Voluntary Report - public distribution **Date:** 12/19/2002

**GAIN Report Number:** MX2173

MX2173

**Mexico**

**Agricultural Situation**

**Mexico\'s Agricultural Armor Package**

2002

**Approved by:**

![](media/image1.wmf)William L. Brant

#### U. S. Embassy

**Prepared by:**

Lisa Anderson

**Report Highlights:**

On November 18, 2002, the Government of Mexico officially published
details of the agricultural armor package it initially announced it
would be designing in August 2002. The package includes several proposed
new bills, some changes to current laws, introduction of new regulations
and standards, and new programs to support production agriculture. Very
few of these measures have actually been enacted yet as most will have
to undergo the rule making process or be submitted for congressional
approval. It remains to be seen whether these measures will adversely
impact trade or not.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\], \[MX\]

In response to increasing pressure from Mexican producer groups to
protect Mexican agriculture, the Mexican Secretaries of Agriculture and
Economy announced in August 2002 that they would be designing a series
of measures to make the Mexican agricultural sector more competitive. In
November 2002, that package of measures was officially announced.

**Background:** Mexican producer groups have been concerned for quite
some time about 2003, the penultimate stage of NAFTA in which tariffs on
most agricultural products will be eliminated. With the passage of the
U.S. Farm Bill in May 2002, this concern was further heightened. While
these concerns are mostly groundless, due to the fact that 90 percent of
tariffs on agricultural products are already very low -- between 1-2
percent -- and that U.S. spending on production agriculture has not
increased in four years, the perception remains within Mexico that 2003
will be a ruinous year for Mexican agriculture as it will not be able to
compete with the "flood" of "heavily subsidized" U.S agricultural
imports. As a result, the Fox Administration chose to address some
producer groups' concerns in the form of an "agricultural armor"
package. The Ministries of Agriculture (SAGARPA) and Economy (SE), those
ministries under whose authority most of the measures fall, have stated
repeatedly that the measures are not meant to be protectionist; rather
they are designed to make Mexican agriculture more competitive.

**FAS Analysis:** The agricultural armor package includes several
proposed new bills, some changes to current laws, introduction of new
regulations and standards, and new programs to support production
agriculture, but does not give much detail on any of these. New
legislative and administrative measures call for revision of the Foreign
Trade Law to allow domestic producers more expeditious recourse to
protection in cases of unfair commercial practices, and better
inter-agency cooperation. Of special concern are the proposed sanitary
and phytosanitary, food safety and quality measures. These include the
establishment of a new regulatory agency for grain quality; product
traceability; a country-of-origin labeling scheme; increased inspection
and control on imported products; transformation of voluntary quality
standards into enforceable quality standards; and the establishment of
quality destination grades for imported grains. A new support program
for production agriculture is also established, wherein target prices
and direct payments/ton are established and based on average yields.

Although many measures do provide the Government of Mexico (GOM) with
more wherewithal to enact potentially trade-restrictive actions, the GOM
views its actions as being WTO consistent and in line with other laws,
standards, and procedures that the United States and other developed
countries have. Moreover, the Mexican government does not have a lot of
financial resources with which to support the agricultural sector, and
is using what means it does have -- the ability to change laws,
regulations, and standards \-- as one of the principal means of
supporting Mexican agricultural interests. Very few of these measures
have actually been enacted yet as most will have to undergo the rule
making process or be submitted for congressional approval. All will be
dependent on whether or not SAGARPA or SE have the budgetary resources
to implement them. It remains to be seen whether these measures will
adversely impact trade or not.

The following is an official translation of the GOM's agricultural armor
package.

AGRICULTURAL AND FISHERIES SECTORIAL-STRENGTHENING POLITICAL ACTIONS

# I. Frame of Reference

1 During the last decade, the Agricultural and Fisheries Sector both in
Mexico and worldwide has been engaged in a process of globalization,
aperture and structural adjustments.

2 Mexico's heterogeneous sector is abundant because of the productive
traits it has from the variety of regions, climatic conditions,
productive unit sizes, property types, and differentiated levels of
productivity and social arrangements in the rural sector.

