The University of Texas at Austin

Op-Ed

Mexicans' Quest for Cheap Tortillas Leads North

Austin American-Statesman, June 2, 2007

Carolyn Barker, Master's Candidate, LBJ School of Public Affairs

While the battle for immigration reform heats up again in the United States, Mexico's President Felipe Calderón has been busy fighting drug wars by sending the military into cartel havens and extraditing the most notorious offenders to the United States.

Meanwhile, he has left a crisis that touches the daily lives of all Mexicans to stew on its own. In mid-January, the price of tortillas in Mexico skyrocketed. A kilo of tortillas, which are a mainstay of the Mexican diet, had almost doubled from five pesos (a little under 50 cents) to 9 pesos. In Durango, the price was up to 20 pesos (about $2). For the average family that consumes more than three kilos of tortillas a day, the price hike could easily represent half of its daily income.

The country was outraged. Protesters in the capital were heard yelling, "Queremos tortillas, no queremos PAN" ("We want tortillas, not bread")—a play on words and a direct attack on Calderón's conservative, business-friendly National Action Party party.

Unbeknownst to Calderón when he was inaugurated just one month earlier, The tortilla predicament became one of the first crises of Calderón's six-year term. Under the guidance of his secretary for the economy, Eduardo Sojo, he crafted a two-tiered solution: one part free trade, one part voluntary price control. This strategy satisfied the masses, at least for a few months. But the upcoming summer corn harvest and the looming NAFTA deadline to remove all agricultural tariffs by the beginning of next year are sure to stir up a new storm.

In January, Calderón authorized the importation of more than 600,000 tons of white corn, the variety used to make tortillas. Two-thirds of the tariff-free corn would come from the United States. The move assuaged the rampant rumors that claimed the shortage was caused by the diversion of U.S. corn to the more profitable ethanol market. The rumor mill neglected to mention that ethanol is made from yellow corn, which is primarily used for animal feed in Mexico.

Meanwhile, Calderón also negotiated an agreement with the country's tortillas providers. At the table were members of Mexico's food industry oligarchy including Cargill México, Minsa, Bimbo and Wal-Mart, which, early in the crisis, had promised to keep its tortilla price under six pesos. Gruma Corp., which controls close to 90 percent of tortilla production in Mexico and the rest of the world, joined the other companies in implementing a price cap of 8.5 pesos per kilos on the condition that it was voluntary and temporary. Market price distortions in Mexico, after all, are a thing of the past. And, as promised, the agreement was slated to terminate at the end of April.

In reality, a third of Mexico's tortillas have been priced well above the cap. Lucky for Calderón, the Secretary of Agriculture made a timely announcement: based on their predictions, tortilla prices will soon fall to below the 8.5 pesos cap thanks to a forecasted bumper crop of corn in Sinaloa state. So Mexicans can let out a sigh of relief—or can they?

In Mexico, the tortilla crisis affects much more than the country's daily diet. Most of the white corn supply—more than 85 percent—comes from small-scale farms with less than 5 acres of land. Mexico, therefore, cannot rely entirely on increased production in its agro-industrial sector to ensure lower prices nor to support its farmers. The removal of tariffs on corn imports in January 2008 may help with persistent shortages, though white corn production in the United States pales in comparison to yellow corn.

Moreover, imports would also add pressure to the millions of low-income farmers in Mexico who depend on their income from corn for their survival. The rural poor already represent half of the population living under the poverty line in Mexico. Rural areas also are the No. 1 source of migrants to the United States. If corn prices dip lower because of increased competition, thousands of Mexican farmers will be forced to look elsewhere for work. And, you guessed it, migration to "el otro lado" (the other side) will be all the more alluring.

So, President Calderón, while you are busy sending troops to the northern states and extraditing drug lords, don't forget about the tortillas. Whether or not you like it, they—and the crisis they brew—are here to stay.

Barker is completing a dual-degree master's program in Latin American studies and the LBJ School of Public Affairs.

Copyright 2007 Austin American-Statesman