It’s not all NAFTA’s fault, however.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
The price of tortilla, a staple in Mexico that is consumed in myriad forms, flavors and colors, is on the rise. The country’s federal consumer association Profeco has already warned of price rises across the country, with the most pronounced increases in the states of Baja California, Colima, Quintana Roo, Guerrero, Yucatán, Nayarit, Ciudad de México, Tabasco and Oaxaca.
It’s the latest spike in an ongoing trend. In the last 10 years, average tortilla prices have soared by over 90%. Early last year prices reached as high as 16 pesos per kilo in some regions. Since then the Mexican peso has accentuated its slide against the U.S, dollar, slumping 17% in 2016 and close to 5% in the first two weeks of this year.
It was only a matter of time before the traditional bugbear of inflation began to rear its ugly head. Even before the government ushered in the new year with a brutal 20% hike in fuel prices, inflation had already accelerated from historic lows to a two-year high. In January it’s expected to surpass 1% on a monthly basis, its fasted increase since 2000. And there are already rumors of further gas price spikes in February.
As the FT warns, if the cost of mainstays of the Mexican diet such as tortillas, eggs, milk and chicken start to soar, an already unpopular government can expect snowballing protests in a country where nearly half the population lives in absolute poverty.
Profeco has already detected rising prices of other staple food, including frijoles (black beans), chicken and eggs, in some regions, although the “trend is not yet generalized.”
In an effort to dampen public fears — and anger — about rising prices, Enrique Peña Nieto’s government last week announced a grand pact with business and union leaders aimed at preventing disproportionate price rises as a result of higher costs at the pump. But it was so light on detail that Coparmex, one of Mexico’s two big business lobbies whose members account for 30% of GDP, refused to sign it.
The government has good reason to be concerned. The last time the price of tortilla rose so fast, in 2006, it led to food riots. And today the country is even more dependent on the international food markets, largely as a result of the North American Free Trade Agreement (NAFTA).
“NAFTA created a disloyal competition, because the United States and Canada continued to subsidize agricultural producers, and we pulled the subsidies,” says José Herrera Vizcarra, an advisor with the Cardenista Peasant Union in Mexico City, told Watershed Sentinel. “It became impossible for small and medium producers to compete with producers from Canada and United States.”
When NAFTA was signed in 1994, Mexico imported $5 billion worth of agricultural products. By 2013 that figure had increased almost fourfold, to $19 billion. In 2015 the Food and Agriculture Organization (FAO) of the United Nations warned that Mexico had become a net importer of food, making it more vulnerable to international price rises and pronounced currency fluctuations.
The FAO estimates that the threshold at which a country becomes what it calls “food-vulnerable” is when as much as 25% of its food supply comes from abroad. Mexico currently imports over 40% of the food it consumes, with nearly four-fifths of it coming from the U.S. As Bloomberg reports, Tyson Foods and Coca-Cola are among the biggest sellers of American products in Mexico.
Mexico buys a third of the corn it consumes from the U.S., between 30-50% of its beans, and up to 80% of its rice, according to data provided by the Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food (Sagarpa). In return Mexico exports to the U.S. tomatoes, chiles, avocado, coffee, grapes, strawberries and water melon.
But it’s the staple crops that matter the most — and they are almost all moving in one direction. In a study on the role of American agribusiness in the Mexican economy the Woodrow Wilson Center found that U.S. exports of eight basic agricultural staples (corn, soy, wheat, cotton, rice, beef, pork and chicken) have seen huge increases — some of as much as 700% — since NAFTA. As the study’s director, Timothy A. Wise, points out, all of the products receive, in one form or another, significant financial support from the U.S. government. Some are even sold in Mexico at below the actual U.S. production cost.
It’s not all NAFTA’s fault, however. Also to blame are Mexico’s political and business classes, who have shown scant interest in safeguarding, let alone developing, the country’s internal market. As long as Mexican businesses were able to book guaranteed profits by providing cheap labor assembling consumer products for the world’s biggest market, there was no need to worry about Mexico’s internal market. At least that was the assumption.
But now that Trump is about to take the keys of the White House, Mexico not only risks losing a chunk of its niche export market; it faces the grim prospect of galloping food inflation as the cost of US$-denominated food imports rises.
