Mexicos tortilla crisis: harvest of NAFTA

NewsAnalysis

More than 120,000 people protested in Mexico City, Jan. 31, against massive hikes in the price of white maize (called “corn” in the U.S.) and other basic foodstuffs — up nearly 100 percent since Christmas on top of a 700 percent increase since 1994.

Marchers, organized by major labor, farmer and political organizations, chanted “Queremos tortillas, no queremos PAN” (“We want tortillas, we don’t want bread/PAN.”) The right-wing ruling party of President Felipe Calderon is the PAN (National Action Party), and “pan” in Spanish also means bread.

In Mexico, white maize tortillas are traditionally the food of the laboring millions, some of whom can afford little else, as opposed to the white bread of the elite. The protesters were demanding renegotiation of the North American Free Trade Agreement, restoration of grain self-sufficiency, and wage increases.

Calderon announced the duty-free import of 650,000 metric tons of white maize from the United States, plus a “gentlemen’s agreement” with some tortilla distributors to cap prices at 76 cents (U.S.) a kilogram.

The plan to import maize enraged Mexico’s farmers. Since the inception of NAFTA in 1994, they have felt their government has allowed cheap U.S. grain imports, heavily subsidized by U.S. taxpayers, and the elimination of government price supports to destroy their livelihoods, driving millions of them off the land.

Some distributors announced they would refuse to honor the price caps. But Wal-Mart, by far the largest retailer in Mexico, began selling tortillas at three-fourths to one-half the price of others, sparking fears that its actions will wipe out even more small distributors than it already has.

Environmental groups pointed out the danger of genetically modified imported grain.

From the early 1980s, the Mexican government of the Institutional Revolutionary Party (PRI) turned sharply away from long-standing policies of protectionism toward neoliberalism — free trade, privatization and public austerity. Such policies were followed by PRI presidents until 2000, and intensified by PANista Presidents Fox (2000-2006) and Calderon.

Under NAFTA, the Mexican government hoped to attract foreign industrial investment and to expand its exports of fruits and vegetables to the U.S. and Canada, while moving farmers away from grain farming, which, in line with the classical economic theories of David Ricardo, Mexico “should not” be doing because the geography and climate of the U.S. and south-central Canada are better suited to this than Mexico’s.

This all went awry the first day that NAFTA came into force: Jan. 1, 1994, when Native American peasants in Chiapas rose in armed rebellion, claiming that NAFTA would destroy their communities. The PRI’s presidential candidate, Luis Donaldo Colosio, was assassinated in February (an event unconnected with the Chiapas rebellion). This set off a chain of events involving devaluation, disinvestment and capital flight, which nearly collapsed the Mexican fiscal house of cards.

To rescue U.S. investors, the Clinton administration organized a $50 billion loan with conditions that led then-President Zedillo to greatly speed up the pace of implementing neoliberal policies.

The results have been devastating. The government agency that used to buy 20 percent of the Mexican maize crop at a subsidized price to sell cheaply to the poor was dismantled. Neither the export-oriented crop farming nor foreign-owned factories were able to absorb the displaced grain farmers. Mexican real wages dropped drastically to less than half their 1994 value, and many businesses went broke.

As a result, economically displaced Mexicans have poured into the “informal” economy and over the border to the U.S.

Free-trade ideologues blame the rise in maize prices on the diversion of large amounts of the U.S. harvest into ethanol. But the left, unions and farmers claim that there is also massive hoarding and speculation by big Mexican and international monopolies such as Cargill and the giant Mexican conglomerate Gruma, which is 27 percent owned by Archer-Daniels-Midland. In 2006, Cargill bought 600,000 metric tons of white maize at 1,650 pesos per metric ton at midyear and sold it in the Mexico City area for 3,500 pesos per metric ton at the end of the year.

This situation has fueled hikes in other food prices, too. And in 2008, all protective tariffs on maize and other foods, such as chickens, are supposed to disappear. Protests will only grow if massive inflation of food prices is going to make the poor majority in Mexico even poorer.

Mexico’s farmers and working-class consumers have often been played off against each other in the past, but the common enemy of U.S.-inspired neoliberalism is now bringing them together.