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Nafta to Open Foodgates, Engulfing Rural Mexico

(Thursday, Dec. 19, 2002 -- CropChoice news) --

NY Times: IRAPUATO, Mexico, Dec. 15 A decade of hemispheric economic upheaval finally turned Eugenio Guerrero's life upside down last Saturday. That morning, he tried to auction off the pig farm that has supported his family and some 50 others for two generations.

"It's true," read a flier that announced the sale. "We are closing and auctioning everything."

From now on Mr. Guerrero, 41, will dedicate himself to selling paint.

The changes he has been forced to confront are being felt all over Mexico as the country struggles to keep its balance, one foot in poverty, the other seeking a toehold in prosperity through the North American Free Trade Agreement.

Mr. Guerrero said he had barely been able to keep afloat since the treaty began abolishing trade barriers between Mexico, the United States and Canada nearly 10 years ago. Credit ran dry after a national economic crisis devastated banks in 1995. The Mexican government ended most agricultural subsidies, sending his costs through the roof. Pork prices plunged as cheaper imports from the United States flooded Mexican markets.

Now, Mr. Guerrero's last defense is being dismantled. Under Nafta, on Jan. 1 tariffs on almost all agricultural imports from the United States will end.

The looming deadline has consumed the attention of a nation where a quarter of the population lives in rural areas, and produced warnings about the possibility of unrest and increased migration across the Mexican countryside and into the United States, as millions of peasants are forced to abandon their tiny fields.

In recent weeks, hundreds of thousands of Mexican farmers and their supporters have blocked highways and border crossings. They have temporarily shut down gas and electricity installations, and even burst into Congress on horseback.

President Vicente Fox's government is short of cash and has offered little more than moral support. "In the world today, all sectors have to adapt to the new competitive conditions," the president said. "Agriculture cannot be the exception."

Meanwhile, some, like Mr. Guerrero, grope for ways to hold on to a middle-class way of life, if not their farms. For him, Saturday was the start of another life.

That morning, Mr. Guerrero, the father of two adolescent sons, held an auction to begin selling off half of his 2,000 pigs. There was no way, he said, that the family business could compete against large-scale pork producers in the United States, who now hold 40 percent of the Mexican market.

In the United States, a pig can be raised and sold in Iowa for a fifth of what it would cost to raise and sell one in Irapuato. Since Nafta took effect, a third of Mexico's 18,000 swine producers have gone out of business, according to the Mexican Hog Farmers Association.

Mr. Guerrero said he had laid off all but five of his workers. Most told him they would emigrate to the United States illegally in search of a new start.

Mr. Guerrero, however, decided to start over at home. He closed Saturday's auction with the sale of a hulking black and white male that went for 40 percent less than he was asking. A few hours later, more resigned than rejoicing, he presided over the grand opening of his new paint store.

"Mexico will not be a country of producers, it is going to become a country of salesmen," he lamented. "The problem with that is we are putting our independence at risk. We are becoming a country that depends on foreigners for food."

Mr. Guerrero said he accepted the survival-of-the-fittest laws of free trade. "But Mexico entered the free trade game with serious disadvantages," he added. "Naturally, we are the losers."

It was widely predicted before Nafta took effect on Jan. 1, 1994, that free trade would create a new world of economic winners and losers. Mexico has become the world's ninth largest economy and a powerhouse in the export of manufactured goods. Hundreds of thousands of jobs were created, most of them in assembly plants called maquiladoras.

Food imports from the United States have doubled, from $3.6 billion a year to $7.4 billion. But the food trade has also boomed in the opposite direction.

Exports to the United States, mostly products made by large Mexican and transnational food processing corporations, have increased from $2.7 billion to nearly $5.3 billion. Among the most notable winners are companies like Grupo Bimbo, Mexico's largest food company, which has taken advantage of cheap grain imports.

Other winners are Maseca, which has become the world's largest producer of cornmeal and tortillas, and Sigma, which imports cheap pork parts and poultry pastes from the United States to make sandwich meats.

Fruit and vegetable farmers, who benefit from longer seasons of sunshine and cheaper labor than their American competitors, have also increased their exports to the United States under Nafta.

But many observers say the losses outweigh the gains. Mexico's most difficult challenge has been the fate of some 25 million people who live in the countryside.

Although agriculture represents less than 5 percent of the gross domestic product, about one in five working Mexicans are directly involved in it. The overwhelming majority are poor subsistence farmers, who work plots as small as two acres. However, midsized farmers are also being devastated.

Poultry farmers, too, are expected to be hit hard when remaining tariffs are lifted on Jan. 1. Currently Mexico places a 48 percent tariff on poultry.

As much as Nafta ignited an economic evolution, said analysts, it has also set off a kind of social landslide as the government struggles, in the span of a decade, to move millions of people from farming into other ways of life. The impact is likely to be felt on both sides of the border.

Some 700,000 people are expected to lose jobs in farming and other food industries next year, warned Armando Paredes Arroyo, president of the National Agriculture Commission. Many may join the estimated 300,000 Mexicans a year who make the illegal journey to the United States. Most are peasant farmers.

Farm leaders pointed to President Bush's farm bill, which promised $180 billion in spending over the next 10 years, as an example of unfair trade practices by the United States. A typical farmer in Mexico receives $722 a year in government subsidies, officials say, while the average American farmer will receive more than $20,000 under the bill signed by President Bush.

President Fox, however, rejected calls to renegotiate or suspend Nafta. The government says the farming crisis is linked in large part to the legacy of government corruption and mismanagement by the Institutional Revolutionary Party, which controlled Mexico for seven decades.

In the budget approved last week, the Mexican government pledged $10.2 billion in spending on agriculture next year, an increase of about 4 percent over last year. However, farmers complain, only $4.5 billion will go directly to subsidies.