The good news is that many of the staple food products Mexico has grown to depend on from the U.S. could be produced just as easily in-house, including sugar, corn (which is native to Mexico), rice, and beans. As Mexican economist Alfredo Bravo Olivares says, the government should already have launched a coordinated production program in Mexico’s long-neglected countryside, providing subsidies as necessary to growers of staple food products like corn and frijoles, to reduce imports from the US. It should also be diversifying its import and export markets away from the US — a process that has already begun. By Don Quijones, Raging Bull-Shit.
The Risk of Contagion of a full-blown Mexican crisis is far greater today than it was during the Tequila Crisis 22 years ago. Read… Hideous Constellation of Threats and Challenges Facing Mexico
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– And a falling MXN/USD also will help mexican farmers to produce more food. Or are the US & canadian farmers going to their governments for even MORE subsidies ?
– Another weird thing. There’s a drought in California and yet the golden state is still producing rice for exports. Insane.
And much of California’s almond crop is destined for exports. And much of the produce is sold to other US states. That’s why water is so important.
Update on the drought: In Northern California (Bay Area) and in the Sierra, there has been an enormous amount of precipitation over the past two months, and in particular over the past two weeks. So the drought in Norther California is over. Southern California is getting some rain too, but not nearly enough yet.
Growers in Mexico are getting pretty good at exporting higher value produce, such as avocados, tomatoes, etc. to the North in line with the season. In the winter, we see a lot of Mexican produce at our Safeway. Much of this is done by US growers with operations in Mexico.
– I did some research and found out that Calif. indeed received a significant amount of rain.
– Still have to find out what happened to the temperature of the waters off the North America west coast this year. And that’s much more important for the long term (drought) outlook.
I’ve been to a Farmer’s market in Davis, CA, Northern California a few times in the past few years. There so many different types of produce at a reasonable price. I was amazed. Very diverse crops, all local. I’ve also traveled overseas and have seen higher prices in poorer countries. I can’t explain it, but it’s what I’ve observed.
Yes, when it comes to produce, we in California are blessed. There’s always something being harvested, year-round. Glad to hear you’re going to your local farmers market. We have lots of farmers’ markets in San Francisco (including one that’s 10 min on foot from us), but even Costco is packed with seasonal produce, much of it organic, from California farms. You buy it by the crate, and a lot of times, it says the name of the grower on the crate….
But in my experience, tropical and sub-tropical “poor countries” – and I have been to many of them – have got us beat on price and often on flavor too.
Other “poor countries,” such as Mongolia, don’t even grow produce. So anything like that is imported and relatively expensive.
– It also mean that farmers get a better price for their produce. Because then there’s no supermarket who also wants a profit margin.
Almonds seem to be a rare find on the East Coast.
So much for global warming. One or two storms and we are back to regular business.
Brian Brettschneider on Twitter: “Annual precipitable water in 2016 at the global scale was at record levels according to R1 Reanalysis (1948-present)
Highest recorded atmospheric moisture from warmest atmosphere following El Niño ocean temps and a screwed up polar vortex. Probably see more records as we’ve passed the inflection point for winter temps that moisture will eventually drop, as floods on some places.
Yeah! Tell that to the South which has had two months in a row in the middle of winter of massive thunderstorms and tornadoes.
This would be a good way for Mexico to counter Trump’s campaign against them – subsidize domestic food production, then announce a tariff on US-grown staples being imported into Mexico. I expect the pro-Trump farming communities would not be pleased.
And China will come in and replace NAFTA with CHIMFA and Trump’s Wall will be used to keep money in the US while Tennessee auto worker pay for it.
I love the moniker RepunAnon. A very good idea. They need a Program.
HIGHER PRICES IN MEXICO TEND TO DAMPEN CONSUMPTION, KEEPING PRICES DOWN IN THE US.
ah, the virtuous circle.
repeat as necessary.
