significantly with strong dependence on the US market, which accounts for about 85% of fruit and vegetable exports and 65% of meat and poultry exports. Fruits and vegetables dominate Mexican agricultural exports, growing from about 60% in 1994 to over 74% in 2006 (FAO 2006).6
By 2001, MNCs controlled an estimated 75% of the new supermarket chains in Mexico (Rivera et al., p 32). By 2003, four companies controlled 50% of the official food market (Cervantes-Godoy et al. 2008). Nonetheless, despite the growth of these retailers, they accounted in 2005 for 25–30% of fruit and vegetable sales. The large modern chains, such as Walmart, Costco, Gigante, Soriana, and Comercial Mexicana, by-passed the traditional wholesale markets, using their own distribution centers, which accounted for about 80% of their sold produce; 95% of which was supplied by large firms (Cervantes-Godoy et al 2008). Most farmers were selling directly or via middlemen into one of the public–private wholesale markets that dominate the rest of domestic distribution system.7
By virtue of the standards set by the growing presence of large retailers as well as for entering the US market and joining the WTO, the Mexican government and its firms faced strong incentives to comply and upgrade.8 The default development path however confined diffusion to global buyers and MNCs requiring relatively few local suppliers to meet international standards with limited spillovers into the domestic institutions (Lee et al 2012). Although there was no comprehensive data, the estimates at the time suggested that the effects of this path in Mexico had reinforced an industry structure of relatively few large participants and a vast majority of small unintegrated firms. Cervantes-Godoy et al. (2008) estimated that of the 4.5 million farms in Mexico in 2005, 76% were for subsistence, 19% in transition, and only 6% commercial. The FAO estimated that about 2% of fruit and vegetable farmers participated in export markets or supply chains and about 17% participated in both export markets and sales to big supermarket chains (FAO 2012). In a study of US imports of Mexican winter vegetables from one of the most advanced, developed border states in Mexico, Calvin and Barrios (1998) found that about three quarters of a shipper’s volume came from its largest grower, usually its own farms.
A major barrier for firms implementing new food safety standards (private or public) was the economics of upgrading. When producers attempted to connect to the supply chains for exports or for the large supermarket chains in Mexico, they would have to agree under contract to upgrade their operations extensively.9 Some could make this shift, with the opportunity to receive better prices, timely payments, and potentially technical assistance. But most could not as the costs of learning and implementation remained significant.
For instance, the studies by Avendano and colleagues (2005, 2010, 2012) in the northern states of Mexico, where producers were highly oriented to the US market, revealed that on average, fresh fruit and vegetable producers faced a fixed cost increase of $700,000 to $1.5 million and a continuing annual cost (for training, inputs, regular third party inspectors, and certifiers, like PrimusLabs) of $15,000 to $28,000. Such costs were prohibitive to most small and medium-sized producers. At the same time, the greatest retention of income came from controlling downstream parts of the value chain. Because of storage and transportation costs, small and many medium-sized producers tended to prefer the use of middlemen that came to receive and pay for goods on site but cut significantly into the earnings of the producer.
These factors were coupled with a lack access to new knowledge. In sectors as varied as mangoes, kiwi, green onions, avocados, strawberries, melons, and other vegetables, survey and field studies have also shown that a majority of producers were still unaware of international standards or even the new national norms, while a small minority of those aware of the standards implement them, gain direct assistance from MNC buyers, or use recently developed federal programs.10
Although the MNCs and large affiliated Mexican buyers tried to address these economic and knowledge problems via credit assistance, input packages, and direct assistance, the administrative and coordination costs were large. This led buyers to reduce the number of suppliers and focus on larger partners, while SME participation declined. For instance, in their study of fresh vegetable producers in the northern Mexicali Valley, where the export compliance incentives were very strong, Avendano and Rindermann (2005) found that at the time of market liberalization in the early 1990s, there were about 200 producers, 30% of which were exported to the US and 86% of which were small firms. By 2002, there were only 25 firms exporting, 40% of which were large and the rest medium sized. Similar trends were found across a variety of fresh produce and meat export sectors. After new regulations for cantaloupes (discussed below), Mexico saw a 40% decrease in its US market share with only 13 producers certified to export as of 2009 (Avendano & Llamas 2010, Coemel 2005). Although the state of Michoacán accounted for 40% of the world’s avocados, only 8% growers were export certified for the US by 2001 (Stanford 2002). In an exhaustive search, Cervantes-Godoy et al. (2008) found only about 2500 small producers in all of Mexico selling to the modern supermarkets.
