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Mexico: Staple foods at risk from free market

Inter Press Service | 26 February 2007

TRADE-MEXICO: Staple Foods at Risk from Free Market

Diego Cevallos

MEXICO CITY, Feb 26 (IPS) — When the Mexican government negotiated the North American Free Trade Agreement (NAFTA), in force since 1994, it estimated that 14 years of safeguards for its maize and beans would be enough time for local production of these crops to become competitive. But things did not work out that way.

In only 11 months’ time the market for these products, the traditional staple foods of Mexican consumers, will be wide open to receive maize and beans from the other two NAFTA partners, Canada and the United States.

The tension is growing. The resources that were to improve agricultural competitiveness have been frittered away, and the plans never worked.

The Felipe Calderón administration announced on Friday that to prepare for the free market, it will grant farmers this year support in the amount of 640 million dollars.

The government promised that these funds, to be spent on advice to boost competitiveness and on seeds and other back-up, will be additional to public investment in rural areas, on healthcare and roads, for example, totalling an unprecedented 16 billion dollars this year.

Furthermore, new inter-ministerial work and supervision strategies will be adopted to face the challenge of free trade in maize and beans, grown by 3.7 million small farmers, the majority of whom are poor.

Calderón said he would propose to the governments of the United States and Canada that a working group be created to find ways of mitigating the impact of this extension of free trade in Mexico.

His goal is to secure the backing of these countries to improve production and marketing of the Mexican crops, he said.

But Calderón’s announcements have not satisfied small farmers’ organisations, opposition politicians and activists, who regard NAFTA as the main cause of the problems in the rural areas, home to 30 million out of the country’s 104 million people.

Removing the tariff barriers will sound the death knell for rural workers, said the National Peasant Federation (CNC), linked to the opposition Institutional Revolutionary Party (PRI) which promoted, negotiated and signed NAFTA in 1992, while it was still in power.

U.S. competition in the product categories to be liberated will be very tough on Mexico. The maize yield in this country is about 2.3 tons per hectare, compared with 7.2 tons per hectare in the United States, while U.S. farmers produce 2.9 times more beans per hectare than Mexican farmers.

The United States subsidises its farmers at a level of over 19 billion dollars a year, more than all of Mexico’s rural sector funding sources put together.

And Mexico is not self-sufficient in these food crops. In 2006 it had to import 5.2 million tons of maize and 122,000 tons of beans, nearly all from the United States, to cope with domestic demand.

Because NAFTA clauses allow these food imports by Mexico, some observers argue that the market has in fact already been thrown open.

Small farmers’ organisations want the Calderón administration to renegotiate the treaty. However, the president is not considering this option.

Renegotiating the treaty is not the most promising approach, unless Mexico wishes to offer concessions to its NAFTA partners in relation to products like tomatoes, avocadoes and green vegetables, where this country already has considerable advantages, regional integration expert and professor at several universities Germán de la Reza told IPS.

NAFTA was negotiated en bloc, with joint and reciprocal commitments and concessions in different product categories. "If a single element were to be renegotiated now, the whole treaty would be at risk of falling apart, and none of the partners wants that to happen," de la Reza said.

Former President Vicente Fox (2000-2006) broached the subject of renegotiating the agricultural chapter of the treaty with the United States, but the suggestion was rejected out of hand.

De la Reza hopes that the financial support for farmers announced on Friday will be put to its proper use and not, as in the past, be distributed in return for political backing.

Mexico should be able to honour its commitment to remove tariff barriers for maize and beans in 2008, so long as enough support is given to farmers, de la Reza said.

The main opposition force, the leftwing Party of the Democratic Revolution (PRD), together with small farmers organisations and activists, are adamant that opening maize and beans production to competition is suicide. They blame NAFTA, which has been in force for 13 years, for the country’s agricultural problems.

In contrast, Braulio Serna, head of the agricultural development unit of the Economic Commission for Latin America and the Caribbean (ECLAC)’s local office, said that NAFTA does not affect Mexico’s rural sector to a significant extent.

In 2005, Serna presented an exhaustive study on Mexican agriculture in which he claimed that only a biased view could point to free trade as a determining factor in the country’s agricultural performance.

Rural problems, poverty and mass migration are rather the effects of poor public policies, global and national economic crises, climate factors, low levels of education and training, and depressed international prices of a number of agricultural goods, Serna said.

De la Reza also blames bad policies, going back to before NAFTA came into effect. Governments have had 14 years to prepare for this challenge, and they have done nothing.

With the barriers about to come down, small farmers are predicting yet another crisis.

 source: IPS