The US subsidised agriculture employ illegal Mexican immigrants to run Mexican farms out of business, encouraging Mexicans to emigrate illegally emigrate to the US to work at farms producing for the Mexican market. The EU does the same thing: The taxpayer subsidise agriculture, especially in places that are relatively poor like Spain to create jobs. These jobs are often done by Illegal African immigrants that will do the job for less. The farmers then produce more than the EU market needs and to keep prices up, The EU subsidise export to (among other markets) Africa, running African farmers out of business, resulting in more Africans illegally emigrating to the EU.
Personally, if I’m going to by tomatoes picked by Africans, I’d prefer it if the picking was done in Africa. I suspect that quite a few Americans feel the same about Mexico and Mexicans. Not having to subsidise businesses to employ illegal immigrants would be gravy on top.
The other side of that coin, there is little regulation in developing countries, meaning you’d potentially be exposing yourself pesticides or other harmful elements from the water, soil, or production process. If the produce is grown locally (no matter who picks it), at least you can assure it is organic and pesticide free. Cheap Mexican field grown tomato, or BC hothouse? I know which one I’d prefer.
Are you sure it’s really organic? The only organic produce I trust is what I grow in the summer. I just hope the seeds I buy are good.
I won’t bother with BC Hot House, or anyone’s hot house. They are hydroponic grown and taste of nothing. I’ll take US or Mexican field. The only conceivable use of HH tom is for the slice in a hamburger.
In season Okanagan toms are great- but BC supers don’t carry them you have to go to small markets.
I bought a case last year- last were getting soft so made sauce but wow -that’s a tomato. A slice would cover a slice of bread. juicy, acidic
I agree. Don’t buy US farmed agriculture picked by illegal immigrants.
Then, when big AG can’t find lazy “complaining that Mexicans are taking their job” Americans to do the work, we can all resort to eating processed starches and meat to get more obese.
Sounds like a sane plan!
So, what about “sustainability” for Mexico’s food supply?
Importing 40% of a country’s food doesn’t sound like good planning. And it won’t be for the US either. The US needs Mexico to buy its corn since China won’t due to it being GMO. Mexico hasn’t developed a quality food consciousness yet. That’s the only reason for all these imports. Monsanto polluted some of the Oaxua (wrong spelling) corn genes. If I were Mexican, I wouldn’t buy a single US food product.
So the Mexican people did not benefit from NAFTA (“…as much as 700% increase….”), nor did the American citizen as we subsidized (“….significant financial support from the US government”) these commodities to “keep prices down”. One wonders, without our subsidies, would this 700% be a far greater number? Is Trump right yet again, NAFTA is the worst trade deal ever concocted? Apparently so and to whose benefit?
Subsidies for rice? Consider that:
1. Farmers in California receive subsidized water.
2. They receive export loans or guarantees.
3. They receive price supports.
4. Cotton, rice and hay are among the largest consumers of water in California.
This needs to end.
California is one of the best places in the world to grow food, Silicon Vally was a land of fruit orchards.
Alas, it was converted to a toilet.
one of the more interesting issues of mexican agricultural production has been the usage of non-potable water for irrigation and fecal contamination of crops.
over the last decade plus, this became a buried scandal when raspberries and blackberries from mexico were entering the us market. all of a sudden there were widespread outbreaks of cryptosporidium and cyclospora in the usa.
vector seemed to be a us agricultural giant, driscoll’s, that produces these berries in both the usa and also in mexico.
labels appear identical. the ones to watch out for are those that read “grown in mexico”.
the “grown in mexico” berries should be avoided if one has a weakened immune system. or perhaps even a strong immune system.
these are nasty gi infections. for cyclospora i think that there is no real, long-term cure. it may well be one of those infections that seems to go away with a course of bactrim, cipro, only to return at times when the infectee is under stress.
these berry situations need to be discussed because, having been ignored, big ag has convinced the usda to abandon origin requirements for most agricultural products.
