Monday, December 31, 2007

Is Mexico Ready for a Flood of Imported Corn and Beans?

By Allan Wall

January 1st, 2008 – New Year’s Day – is the scheduled date for the abolition of all tariffs on corn, beans, milk and sugar entering Mexico from the United States of America.

Many fear that a flood of agricultural imports will drive even more Mexican farmers out of business.  Protests are planned in Mexican cities, including a “human wall” on the border. 

When you talk about corn, beans and the NAFTA (North American Free Trade Agreement) you are stepping into a minefield of economic, social, cultural and political controversies.

Corn and beans have been staple foods in Mexico since pre-Hispanic times, and are important parts of the culture.  Nevertheless, the country has already lost self-sufficiency in corn.  Currently, Mexico produces 22 million tons of corn and imports 10 million tons.

NAFTA, depending on whom you listen to, is absolutely great or absolutely disastrous.  According to polls, Mexicans and Canadians think the U.S. gets the best of NAFTA, while Americans think that Mexico does.

Like any trade pact, NAFTA has its winners and losers.  Mexican vegetable farmers have done splendidly under NAFTA. On the other hand, small farmers, including beef and pork producers, have been hit hard.  Since NAFTA took effect (January 1st, 1994), 3 million Mexicans have lost farm jobs.  And generally it’s the most vulnerable farmers who are the hardest hit.

On the other hand, some of the things blamed on NAFTA might have happened anyway.  For example, Mexican corn farmers’ incomes were trending downward before NAFTA.

Some are concerned about NAFTA not so much for what it is, but for what it might become.  Will NAFTA be transformed into a continental merger on the order of the European Union?  Felipe Calderon expressed his desire for such a union even before becoming president.

Although NAFTA is a trilateral trade agreement between the U.S., Canada and Mexico, in agriculture it consists of three separate bilateral accords.

There’s a U.S.-Canadian agreement, a Canadian-Mexican agreement, and a U.S.-Mexican agreement (the one we are talking about here).

The fear in Mexico is that Mexican small farmers will be unable to compete with the flood of subsidized American imports. American farmers have higher productivity, better infrastructure and organization, and much higher government subsidies.  The average production of a U.S. corn farm is 22 tons per acre, while in Mexico it’s 6 tons per acre, and most Mexican farms are 6 acres or smaller.                           

Nevertheless, President Calderon is dead set against renegotiating the U.S.- Mexican agricultural accord. For one thing, there is the fear that if you renegotiate one thing you might have to renegotiate the whole agreement.  It could also scare off investors.   

How significant is the January 1st date anyway?  Most of the tariffs on U.S. corn and beans have already been lifted.  Pro-NAFTA Mexicans accuse opponents of exaggerating the impact.

Quoth Luis de la Calle, one of the Mexican negotiators of NAFTA: “It’s an important date because it marks the end of the process.  But in terms of the market, there will be very little impact.” Still, the date is symbolic.

NAFTA has been in effect since 1994, and the plan was to phase out the tariffs while simultaneously preparing Mexican agriculture to be ready to compete by 2008. But that didn’t happen.  On the contrary, the Mexican government has allowed the infrastructure and distribution networks to decay during the same time period.  As agricultural organizer Victor Suarez describes it, “There was no transition period like they promised 15 years ago. We are not ready, the only ones who are ready are the 20 big agribusiness corporations.”  

Some Mexican agricultural leaders realize that if they are going to be competitive they can’t depend on the government.  They’re going to have to help themselves, and effectively organize, as American farmers have done in the past.  

The aforementioned Victor Suarez, for example, leads a farm co-op promoting the direct sale of corn tortillas from farmers to consumers.

Hector Salazar, of the National Corn Producers Federation, says his group is working to organize corn farmers so they can market their produce to food companies.

As Mexican agricultural analyst Hugo Garcia puts it, “They (Mexican farmers) have only one way to survive, and that is by understanding the need to organize.”

Mexican farmers face great challenges, but if they can organize into cooperatives, pool resources and bargain collectively for better prices, they might stand a fighting chance.   

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Allan Wall, a MexiData.info columnist, recently returned from a tour of duty in Iraq.  He currently resides in Mexico, where he has lived since 1991. He can be reached via e-mail at allan39@prodigy.net.mx.