In sum, the reforms in Mexico broadly utilized market incentives of the value chains as main vehicles of upgrading food safety standards. This benefited larger firms but not the vast majority of producers, the SMEs. The reforms also pushed upgrading for regulatory capacities and firm capabilities to weak subnational levels. We now explore how this latter process could induce new upgrading experiments while still constraining broader institutional improvements and small firm access.
Opportunities and Constraints for Upgrading at the Subnational Level
As noted above, the dual challenge for integrating new transnational regulations into a semi-periphery country is creating institutional capacities for effective dissemination and monitoring of the standards and upgrading a broad base of firm capabilities to implement and benefit from them. Without a collective solution in sectors like fresh produce, the lack of broad-based compliance easily leads to costs for all, since pestilence and disease can spread across producers, leading to further outbreaks and reputational damage (McDermott 2007; Perez-Aleman 2010; Schrank 2013).
As discussed in Section I, the literature on upgrading for standards diffusion offered insights as to how the decentralized regulatory and support system in Mexico could both foster and limit the emergence of new learning communities to solve these challenges. First, learning communities utilize complementary public and private resources to define and implement regulations on the ground (Locke et al 2009; Amengual 2010). They are anchored by a network of producer organizations (associations) and public extension institutions that help coordinate and recombine existing material and knowledge resources for the adaptation of new practices (Breznitz 2005; Giuliani & Bell 2005; Perez-Aleman 2010; McDermott 2007).
Second, this work also reveals the social and political constraints of learning communities. Having access to the community brings costs and privileges, in turn an incentive for members to carefully guard their boundaries. In effect, these communities and their member firms and organizations are gatekeepers of certification, resources, and knowledge. Gatekeeping power can lead to exclusionary practices, self-dealing, and competitive decline (Fuentes 2021; Giuliani et al 2005; Schmitz 2004).
These insights on the enabling conditions—effective producer organizations or associations that are connected public support and regulatory institutions—shed light on some of the few quantitative studies about Mexican producers. For instance, in her survey analysis of small producers from relatively poorer states selling to the domestic modern supermarkets, Cervantes-Godoy (2008) found that obtaining credit, technical assistance, and critical information on product and process standards depended on whether the firm belonged to a collective producer organization. The network analysis of 343 producer by Avendano et al. (2017) found that the most important sources of knowledge and assistance for upgrading practices and technological adoption were mostly other growers, the state level producer associations, the state level public regulatory, and extension services..
However, in highlighting the roles of associations and public institutions, these scholars also note how rare this configuration occurred in Mexico. A key reason for the sparseness is the legacy of the corporatist system (Valtierra-Pacheco 1999). Recall that prior to the 1990s, the Mexican government used official confederations and their semi-autonomous associations both to enact policy and maintain socio-political order. These organizations were controlled by an elite few who were closely tied to national- or state-level politicians; they mediated the paternalistic relationship between government and farmers in exchange for political support (Schneider 2004, Snyder 1999). The dissolution of the mandatory membership in the corporatist system in the mid-1990s left the agricultural sectors highly fragmented and a few remaining associations and its resources in the hands of a relatively limited number of firms.
