By Lizbeth Diaz and David Alire Garcia
BADIRAGUATO, Mexico (Reuters) - In Joaquin "El Chapo" Guzman's home town, some thought they were dreaming and others shed tears of joy when they heard the drug lord had broken out of Mexico's top maximum security prison through a tunnel built into his cell.
A picturesque, agricultural backwater in the foothills of the Sierra Madre mountains of northwestern Mexico, Badiraguato has been the breeding ground for some of the world's most notorious - and successful - drug traffickers.
Above them all stands "El Chapo", or "Shorty", whose second escape from prison a week ago humiliated President Enrique Pena Nieto and utterly exposed the limits of the federal government's power.
From the "El Chapo" roast chicken restaurant by the main square to the words of local officials, the presence of the gang boss locals refer to as "El Viejon" - The Old Man - hangs over the 400-year-old town that lives, breathes and sleeps drugs.
Yet even here, Guzman's latest escapade beggared belief.
"There was a sense of surprise among the people of Badiraguato, but also one of joy. Let's put it like this: 'Look, El Chapo gave them the slip, it's totally bad ass,'" said the mayor Mario Alfonso Valenzuela, a member of Pena Nieto's ruling Institutional Revolutionary Party, or PRI.
"I thought I was dreaming, it seemed impossible to me."
Extending into rugged hillsides, where living conditions can be very basic, the municipality of around 32,000 people officially has a 75 percent poverty rate.
But the town itself, lying in a valley flanked by lush green hills, has conspicuous signs of wealth such as gated villas, new cars and a recently built riverside park.
At least half of Badiraguato's population cultivate marijuana, Valenzuela said, the same trade Guzman plied as a poor boy in the sierra with his father long before he became so rich that Forbes magazine put him on its list of billionaires.
Small wonder then that some hoping to follow his footsteps were deeply affected by El Chapo's breakout of Altiplano prison in central Mexico some 17 months after he was arrested.
"The honest truth is, when I found out about it, I got drunk for three days, and I tell you I cried, I'm not ashamed to say it. He helps you, he gives you a job, and you can make a lot of money," said 15-year-old Roberto, a marijuana planter.
"As he would say, 'Money makes up for who you aren't.'"
Blessed with some of Mexico's richest soils, Guzman's home state of Sinaloa became a major producer of marijuana in the early 1900s, and later opium and heroin, after Chinese migrants fleeing political unrest brought poppy seeds across the Pacific.
Getting a start in the business is not hard, said Roberto.
"If you want to grow, they give you everything, and I mean everything: the seeds you plant and your radio because up in the hills, cell phones don't work," he said.
Poppy cultivation here was once encouraged by the United States to supply soldiers with painkillers like morphine during the Second World War and the Vietnam War, said Raul Benitez, a security expert at the National Autonomous University of Mexico.
But with U.S. President Richard Nixon's declaration of a war on drugs, the business went underground, setting the scene for gang rivalries and conflicts that have claimed tens of thousands of lives in Mexico over the past decade.
In Badiraguato, the deadly rules of the game are no secret.
"You look at it like a job," said Juan Carlos, a 22-year-old selling trinkets outside the mayor's office, who said he had once worked as a hit man for as much as 200,000 pesos ($12,600) per job. "You think they're bad, people who are going to kill other innocent people. And sure, at times you do regret it."
'NO ROBIN HOOD'
Pick-up trucks and quad bikes bristling with masked gunmen ride through town, and paid lookouts constantly scan the plaza for unfamiliar faces.
Instead of criticizing him, a local policeman suggested Guzman is one of the few people capable of bringing order to Mexico.
"It's the south that's a mess," he said, speaking at a check point going into town. "He (Guzman) needs to be on the outside to sort the mess out."
There is certainly evidence that Badiraguato's kingpins are tougher or sharper than their rivals.
Of the 24 capos at the top of the Mexican government's wanted list in 2009, all but three are now dead or in jail.
The three still at large were all born in the hills around Badiraguato: Guzman, 58, and his Sinaloa Cartel allies, Ismael "El Mayo" Zambada and Juan Jose Esparragoza, alias "El Azul", both now well into their sixties.
El Chapo's mother still lives in the Guzman family ranch of La Tuna a few miles out of Badiraguato, and mayor Valenzuela noted that he and many other members of the local community had met her, describing her as very kind and religious.
Years ago, Guzman paid for the town's electricity supply, contracting yellow helicopters to help put in staging posts, said a municipal official, speaking on condition of anonymity.
Valenzuela demurred, saying Badiraguato does not have public works paid for by Guzman or his colleagues.
"As a government we don't depend on him, not the government nor the population," he said. "Sure, there's a chain (of people) who depend on his businesses, but he's no Robin Hood."
(Writing by Dave Graham; Editing by Kieran Murray)