Yes, but we’ve had plenty of food-born illnesses from US-grown food too, such as E. coli contaminated lettuce, and many other things. Food historically has killed a lot of people. But NOT eating food kills even more people :-]
yes, of course, starvation is one of the insoluble dilemmas confronting the world.
and, quite candidly, as a former red crosser, we didn’t know how to solve that problem.
and perhaps, no one at the top wanted to solve that problem.
i think that the issue of state-sanctioned starvations may go beyond the scope of this thread.
also quite candidly, i have concluded that starvation is not a situation that any western[asian] government cares to ameliorate. it is just not on the agenda.
which brings us to the objectives of the state[usa] and its allies. is tjhe starvation mechanism of the usg. to force countries to bend to the usa’s will?
that may be the real issue. starvation as a tool of empire.
who tracks that activity by the way? the usaid? a cia subordinate secret economic police?
well, if that is the case, then you can understand the secret economic warfare state. administered by the usaid.
play ball with the usa, your citizens will become fed. don’t play, and we shall stand by and watch them starve.
isn’t that how it really works?
One way to solve and curtail the poisoning of our food and water is to stop this right wing deregulation nonsense that we now see with the Trump cabals.
Each of those Trump Cabinet members were appointed to even further dumb down both the good and bad regulatory agencies.
This is always the oroblem with extremist ideologies. The blind faith implementation goes too far and creates public health and safety disasters while also giving the Wall Street crooks license to to steal our tax dollars and eventually our trust.
Americans seem addicted to political drama – since consumerism and tax dodging non-profit big Religion is really a spiritual scam with no ultimate life salvation.
Americans could look inward for answers. But then it would require real change and the acknowledgement that American capitalism as the two party duopolies reinvent every 8 years is not fixable.
Simply put, give the political power back to the citizens and workers – but without the hatefully crude economic authoritarianism we will see in less tha a week.
A World Trade Organization ruling against the US forced Congress to repeal the Country of Origin Labeling law. It was caused by complaints from Canada and Mexico, not ‘Big Ag’ per se. They most likely pulled strings to get the complaints filed in the first place.
The COOL law ended last month.
From now on, you won’t be able to easily screen out Mexican food because there will be no way for you to know if the food is Mexican by reading the label.
If it’s grown by the guy living down the road who drove it to the farmer’s market, you can be certain it’s not Mexican. Otherwise, its origin may be hard to determine.
A truly free market would allow people to know whee their food comes from so that they can decide for themselves if they want to risk eating it.
These so-called free trade agreements are often Trojan horses for power grabs by multinational corporations.
“raspberries and blackberries from mexico were entering the us market. all of a sudden there were widespread outbreaks of cryptosporidium and cyclospora in the USA!”
Cite your sources so we can know this is not more exaggerated Mexico bashing!
it goes back a few years. 10?
there were a number of cyrptosporidia, cyclospora outbreaks in the usa. which are relatively rare. the cdc[trustworthy?] findings were reported in the nyt[trustworthy?].
not major stories. and quickly disappeared since they involved driscoll’s mexican grown berries. before this occurred, driscoll’s did not grow berries in mexico.
another reason that this may not have gotten a lot of air is because public health services are rarely involved in non-lethal gi infections unless a physician takes the time to submit a stool sample[hardly ever happens as they prescribe antibiotics and send the patient home].
and by the way, have you ever tried to deal with a municipal health service?
almost impossible. they are understaffed and overwhelmed.
but, you might find one of the stories in the nyt archives. it involved a wedding reception in dallas as i recall.
cyclospora is an almost impossible infection to detect. until berries from mexico started entering the usa, it was rarely seen.
i am sure that if you look all this up on the net, you can become knowledgeable.
Here’s an article on 2 studies from the CDC (2015, 2014) on produce from Mexico contaminated with Cyclospora in the years 2013, 2014 and 2015 – not berries but lettuce, cilantro, etc. which sickened hundreds of Americans. The article links the two studies from the CDC.
This stuff isn’t rare. But it’s not just Mexico. Food-born illnesses happen in the US too, and in other countries as well.
i focused on driscoll’s berries from mexico because they poisoned me.
and you are correct, there are a lot of infecting agents in the amerikan food system. from overseas and from the lower 48.
after the macondo well disaster, i no longer eat seafood from the gulf.
as to lettuce, only hydroponically grown stuff[i am not sure if that is safe enough].
having been poisoned so frequently by oysters, i no longer eat them raw or cooked.
it is pretty crazy when one has to question everything that one ingests.
i have traveled all over the world. here is what i find out. only countries in which i have never been food-poisoned were china, russia, argentina, chile.
mexico was always a gamble. i remember ruth’s chris steak house in can cun for instance. a shrimp remoulade. shrimp on a bed of bibb lettuce. i made the mistake of eating the lettuce. ruined an otherwise nice vacation.
on the other hand, i have eaten jicama seasoned with dried chiles and limes from street vendor stalls in manzanillo, mazatlan and never had a problem.
the worst revenge were the margaritas at las brisas in aca pulco. ice was not made from agua purificada. the lesson, drink your tequila straight. maybe with a jolt of sangrita. no lime.
