In the state of Puebla, as in Chiapas, the governor responded to the withdrawal of INMECAFE by launching a crony capitalist reregulation project intended to win political support from a powerful coffee oligarchy. In Chiapas, a strong movement of small producers blocked the governor's project and was eventually able to forge a participatory policy framework by allying with reformist federal government officials. By contrast, the producer movement in Puebla was extremely weak, and thus the crony capitalist project faced no significant opposition. Consequently, the politics of reregulation resulted in an exclusionary policy framework that generated monopoly rents for oligarchs.

The chapter begins by analyzing the crony capitalist project launched by Governor Mariano Piña Olaya (1987–93). The next section focuses on Puebla's small producer movement and shows how the weakness of their grassroots organizations prevented a coherent response by small producers to the crony capitalist project. The analysis then turns to the impact on the politics of reregulation of President Ernesto Zedillo's New Federalism program, a major national policy initiative launched in 1995 to decentralize government. The governor of Puebla, Manuel Bartlett Díaz (1993–9), was a leading supporter of the New Federalism, and he boldly exploited the opportunities this program offered to expand his authority. Bartlett's efforts to take advantage of the federal government's decentralizing reforms were especially strong in the coffee sector, where his government sought to wrest control from federal agencies of a financial assistance program targeting small producers. In addition to analyzing the financial program's contested implementation in Puebla, the concluding sections explore the sobering implications of this case for Mexico's grassroots organizations in the face of a growing national trend toward political decentralization.