Can Remittances Transform a Mexican Town?

July 24, 2007

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In the town of Venustiano Carranza , this is the sound of money:

ambi: vvrrrmmmm. beep beep (motorcycle sound)…Maria Moreno Rios?? Si.

Six days a week, David Lopez home-delivers money orders by motorcycle to families throughout this small town.

Dollars also arrive by bank transfer, wire transfer, and in the pockets of people coming home.

Some $4,700 remittance dollars flow into Michoacan every minute, all year long. By the end of this report, another $38,000 dollars will have arrived -- to this state alone.

Despite all that money being pumped into the economy, people here continue to head for the United States for the same reason they did 20 and 30 years ago.

GERARDO TORRES: There's no jobs down there.
 
Gerardo Torres was born in Venustiano Carranza, but now lives in Batavia, one of Chicago's western suburbs. He's president of a club of Venustiano natives who live in Illinois. The club has delivered wheelchairs and food to the needy in Venustiano. But not long ago, they decided to take on something more challenging: the local economy.

GERARDO TORRES: People from my club said we should do something…and we started working on it. We got 26 partners right now…we collect 75,000 dollars… and we started this project.

“The project” is a one-acre tent that has emerged from a patch of farmland outside Venustiano Carranza. Within a month, there will be 18,000 hydroponic tomato plants in this spacious greenhouse. If all goes well, the plants will produce 125 tons of tomatoes. Torres hopes that as many as 40 of his countrymen will be hired to pick them.
 
GERARDO TORRES: We don't even have like the plants already there, and people are so excited. And people from my home town they're like, “Hey! Can you give me a job there?

It's like a greenhouse fever has hit this state…dozens of the space-age tents are popping up here.

The Mexican government is enthusiastic about these ventures. It's created the “3 for 1” program, in which local, state, and federal governments here contribute 75 percent of start-up costs.

International assistance is coming in as well. Donald Terry is a remittance expert for the Inter American Development Bank. The bank is loaning Mexico seven million dollars to promote these types of projects.
 
DONALD TERRY: The challenge ahead is whether or not remittances—which have been a very effective and direct poverty alleviation program for millions of families-- can also be turned into an effective economic development program.

Immigrants should have options when it comes to sending their money home—there should be investment opportunities that can be good for them and for their home countries, says Terry.

When Torres was looking for investors for the project, immigrants would hand him $3,000 cash. He'd ask them, “Don't you want to give me a money order or a check?” No, the investors would tell him. Here's the cash. Do whatever you need to with it.

GERARDO TORRES: Our goal was to help our people…they don't even know if they're going to get their money back—this is the way they say it….but they want to do something.

But making these economic development initiatives work is proving a lot more complicated than simply sending dollars south.

One hydroponics tomato project in Michoacan remains on life support because the immigrants don't have a reliable source for the 10,000 gallons of water they need every day.

In another town, farmers grew perfect greenhouse eggplants—but the vegetables eventually rotted because no one could figure out where to sell them.
 
Even Torres' project has run into problems. Venustiano's mayor, Ismael Torres del Rio, refused to put up his share-- in local matching funds for the project--$37,000.

ISMAEL TORRES DEL RIO: We measured the benefit, considering that this is a private company. We considered the creation of jobs. This project is just getting started, and we didn't believe that enough people would benefit to justify using public funds.

The question of who benefits is one of many in this new world of Mexican immigrant investment. In fact, there are few rules governing the “3 for 1” program at all. There are no rules about job creation, or whether the profits must stay in Mexico. Immigrant investors don't have to repay the government either, for any of the start up money it contributes.

Even if the projects are successful, it's unlikely they'll keep people from heading for the U.S., says Tarsicio Torres. Torres is an economist at the University of Michoacán who studies migration.

TARSICIO TORRES: Creating jobs to slow down migration has not had that effect. Quite the opposite, it has promoted migration… …Now the migrants can go to the United States without as many worries—they know that they've left their wives working at a job that will provide some income, at least until they can get established over there and start sending dollars back.
 
When the mayor of Venustiano Carranza decided not to fund the Chicago immigrants' greenhouse, Gerardo Torres and the others voted to continue anyway. Torres vows that the Chicago investors won't stop until they create between 80 and 100 jobs in Venustiano Carranza.
 
GERARDO TORRES: We got a big dreams. When I was in my home town I would never have even a bicycle . And now, very different. thank you to this beautiful country—United States—we develop this country.

The Venustiano greenhouse has already created one semi-permanent job: Jose Ochoa is the greenhouse's round-the-clock watchman. He's lives on the site in a small tent he fashioned from pieces of plastic. His job: make sure no vandals or small animals harm the greenhouse. For his 24-hour shifts—no days off— he earns $150 a week.

JOSE OCHOA: They need to pay a fair wage to keep people from going to the United States. At least $200 pesos per day—because everything is expensive—gas, food, seed, beans. All that is expensive.

Two hundred pesos amounts to about $20 a day.

Time will tell whether dollars from the U.S. and a greenhouse full of tomatoes can keep people in Venustiano Carranza from going north.

Already, Michoacán is seeing some initial benefits from some of its greenhouses.

SOUND: Tomato sorting machines.

This fall, when the Venustiano tomatoes begin turning from green to red, a truck will haul them to a new packing plant-- a packing plant that was built with profits from other immigrant greenhouses.

There, they'll be dumped onto a machine that will clean and sort them by size. When there are tomatoes to pack, 20 people work here, including a few who used to work in the United States.

For Chicago Public Radio, I'm Linda Lutton.

To view photos of the Mexico greenhouses please visit our website, chicago public radio dot org.

Chicago Matters is an annual public information series made possible by The Chicago Community Trust, with programming by Chicago Public Radio, WTTW 11, the Chicago Public Library, and The Chicago Reporter. Visit www.chicagomatters.org for more information.
 
The executive producer of Chicago Matters: Beyond Borders is Sally Eisele and the series is produced by Alexandra Salomon. This report was edited by Julia McEvoy. Alison Cuddy is the Project Coordinator for Chicago Matters.