May 1, 2007

 

Mexican corn farmers relieved at higher corn prices

 

 

Ethanol demand from its superpower neighbour further north has brought a change in fortune for Mexican corn farmers.

 

Now, with supplies short and prices for the grain on world markets reaching 10-year highs of over US$4 a bushel, farmers are reaping long-awaited rewards for their labour. 

 

Helped by plentiful midsummer rains, last year's bumper harvest enriched thousands of corn farmers in Mexico.

 

Farmers are expecting another bumper crop if it rains in July and August.

 

Although prices have risen, they have barely risen high enough to be worth celebrating after taking into consideration seed and fertilizer costs. Still, farmers are hoping for bigger returns with the help of government subsidies for seeds and tractors, which has been rare until recent times.

 

As corn prices rise, prices for tortilla, which is a staple food made from corn, have also risen. Price caps were put on the corn-price increases after protests broke out but farmers were relatively unaffected.

 

Mexican farmers have suffered immensely under the North American Free Trade Agreement, or NAFTA, which enabled heavily subsidized US corn imports to flow into Mexico and drive down prices.

 

The lifting of trade barriers on corn set for 2008, could also put many Mexican peasants deeper into poverty.

 

However, as the new ethanol plants in the US consumes more from the domestic crop, exports are likely to be lessened, according to studies.

 

Favourable government policies, a decrease in US imports and higher prices are now lifting the spirits of Mexican corn farmers.

 

Still, the National Corn Producers' Confederation worries that the good times may not last as there has been little government initiative to organize farmers with small plots.