The European Union has steadfastly opposed agricultural trade liberalization, as proposed by the United States, with arguments in favor of food security and employment.1 And it makes sense that the old continent, which is home, in proportional terms, to five times as many farmers as the United States, sees no incentive in opening its market to cheap, heavily subsidized U.S. food and having to pay even greater subsidies than it already does to protect its own important agricultural sector—and to prevent the very probable collapse of its rich culinary tradition (coq au vin and Bordeaux or Big Macs and Coca-Cola?). Despite the high cost of European agricultural subsidies, they have allowed millions of farmers to remain integrated into modern forms of production and consumption, while keeping backwardness and structural dualism at bay.
However, these policies, which defend social welfare in the core countries, harm developing countries: According to a study by the International Food Policy Research Institute, disseminated by the World Trade Organization, the rich countries’ agricultural dumping, made possible by generous subsidies, result in the loss of about $24 billion each year in developing countries, and the European Union is principally responsible. If these subsidies were eliminated, the countries of the South would triple their agricultural exports, reaching $60 billion annually, according to the study.2
If the proportion of Europeans linked to agricultural production is five times higher than that in the United States, Mexico has a proportion 15 times greater, with one out of four Mexicans living in villages with populations of 2,500 or less. Although Mexican agriculture is competitive in fruits, vegetables, flowers, seafood, beer, and tequila—which together account for some $5 billion of exports each year, representing 80% of its agricultural exports—Mexican capital has very little invested in the most important agro-exporting companies (Dole, Chiquita, Fisher, and Del Monte).3 As the Mexican economist José Luís Calva affirmed long ago, if Mexico throws its hat into the ring of comparative advantage, “not even a 10th of the area we lose for staple crops could be channeled toward harvesting fruits and vegetables for export to the United States.” His argument was logical: “The markets for these products are not unlimited. In the 1980s, we accounted for 70% of U.S. vegetable imports. If we considerably increase our supply of exportable agricultural goods, there really could be a sharp fall in the North American market’s prices.”4
Meanwhile, Mexico is not competitive in almost any other agricultural product. Why, then, has the country opened its borders for all products? Moreover, take the following into account: In Mexico, each acre of planted corn yields one ton, versus more than three and a half tons in the United States; Mexico subsidizes its agricultural industry with $3.5 billion each year, versus $20 billion in the United States; Mexico’s fertilizers, electricity, diesel, and gasoline cost up to 60% more than in the United States; and the Mexican government promotes dumping against its own producers, having charged no duties on corn imports that exceeded quotas since NAFTA was instituted—duties that would have equaled $1.3 billion between 1995 and 2000, and $429 million from 2000 to 2002. And all this occurred while Mexican producers of staple grains and other agricultural goods saw their warehouses filled up with no hope of selling anything during the same years. Many simply did not harvest their crops because of the drop in prices: Between 1995 and 1999, real prices for corn and wheat declined by 45%, sorghum by 55%, and seeds and fertilizers by 50% and 60%, respectively. Between 1990 and 1999, the price of beans fell by 40%.5
Following the agricultural logic of neoliberalism, it could cynically be said that if it is so much cheaper to produce staple grains in the United States and elsewhere, the best thing for Mexico to do would simply be to import everything, paying with a portion of domestically produced petroleum. But obviously this wouldn’t work, since the North Americans do not subsidize their farmers in order to feed the world. The very low subsidized prices of U.S. agricultural output were meant only to influence the fall in prices for staple goods produced in Mexico by small- and medium-size farmers, and to essentially drive those farmers out of business.6
A great blow to this latter sector came during the administration of Carlos Salinas de Gortari (1988–94), which promoted the production of industrialized tortillas. These are replacing the tortillas traditionally made by hand from masa de nixtamal, the alkalized corn dough used by small producers whose importance to the industry has been drastically reduced. Already by 2003, almost half of tortilla production was in the hands of big industry, among which the Gruma corporation (owners of the Maseca company) controlled 70%.
