|Friday, Nov. 15,
2002, CropChoice news, via 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
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.