August 9, 2006

 

Mexican farmers see red as US yellow corn floods their market
 

 

Cheap corn from the US is raising the ire of Mexican farmers as the approach of North America Free Trade Agreement (NAFTA) opens the floodgates to imports of the product.

 

Even before a 2008 NAFTA deadline for Mexico to abandon its corn and bean import tariffs arrives, farmers are fuming about American corn being cheaper than local corn.

 

The disputed presidential election, in which runner-up Andreas Manuel Lopez Obrador lost by 0.6 percentage point, has added more drama to the trade row.

 

While campaigning, Andreas Manuel Lopez Obrador had promised to renegotiate NAFTA provisions to protect the nation's corn and bean farmers if elected. Now, he is demanding, with huge support, for a vote-by-vote recount of the election.

 

The electoral court, which has until Sep 6 to rule, would decide on the presidency if the matter is not resoved. Farming groups have promised strong demonstrations in support of Obrador as president.

 

The corn issue may become extremely explosive, said Jon Huenemann, a former assistant US trade representative.

 

On a larger scale, if Mexico fails to honour its obligations, the US could enter a dispute under NAFTA or retaliate by not honoring other provisions, such as imposing tariffs on Mexican avocado, which has seen business booming under NAFTA.

 

In the 2004-05 season, the US exported 231 million bushels to Mexico, its second-largest customer after Japan. Most of the corn exported from the USA is yellow corn for animal feed, not white corn that Mexican farmers grow for human consumption.

 

However, critics say cheap American corn is lowering the price of all corn and causing much hardship for farmers.

 

Victor Suarez, a congressman for Obrador's Democratic Revolution Party said nearly a million farmers have been displaced since NAFTA went into effect in 1994.

 

Still, some say cheaper US corn does for its benefits. Violating NAFTA would mean higher corn prices, which would only benefit farmers but hurt consumers, Jorge Gonzalez, a professor of economics at Trinity University in San Antonio said.

 

However, even as Mexican farmers are grousing about cheap US corn, the trend could soon change. That is because US corn prices have been rising as demand increases for its energy uses in the form of ethanol.