Guest Column
The tortilla crisis
- By Fred Rosen
- The Herald Mexico/El Universal
- January 21, 2007
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The price controls on tortillas announced by the Calderón government constitute a compromise between two opposite "lessons learned" from Mexico’s sudden corn shortage — the shortage that has led to a dramatic rise in the price of tortillas, the Mexican staple.
The compromise, agreed to by the government and the major corn and tortilla distributors — including Maseca, Bimbo and Wal-Mart — reflects the Calderón government’s acknowledgement that free-market ideology has its limits, and the simultaneous expectation that the global market will resolve Mexico´s corn crisis. The agreement sets a price cap of 8.50 pesos per kilo of tortillas and at the same time allows for a significant increase of tariff-free imports of various types of corn, including corn used for animal feed. It will remain in effect until April.
The two lessons learned are somewhat self-fulfilling.
Lesson #1: The tortilla crisis shows that corn markets must be allowed to operate more freely, and that Mexico must further open itself to free trade by rapidly abolishing all remaining tariffs on imported corn. Indeed, the initial government response was to authorize the tariff-free import of an additional 450,000 tons of white corn from the United States, and another 200,000 from the rest of the world. Mexico currently imports about 8 million tons of various kinds of corn per year. This comes to over one quarter of all the corn that is consumed in the country.
Lesson #2: The crisis demonstrates that the corn markets must be more tightly regulated, watched over and controlled.
"It doesn´t add up," observed an editorial last week in the daily paper, El Universal. "If a kilo of corn costs 2.20 pesos and at the end of the productive chain a kilo of tortillas sells for 10 pesos or more, than most of what the consumer is paying goes to intermediaries, who certainly incur costs and have the right to a profit, but not to take such a disproportionate slice of the pie, much less to speculate with the product to cause an artificial shortage."
Of course, it is not exactly the "laws" of the market that are at fault here. A perfect market, requiring transparency and perfect information, does not exist in the imperfect world of the transnational trade of industrialized, transgenic corn. In the world of global agribusiness, relying on the market typically means relying on those who have predominant power within the market — or within regional corners of the market.
One popular response has been to search for the guilty parties, leading to a great deal of conjecture about who is speculating and who is hoarding. Another response has been talk among owners of small tortilla shops of forming a large trade cooperative that would allow them to collectively purchase corn from abroad and avoid the current set of intermediaries.
Most tragically, when all is said and done, the tortilla crisis illuminates the fact that the future of the Mexican family farmer looks grimmer than ever. Max Correa, secretary general of a campesino group called the "Central Campesina Cardenista," estimates that "for every five tons bought from foreign producers, one campesino becomes a candidate for migration." The importing of the proposed 450,000 tons of white corn, he told a press conference last week, is likely to eliminate more than 100,000 jobs in the rural sector.
Meanwhile, the general popular response seems to be somewhere between resignation and cynicism.
The cousins who run a family owned tortillería on the outskirts of Cuernavaca where a good friend of mine buys her tortillas tell us they will not be raising their prices. "It´s still eight pesos for a dozen, just as it´s been for the past six months," says one of the cousins as she places a dozen fresh yellow tortillas in a customer´s basket. "The flour we buy," says another cousin, "comes from corn grown by local campesinos, mainly for self-consumption. The problem is not with the price of corn grown by local cultivators. They have gotten nothing from these price increases."
"Really we are talking about speculation," responds a customer, "particularly in the great industries, and about the attempt of the government to speed up free trade."
She tells us she supposes that one strategy behind the temporary price controls is to keep resigned cynicism from spilling over into angry activism. "For the poor," she pauses, "and for the almost poor like us," she goes on with a little laugh," the price increases were strategically timed. After the big spending over the holiday season, "people are accustomed to being ´sin dinero en enero´ (penniless in January) and hardly notice when prices rise."
But this year, people notice the increase. Even with the price controls, the pinch is much greater, and resignation is mixed with anger.
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