PROCAMPO Program Explained
In GAINS report #2117 dated August 26, 2002 entitled "Mexico Announces New System Under PROCAMPO Program 2002", FAS/Mexico described the PROCAMPO in the following manner:
SAGARPA initiated the PROCAMPO program in October 1993 to facilitate the transition to more market-oriented policies from the previous system of guaranteed prices. Since 1993 it has provided direct cash payments at planting time on a per hectare basis to growers of several crops. These payments will remain constant in real terms until the fall/winter 2007/08 planting cycle. However, with the initiation of a new system of credit guarantees, farmers will be able to obtain all future PROCAMPO payments in one amount, through credit guarantees. The objective of this new system is to provide capital to farmers so that they can diversify or establish more market-based agribusiness ventures. The one-time amount will consist of all the payments producers would normally have received from July 2002 (the date of this announcement) through 2008 (the last year for which direct payments to producers is in effect).
....Growers of corn, dry beans, wheat, rice, sorghum, soybean, safflower, cotton and barley destined for use as grain are eligible. (Note: other products may be eligible if the grower had planted the above mentioned crops during the spring/summer and fall/winter planting seasons of 1990/91, 1991/92, and 1992/93.) Popcorn, feed sorghum, feed wheat, broomcorn, barley forage and dry bean forage are ineligible.
....Comment: This announcement is being viewed as an important attempt by the GOM to provide incentives to its producers to diversify or establish more market-based agribusiness ventures. It is unclear if, in the next five years, enough time remains to do so, given that approximately 30 percent of Mexicans are employed in the agricultural sector. Although the impact of this announcement is hard to gauge, as the GOM has not yet made a final decision with regard to the level at which it will back these credit guarantees, it is being viewed as a positive step in helping Mexico's ailing agriculture sector deal with the full implementation of NAFTA, which, in its remaining five years, will see tariffs on all goods reduced to zero.