First, firms in general abandoned the associations, with the vast numbers of small and medium-sized firms treating them with suspicion and entrepreneurs viewing them as constraints (Shadlen 2004; Schneider 2004). As of 2003, there were about 2500 associations registered in agriculture, grouped under 38 “unions,” but it is estimated that less than 30% actively functioned (Claridades 2006). In the aforementioned study of small growers selling to modern supermarkets, Cervantes-Godoy et al. (2008) could only identify 12 active producer organizations in all of Mexico. Ruiz (2001) estimated that 80% of Mexican growers did not belong to a producer organization. Larger studies confirmed low participation rates (Avendano et al. 2017, COEMEL 2005). Second, the past left the vast majority of producers with no organizing experience, as it had always been a top down decision (Valtierra-Pacheco 1999). Third, and conversely, the few associations that remained active composed some of the only available institutional infrastructure especially at state levels to implement new policies. Indeed, Snyder (1999) argues that state-level variation in the re-regulation of the coffee industry in the 1990s was due to the interaction between the organizational capabilities of small holders and large firms and the preference by governors to re-use existing corporatist organizations.
The remainder of this article examines in greater detail how these legacies shaped the relative successes and failures in enabling learning communities that could facilitate broad-based regulatory and firm upgrading. In all the cases below, the sectors were hit by de facto or de jure regulatory threats to their exports. Effective collective action was a product of whether and how producers could mobilize and their ability to obtain benefits from public institutions. In the first case of a long-term negative decline, producers were unable to organize effectively and the federal government imposed a new regulation. In the second and third cases of rebounding regulation and growth, producer associations worked closely with state agencies and even the US government, but the diffusion of benefits and standards were limited to relatively few firms controlling the associations. We see that public intervention, and especially public–private collaboration, helps foster new paths of upgrading and certification, but still remains constrained by the refurbished associations as gate keepers without additional public efforts to expand access.
Cantaloupe Exports—Regulation Without Coordination
Cantaloupe production was historically widespread in Mexico, with numerous producers of all sizes exporting from 13 different states. Exports to the US consistently rose through the 1990s, reaching $72 million in 1999, accounting for about 30% of cantaloupe imports in the US. At the same time, the number of rejections by the FDA of Mexican cargo sampled at the border increased 92% due to contamination with illegal pesticide residues and microbial contaminants such as Salmonella and Shigella. In cooperation with the Mexican government, the FDA conducted farm investigations from 2000 to 2002, determining that the contamination from Salmonella came from unhygienic conditions in cultivating and packaging the product, mainly in the state Guerrero. The FDA issued an import alert and then a total ban in 2002. Mexican producers were allowed to re-enter the US market after October 2003, after the new system described below. But even by 2010, export sales never rose above $10 million with import market share at 3%, as Central American producers grew to dominate (Avendano & Llamas 2010, Avendano et al. 2012, 2017, Calvin 2003).
After trying to fight the ban in the WTO, the Mexican government worked with the FDA to develop new strict guidelines for food safety practices, culminating in the November 2002 obligatory regulation for all businesses that wished to export cantaloupes to the U.S.11 This specific certification was renewed annually and issued directly by SENASICA.
The regulation gave very detailed GAPs and GMPs, including specific hygienic conditions on the farm, methods of harvest, packaging, and transport, and cold storage. By extension, in order to be prepared for audits, the firm must implement systems of constant testing and monitoring using internal systems and third party private inspectors. The standards were not only costly but required significant changes in the organization of the firms and the skills of their employees. The vast majority of producers could not respond adequately. Most of these producers were small in relatively backward regions. For instance, in a 2004 survey of producers in the state of Colima, over 60% had only a primary education, 90% lacked basic managerial capabilities, 17% had access to credit, and 77% had never received any government assistance or program. Ninety-six percent did not apply the GAPs. Even the packers, which were usually larger, more experienced firms, had never participated in a government program (COEMEL 2005). A separate survey in 2007 found similar trends. For instance, 88% of growers were still using water from rivers, which increased microbial risks, but only 59% reported ever having the water tested. Seventy-one percent did not know the implications of GAPs, while 41% revealed that lack of information was the main reason for not implement GAPs (Avendano et al 2013).
A key reason for the inability to find the means to upgrade and even become adequately informed of the regulations was the lack of collective organization of the producers. For instance, in 2004, 94% of cantaloupe producers in Colima did not belong to any type of collective organization (e.g., cooperative, association). In that state, there was little history of producer organizations or active government programs and infrastructure in educating and training producers, let alone monitoring food safety. At the same time, there was no encompassing melon producer association for the country, as the producers were historically fragmented and small throughout many states (COEMEL 2005).
