Near the Guatemalan border in Mexico's Chiapas region, sandwiched between the Sierra Madres and the Pacific Ocean, there's a fertile pocket of land called the Soconusco. While once a hotbed of cacao production for the Aztecs and then the Spanish, the area was decimated by smallpox and measles soon after the Spanish conquest. For most of the 1800s, hardly anyone lived there. But by the turn of the twentieth century, the Soconusco had become a major coffee producer and exporter. It remains so today.
Casey M. Lurtz is intrigued by this unlikely agricultural success story, and has spent much of her academic career studying the coffee economy of southern Mexico in the nineteenth and early twentieth centuries. While her geographical focus is narrow, her research yields insights into export economies—and broad lessons for anyone building an entrepreneurial community in the face of adversity.
“The work is all about the difficulty of building an economy where there's nothing.”
"The work is all about the difficulty of building an economy where there's nothing: where there are no roads, where there's no reliable labor system, where there are no property rights, where there are no banks for another 30 years," says Lurtz, the Harvard-Newcomen Fellow at Harvard Business School. "How do you build these institutions that you need for market agriculture in a place where maybe there are laws on the books, but there's not much apparatus for support? It's looking at all these entrepreneurs who are working and trying and failing and succeeding—and who eventually build up the largest exporter of coffee in Mexico."
Lurtz is spending her year at Harvard working on a book manuscript titled "Markets of Progress: Coffee, Commerce, and Community in the Soconusco, Chiapas, 1867-1920." The work uses the Mexican coffee economy to show how rural landholders and workers had a surprisingly large influence on foreign—and state—driven modernization projects, and how small plantations outlasted large ones in the Soconusco.
"It's a story of limited expectations and sensible investments, Lurtz says."
The Entrepreneurs Of The Soconusco
A protégée of historian John Womack, Lurtz took an interest in Latin American economics while an undergrad at Harvard College. As a doctoral student at the University of Chicago, she spent more than a year on the ground in Mexico City and in the Soconusco, where she befriended the descendants of coffee entrepreneurs, interviewed local historians, and pored over old documents in the backrooms of rural municipal buildings.
"There were all these archives that nobody had looked at," she says. "The documents were so disorganized, it took months to pick through them to get a complete picture. It was not fun all of the time. It was incredibly humid in this place. I breathed a lot of archive dust. But it was such a rich trove of information."
Lurtz's research has revealed a patchwork of entrepreneurial effort that contradicted common conceptions about agriculture and commerce in that era. Much credit for the expansion of Mexican export crops has gone to Porfirio Díaz, president of Mexico for all but four of the years from 1876 to 1910. Indeed, he built roads and railroads, and he instituted liberal land, labor, and credit laws that favored agricultural commerce for large landowners.
But the transportation infrastructure efforts didn't reach the rural Soconusco. And farmers there were less aided by national policy than they were by informal, local business deals. As Lurtz writes in her research summary, "Here coffee emerged in the hands of a diverse body of participants. Alongside foreign merchants and migrant planters, local smallholders, migrant laborers, and regional politicians took an active role in the expansion of the coffee economy."
The coffee economy did receive initial state-sponsored help from Matías Romero, who served as Mexico's secretary of finance three times at the end of the nineteenth century. "He's one of my favorite people," Lurtz says. "He had all these grand ideas, and one of these ideas was figuring out how [the Soconusco] could leverage Mexico's competitive advantage in export agriculture. So why not try coffee? Coffee for the masses had been a thing for a couple of decades at that point, but there was a new and growing interest in luxury coffee."
Romero set out to surmount the Soconusco's geographical isolation. He sent surveyors to assess the region, he negotiated the approval of an international port, and he arranged for an international shipping company to stop there once a month. "The port was not much of a port," Lurtz says. "It was a stretch of beach."
Next, Romero moved to the Soconusco, setting up a coffee plantation of his own in an attempt to lead by example. "He was just awful at it," Lurtz says. "He was a good minister. He was good at politics. He was a great negotiator. But as a plantation owner, he was awful. He didn't know what he was doing, but he tried. He wrote all these books about how to grow coffee. People laughed at them and at him. After a few years, he left and moved back to Mexico City. He was a failure. But coffee stayed. And coffee succeeded."
Institutions Of Trust
While his own plantation didn't work out, Romero's enthusiasm piqued the interest of local, national, and international entrepreneurs whose efforts did work out. These included investors and indigenous laborers from other parts of Mexico; American pioneers who headed south having tired of exploring the west; and many Europeans. (One was a Swiss man who met a tragic end—but died with noble intentions. "In a letter to Romero he wrote that he just wanted to be remembered for having contributed something to this place," Lurtz says. "It was a lovely sentiment. He ended up being shot while he was reading his newspaper.")
But aside from Romero's efforts, the Soconusco's coffee economy didn't have much direct help from the Mexican state. In terms of securing farmland, the initial investors depended on the British-owned Mexican Land and Colonization Company, which surveyed the land and then sold what it had surveyed—although it may not have been legal to do so. In terms of building the economy, the coffee pioneers depended on their ties to global markets and cooperative and competitive lending that emerged within this group of entrepreneurs.
"Eventually what worked was that there were enough people who moved to the Soconusco and stayed there ,determined that this was going to work," Lurtz says. "They needed to cooperate with each other to build these institutions of trust."
Unlike many informal institutions in historical literature, "there was lending going back and forth, on pretty equitable terms, between people who had no direct social connections," Lurtz says. "There was just a general sense of 'This is going to work, so we'll push it forward.' "
Along with neighboring Guatemala, the Soconusco is still a major exporter of high-end coffee today. Coffee from the region is widely available in the United States. For example, the California-based Rogers Family Company exports coffee from its farm, Finca Peru Paris, and sells it at major retail outlets such as Costco stores on the west coast of the United States.
Lurtz points out that the most successful of the coffee pioneers were those with smaller plantations—those who borrowed a little money to invest in a little land. The average size of a coffee plantation in the Soconusco averaged about 300 hectares, compared with an average of 1,000 hectares in other parts of Latin America. But some coffee planters entered the global market producing on as few as 5 hectares. Lurtz will be returning to the Soconusco in the spring, where she will complete the final stages of research into how such small landholders thrived alongside of relatively bigger ones and continue to do so today.
"The people who succeeded were those who didn't get too aspirational," she says. "The ones who failed were those who were determined to go big or go home. They went home."