I have a friend in northern NY State whose family was paid NOT to grow corn…for years. He was also subsidized to attend university, as his family was supposedly too poor to pay for it. The university attendence was years ago, but as far as I know the corn subsidies still exist when the prices are too low.
Nice work, if you can get it.
We seldom buy Mexican produce as they really pound the pesticides to it. BC Hothouse is fine when our own greenhouses are fallow for 3 winter months per year. (We don’t heat them) There are also Ontario hothouse products.
Buy local and support your friends, neighours, and/or country.
If unrest in Mexico leads to a reduction of gringo visits, look for things to intensify.
Wow, for being the richest country in the world, I read here some very negative and resentful economic opinions.
What have any of you got to complain about? Mexico and their cheap labor has helped keep US inflation down over the last two decades. Yet many of you make ugly almost racist comments about them? Talk about kicking the victim while they’re on the ground!
Americans appear to have become a nation of whiny little weasels who elected a soon to be Predator-In Chief to be their predatory leader.
The Mexican workers I have hired here in Texas over the last twenty years to work on my house probably work harder and have better skills than most of you arrogant xenophobes.
Nothing more pathetic than predators acting like victims. Shame on you people.
Give it a rest.
Your name calling is uncalled for and your post is full of nothing but BS.
There has not been one ‘racist’ comment posted in the comments section yet.
The shame is on you for your post which is full of crap.
Sorry Rocky but you are just plain wrong I have nothing against Mexicans or anyone else but when you lose your job and your house because you can’t find employment that affords you that”luxury” because of illegal workers taking over the job market you might have a different view Sure if you are the one benefiting from the cheap labor you’re going to have a different viewpoint
Xenophobia is simply another form of racism. Because this how many of you are denying your own role in the slow economic collapse of American democracy.
The scapegoating of everyone other than your own mindless free markets greed and complacency is the real reason many of you can’t take responsibility for your past voting record and your disparaging anger.
You love the Mexican and Chinese cheap labor when your stock prices go up and when your consumer gluttony is insatiable, but then many of you become the poor victims when the underlying American Dream lifestyle starts to falter. It’s simple economic hypocrisy.
And I am the one that has grown up. Because I’m the one who doesn’t blame others for my economic decisions and status and my life.
I probably make more annual income and pay the highest tax bracket on that income than most of you AND I do not need blame foreigners, liberals, Obama, regulations, big government, trade policies, etc. – or whatever other irresponsible scapegoating targets many of you choose to attack.
That, my angry defensive attackers, is what real American responsibility is about. It is not about closet racist scapegoating.
Those of you who don’t like my truth choose to elect the Economic Predator-In-Chief Trump to bash the fake bogeymen – like Mexico, China, Muslims, Obama. (btw, if you’re not closet racists, what about your voting for Trump when all he did for 8 years was say Obama not born in the US?)
The real bogeyman is your own blind faith in a corrupted US economic system that has been given legal cover to steal from American middle class workers and taxpayers.
I’m sorry if I used the word “weasel” too loosely. I really meant “bullies.”
If the shoe fits…….
Rocky, I can´t say I have seen much of any of that stuff on here you are accusing everybody of. You seem to be projecting all kinds of attitudes you picked up elsewhere. Your messages are an incoherent mass of confusion. You lack the ability to reason. Everybody seems to have made you out to be a typical troll and are ignoring you. I think I will do the same.
“Never argue with a madman or a vegan!”
” here in Texas”
Currently on TDY in Texas. Turning into Texas is what the rest of the states want to avoid. Look up “Clusterf##K” in the dictionary, and it show an aerial view of the DFW area.
