CORN PRODUCING SECTOR IN MEXICO

Alejandro Nadal

PART 2

Declining support for agriculture

Withdrawal of support policies: public expenditures for agriculture drop to all-time historical low

Green Box subsidies could increase 200% today and remain within AMS authorized levels of URAA-WTO

In spite of all of this, Corn production increased and cultivated surface expanded.

“What happened?” asked World Bank and Mexico’s official experts?

Mexico: Total Corn Output (1980-2003)

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Met

ric to

ns

Corn (grain) Cornfeed

Yields in Corn Production (1980-2003)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Tons

Tons/Cultivated surface Tons/Harvested surface

Land Surface in Mexico's Corn Sector (1980-2003)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

Hect

ares

Cultivated surface Harvested surface

Explaining the dynamics of corn production in Mexico after NAFTA

• Producers prices did go down as a result of NAFTA• But corn output started to increase• Why?• General equilibrium versus partial equilibrium:

Need to consider the movement of the entire constellation of agricultural prices

• “El regreso al campo”: the return to the countryside by impoverished peasants that had previously migrated to urban centres

Tortilla prices increased by 50% in real terms

Explaining Corn Output in Mexico (1994-2003)

Real Tortilla Prices in Mexico1994-2003 (2002 pesos)

0.50

0.75

1.00

1.25

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Source: Banco de Mexico, Informacion Financiera y Economica, IPC

Explaining Corn Output in Mexico (1994-2003)All agricultural prices fall. Open-pollinated corn varieties offer a safer option

for poor producers.

Real Prices for Selected Crops (1980-2003)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Corn Rice Barley Beans Sorghum Soybeans Cotton

Discussion• Insecurity and adverse economic environment for

small scale producers– Adverse conditions: 293% inflation between 1994- 2003

• Why did output increase?• Not “in spite of” but precisely because of these

adverse conditions corn producers have expanded their operations (hence, “the return to the fields”)– All agricultural prices were falling: the relative price of

corn was stable or in fact increasing!– Corn is familiar technology– Staple food

Impacts on Production and Survival Strategies of Corn Producing Households

• Crop substitution• Changes in land use patterns• Reallocation of labor resources• Off-farm income-generating activities• Temporary or permanent migration

Migration and semi-proletarization degrade local institutions for resource management, as well as technological capabilities at the household level.

Impact on seed selection and recycling, and on the development of maize genetic resources.

Economic Forces and Maize Producers in Mexico

A. Rural exodus and semi-proletarization in response to pervasive poverty and economic pressure degrade local institutions and technical capabilities at the household level.

B. Labor-intensive processes (i.e., milpa multicropping and inter-planting systems) tend to be replaced by monoculture and higher herbicide usage rates. Crop biodiversity affected.

C. This impairs capacity to select and recycle seeds and degrades in situ conservation of maize genetic resources.

D. This may lead to a severe event of genetic erosion through poverty, migration and semi-proletarization.

E. Germplasm banks may not be a viable solution over the long haul. Passports of accessions not enough for comprehensive understanding of role of maize biodiversity (Taba, Ortega).

Cultivated Surface in Corn, 1990

Cultivated Surface in Corn, 2001