By 2009, 13 producers were certified to export to the US, with one from Colima, two from Michoacan, and 10 from Sonora. These were all relatively large firms, with internal integration of growing, packaging, and storage. The shift of production to the northern state of Sonora also was not surprising. This has been a relatively prosperous state, with large experienced diversified agricultural firms, involved with associations, like the historically strong AOANS, which was created in 1963 in the corporatist era and worked actively with the state commissions and SAGARPA offices.12 These traits will be highlighted in our next case.
Green Onions and Tomatoes in the North—Rapid Response by Strong Associations and Allied State Agencies
The last case showed that although the federal government did issue new, strict regulations for the export of cantaloupes, indeed in collaboration with the FDA, adoption by growers was weak because of fragmentation and lack of institutional infrastructure for collective action. In contrast, the following case shows a rapid coordinated response by producers and state and federal actors. It appears that the key conditions for this are the relatively small number of large producers in a limited region, who have historically strong associations and close ties with the state government.
During the 1990s, Mexico became the most important exporter of green onions to the US, with exports doubling by 2001. Production was concentrated in 25 firms located in the neighboring valleys in the northern border states of Baja California and Sonora. In November 2003, the FDA reported outbreaks of hepatitis A linked to green onions consumed in four US states. The FDA traced one part of the cases to four producers in this region. In December, in cooperation with SAGARPA, the FDA and CDC investigated these and other producers in the region. Although not finding any evidence at the time of hepatitis A in the firms, the FDA issued a report identifying several quality control problems that could have allowed the disease to emerge, including poor sanitary conditions, inadequate hygiene facilities, poor maintenance by employees, and questionable quality of the water used in the fields, packing, and cold storage (Calvin et al. 2004).
Cognizant of the reputational damage and the events in the cantaloupe sector, the producers, under the leaders of UARPH, the Agriculture Union of Producers of the Region of Mexicali Valley, immediately called on the Secretariat of Agriculture of Baja California (SEFOA) and SENASICA to create a comprehensive set of standards for all green onion export producers.13 UARPH was a holdover confederation from decades past, representing seven producer associations of the region. In close consultation with UARPH, SEFOA, and the Agriculture Union of Producers of Rio Colorado (in neighboring Sonora), SENASICA created a voluntary protocol specifically for GAPs and GMPs for the production of green onions in the two valleys. Published in the official registry in Baja California in August of 2004, the protocol detailed strict guidelines and practices for production, harvesting, and packaging of green onions; it also required that any exporter be audited regularly by SENASICA and certified by a third party private firm, like PrimusLabs. The reason for having both inspections was to utilize the resources and authority of SENASICA and adhere to the preference by US importers for internationally recognized certifiers.
The state office of SENASICA (the OAS), via the JLSVs of the region, committed not only to audits and issuing the certification, but especially to training SENASICA employees and their contracted certifiers in the details of the GAPs and GMPs and customizing a program of technical support for standards adoption and regular monitoring. SEFOA committed funds to these programs and also enlisted the aid of regional universities and institutes to help the growers implement new practices and technology and utilize laboratories. The two aforementioned unions and their relevant member associations committed resources in co-financing the above programs and also commit personnel in a new monitoring system. The firms in these unions accounted for 85% of production. By 2006, 20 firms were certified. From 2003 to 2010, exports increased by about 60% (Avendano & Hernandez 2012).
Between 1995 and 2005, Mexican tomato exports almost doubled. Baja California accounted for about 75% of this. During this period, these producers were subject to several rounds of negotiations regarding certification protocols and alerts. In 2008, the FDA reported an outbreak of Salmonella Saint Paul linked to tomatoes founds in several US states. Although the FDA did not identify the actual source of the hazard, it put Mexico on the list of possible contaminated suppliers, which immediately damaged sales. Within four days, the governor of the state of Baja California petitioned the FDA with a very detailed document about their exports, to exclude the producers of Baja California from this list. The mechanism for exclusion was a new protocol that would be required of any tomato exporter in Baja California.
