chapter  8
18 Pages

Productos del Monte: A Vegetable and Fruit Canning Operation in Mexico

WithSimon Williams

Productos del Monte (PDM) is a wholly owned subsidiary of the Del Monte Corporation. PDM entered Mexico in the early 1950s, not as a manufacturer but as an exporter of canned goods, selling through a Mexican distributor. Between 1957 and 1960, the company investigated the feasibility of growing a wide range of fruits and vegetables in Central Mexico. In June 1962, PDM completed its first pack at its cannery in Irapuato, consisting of tomatoes, tomato products, and chilies. By 1982, sixty-nine items were offered for sale. With the exception of canned white asparagus exported to Europe, all products are for the Mexican market.

PDM, along with several other food processors in the area-for example, Campbell Soup Company (Chapter 13, Section 3), Bird's Eye Foods, and most recently, Green Giant (Chapter 13, Section 3)--pioneered in the development of a "satellite farming" raw material supply system that became a powerful force in revolutionizing the agricultural economy of central Mexico. Companies like PDM played a decisive role in justifying public investment in supportive infrastructure, particularly in irrigation, transportation, and communication. By 1983, PDM was contracting 8,750 acres, held by 140 farmers, 130 of whom were private land owners, and 10 of whom were ejidatarios (members of a land tenure system unique to Mexico). Contract farmers supply 80 percent of cannery requirements; the rest is purchased on the open market, or, with regard to asparagus, is grown under company control on farms leased or owned by PDM. Historically, PDM and other food processors in Mexico have tended to contract more with larger-scale commercial farmers than with small-scale farmers. This case study notes some serious problems that this emphasis has created and the new directions the company has taken and may take as a consequence.

A staff of nine agronomists is responsible for the satellite farming supply system. Each year, to ensure fair and affordable prices to both farmer and company, the staff calculates on-farm production costs and discusses these with farmers before setting 126the contract price. PDM does not extend normal credit for crop practice. Each farmer must negotiate credit needs with banks, using the PDM contract only as verification of ability to manage a loan. On the other hand, a fundamental aspect of farmer loyalty and the relationship of confidence and trust between agronomist and farmer is the willingness of PDM to provide credit additions for such emergencies as a severe and unexpected pest infestation or a personal crisis. PDM helps to minimize the investment of farmers in heavy equipment by maintaining an extensive pool of agricultural machinery that, with the approval of an agronomist, is rented out at a cost well below company cost of capital, operation, and maintenance. A key to the success of the procurement system is the constant contact between agronomists and farmers during a crop season. PDM does not conduct crop research in the traditional sense, but the staff constantly seeks out improved practices elsewhere for adaptation locally.