Tracing the maize-tortilla chain.

• Author: Appendini, Kirsten

Mexico is the original source of maize and home to a wide biodiversity. Maize has always been the main staple food of Mexicans and the principal crop cultivated by its farmers for millennia. (1)

In the twentieth century, Mexico's economic growth centred around towns and cities. In the first half of the twentieth century, maize was central to a food policy motivated by the goal of self-sufficiency. Agriculture flourished because of the Green Revolution. This strategy enabled agricultural growth and also increased yields. Cheap food was therefore guaranteed to a population growing rapidly--reaching a peak annual growth rate of 3.6 percent in the 1960s. However, by the early 1970s, Mexico began to import corn, mainly from the United States. This trend persisted, so that by 2008 Mexico's balance of trade in food has been increasingly in the deficit.

This increased dependency on foreign markets to satisfy the demand for food in Mexico is the outcome of a complex historical process in which the State has played a key role: food policy either enabled or constrained farmers to grow food and consumers to consume. The overriding goal of Mexico's food policy was to provide for enough cheap food, which was a quantitative approach to food security rather than a "qualitative" approach concerned with preferences. (2)

How to obtain enough and cheap food has changed over time in Mexico. In the early 1990s, Mexico's opening economy was integrated with the North American Free Trade Agreement (NAFTA), and Mexico moved away from import substitution, i.e. replacing imports with goods produced in the country. As part of NAFTA, commercial farmers from midwestern United States and Mexico supplied corn and met Mexico's food security. Small and medium farmers in Mexico were deemed inefficient and uncompetitive in the world market. The current rise in world food prices has completely changed the context of such a strategy.

In this article, I argue that Mexico now has an opportunity to revise its food policy and give more attention to domestic agriculture and output. In order to sustain this argument, I will briefly review the food policy in the latter half of the twentieth century and then analyse the current situation of the maize-tortilla chain. Finally, I will argue for revising the food policy in the framework of the current international debate on the "food crisis".

MODERNIZING MEXICAN AGRICULTURE: A 20TH CENTURY TIMELINE

From the 1950s to the mid-1980s domestic production sustained Mexico's cheap food policy. In the early years, as the agricultural frontier expanded and more staple crops were sown, productivity shot up with the application of the green revolution technology. Mexico was self-sufficient in food crops until 1970.

Modernization, however, meant that the subsidies to accelerate the green revolution were channelled to areas that could quickly adjust to policy incentives, that is, commercial farms and irrigated lands. From the 1940s to the late 1960s, private landholdings became the dynamo of agricultural development. Small and medium-sized farms, consisting mainly of peasants with land distributed under the agrarian reform (ejidos), were marginalized and deprived of policy benefits. Hence the majority of Mexican farmers remained in peasant economies that supplied cheap labour to the economy and produced marginal agricultural surplus. The outcome was a highly polarized farm landscape. In 1970, 13.4 per cent of farms produced 58 per cent of farm output, while 55.7 per cent of farms did not even make subsistence income and only contributed 11.7 per cent of the output.

By the late 1960s, the constant tug-of-war between giving incentives to agriculture and maintaining low prices in order to contain wages reached its limits. But the trend to maintain low prices had a negative impact, particularly on maize output. Commercial farmers instead cultivated feed crops for livestock due to the demand for meat from a domestic, urban, middle-class population. Peasant agriculture--growing staple foods like maize and beans--was unable to create surplus stocks, as their access to productive resources, including technology, had been overtaken by agricultural policy. However, by 1971, when Mexico began to import corn from the United States, agricultural policy was also revised with the goal of regaining self-sufficiency in staple foods.

GOVERNMENT PROGRAMMES EMBRACE THE SMALL FARMER

A new "modernization programme" was launched. It embraced the small and medium farmer. Resources were funnelled to the countryside and ejidos were organized to benefit from the green revolution. Rural credit, storage facilities and marketing, at government stabilized prices, reached out to small and medium-sized farms through the state marketing agency Compania Nacional de Subsistencias Populares (Conasupo). Within a decade, the modernization drive gained momentum when excess oil revenues were routed to the food sector under the Sistema Alimentario Mexicano programme, the most serious effort to implement a successful food security policy in recent history. Maize output grew 37 per cent from 1969/71 to 1980/82--not enough to regain self-sufficiency, but enough to show that small farmers could respond to policy incentives. Another positive experience was the organization of a food distribution system in both urban and rural areas that confronted the power of local merchants and shopkeepers, benefiting low-income consumers, even those in remote areas of the country.

The dilemma of maintaining low agricultural and low food prices was solved during the 1970s and early 1980s by adding subsidies along the maize production chain. Guaranteed prices were paid, above international levels, to farmers who sold to the State marketing boards that also set the market price for maize. Subsidies backed credit to purchase agricultural inputs; subsidies supported the tortilla industry for purchasing maize; and urban consumers bought tortillas at government-subsidized prices. To sustain the subsidies and support the corn flour and tortilla industry, the government increasingly complemented domestic production with corn imported at lower world prices. (3)

The ability to sustain a subsidized cheap food policy paradoxically proved costly to the government. Due to the financial crisis of 1982, when Mexico briefly defaulted on its foreign debt, the cheap food policy ultimately became unsustainable. Like many other countries, Mexico followed the International Monetary Fund's structural adjustment prescriptions and pursued to stabilize its economy. Food policy was revised, subsidies slowly withdrawn, creating a ripple effect on agriculture.

Meanwhile, a new agriculture modernization programme, Programa de Modernizacion del Campo, was announced in 1990. The programme aimed to promote competitiveness and productivity in Mexican agriculture so that it could compete internationally. Inefficient farm holdings, as defined by the market, would no longer be supported, but would be helped through urban and rural poverty reduction programmes established in the same decade. Agricultural performance was to be based on high-value export crops, such as fruit and vegetables, that could survive competitively on the international market.

During the early 1990s, the State dismantled the institutional framework that supported agriculture. This included: the rural credit bank that mainly financed peasant or agrarian reform land; the State marketing agency, Conasupo; the State fertilizer and seed industry; and extension services provided by the Ministry of Agriculture. Agrarian legislation was also modified, so that land distribution came to an end and restrictions on land transaction in the reform sector (ejidos) were modified in order to prompt investment in agriculture.

To compensate the income loss to farmers once the State no longer supported the price of food staples, Programa de Apoyo Directo al Campo (Procampo) or "direct support to the countryside" paid farmers according to the number of hectares they owned. Designed in 1993 as a transitional programme, Procampo has now been renewed and is one of the main farm-income subsidies. Another programme, Apoyos y Servicios a la Comercializacion (Aserca) or "support and services to agricultural commercialization", implemented in 1991, paid a subsidy per tonne based on the difference between world prices and a regional price, thus guaranteeing income to farmers. The third major programme, Alianza para el Campo or "alliance for the countryside", later renamed Alianza Contigo or "alliance with you", implemented in 1995, was directed at promoting technology and changing the crop-sowing patterns towards high-value crops and pasture lands, to give incentives to livestock production. However, these programmes were not universal and were targeted at farmers who complied...