Recent announcements from President Bush on prioritising the biofuels agenda have fuelled the debate on the possible implications for developing countries and one of the main concerns is the impact it will have on food security. This issue is of special concern for Mexico, which experienced its first shock in the rise of food prices in January, when the price of tortillas more than doubled. Facing popular discontent, the government’s immediate solution was to authorize the import of 650,000 tons of corn free of tariffs from the US and intervene in the regulation of prices until May, when the new harvests in the North of Mexico are expected. This event came as a terrible blow to the country where corn originated and constitutes the basis of the national diet.
Media reports attributed the rise in tortilla prices to dwindling imports of corn due to its increasing demand for ethanol production. Others argued that the problem was not lack of corn, but rather the monopolizing practices and speculation carried out by the main companies that have controlled corn commercialization in Mexico ever since president Salinas privatized CONASUPO, the major parastatal company that used to regulate prices and subsidize corn. In Mexico, yellow corn (a source of ethanol) is used for animal feed and industrial purposes, whereas white corn is used for consumption, especially tortilla-making. In the last twenty years, Mexico has imported cheap yellow corn from the US. For this reason, the rise in corn prices affected some areas of food industry, leading some companies to divert the use of white corn for animal feed, reducing its availability for tortilla-making and inciting speculative practices.
However, the core issue underlying this problem is the lack of competitiveness and low productivity that has persistently characterised Mexican agriculture in the last decades. In the nineties, president Salinas implemented a series of market reforms, including the liberalization of the land market, the abolition of internal regulations for corn commercialization and the implementation of NAFTA. However, these reforms have only contributed to undermine self-sufficiency in food production and have led to the increasing deterioration of rural conditions of small producers who cannot possibly compete with American farmers. In recent years, we have witnessed the increasing exodus of rural dwellers migrating illegally to the US. The recent rise in tortilla prices reveals Mexico’s vulnerability to fluctuations in international corn prices and its fragile food production system, which increasingly depends on corn imports for domestic consumption.
As a result of this, analysts recommend increasing corn production as the most viable solution for future market challenges. However, given that 70% of agricultural producers are small subsistence farmers, this would require agricultural reform and facing historical problems of failed land distribution, ethnic divisions, poverty and marginalization of the rural sector in the south.
The immediate solution that agribusinesses are trying to push forwards is increasing productivity through the introduction of genetically modified corn, which until now has been tightly restricted in Mexico. However, given that the market for GMs is currently controlled by big multilateral corporations, this would mean local small and medium producers are unable to access agricultural markets and eventually, become even more dependent on US technology and imported goods. In addition to this, there are also fears about seed contamination. With corn and bean products expected to join the NAFTA in 2008, food self-sufficiency, particularly in corn production, is increasingly being seen as a matter of national security.
Biofuels are likely to have a negative impact on food security in developing countries only if other structural issues are not properly addressed. Perhaps the current situation in Mexico can be a lesson from which other Latin American countries can learn in the threshold of their free trade agreement negotiations with the US.
By Sitna Quiroz
