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Plowing under Mexico's farmers (Friday, Nov. 15, 2002 -- CropChoice news) --
Geri Smith, BusinessWeek Online,11/14/02:
It was quite a parade. Farmers in Mexico recently marched hundreds of squealing pigs
through La Piedad, a small town in Guanajuato state. The show of porcine heft was a
protest against an expected avalanche of U.S. bacon, ham, and pork chops when import
tariffs on a variety of farm products are eliminated next year under the North
American Free Trade Agreement. Some U.S. pork cuts already cost just 27 cents a pound
in Mexico, vs. $1.14 for domestic pork, and import prices will likely drop further.
"If our situation doesn't change quickly, Mexico's 15,000 pork producers face
complete collapse," says Carlos Ramayo, head of the Confederation of Mexican Pork
Producers.
Mexico and the U.S. are headed for a major food fight. Starting on Jan. 1, Mexico
must scrap tariffs on a dozen key products, including rice, potatoes, pork, and
chicken, that have enjoyed special protection under NAFTA. To Mexicans, agriculture's
importance is not measured in dollars--in fact, the sector contributes 4% of gross
domestic product. But 10 million people, about one-quarter of the Mexican workforce,
still live off the land. And the dirt-poor campesino remains a potent symbol of
Mexico's revolutionary legacy.
No wonder this latest round of tariff cuts is fast turning into a hot-button issue in
Mexican politics. What especially galls the Mexicans is that they have to fight with
one hand tied behind their backs. According to Mexico's National Agricultural Council
[CNA], the average Mexican farmer receives just $722 in annual subsidies, while U.S.
farmers stand to collect $20,800 a year as part of a $180 billion farm bill approved
earlier this year. Mexican President Vicente Fox (news - web sites) in October warned
fellow rancher George W. Bush that the U.S. subsidies could push up unemployment in
Mexico's countryside and drive farmers across the border. "Many farms are going to
disappear," warns CNA President Armando Paredes, who figures at least 750,000 jobs
could go next year alone.
American farmers point out that Mexico's agricultural exports to the U.S. have nearly
doubled, to $6.3 billion, over the past decade. "It's been a win-win situation for
both countries as far as increasing exports goes," says Terry Francl, a senior
economist at the American Farm Bureau (news - web sites) Federation. Mexico has fared
particularly well with labor-intensive crops: Today, more than half the cucumbers and
over one-third of all tomatoes eaten in the U.S. are grown south of the border. But
U.S. producers, with their large, capital-intensive farms, superior technology and
infrastructure, have boosted their exports of rice, cattle, dairy products, and
apples by more than 15% a year since NAFTA took effect. Mexico's agro deficit with
the U.S. reached $4.1 billion last year.
Mexico has been reluctant to tarnish its free-trade credentials by resorting to
nontariff barriers such as anti-dumping duties, and sanitary restrictions--means by
which U.S. tomato and avocado farmers have kept Mexican products out of some markets.
But the gloves are expected to come off as the country heads for midterm elections in
July, 2003. This month, Fox is due to announce a raft of new measures to
"armor-plate" the agricultural sector from increased competition. Expect more
anti-dumping measures, such as the 46.6% duty officials imposed on U.S. shipments of
Golden and Red Delicious apples starting in August. "We will not hesitate to utilize
all of the protective mechanisms established by national and international
legislation," Fox told a gathering of Mexican farmers in early November.
But no matter what Fox does, the countryside will suffer from the new onslaught.
Mexican farms average just 13 acres, a legacy of a land reform introduced after the
Mexican Revolution. Farmers also pay 40% more for diesel fuel and face sharply higher
interest rates on loans. "If Mexico's farm sector is to survive, the government is
going to have to give out more subsidies," says Juan Habermann, a prosperous grower
of green beans and sorghum in the state of Sinaloa. Fox might be happy to oblige. But
there's little room in the tight federal budget for such largesse. For Mexican
farmers, bringing home the bacon keeps getting harder. | |