Similar to the case of green onions, the producers, this time through two main associations CAADES and CABC (linked as well to UARPH), worked closely with SENASICA, SEFOA, and the JLSVs to design a protocol that required an exporter to certify the origin of the tomatoes (only from Baja California) and that it was following numerous detailed GAPs and GMPs from farm to transport (similar to the types mentioned above). The protocol also established that SEFOA would be the government authority issuing the certificates. The FDA reviewed and approved the protocol and excluded Baja California from the alert list. As of 2011, of the 34 tomato producers in Baja California, 21 were up to date on their certification; tomato exports from the state to the US increased 50% between 2005 and 2010. Virtually, all the producers were relatively large with their own farms and packing houses.
There are two points to highlight here. First, the processes of upgrading and regulating are closely linked, requiring close coordination and joint action between the relevant public and private actors. These cases reveal that such cooperation appears more likely when there is a relatively small group of experienced, resourceful producers who have a well-organized association that then has a working relationship with the key public institutions (Shadlen 2004). This is naturally a concern. While upgrading and learning communities must start from the resources they have, it is not clear how the circle will grow. Indeed, the network study by Avendano et al. (2017) mentioned earlier was conducted in these northern states, and they found that only 343 firms across many sectors were members of producer associations, almost all of which came from the corporatist era. A slight exception is CABC, which was created in Baja California in 2000 out of dissolution of a few older associations.
Second, it is noteworthy that the key public actors come from the state level. In both cases, the leaders were a combination of producer associations and state agencies. This may not be a surprise since Baja California and Sonora already had rather active agricultural institutions, with state committees on plant safety composed of representatives of the associations and the secretariates. These state actors then turned to the federal actors, the regional offices of SENASICA for complementary expertise, knowledge, and authority.
The Transnational State as Initiator of Mexican Public–Private Regulation
In the above cases, one could argue that transnational regulatory integration or the transnational state, via the US FDA, was playing an indirect role in shaping Mexican public and private actors to experiment with new forms of coordination. In this case, the role of the US government, specifically the USDA agency APHIS, the regulator of plant and vegetable safety, had much more direct role. In contrast to the FDA, APHIS had the authority to evaluate and certify another country’s producers and its regulators. This authority, coupled with the arguably greater diffusion of pestilence type hazards, which in turn poses a threat to US growers, led APHIS to create pre-certification programs for exports in several key fruit sectors, such as mango, citrus, avocado, papaya, and guava. The design and evolution of the programs, as we will see, also resulted in coordination and learning opportunities in regulation and upgrading not only between US and Mexican actors but also between Mexican public and private actors at the state and federal levels. At the same time, and similar to the above cases, the spillover effects to domestic regulation and upgrading are constrained by program design and the exclusive rights the APHIS grants to a few associations.
The programs required that relevant packers be paying members of an association that partnered with APHIS. APHIS created agreements with one association for each of aforementioned sectors, and only their members who complied with all the stipulations of the agreements could then be certified to export the given product to the US. The agreements required the Mexican packers (in some cases their supplying producers) follow strict plans for the eradication of pests and treatment of products in packing houses. APHIS had on average 90 employees, mostly Mexican nationals, based in Guadalajara, who regularly inspected the packing houses and treatment centers, and certified for export the compliant packers (and by extension, their producers). The Mexican firms, via their association, paid for these employees, while the associations were the intermediaries for the financial management of the program and in any disputes, such as decertification or suspensions of particular firms.14 Each association representing packers in the aforementioned sectors came from the corporatist era, although each renamed itself and also had changed its governance rules and roles, in part adapting to the APHIS work plans. SENASICA was also a signatory to the annual work plans, though its role was less direct. The strength of this approach for the Mexicans was the institutionalization of cross border public–private regulation, the transfer of standards and practices, and stable growth in exports. We now describe the two most prominent programs, those for mango and avocado exports, which reveal the variation in approaches to regulation and in the roles of the public and private actors.
The mango program started in earnest in the early 1990s, when APHIS contracted with EMEX, the association for Mexican Mango Exporters. Before 1991, EMEX was known as ANEPMM, a corporatist association for mango packers. From 1992 to 2010, the number of participating packers grew from 30 to 58, with export sales and volumes growing by about 200%.