3 Production levels in nearly all the areas of activity have increased
in these past years, as well as exports, showing diversification of
products and geographic destinations. The social and natural resource
base lets us estimate improved sector performance. However, there are
other areas where additional efforts can be undertaken, such as:

a)  Developing the agricultural and livestock markets, which currently
    have deficiencies in detriment of farmers.

b)  Disloyal competition causing direct unbalancing effects in different
    markets.

c)  Basic infrastructure development.

d)  Accessing technology and capital to ignite new competitive
    investments.

e)  Promoting farmer economic organization to face the problems of
    minifundium and production scales that are economically unfeasible.

f)  Training, market business capacity and vision.

g)  Combining the economic agents that form the agrifood chains.

4 The Agricultural Sector cannot separate itself from farmer
globalization and decision-making, since international market opening is
at the juncture stage. In light of this, the Agricultural Sector reveals
its strengths and weaknesses, and the Federal Government has the
obligation to set the measures that will increase competitiveness.

5 Coordinating the participation between different productive chain
links and the Federal, State and Municipal government levels is
essential to provide the correct mechanisms to strengthen the Sector as
it faces globalization.

6 The Federal Government has implemented structure programs during this
Administration to assist the Agricultural Sector; however, the
Government also understands the need to reinforce these programs with
further steps. To fulfill this goal, it holds permanent consultations
with farmer organizations.

7 On the other hand, the Government recognizes the international
Agricultural and Fisheries market's situation, as well as the conclusion
of NAFTAS' period of transition -when full removal of tariffs on
agricultural products begins on January 1, 2003-, with the exclusion of
corn, beans, sugar and powder milk.

8 In order to strengthen the Sector so it can face the challenges it
lives, a set of legislative, budget and administrative measures have
been designed jointly with the Legislative Branch and the Secretary of
Agriculture, Livestock, Rural Development, Fishery and Food (SAGARPA),
Secretary of Economy, Secretary of Social Development (SEDESOL),
Secretary of the Environment and Natural Resources (SEMARNAT), Secretary
of Health, and the Secretary of Finances and Public Credit (SHCP). These
measures take into account different farming sectors:

a)  Farmers with marketable, highly technified and placeable surpluses.

b)  Medium size farmers likely to generate surplus, and medium or low
    technification.

c)  Self-consumption farmers.

9 These measures are compatible with Mexico's rights and obligation
acquired through international trade agreements.

II\. Goals

10 To ensure the feasibility and competitiveness of the Mexican
Agricultural Sector in an open economy context, and to reduce the rural
environment's regional disparities.

11 To promote agricultural production through the rational exploitation
of natural resources, in order to cover internal market requirements as
much as possible through National production, according to soil
capability, while preserving the activity's sustainability.

12 Promote the Country's rural development with sustainable,
territorial, and comprehensive actions, clearly emphasizing on improving
the rural population's quality of life.

#### III. Strategies

13 Aiming to overcome structural features, specially poverty, to develop
possibilities for the inhabitants of rural areas, and to use the
opportunities provided by the social and farming composition as well as
by the preferential access that Mexico enjoys in the most important
export markets, public polices will reinforce the promotion of
agricultural businesses, and strengthen the competitiveness of the
agrifood chains and diversification of farm sources of employment.
Government support plays a complementary role on farmer income, pursuant
to a point of view of equality and shared responsibility, and provides
the conditions needed to reach international competitive standards.

14 The following actions have been designed to reach these goals:

-   Integrate the chains of production so farmers can keep as much as
    they can from the added values, to strengthen their income.

-   Promote the production and productivity of those agricultural
    products where Mexico shows trade deficits and/or export potential,
    seeking to increase balances in regional markets.

-   Promote farmer economic organization.

-   Foster an efficient rural financial and risk management system, to
    impact and improve access conditions, making sure the system has
    financial brokers that call for a high level of farmer
    participation.

-   Strengthen the programs of quality and health to create the
    conditions needed to bring about order in agricultural markets.

