Corn is just corn?

by rdan

The Economist reports on troubles in Mexico around corn tortillas. Last year there were demonstrations about a significant rise in prices for corn tortillas.

From research I learned that 50% of the people in Mexico earn $5 or less per day, with the corn tortilla being the mainstay of diet…Indeed, the average Mexican consumes 120 kg of tortillas every year. Tortillas constitute more than half the daily calories and protein of Mexico’s poor.

Nevertheless, the Mexican maize crop has grown from 18m tonnes before NAFTA to 24m tonnes last year. This, says Jaime Serra Puche, the trade minister when NAFTA was negotiated, is a problem rather than a success. Growing maize efficiently requires lots of water, large fields and mechanisation—in other words, Iowa or Saskatchewan rather than Oaxaca. Subsidies have caused Mexican farmers to stick to maize instead of switching to more profitable and labour-intensive crops, such as fruit and vegetables, Mr Serra argues. Alberto Cárdenas, the minister of agriculture, says he is trying to streamline and simplify the subsidy system, and direct more of the money to poorer farmers. Others are sceptical that this is happening.

Advocates for subsistence farmers claim that Grupo Maseca, a big tortilla maker, controls 85% of the market for maize flour. “We are not against markets, we are against monopolies,” says Victor Suárez, one of the organisers of the protest. Mr Cárdenas says that the maize market is competitive, but other officials express worries about market concentration.

Fortunately for the government, the tariffs have been removed while prices are at record levels. With maize at $5 a bushel, thanks to a (subsidised) boom in its use to make ethanol in the United States, even the least efficient subsistence farmer can make money. Open markets benefit the millions of poor Mexicans who are not farmers but consume lots of maize. But few of them seem to realise this.

The article simply ends, which I found jarring.