APHIS employees annually certified and regularly monitored each packing house, in turn each shipment, and the required hot water treatment to eradicate fruit flies. The annual work plans specified fees, standards, practices, and roles. To be certified, a packer had to pay a set of fees to EMEX to cover the costs of all inspections and certification. This payment made one a member of EMEX. SENASICA employees accompanied the APHIS inspectors to packing houses as observers and mediators. APHIS however did not have a direct role with the producers and had no authority to visit, without invitation, orchards or the JLSVs (the state-level plant safety committees discussed above).
This program has revealed opportunities and limits for regulatory and firm upgrading. On the one hand, EMEX and SENASICA were gradually expanding their roles and learning how to adapt the APHIS requirements for regulatory expansion. EMEX, though only with a full-time staff of 6–9 people, developed capabilities for export promotion, collecting and sharing information on regulations, practices, and producers, and working with SENASICA and the JLSVs to update GAPs and programs for aiding packers and somewhat producers. SENASICA, in turn, incorporated APHIS standards and methods into its own certification and monitoring systems and directed greater resources over time to encourage JLSVs to upgrade the pest monitoring methods. SENASICA developed a detailed database on all producers it certified as suppliers to the designated packers and also occasionally invited APHIS employees to meetings with the JLSV to explain new requirements and techniques in packing that it learned elsewhere.
On the other hand, there are clear constraints to expansion and upgrading. First, because of the program design, SENASICA did not work with APHIS directly in the fields and responded mainly to firm demands. For instance, while EMEX helped coordinate some changes in monitoring and assistance programs between SENASICA and producer associations, these were mostly limited to the states of Nayarit and Sinaloa, where most member packers were located and where there were historically strong associations, such as CAADES. Indeed, the president of EMEX made clear to us his frustration with the JLSV and the producers, remarking that implementation of GAPs, monitoring, and assistance was the responsibility of the local producers and the JLSV, not EMEX. Hence, expansion and upgrading of local infrastructure and producers were still subject to the local politics and organizational issues discussed above. Those constraints may be the reason that certified producers in the export value chain were limited to mainly two states, although mango production is across ten states, and that 90% of EMEX packers were supplied mostly from their own orchards. Second, in 2005, EMEX changed the member voting rules to allow the number of votes per packer/member to correspond to the volume of shipments. This allowed about 20 members to hold a majority of the votes (Alvarez 2006).
The avocado program shows both more opportunities and constraints. This program was created through negotiations between the USDA and SAGARPA to resolve a long running conflict over the entry of Mexican avocados into the US. In turn, this program not only had a similar structure as above but also a Mexican law authorizing it and defining its terms. Starting in 1995, APHIS signed an agreement with SAGARPA/SENASICA and APEAM, the association of avocado exporters from the state of Michoacan. Only avocados from this state were allowed into the program. APEAM grew out of a decades old association and represented only packers, not producers, and governed itself like EMEX. The number of packers grew from a handful to 38 by 2012. As with the above, each paid fees to APEAM to cover the costs of the program, promotion, and APHIS employees. The number of producers certified as suppliers grew to include over 9000, with 19 of 38 municipalities certified by SENASICA (their office at the state-level OAS) as pest free. Exports to the US grew by 250% between 1998 and 2013, though only about 20% of avocado production is exported.
This program followed a systems approach, whereby APHIS monitored and certified the packers as well as included in the work plan detailed practices for control of pests and microbial hazards in the orchard. APHIS employees also inspected orchards twice per year. Because of this approach, the roles of APEAM and SENASICA were more directly expansive, as they both were involved, via the agreement and de facto incentives, to promote GAPs and GMPs not only with packers but also with growers. This also allowed much closer relationships with and learning opportunities from APHIS employees. For instance, APHIS employees were in regular contact with the OAS and worked together on updating standards, identifying weakness in the monitoring systems, and encouraging more Mexican resources. SENASICA, APEAM, and APHIS representatives had regular meetings to update databases and plan certification of more municipalities. Indeed, this relationship led APHIS to trust SENASICA professionals more, as they came to use SENASICA labs for analyses of pests.