-   Increased use of the installed capacity for agricultural industry
    processing.

# IV. Legislative and Regulatory Initiatives

15 Starting in November 2002, Congress will discuss a series of reform
initiatives applicable to the Foreign Trade Act to modify the legal
framework so disloyal trade practices can be covered promptly.

16A bill to amend the Federal Metrology and Standardization Act will be
submitted to Congress during the first 2003 session to facilitate and
expedite the adoption of quality and labeling compulsory standards to
meet competitive trade practices.

17The Fisheries' Act Standards and Regulations are being reviewed,
adapting them to a globalized environment; proposals will be submitted
to the National Board of Aquaculture and Fisheries for their review
during the first session in 2003

18A Bill to create the new "Financiera Rural" was sent to Congress, and
approval thereof is expected this year. This Institution will help
provide self-sustainable rural credits, focusing on shared
responsibility between Government and farmers, providing financing at
competitive rates.

19 We are working concurrently with the Bank of Mexico, the Secretary of
Finance, and the National Banking and Securities Commission to design
the regulatory framework of the new rural financing brokers. The special
rules for Limited Purpose Financial Corporations (SOFOLES) are
available, and are designed by inter-institutional consensus. The rules
for Cajas Rurales are also being planned.

20 To provide medium term stability to farmers and other economic agents
participating in the Sector, multi-annual budgets, as set forth in the
Sustainable Rural Development Act, are needed. Parallel amendments have
to be proposed to the Legislative Branch.

21 A Rural Storage Bill is being developed jointly with SHCP, to provide
access to agricultural product marketing credits. It will be submitted
to Congress in the first quarter of 2003.

22 A package of fiscal incentives for individuals and corporations will
be submitted to promote direct investment in farming and in related
services, such as port infrastructure, cold networks, storage, TIF
infrastructure and transportation networks.

23 We have the Federal Act on Human and Animal Food Consumption
Marketing Information to provide certainty and promote agricultural and
fisheries' market laws.

# V. Administrative Improvement Actions

24 Based on the Sustainable Rural Development Act and other applicable
laws, institutional coordination has increased to help:

-   Fight commercial technical smuggling and tariff avoidance, as well
    as to help comply with rules of origin, quality and health.

-   Adapt tariff sections to Mexican quality standards for agricultural
    products.

-   Expedite the ruling process on disloyal trade practice cases.

-   Strengthen labeling regulations on agricultural products.

-   Generate, inform and train users on information use.

# VI. Health, Non-Toxicity and Quality.

These powers are exclusive of the Executive Branch, and the following
actions are provided:

25 To avoid problems related to health issues, plant health, animal
health and non-toxicity, imported products will be controlled by
increasing inspection levels through the "Rojo-Operativo", jointly with
the General Office of Customs and the Federal Commission on Health Risk
Prevention.

26Traceability of imported products, knowing their point of origin,
point of entrance and point of destination. These transit routes are
defined in each import certificate.

27 Application of standards of quality and non-toxicity to agricultural
products and subproducts, adapting them to the prevailing trade
practices so they can become reference points for trade transactions.

28Farming organizations will help define the Standard of quality,
thereby contributing to new market regulations. These instruments will
apply both to national production trade as well as to imported products.

29 Setting foundations with SAGARPA, Secretary of Health, SEMARNAT and
the Secretary of Economy, for issues on health, non-toxicity,
environmental impact, quality standards and foreign trade, to guarantee
activity congruency and opportunity to all players.

30Operating the National Standardization and Inspection Service on
Agricultural and Storage Products, to safe-keep the interest of grain
importers by point of destination certification, as well as by
certifying the grain quality stored in national warehouses. On the other
hand, the quality certification of fruit and produce will be implemented
together with the Dispute Resolution Corporation, the arbitration
mechanism to help decrease those differences that cannot be resolved
between parties.

31Amendments to tax laws are being promoted before Congress so that fees
levied by the National Agrifood Health, Non-Toxicity and Quality Service
(SENASICA) for services rendered can be used to increase hedging and
improve the quality of attention provided to users.

