Question

1. Mexico’s PROCAMPO program was introduced to compensate farmers for crop price reductions associated with the North American Free Trade Agreement (NAFTA), and to support farmers as they transitioned away from producing the affected crops into new economic activities. Farmers were eligible if they cultivated one of nine qualifying crops in the three years just prior to NAFTA. Farmers received payments equal to about $70 per hectare of qualifying land (i.e. land on which qualifying crops had been grown in 1991-1993). The program was implemented by program staff located in government offices in major market towns and was publicized on radio and TV. At the beginning of each planting season eligible farmers could claim payments at program offices, as long as they continued to cultivate any crops (not just the crops affected by NAFTA) on their qualifying land. To put this another way, farmers could not continue to collect benefits if their qualifying land was idle, and no one could collect benefits if the land had been sold or given to new owners. The program was originally designed to make these payments at the initial levels for 10 years, and then to reduce the per-hectare payments down to zero over a five-year phase-out period.

1. What are PROCAMPO’s eligibility requirements?

2. What are PROCAMPO’s behavioral conditions?

3. Why do you think eligibility is tied to historical cultivation of NAFTA crops rather than

   to current cultivation of those crops?

4. Given what you know about the program’s design, what concerns do you have about

   potential targeting failures?

Answer 1

1. PROCAMPO’s Eligibility requirements were that farmers were entitled if they cultivated one of nine qualifying crops in the three years just prior to NAFTA.Farmerswere given payments equal to about $70 per hectare of qualifying land (i.e. land on which qualifying crops had been grown in 1991-1993).
2. PROCAMPO’s behavioural conditions were that at the starting of each planting season eligible farmers could claim payments at program offices, as long as they continued to cultivate any crops (not just the crops affected by NAFTA) on their qualifying land but could not do so if they stopped cultivating their land.This program was implemented by program staff located in government offices in major market towns and was publicized on radio and TV.
3. Historical cultivatio of NAFTA crops is tied to eligibility as it affects the livelihood of the farmers who were previously cultivating a particular crop in their region.This would serve as an impetus to agricultural activities and also to compensate the farmers for the crop price reduction caused due to NAFTA. This also helps stop the migration of land use from farming to other purposes by farmers due to low crop prices.It is not related to current crop prices as the current crop prices are lower than the historic prices caused by free trade, thus the compensation should be based on the higher prices the farmers were getting previously.
4. The potential target failures could be due to the lack of program education among lesser literate farmers and those living in obscure areas that are lesser connected to major market towns where the programme staff is located.Also if the land was idle the farmers could not collect the benefits but it it was sold and the land qualified for benefits the new owner could collect the benefits , which means that the real target , the farmers who were losing out due to free trade would again lose out on benefits in such cases.