At the same time, SENASICA and SAGARPA employees have learned to work more closely with APEAM and state-level actors to expand certification, monitoring, and assistance programs. Over the years, the three designed an economical monitoring and training package for growers, which greatly interested Michoacan officials to increase the number of certified municipalities. They pooled resources to increase the number of full-time dedicated inspectors and certifiers to 138 for the state. By 2010, they created coordination agreements with the state university’s agronomy faculty to access their laboratories, perform regular studies, and send graduate students to test and aid producers.
As with mangos, this and other programs still faced important constraints. First, these programs were a delicate balance between tight control of SPS hazards in the supply chain and gradual export growth. For instance, as of 2009, the total number of certified packers for mangos, avocados, guava, and citrus was, respectively, 49, 28, 5, and 7. But just to give an idea about the intended bottle neck the programs have created, there were at the same time over 61,000 mango producers; 49,000 lemon producers; and 122,000 orange producers in Mexico. The avocado program was restricted to the state of Michoacan, which accounts for about 33% producers and 69% of production nationally. The most generous estimates of coverage would have the APHIS avocado program including 35% of Michoacan producers but only 11% of Mexican producers and 24% of Mexican production. Six export distributors accounted for 72% of the total avocado exports (by volume) to the US between 2005 and 2010.15
Second, these programs have purposively aimed to begin with relatively small groups to utilize the institutional infrastructure at hand. This means that a handful of associations were the gatekeepers and the cost of membership was non-trivial. At the same time, it depends on finding active public partners at the state level. As the dominant producer of avocados, the state of Michoacan clearly had a very strong interest in participating in the program and working with the others to expand certification and related infrastructure. Whether other states, with less resources, less direct incentives, and weaker associations can do so was less clear.
Third, while the USDA and APHIS continue to work closely with Mexican partners, their representatives made clear to us that they were not in the institutional development business (but rather protecting US consumers) and that they were not interested in transferring pre-clearance authority to SENASICA. While they saw positive developments in SENASICA, they viewed it with weak resources and authority, subject to the variations in interest groups and infrastructure at the state and local levels. Indeed, a repeated concern was the continued lack of a corps of highly trained SENASICA inspectors instead of third party private, “recognized” inspectors, who faced the conflicts of interest discussed earlier.
Concluding Remarks
This article analyzed how public and private actors in the semi-periphery country Mexico attempted to adapt and implement international food safety standards at the regulatory and firm levels in the face of transnational market and regulatory integration via NAFTA. Mexico was an ideal case for comprehensive adoption because of the strong economic and legal incentives instilled by NAFTA. However, despite market liberalization and mimicking US food safety regulations, the reforms favored large firms and marginalized the majority SMEs. At the same time, the reforms led to distinct patterns of subnational and sectoral variation the creation of new regulatory and upgrading capabilities.
To account for this variation and co-evolution of regulation and upgrading, the socio-political approach here focused on how transnational regulations are layered on pre-existing institutional resources and on how firms are embedded in different constellations of these public and private institutions. These constellations can enable relevant public and private actors to create learning communities to recombine existing roles and resources to improve regulatory and firm capabilities. But the emergences and inclusiveness of learning communities depend on the interaction between the ability of producers to organize and the ways in which regional or local public agencies privilege certain producer associations and commit resources to upgrading.
On the one hand, the co-evolution of regulation and upgrading depends less on optimal incentives and state largess and more on process of joint problem-solving, knowledge sharing, and resource pooling. The creation of new regulatory institutional capacities to integrate and monitor rules and the ability of firms to adapt practices and upgrade processes are functions of relevant public and private actors recombining existing knowledge and material resources while coordinating ongoing organizational experiments. On the other hand, such a process is shaped by the institutional resources at hand, particularly those that enable or constrain the ability of producers to organize collectively and collaborate with subnational government agencies to invest in both regulatory capacities and upgrading assistance programs.