32Professionals and businesses approved by the private sector to apply
regulations on health, non-toxicity and quality of agrifoods will be
used to expedite program implementation.

33Priority is given to procedures with other countries to recognize
plague and disease-free zones, and health and non-toxicity programs, to
use the trade agreements that Mexico has signed.

#### VII. Actions to Strengthen the Productive Sector's Competitiveness

34Farmer income is based on the size of the plot, yield per hectare,
income from market sales and government support. These are an important
complement to farmer income, yet are not the correct instrument to solve
structure problems such as the minifundium, decrease in productivity and
barriers to access capital and technology.

35 SAGARPA's policies are such that all transactions are carried our at
market prices in order to maintain the feasibility of the productive
chains and integrate them through agriculture-by-contract schemes. The
priority is to increase production, productivity and reach higher levels
of profitability.

# A. Grains and Oilseeds

36A scheme will be provided to guarantee income per ton of grains and
oilseeds (Target Income) during a five-year fiscal term, in order to
provide certainty to farmers as well as to the economic agents
participating in the Sector.

37 Target Income has three components:

a)  PROCAMPO, stated in tonnage.

b)  Income from markets

c)  Additional aid to reach Target Income, in case PROCAMPO and market
    income are not enough.

38These schemes provide certainty to farmers and offer the rational
usage of public resources, promoting productive diversification and
generating incentives for rural capitalization. The following actions
are designed to help reach these goals:

a)  The Target Income program takes into account a wide variety of
    crops, and will be instrumented throughout the Country that has
    marketable surplus. Through strategic planning, and through State
    participation, other grains and oilseeds will be included. Target
    Income is referenced against Quality Standards.

+-----------------------------+----------------------------------------+
| ## Crop                     | Target Income                          |
|                             |                                        |
|                             | (weight/tonnage)                       |
+-----------------------------+----------------------------------------+
| ### Corn                    | 1,650.0                                |
+-----------------------------+----------------------------------------+
| > Wheat                     | 1,800.0                                |
+-----------------------------+----------------------------------------+
| > Sorghum                   | 1,270.0                                |
+-----------------------------+----------------------------------------+
| > Safflower                 | 3,300.0                                |
+-----------------------------+----------------------------------------+
| > Canola                    | 3,500.0                                |
+-----------------------------+----------------------------------------+
| > Cotton ^1/^               | 14,700.0                               |
+-----------------------------+----------------------------------------+
| > Rice                      | 2,100.0                                |
+-----------------------------+----------------------------------------+
| > Soy                       | 3,000.0                                |
+-----------------------------+----------------------------------------+
| > Triticale                 | 1,800.0                                |
+-----------------------------+----------------------------------------+

> 1/ Tonnage of feather cotton equivalent to 64 dls/quintal.

b)  To recognize each region's productivity, and in order to pay out the
    aid, the average yield per crop from every Rural Development Support
    Center (CADER) will be taken into account, furthering yield
    recognition from every site. Yield determination will be under the
    care of the National Institute of Forest, Agricultural and Fishery
    Research (INIFAP) using a shared responsibility scheme with other
    Government agencies.

c)  Since recognition per hectare is not homogenous, regionalization in
    order to calculate PROCAMPO stated in tons, will be determined with
    the support from several government agencies.

d)  PROCAMPO will continue paying a set rate per hectare. PROCAMPO is
    stated in tons and its corresponding regionalization, the purpose
    being to incorporate it into the Target Income calculation.

e)  Starting in 2004, farmers who Benefit from PROCAMPO, and who are
    organized according to regionalization, can choose from the
    following modes of payment:

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i)  PROCAMPO per hectare, as has been up to now.

ii) PROCAMPO per tonnage. Rates will be the result of payment per
    tonnage multiplied by the yield from each region. This is an
    incentive to increase yields as well as to have farmers organize
    themselves.