This was combined with the dismantling of the National Company of Popular Subsistence (Conasupo), according to a provision of NAFTA. As a state agricultural trader, Conasupo had played a role in regulating stockpiling, establishing guaranteed prices, distribution, and importing grain. Its disappearance gave way to the great transnational retailers—Minsa, Corn Products International, Anderson Clayton, Cargill, Pilgrims Pride, Maseca, Bachoco, Purina, Bimbo, Nestlé, Sabritas—which sold staple goods on the Mexican domestic market. These companies bought corn, sorghum, wheat, and beans at depressed prices from Mexican producers, and after subjecting them to fairly simple processing, sold them at ever higher prices: While the real price of corn fell 45% in five years, the cost of tortillas (which provide 75% of caloric intake for 45 million poor people) went from 1.9 pesos per kilo in 1998 to 3.5 in 1999 to 5.5 in 2003.7
These very companies have benefited from two thirds of the Mexican government’s subsidies, and they have further added to their profits by working together with transnational chains like Wal-Mart, Costco, Sam’s Club, Auchan, and Carrefour, taking over a retail business that before had been in Mexican hands.8 The massive rise in prices for corn and tortillas that was unleashed in 2007 can thus be explained in this context: The large retailers had acquired, at 1,350 pesos per ton, a great part of the previous year’s corn harvest from the state of Sinaloa, where about half of Mexican corn is produced. Manipulating the supply of these enormous stocks, they managed to sell this same grain, in Mexico City, at 3,500 pesos, with a profit of more than 2,000 pesos per ton.9 World prices for corn had been rising since the beginning of 2007 because of its use in producing ethanol and the increase in the costs of basic inputs (diesel, gasoline, and electricity), but the speculative jump that occurred at the beginning of that year—from six to eight pesos per kilo of tortillas—had no correlation whatever with biofuel production and rising input costs, but rather with the multinationals’ hoarding. In mid-2008, these factors combined with the world food crisis, as we will see below.
But even before the current crisis, the Mexican government responded to the inflationary agitation of 2007 by opening borders to grain imports with no tariffs. Mexico imported yellow and white corn from the United States to control the price and instituted no policies that would give Mexican producers an incentive—that is, they chose not to take advantage of the rise in prices, which would have benefited them in the medium term, gradually reconstructing food autonomy. Rather, the government ceded this market advantage to the very speculators who had provoked the price rise in the first place, since it was they and no one else who were in charge of commercializing the massive imports.
What a way to squander an opportunity to strengthen Mexico’s own non-monopolistic companies! But the Mexican officials of the neoliberal era do not think in social terms; in the imperial universities where they were educated, they were never taught to think this way. What’s more, these monopolist groups receive strong support from President Felipe Calderón. As the economist Alejandro Nadal wrote in 2007, “Maseca [a subsidiary of Gruma], the largest corn flour company in Mexico and the world, expects that after [the price hike], many corn millers and nixtamal producers will leave the market, or remain on its fringes. Today, Maseca already controls 50% of the national tortilla market, and it is considering taking over the entire market with these predatory practices.”10
The agro-industrial exporters win, as do the big companies oriented toward the domestic market. Mexico’s small- and medium-size producers lose, and the campesinos either migrate or remain, surviving on subsistence consumption and the unprofitable sale of their surpluses. It is in this context that eight out of 10 Mexicans live in poverty, and two out of three in extreme poverty.
From the macroeconomic point of view of globalization and comparative advantage, improving people’s quality of life matters little, and increasing subsidies to the inefficient countryside would be idiotic, a waste of resources. As former president Vicente Fox’s finance secretary, Fernando Canales Clariond, explained in 2003: “The campesinos will have to transform themselves into industrial workers or true businesspeople, particularly the poor corn and bean producers.”11 What officials like Canales made clear is that the perspective of “open economy” does not value making an effort to increase the domestic production of products imported at low prices, prices made possible by the very high subsidies they receive from their countries of origin. Better that the 3 million grain producers, the half-million coffee growers, the 800,000 livestock farmers, the 150,000 sugarcane growers—and in general the 25 million Mexicans connected to the countryside—either demonstrate their competitiveness or throw in the towel.
The number of Mexico’s agricultural day laborers, working for ever more depressed wages throughout Mexico’s north and west, has swelled. In addition to the growing impoverishment and marginalization to which these rural majorities will be relegated, certain tendencies are already manifesting to the detriment of their collective identity and social equilibrium: The most important of these is the “casualization” (precarización) of labor, which becomes informal, temporary, and insecure.