In the case of Mexican food safety, while the federal government eventually created laws and agencies reflecting NAFTA (US) standards, its reluctance to invest in comprehensive capacities for enforcement and assistance made implementation often a function of state and sectoral level politics and organizational resources. Common to many countries in Latin America (Schneider 2013; Shadlen 2004), these latter factors were greatly shaped by the corporatist legacies of privileged associations and fragmented producers. The cases of different fresh fruit and vegetable sectors reflected these legacies. The case of cantaloupes showed that the failure of broad-based adoption of the new standards came from the lack of an association to mobilize producers. The other two sets of cases showed how more promising proactive responses to regulatory shocks came from those regions and sectors where a limited number of firms within some refashioned associations could initiate joint problem-solving. They then created a common regulatory and upgrading system with subnational (and sometimes US) public institutions, with whom they had long-standing professional relationships. However, these legacies could reinforce exclusion as the associations controlled certification, being granted particular rights and resources with limited incentives or governance rules to enhance inclusion. In many ways, this analysis complements Schneider’s HME account of “gridlock” coming from Mexican legacies of weak formal state institutional capacities, corporate concentration, and corporatist associations (Schneider 2013, Ch. 8).
The analysis here invites two avenues for future research on the ways in which semi-periphery countries are integrated into transnational trade and regulatory regimes. First, at the domestic national level, it remains unclear what types of generative rules or mechanisms can help both initiate and expand learning communities in ways to facilitate broad-based upgrading of capabilities at the firm and institutional levels. Prior work on common resource management and industrial restructuring has pointed to the need for encompassing institutions that can tap into different organizational experiments and limit the devolution of self-dealing localities (Ostrom 1999, Safford 2009). Work on firm upgrading and innovation has highlighted how public–private industry support institutions can become social and knowledge bridges between distinct, isolated producer communities in part through specific rules of group inclusion, participatory governance, and knowledge sharing (McDermott 2007; Powell et al 2012; Schrank 2013). This research would in turn emphasize the need for national public institutions like SAGARPA and SENASICA to focus less on building a Weberian bureaucracy and more on creating the capabilities to complement local initiatives with resources to assist SMEs improve practices and gain access to the learning communities and their associations that control certification and upgrading. Such approaches echo the complementarities with more national formal institutional models (Schneider 2013).
Second, this article reinforces recent calls (Bartley 2011; Bruszt & McDermott 2014; Locke 2013) for closer attention to ways in which different transnational integration mechanisms can foster more inclusive regulatory and upgrading institutions in semi-periphery countries. For instance, as noted throughout this article and especially in the last case, the US government agencies increasingly shaped Mexican food safety standards and monitoring capabilities. On the one hand, APHIS’s direct effects on federal agencies like SENASICA were limited to ad hoc cases. Indeed, one could argue that the certification programs established in such sectors as avocados and mangos appeared to end run the federal actors and prioritized associations and local actors. On the other hand, these experiences were sources of learning for SENASICA and instigated new forms of collaboration between SENASICA, state officials, and producer associations. Yet, we also saw how these gains were constrained by APHIS effectively converting a few associations into gatekeepers and refraining from assisting national and state actors to building regulatory equivalence and upgrading systems. Hence, we see an opportunity for international and comparative political economy scholars to merge research approaches that focus less on the politics of the defining transnational rules and more on the political conditions that enable regional regimes, core advanced governments, and multilaterals to facilitate institutional capacity building at the national and subnational levels in semi-periphery countries.
Acknowledgements
The authors would like to thank Ela Lasic and Chanyong Yoo for their research assistance. All errors and omissions are our own.
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Gerald McDermott
PhD MIT, is the Chair of the Sonoco International Business Department at the Darla Moore School of Business at the University of South Carolina. His work focuses on institutional change, economic upgrading, and international strategy in emerging market countries, especially in East Central Europe and Latin America. His articles and books are published in the leading journal and university presses in comparative political economy, international business, and economic sociology.
Dr. Belem Dolores Avendaño Ruiz
is a professor at the Economics and International Relations Faculty of the Autonomous University of Baja California, México. She leads the research group on Agri-Food, Development and Competitiveness and is a member of the prestigious National Researchers System (SNI) of Mexico.