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f)  PROCAMPO rates for Spring-Summer cycles (SS) 2002 and Fall-Winter
    (FW) 2002/2003 are 873 pesos per hectare, and 905 pesos per hectare
    for SS 2003 and FW 2003/2004.

g)  The 2 million 500 thousand farmers with plots under five hectares
    registered temporarily with PROCAMPO (rounded out to one hectare),
    will receive higher payments, 1,030 pesos per hectare for SS 2003
    and FW 2003/2004. This measures requires an additional budget of 850
    million pesos.

h)  Criteria for surface and beneficiary eligibility are being defined
    for countercycle aid. An alternate roster of grain and oilseed
    farmers is in the Works to include those that are not registered
    with PROCAMPO so they can participate in the Target Income scheme.

39 All aid to grain and oilseed farmers will be given through individual
contracts. The number of signed contracts has increased between farmers
and SAGARPA, in order to provide total transparency, control budgets,
and establish shared responsibility.

40 The budget assigned to support farmer Target Income (including price
hedging), direct and complementary aid, as well as productive
reconversion) is de 16,993.7 million pesos.

# B. Livestock Sector

41 Livestock Production Support Programs are being reinforced to:

-   Encourage investment in infrastructure, machinery, equipment and
    breeding stock, production and storing units updating, and product
    transformation.

-   Promote technical training and adoption of technology

> These two programs have a budget of 701 million pesos

-   Promote development of Federal Inspection Type units (TIF), as well
    as TIF slaughterhouses. This program has a budget of 100 million
    pesos for 2003. A similar budget was assigned in 2002.

42 The following programs will also be included:

-   Stockfarming Productivity Program (PROGAN), to increase grazing land
    quality and provide more forage to productive units. This is to
    improve natural resources and summering.

> At least 800 thousand units will be incorporated in the next four
> years. Subsequent aid will be conditioned to actions undertaken to
> increase forage production. Aid will mark a difference by regions and
> will be linked to summering coefficients. The program will have a 5
> million-peso budget for 2003 -- 2006.

-   A National Individual Cattle Recognition Identification System will
    be set up to help the food safety schemes and to fight rustling. The
    first stage includes bovine cattle and will have 60 million pesos
    (2003), the second stage (2004-2006), will include swine, sheep and
    goats.

-   Access to national forage will be guaranteed at low competitive
    prices per contract. Producers will have to sign contracts with
    agriculture farmers to satisfy quality requirements. The Federal
    Government will provide resources to guarantee operation feasibility
    and give farmers additional support so they can sell to the
    livestock purchases at international prices, plus trade bases, at
    the port or border offering the best logistic conditions to supply
    consumer zones. Resources will be in the order of 1,200 million
    pesos.

# 

43Aid to this Sector is conditioned to compliance of applicable measures
trying to harmonize animal health throughout the Country.

# C. Access to Input at Competitive Prices

44Standardization at 30 cents per kilowatt-hour for the agricultural
sector eliminating consumer ranges. This means spending 5,700 million
pesos from CFE. SAGARPA will give 40 million pesos more.

45Promoting irrigation and water savings with a 5% payment assistance
for energy usage to new Projects in the first year. 120 million pesos
will be provided.

46Access to diesel at competitive prices for the agricultural sector.
SHCP will announce this before December 20.

47 Financial aid so that organized producers can access fertilizers,
chemicals and biological products at competitive prices.

# D. Financing Under Competitive Terms

48 As part of the sector's strategy for development, tax aid plays a
complementary role. To increase growth and promote agricultural activity
updating, credit has to be the key lever. Creative financial schemes
have to be reproduced in Mexico and follow prevailing conditions.
Specific actions include:

-   Restructuring and redimensioning FIRAs, to guarantee credit as the
    formula to help multiply the impact on resources directed to sector
    financing, in order to consolidate the growth of the credit granted
    out, as seen during the last two years.

-   Schemes that help provide farmers with risk management mechanisms
    (price hedging and insurance) are being furthered and will have a
    budget of 848.2 million pesos.

