Friday, February 1, 2008

NAFTA Pushes Corn Farmers North

Mexico is finally coming around to one important obligation of the North America Free Trade Agreement -- lifting the high tariffs on corn and bean imports from the U.S. and Canada. The result may be a wave of cheap corn moving south and cheap labor moving north. Mexican corn farmers are currently demonstrating against the measure in the streets of Mexico City. (See NY Times article.)

There are more than two and a half million Mexican farmers raining corn on plots of less than 12 acres. It's enough to generate $3,000 to $6,000 in annual income. To survive the competition of corn from the U.S. or Canada, they need the help of the additional tax on the imports. While it might seem to contradict "free-trade" dogma and to reward economic inefficiency, in reality it's only "fair". That gringo corn has already been subsidized as part of U.S. farm policy. Cargill and ADM have their production costs pretty well covered by farm supports and so can unload their corn for a profit in Mexico. A further irony is that the ferderal government even covers the cost of facilitating the export. Such subsidies would be continue in the still unpassed farm bill before Congress.

Already corn imports have culled the ranks of small farmers and have precipitated last year's "tortilla riots" in Mexican cities. The impact of this last lifting of restrains on imports may precipitate a renewed wave of undocumented workers -- whether ther's a recession or no recession.

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