Much like most of the Third World, Texas is a vast country with pockets of vast prosperity (mostly run by those of European descent), surrounded by hordes of poor Hispanics. Or Gringo farmers/landowners dependent on illegal/legal labor. Texas isn’t so great
(Want to know why drive-up windows at fast food joints have “numbers” attached to their menu items. Because it’s easier for an illegal/non-English speaker to understand “#1 Value Meal” than “Quarter-pounder with Cheese, medium fries, and Coke”)
Most Americans don’t have a problem with CONTROLLED immigration. What we don’t like is millions of legals and illegals coming here with no regulation whatsoever, turning whole neighborhoods/cities into Mexico-Lite, undercutting local salaries and businesses, watching them run up the cost of public services, avoid taxes with their “Cash-Only” sub-economy, and all the “benefits” going to the people that helped them get here.
Thank God we don’t share a border with China, India, or Indonesia.
Minion is typical of the chronic scapegoating perpetuated by the right wing Fox News educated.
I’ll say it again: our corporations are the ones responsible for moving US jobs to Mexico, China, Vietnam – wherever.
Yet I don’t read any blaming of the greedy sociopathic corporations for your anger. Why is that?
And why aren’t you blaming the American business owners that hire the illegals and exploit their labor while not paying taxes that they use to subsidize their businesses wth transportation infrastructure etc. Why is that?
And what about your retirement plans growing because corporate profits have increased exponentially due to cheap labor foreign labor outsourcing? What about that?
The economic hypocrisy is astounding! Quit blaming everyone but your own gullibility and faulty thinking for your resentment. It is what addicts do.
Uh…I guess I just plain missed all that negative and resentful economic opinions. I even went back and re-read to find what I missed. Still don’t see it.
Don’t waste your time trying to reason with a crank, Taylor. They live in a delusional hallucinatory world of their own. It is like trying to argue with a radical feminist or a flat earther.
“in a country where nearly half the population lives in absolute poverty.”
What kind of poverty is this? It all looks pretty impoverished to me. Less than a dollar a day type poverty? Or just, we can’t afford the gas (which means you own a car) type poverty.
Extreme poverty will mean the country could soon implode.
The answer is obvious if you read the textbook. Stop eating Tortillas and start eating Cheetos.
Sorry to comment so late. Here in San Joaquin valley, at a well-run local chain of about 10 stores, and heavily patronized by working class Mexican immigrants and their descendants, I’m buying high quality pasta (kosher certified!) and excellent unrefined sugar, both imported from Mexico. The pasta price is much lower than the domestic product. The sugar is the least expensive unrefined product I’ve seen. By way of reference, the store carries a full line of Barilla pasta, at reasonable prices, ie about the same as domestic.
The fresh tomatoes and peppers in the store are always from Mexico–almost certainly Baja California. The lemons and limes are mostly from south of the border. This store would look very different without Mexican imports
Clearly California is the most reasonable, educated, and productive state in the Union.
hahahaha That’s the first time I’ve ever heard California described in such glowing terms You should listen to fellow Californian Dr Savage and how he despises most of his fellow enlightened neighbors hahahaha
They should have a sign at the border: “You are now leaving reality.” then “Welcome to California!”
Like I told my friends once, “Uh Oh, those dudes are from California. Looks like we are going to have to “relate”!
Jerry Bear ^,..,^
I am fairly sure that Texans are regarded as “guds” (geographical undesirables) in California but hopefully not New Mexicans……
In the colder months the Mexican tomatoes here are far superior to those vinyl pink rocks we used to get from Florida.
Obesity in Mexico is more widespread than even in the USA. Perhaps a move to locally-grown non-GMO corn is in order.
“Fat city: the obesity crisis that threatens to overwhelm Mexico’s capital”
It probably has more to do with their lack of protein and large intake of sugars and carbs but it’s just a guess
There is also a genetic factor. The Aztecs and other peoples of Central Mexico who spoke Nahuatl came from the deserts of the far north and they make a heavy contribution to the genetics of the current population. Desert Indian peoples can stand up well to starvation but are highly prone to obesity and diabetes if they have too much food intake, especially refined carbs and sugar.