-   This Administration will participate in the shared responsibility to
    use agricultural credits, sharing the risk in short, medium and long
    term financing, decreasing costs associated to bank brokerage for
    long term credits. Support applies when settling credit to promote
    payment culture. A budget of 500 million pesos is available and will
    help increase credit for up to 12,500 million pesos .

-   Funds will continue being created with State Government guarantees,
    to lever new players in rural financing, thus directing 200 million
    pesos to create and capitalize rural SOFOLES and State trusts.

-   A financial scheme for large crops will be handled so that grain and
    oilseed producers can have credits for production and liquidity, to
    help them achieve a more organized marketing of their crops. This
    scheme has been approved by the FIRA'a technical committee, and is a
    SAGARPA initiative. The budget is 641.6 million pesos to create
    guarantee trusts, and up to 7,000 million pesos more can be provided
    for financing.

-   These new schemes, are the Government's efforts to extend the
    financial system to the rural areas.

-   Marketing credit (factoring) to provide competitiveness to National
    production.

49 To help form and update agricultural businesses, the Federation's
Expense Budget (PEF) will have more resources to help access
complementary financing, i.e., risk capital and shared risk schemes.
These resources total 361 million pesos from the equity from Fondo de
Capitalización e Inversión Rural (FOCIR), and 75 million pesos from the
Shared Trust Risk (Fideicomiso de Riesgo Compartido (FIRCO).

# E. Agricultural and Fisheries Product Consumer Promotion 

50 Have campaigns to promote consumer use of Mexican agricultural and
fisheries products to place them in the consumer's mind, which will
allow for product recognition, providing better prices to the farmers.
The purpose is to bring the farmer and end consumer closer.

51Advertising campaigns so that consumers can identify the quality
stamps that the market has such as TIF, which increase a product's added
value, and promote using the Official Stamp "México Calidad Selecta", to
place national products with the consumer and help him or her tell the
difference between imported and national products.

52Strengthen promotional campaigns abroad, following a quality and
harmlessness strategy, to place Mexican products, through coordinated
efforts between Public Agencies.

53Diversify the export destination to areas of greater potential.
Mexican enjoys preferential treatment in many markets, and the challenge
is to use is, Promotion programs will be strengthen, such as PROEXPORTA.

54 The program called "Programa de Promoción con Co-participación de los
Productores", will be institute, where the Federal Government will
provide resource to farmer activity, through trusts formed in internal
markets as well as abroad.

55 These schemes will have 66 million pesos, plus resources contributed
by farmers and agents from the agrifood chains.

# F. Government Agencies and Restructuring of Agricultural and Fisheries Markets.

56DICONSA and LICONSA will lead national purchases, strengthening the
internal market with more participation and long-term commercial
commitment with farmers.

G. Safety in Internal Market Supply.

57 Production promotion strategies designed to decrease current import
levels of agricultural products will show gradual results. This
Administration's current foreign trade policy understands the
complementary nature of imports, and is careful to make sure that they
do not displace National production. In addition to the measures
implemented to help fight disloyal trade practices, other schemes are
available to help supply the internal market:

-   SAGARPA and the Secretary of Economy guarantee that import limits
    will complement National production.

-   Define and publish credits assigned to minimum levels of NAFTA, by
    December 2002, at the latest to provide certainty to the sectors.

-   Import limits on the livestock sector, which will have an annual
    validity. Allocations will be given by business or farmer
    organization and will follow allotment schemes as per the audited
    use.

-   New alternatives to forage imports from third countries will be
    analyzed (Most Favored Nation) so that Mexico does not become the
    trading businesses' captive market, from the NAFTA partners.

# VIII. Integrating Actions for a Sustainable Rural Development.

58 Rural development depends on increasing economic capacity and
sponsoring the access to the correct levels of education, training,
information, scientific and technological development, efficient
technologies adoption, health, housing, culture and recreation.

59 This wholesome concept represents one of the key efforts of
coordination between the Federal Executive Branch agencies, whose
responsibilities are described in the Sustainable Rural Development Act
set forth in the Programa Especial Concurrente (PEC) 2002-2006.

