The managerial economics of sustainable community forestry in Mexico: A case study of el Balcón, Técpan, guerrero Book Chapter

Torres-Rojo, JM, Guevara-Sanginés, A, Bray, DB. (2005). The managerial economics of sustainable community forestry in Mexico: A case study of el Balcón, Técpan, guerrero . 273-301.

cited authors

  • Torres-Rojo, JM; Guevara-Sanginés, A; Bray, DB

authors

abstract

  • The phenomenon of community-based enterprises competing successfully in the marketplace is relatively new, and there is still very little literature on the subject. Community forest enterprises (CFEs) in Mexico represent a particularly interesting example; CFEs are based on the commercial exploitation of timber from common property forests. The economic development literature in general sheds little light on the "community as entrepreneurial firm" (Antinori 2000; see also Antinori, this volume), but it has been suggested that CFEs have a different "logic" from privately owned capitalist enterprises. Community enterprises have multiple goals that may not be shared by noncommunity private enterprises. Private enterprises aspire only to maximize their earnings, while the CFEs seekthe generation of income, the conservation of the forests, the production of public goods for community benefit, and the participation of the comuneros (Alatorre Frenk 2000). It has also been suggested that Mexican CFEs are at great risk of disappearing entirely because of foreign competition and the lack of profitability in the sector (Chapela 1996). However, Antinori (this volume) maintains that the CFE sector is actually more profitable than has been thought. It is true that in terms of management structure, distribution of benefits, productive assets, and other dimensions, CFEs are different from private enterprises. Nonetheless, they must also compete and survive in an economic context that demands efficiency and competitiveness in quality and price, and thus will finally be judged by the same harsh terms of the marketplace as any other business. In this paper, we will attempt to do an analytic case study of one CFE in mostly entrepreneurial terms, while taking into account some of its special characteristics as a community-owned enterprise with a unique history. The CFE we have chosen was, until recently, little known in the literature, 1 but it is emerging as an example of an unusually successful community enterprise which is now exporting much of its production (Bray and Merino-Pérez 2003; see also Bustamante, 1996). We will undertake an examination of El Balcón in the analytic terms presented by Porter (1990) to understand how it has become competitive despite what are often perceived to be the handicaps of community ownership. Through an analysis of the factor and demand conditions, the related and supporting industries, and firm strategy, structure, and rivalry, we explore why El Balcón has become successful. We will also carry out a brief strategic planning exercise in order to make some concrete suggestions on steps El Balcón can take to further increase its international competitiveness. We will also use the example of El Balcón to evaluate the competitive position of CFEs generally, and while we do not argue that El Balcón has been successful solely because of community ownership, the case study certainly shows that an enterprise based on community ownership of a common property asset is no hindrance for gaining competitive advantage in national and international markets. The historical development of El Balcón is discussed in some detail in the analysis, so here we will just briefly describe the history and setting. El Balcón is located in the Costa Grande region of Guerrero, the Pacific coast north of Acapulco. Situated in the segment of the Sierra Madre Sur known as the Cordillera Costera del Sur, it has an average elevation of 2, 200 meters, with a very rugged topography that leaves parts of the area isolated during the rainy season, when some 1, 400 millimeters of precipitation fall. It was constituted as an ejido in January 1966 with an endowment of 2, 400 hectares. In October 1974, it received an additional 19, 150 hectares, including most of its current forests, for a total land area today of 25, 565 hectares. Its current land area and perimeter were fixed in the resolution of a boundary dispute with the neighboring ejido of Cuatro Cruces in 1986, when it ceded 3, 085 hectares of forest in exchange for 7, 100 hectares of dry shrub forest. El Balcón has a main village, Pocitos, and two outlying population centers, or agencias (La Lajita and Mesa Verde), with a total of 136 ejidatarios and population of around 600. The population was formed from small groups of mestizo families who made their living from corn farming and goat herding, and was severely marked by the violent interfamily and intercommunity clashes over land that have shaped Guerrero in general. The violence of the region in El Balcón makes the CFE and the relative peace of the zone today all the more remarkable. In the early 1960s, this region of the Sierra was described as "enmeshed in terror and killing" as El Balcón became embroiled in brutal interfamily and community conflicts over land (Wexler 1995). Reciprocal murders left the region seriously depopulated for a period as families fled to other communities. Community members from El Balcón sought the intercession of the Mexican government in 1961, initiating the application for ejido status to fix their land boundaries. The claim was recognized in 1966, but final ejido title was not received until 1972. In the late 1960s and early 1970s, the Costa Grande was further roiled by armed guerrilla movements, which brought military incursions and firefights into the area, once again forcing communities to relocate. Some community members from El Balcón fled to a community to the north called La Laguna, which had been operating its own sawmill and logging operation since the late 1950s. When they returned to resettle El Balcón in the early 1970s, they carried with them the realization that their forests were a potential economic resource. Community members began lobbying for a new land grant, which was given in 1974 for 19, 150 hectares. A national small farmer federation, the Central Independiente de Obreros Agrícolas y Campesinos (CIOAC), played a key role in negotiating peace between the communities during the 1970s (Wexler 1995), and commercial logging began in 1980 as a direct result of social peace in the region. When El Balcón first began selling logs in 1980, it sold directly to the state-owned Forestal Vincente Guerrero (FOVIGRO), with about 20 community members working as laborers. Thus, El Balcón never passed through a stage typical in Mexico where the timber buyers come in and take complete charge of extraction, paying only a stumpage fee to the community (rentismo). El Balcón was able to use the significant profits from the first few years of roundwood sales to expand its capital assets. In 1982-1983 El Balcón bought its first logging equipment, and was thus able deliver roundwood directly to the sawmill, capturing more of the value chain. In 1986 El Balcón acquired a new community asset, the sawmill, in a joint investment with a state development-financing agency, the National Trust Fund for Ejido Development (Fideicomiso del Fondo Nacional de Fomento Ejidal; FIFONAFE). FIFONAFE dissolved 10 months later, leaving El Balcón with full ownership of the mill. Thus, in six years, members of El Balcón went from their first logging, essentially as employees of the state-owned enterprise, to full control over their own logging business. This short-term growth confronted serious human capital deficiencies in terms of training and experience in managing a complex industrial enterprise. Due to economic difficulties and managerial problems, in 1989 the ejido turned management of the CFE over to an outside professional manager. This included outside staff as well. The ejidatarios created a "Council of Principles" as a community oversight committee whose purpose was to approve investment and policy guidelines. After the accumulation of productive assets in the enterprise, the enterprise slowly began to hire ejidatarios again in the early 1990s, and today the labor force is over 70% ejidatarios. El Balcón's professional management has also achieved important efficiency gains, such as using logging trucks with double trailers, significantly lowering transportation costs. All this has led to what is reported to be a relatively healthy financial profile. The enterprise reports a 20-35% profit margin in recentyears, with an average of around US$1 million annually in net profits. El Balcón has established a successful commercial relationship with a Washington-based timber marketing company called Westwood Forest Products. Westwood is currently importing both sawnwood and moldings to the United States from El Balcón. From late 1995 to late 2001, El Balcón exported approximately $19 million worth of timber to Westwood. Westwood has been crucial in financing both capital assets and operating costs over the last several years. Other important features of El Balcón are discussed below. © 2005 by The University of Texas Press. All rights reserved.

publication date

  • December 1, 2005

start page

  • 273

end page

  • 301