While a great number of campesinos remain on their lands, rooted in traditional social structures and surviving from subsistence farming, many others, faced with less than self-sufficient production, must now travel long distances to the large farms of the north, following the agricultural cycles of fruits, vegetables, and flowers (as well as demand from the urban construction industry), returning home only at the planting season and again for the harvest. What is new about this phenomenon of informal migrant farm labor is the extent to which it has spread in comparison with full-time employment with a formal contract—it now accounts for about 80% of all agricultural labor in Mexico. Also new is the importance of female and child labor, representing an effort to keep costs low and increase competitiveness. For such tasks as transplanting, harvesting, and packaging, women and children are underpaid by up to 30% to 40% compared to men. For many years, half of the informal workers in Mexican agriculture have been women, and they can easily be found migrating all around the country in small teams.12
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Thus, the laborers involved in Mexico’s agricultural circuit are trapped within a logic of weakening social structures and anomie. Today’s agro-export companies, as opposed to their antecedents, use a reduced workforce of about 100,000 temporary workers, working an area that is also small: almost 5 million acres of corn, as opposed to more than 66 million in previous years.13 Informal workers endure terrible conditions and are paid extremely low wages, with no opportunities for upward mobility. Moreover, these migrant day workers have few labor rights, or rights of any kind, and as they go from one seasonal plantation to another, they are unable to put down roots or organize.
Equally devastating is the undermining of domestic farmers, from the small to larger producers, who cannot compete with cheap agro-imports. Large foreign companies make the profits, as Mexico slips ever deeper into food dependency—during the Fox administration the country spent more than $42 billion on importing basic foods, 55% more than under his predecessor, Ernesto Zedillo.14 Extrapolating, we may calculate that this figure could approach $100 billion in the 2006–12 presidential term if we take into account that, according to the numbers from Mexico’s National Institute of Statistics and Geography, the country imported $5.7 billion worth of food in the first four months of 2007 alone. Even by around 2002, Mexico depended on imports to fill almost half of its food basket. Now that all Mexican tariffs on foods have been eliminated, and the global price of food have has risen, we can only begin to imagine how this dependency will worsen.
This was the general outlook in 2007, when, owing to a combination of factors, neoliberal certainties about the benefits of free trade and comparative advantage in the world food market were undermined. The sharp spike in corn prices at the beginning of that year already prefigured a suspicious change in behavior on the part of world regulators of staple-grain prices, but in the Mexican case, the hoarding of these products by the transnationals was so great that it was thought that importing higher quantities of corn would stabilize prices and do away with the “externalities” of hoarding.
But between mid-2007 and the first months of 2008, the situation—not just in Mexico but worldwide—changed alarmingly: Corn prices on the Chicago market in April 2008 had increased by 50% over the previous 12 months; wheat prices rose by 75% in the same period; and rice prices rose by 75% in just the first two months of 2008. The same occurred with other goods that make up the basic food basket. Summing up the situation, the World Bank noted that between December 2006 and February 2008 average world food prices increased 48%.15
Many explanations for the crisis arose: (1) The rise in general costs of production and transport associated with the increase in gas prices; (2) rising food demand from developing countries (as Brazilian president Inácio Lula Da Silva put it: “The world was unprepared for China and India’s 2 billion inhabitants—out of the 6 billion who live on the planet—eating three meals a day”);16 (3) a worldwide change in consumption habits, which has increased the consumption of meat and, therefore, grains to feed livestock; (4) the diversion of some foods toward the production of biofuels, to which the United States probably devoted a third of its 2007 harvest and the European Union a third of its vegetable oils, both domestic and imported;17 (5) the reduction in food reserves in developed countries because of the high costs of storing perishable foods and adverse climatic conditions in countries where grain exports are very important, like Argentina; (6) the anti-national attitude of agrarian groups in countries like Argentina, Venezuela, and Bolivia, who prefer to export food, provoking an artificial shortage as a mechanism to destabilize their governments;18 (7) reductions in exports decreed by many exporting countries (Argentina, Brazil, Vietnam, India, and Egypt), whose governments are worried about shortages; and (8) the dramatic rise in fertilizer and pesticide prices in just one year. This has pushed many small- and medium-sized corn farmers toward products that demand less of these costly inputs or toward simply abandoning their fields. (In the last 10 years, Mexico has increased fertilizer imports by 400%.)19
At first it would not seem obvious which of these factors has had the greatest impact on the price increase, but according to a World Bank report leaked to the U.K. Guardian, biofuel production is responsible for at least 75% of it, not 3%, as the U.S. government claims.2021
The point here, then, is that if Mexico is already facing a massive trade deficit in primary products—almost $6 billion in 2007—it is obvious that, given the world food market’s new tendencies, the country’s food dependency will severely worsen, as Dominique Strauss-Kahn, managing director of the IMF, predicted in April: “The commercial deficits of countries like Mexico,” he said, “could increase as far as $10 billion, or one percentage point of GDP, because of food imports.”22 World Bank president Robert Zoellick, concerned about unrest in Haiti and Africa, held up a loaf of bread, explaining that it cost a quarter of a family’s income in Yemen, and a two-kilogram sack of rice, saying it cost a family in Bangladesh half its daily income.23 Thus, food dependency is not an alarmist issue recognized only by defenders of the countryside and campesinos, but by the very stalwarts of neoliberalism themselves.
