At the request of several worker cooperatives in Mexico, San Miguel’s Center for Global Justice has organized a revolving loan fund for worker co-ops and democratic work places.
On November 11 the Community Development Loan Fund proudly made its first loan to a network of over 20 worker cooperatives in the town of Chilcuautla in Hidalgo state.
Handing over of the check for $50,000 MN culminated over a year of preparation on the parts of both borrowers and lenders. The network, Empresa Integradora del Valle del Mezquital, S.A. de C.V. is composed of the elected presidents of over 20 worker cooperatives. But before the network could receive the loan it had to set itself up as a legally constituted entity. For its part, the Fund only recently legally organized its own board and account. Receiving the loan was Patricio Bravo, staff person for the Integradora. Handing over the check for the Fund was Yolanda Millán.
The loan is for a co-op that grows greenhouse tomatoes. The money will be used to buy the baby tomato plants, the dirt in which they’re grown, and hoses for irrigation. The Integradora co-ops range in size from a single family with a tomato greenhouse (owned by the coop), to multiple family and village-sized coops devoted to peaches, olives, sheep and other products. These co-ops could easily absorb a million pesos for its agricultural and livestock projects. But $50,000 MN is a start.
Our first meeting with the Integradora in March 2004 culminated over 15 years of visits to worker cooperatives around Mexico: in Yucatan, Campeche, Mexico City, Hidalgo and Guanajuato. Once we settled in San Miguel de Allende, we met the women of Mujeres Productoras, a local women’s SPR (Sociedad de Producción Rural), which has a shop in Mesón San Jose on Mesones.
After a visit in 1989 to Mondragon, Spain with its famous network of over 120 worker cooperatives, Bob Stone and I became convinced that co-ops had potential as building blocks of a democratic society. The Caja Laboral or Labor Bank was and is the network’s backbone.
Worker cooperatives are distinct from housing co-ops, credit unions, and consumer or grocery co-ops, in that they produce and sell. Most importantly, all owners are workers and all workers are owners. Like other co-ops, worker co-ops are democratically managed, sharing all gains and losses according to a plan agreed to by all members, one member one vote.
Studies repeatedly confirm that worker co-ops are more productive and profitable (and last longer) than their investor-owned competitors, perhaps since members have an interest in success. Another advantage is foreclosing of capital flight, since worker-owners who live nearby are unlikely to sell to those who might seek cheaper labor elsewhere. Similarly they are less likely to pollute and contaminate their shop and neighborhood — where they live. Most important, workers who control their economic lives are more likely to assume democratic control in other areas.
In response to demands from the countryside, the Mexican government passed new laws on cooperatives in 2001 directly channelling funds to co-ops. But the grants are only matching funds for projects; the co-ops must themselves provide around a third of the cash needed. For campesinos with a subsistence tradition this is often too much.
Few Mexican lending institutions lend to groups of people, i.e. co-ops; they prefer individuals with collateral to lose. And they charge an unaffordable interest rate. Here is where the Fund comes in, differing from other micro-credit institutions in lending to democratic workplaces, that is, collective entrepreneurs, not individuals.
We have taken many lessons from the loan fund at CEDESA (Centro para el Desarrollo Social y Agropecuaria) in Dolores Hidalgo, which has helped local growers for 40 years. We will for now grow the Fund with donations. Tax-deductible contributions can be made to the Center for Global Justice and ear-marked for the Fund. Donations will recycle indefinitely, helping rural families produce, market, and live locally without having to send members to the US.
The Fund lends only to already-organized democratic workplaces with feasible projects and an operating savings plan. The Board his five members: three Mexican business people who can evaluate likely outcomes; a US business person and myself. The latter two are the fund raisers. An excursion to Chilcuautla is planned so Fund volunteers and donors can meet the cooperators.
Since Center members donate their labor, Fund contributions go 100% to borrowers. The borrowers make a 2% contribution as they repay: one percent to the Fund for overhead, and one percent back to the borrowers to grow their own internal fund. The Fund is focussed on providing very low cost loans to democratic campesino groups to enable them to raise living standards so they can stay on their land.