60 Thus, as of 2003, one of the key measures contemplated in the
Agricultural and Fisheries Sectorial-Strengthening Political Actions
will be the implementation of the Sustainable Rural Development policy
in Mexico through PEC, in which all public policy instruments and
actions are included an which impact the rural areas.

61 Resources set for 2003 for rural development are of 102,563 million
pesos, 3.9 percent more in real terms against what was spent in 2002
(24.9% more in real terms in relation to 2000). They are operated
through 57 government programs implemented by the 13 State Secretaries
and by the Presidency's Office of Indigenous Peoples Representation.

62Understanding all the resources needed to help lead the Sustainable
Rural Development of the Country, this budget will help implement
actions to cover social conditions, labor conditions, productive
infrastructure conditions, environment and other agrarian aspects that
distress the farmer population, as shown in the table bellow:

Expenses for PEC Expense Budget Project for 2003

(Million pesos)

  --------------------------------------------- --------------- ----------
  Concept                                       2003            

                                                mop             \%

  TOTAL                                         102,562.9       100.0

  Social Condition                              46,207.0        45.1

  Labor Conditions                              3,535.9         3.4

  Agrarian Aspects                              2,637.2         2.6

  Productive Activities                         38,053.4        37.1

  Basic and Productive Infrastructure           8,335.7         8.1

  Environment                                   3,792.8         3.7
  --------------------------------------------- --------------- ----------

> Fuente: SHCP

Actions Directed to Rural Populations of Relatively Minor Development

63 PEC resources are directed to improving the lowest income sectors in
the rural areas of the country to improve social conditions so they can
access a higher level of wellbeing and fulfill their living
expectations, under justice, equality and freedom.

64 Sixteen programs are designed to cover the development programs of
the indigenous communities, agricultural education, training, social
infrastructure, workers, food programs, rural housing, campesino women,
compensatory actions for education and health. These programs will have
a budget of 46,207.0 million pesos representing the highest percentage
(45 percent) of resources operated by PEC in 2003.

65Worker conditions will be taken care of through social program,
training, job support, worker mobility, aiming to help temporary migrant
workers to Canada and other countries. Resources in the amount of
3,535.9 million pesos.

66 PEC has resources totaling 38,053.4 million pesos, representing 37
per cent of the total. Most of these resources support productive
actions to the groups that needed the most (women, indigenous, youth and
elderly) and population located in the farthest regions of the Country.
20,448.6 million pesos representing 53.7 percent of the total amount
directed to the productive areas.

67 For low-income producers, the SAGARPA actions represent employment,
self-employment and diversity of economic activities, by forming rural
businesses that provide suitable payment. With a budget of 1,249.0
million pesos, 6,560 projects of investment will be given to the
underdeveloped population. These actions have to be added to those from
Fondo Nacional de Empresas Sociales (FONAES), Secretary of Economy,
SEDESOL and the Secretary of Agrarian Reform, with a budget of 1,102.8
million pesos.

68 SAGARPA stimulated increases to productivity and scale economies,
through support to consolidate production units, integrating 580
thousand producers and economic organizations, with a budget of 346.1
million pesos, providing training, technical aid, through 498.7 million
pesos, to benefit 250 thousand production units of relatively low rural
development. The actions undertaken by FONAES, Secretary of Economy,
SEDESOL, SEMARNAT and Secretary of Agrarian Reform, have a budget of 470
million pesos.

The Rural Society's Participation in Public Policies.

69 Different agencies that promote the rural society's participation in
decision-making are strengthened.

70 The Mexican Council for Sustainable Rural Development has been
working since March 2002, and will have 32 State Councils for
Sustainable Rural Development. In 2003, all Municipal Councils will be
formed. Currently 1,164 have been formed. Several Product-System
Committees have been formed for those productive chains considered as
basic and strategic, highlighting produce such as avocado, mango and
citrics, dairy products, pork, bovine and poultry. These agencies
complement and strengthen the State's actions, thereby supporting rural
development, and promoting the shared responsibility between Government
and society, while inserting democracy to decision-making process.