The Bank of Mexico confirmed the country’s precarious state when it acknowledged, in April 2007 and March 2008, that purchasing the most important 127 foods and agricultural inputs required import payments of $13 billion—or $5 billion more than in 2005, the last year in which prices for these products were stable. This underlined the increase in prices for corn, wheat, soy, powdered milk, and planting seeds; but not so the prices of fruits, beans, and vegetables, which the multinationals export from Mexico and whose prices have increased much less. This increase in the cost of Mexico’s primary imports is equivalent to the country’s petroleum surplus obtained in 2007.24
But the adversity is not the same for everyone. According to data from the USDA, Argentina and Brazil—two Latin American countries that have maintained tariffs on imported grains—will each buy about a million tons of U.S. grain in 2008, while Mexico will bring in 11.3 million.25 Long live comparative advantage!
Sergio Zermeño is a professor at the Institute of Social Research at the National Autonomous University of Mexico.
1. This article is a revised, updated version of Sergio Zermeño, “Desolación en México. Los campesinos del siglo XXI,” Nueva Sociedad no. 190 (March/April 2004): 37–50.
2. WTO study cited in Reuters, “Países en desarrollo pierden 24 mil mdd por subsidios al agro,” published in La Jornada, August 27, 2003.
3. Víctor Quintana, “Saldos del TLCAN,” La Jornada, December 31, 2002.
4. José Luis Calva, quoted in La Jornada, November 16, 1991.
5. Comisión de Desarrollo Rural de la Cámara de Diputados, La soberanía económica de México en riesgo, cited in La Jornada, November 28, 2002. See also Tania Molina Ramírez, “El campo en cifras,” in Masiosare, a supplement to La Jornada, January 12, 2003.
6. Blanca Rubio, Explotados y excluidos (Mexico: Plaza y Valdés, 2001), 128–29.
7. Ibid., 127, 131.
8. Luis Hernández Navarro, “La guerra de los alimentos,” La Jornada, October 22, 2002.
9. Alejandro Nadal, “Maíz, cosechar tempestades,” La Jornada, January 17, 2007.
10. Ibid.
11. Antonio Sánchez, “Entrevista: Fernando Canales Clariond: comercio, la prioridad,” Reforma, January 22, 2003.
12. Hubert Cartón de Grammont, “El mercado de trabajo en el campo: unas reflexiones a partir de la lectura del libro Portraits de Bahia, de Hèléne Rivière d’Arc,” Revista Mexicana de Sociología no. 2 (1991).
13. Molina Ramírez, “El campo en cifras”; Rubio, Explotados y excluidos.
14. Juan Antonio Zúñiga, “Creció 55 por ciento la importación de alimentos básicos en los pasados seis años,” La Jornada, January 16, 2007.
15. Roberto González Amador and David Brooks, “Tensa al mundo en desarrollo altos precios de alimentos: FMI,” La Jornada, April 11, 2008.
16. Ibid.
17. Silvia Ribero, “Agrocombustibles: secretos y trampas del Banco Mundial,” La Jornada, July 5, 2008.
18. Peter Rosset, “La hora de La Vía Campesina,” La Jornada, May 9, 2008.
19. Imelda García, “Crece importación de fertilizantes,” Reforma, May 3, 2008.
20. Ribero, “Agrocombustibles.”
21. Alejandro Nadal, “Crisis alimentaria: ganancias para buitres,” La Jornada, May 7, 2008.
22. Víctor Suárez Carrera, “La economía agroalimentaria, un desastre,” La Jornada del Campo, April 8, 2008; González Amador and Brooks, “Tensa al mundo en desarrollo.”
23. González Amador and Brooks, “Tensa al mundo en desarrollo.”
24. Israel Rodríguez J. , “El alza en alimentos cuesta a México 5 mil mdd: Banxico,” La Jornada, May 4, 2008.
25. Verónica Martínez, “Refleja México ineficiencia en agro,” Reforma, April 29, 2008.
