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Mexico Battling Demand Dilemma, Rising Corn Prices
Cattle Network ^ | January 9, 2007

Posted on 01/09/2007 4:35:10 PM PST by A. Pole

MEXICO CITY (AP)--Mexican legislators, producers, and consumers are battling with the government over how best to control the rising price of corn tortillas, a centuries-old staple of the Mexican diet.

Some lawmakers are calling on renewing price controls used in the past, while incoming economy secretary Eduardo Sojo says a better move would be to help farmers increase production.

Rising demand is a major factor pushing up corn prices, Sojo told a news conference Monday - in particular the fact that more U.S. corn is being diverted for the production of ethanol, instead of heading to Mexico’s consumer market.

Farmers also cite rising production, transportation and energy costs.

Regarding the more structural changes impacting demand, Mexico’s government has “to design programs, together with producers and farmer organizations, to increase productivity and the production of corn,“ Sojo said.

The economy and agriculture ministries are devising plans to support Mexican corn farmers through the “correct incentives,“ he said, adding that he wasn’t sure if that would involve subsidies.

Sojo rejected the possibility of price controls, which have been called for by some farming groups and legislators, saying they would create disincentives for production and hurt market efficiency.

Corn prices in Mexico have climbed sharply over the past year following widespread speculation in markets for both locally produced and imported grains, due to uncertainty about how much U.S. corn would be available for Mexican importers.

Prices for white corn used to make tortillas have been hit the hardest.

Although local corn prices are typically volatile around harvest time, which mostly falls in the second half of the year, traders say the farm gate price for white corn saw an unprecedented rise of up to 45% in 2006 compared with the year-ago levels in the Mexican market.

Grains traders have forecast tortilla prices to rise between 20% and 25% during the last quarter of 2006 and the first quarter of 2007.


TOPICS: Business/Economy; Foreign Affairs; Mexico; News/Current Events
KEYWORDS: corn; energy; ethanol; hungry; immigration; market; mexico; nafta; prices; tacos; tortillas; trade

1 posted on 01/09/2007 4:35:12 PM PST by A. Pole
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To: Willie Green; Wolfie; ex-snook; Jhoffa_; FITZ; arete; FreedomPoster; Red Jones; Pyro7480; ...
Corn prices in Mexico have climbed sharply over the past year following widespread speculation in markets for both locally produced and imported grains, due to uncertainty about how much U.S. corn would be available for Mexican importers.

Amazing! After cheap NAFTA corn ruined millions of Mexican farmers, forcing them to flood cities and USA in search of survival, the price of corn goes up? Who could expect that?

2 posted on 01/09/2007 4:38:44 PM PST by A. Pole (Hugo Chavez: "Huele a azufre, pero Dios está con nosotros")
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To: A. Pole

Perhaps all the Mexican illegal aliens who have snuck into America should return to help their country instead of staying here and sucking ours dry. Good deal for everyone.


3 posted on 01/09/2007 5:04:09 PM PST by janetgreen
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To: janetgreen

Perhaps the illegals could swap a few bucks oops, pesos on the way out to prop up the price of corn. Might help pay for those GPS units the corrupt officials want to hand out to make sure the bums, oops illegals, I mean undocumented workers don't get lost.


4 posted on 01/09/2007 5:14:17 PM PST by JohnD9207 (Lead...follow...or get the HELL out of the way!)
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To: janetgreen

And exactly how are they to make a living? ADM, Cargill, etc. are the engines for Mexican migration, not some secret plan to make you eat tortillas.


5 posted on 01/09/2007 5:33:30 PM PST by rpgdfmx
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To: A. Pole

I guess it's tough tacos for the Mexicans. This just goes to show the stupidity of making ethanol out of corn. Corn is food and if the Mexicans eat this stuff they should have the right to buy it from us to eat in Mexico. Or they'll come up here and buy it.


6 posted on 01/09/2007 5:35:51 PM PST by Kitten Festival
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To: A. Pole
Maybe the reason that there's a shortfall in the amount of corn being sold by the US to Mexico might be that there's increased demand for corn tortillas here in the US, due to the fact that 10% of the population of Mexico is now here, as illegal aliens.

And of course, the first thought is to put price controls on corn... That'll take them straight from higher prices to shortages! Idiots!

Mark

7 posted on 01/09/2007 5:41:59 PM PST by MarkL (When Kaylee says "No power in the `verse can stop me," it's cute. When River says it, it's scary!)
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To: A. Pole

Buy tortillas!


8 posted on 01/09/2007 5:46:56 PM PST by azhenfud (The fool hath said in his heart, There is no God.)
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To: azhenfud

I do. I cut out wheat and I've got my appetite under control. Thank goodness you can get good tortillas in the markets now. There's ONE benefit to immigration. Now for the debits... (oops, computer went down)


9 posted on 01/09/2007 5:59:04 PM PST by GAB-1955 (being dragged, kicking and screaming, into the Kingdom of Heaven....)
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To: A. Pole

"Amazing! After cheap NAFTA corn ruined millions of Mexican farmers, forcing them to flood cities and USA in search of survival, the price of corn goes up? Who could expect that?"

Maybe the the Mexican people should stage a Mexican "corn" party? (Boston "tea" party)


10 posted on 01/09/2007 6:19:44 PM PST by STE=Q ("Diplomacy is the art of saying 'Nice doggie' until you can find a rock." (Will Rogers))
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To: A. Pole
Now, I'm not an economist, but some sharp financial wizard might say that too many dollars are chasing too few goods.

To clarify, I might suggest that when workers migrate out of the country for higher wages, then send dollars home (a LOT of dollars, relative to the local economy), prices are bound to rise.

Those who don't have relatives in del Norte could be in trouble...

11 posted on 01/09/2007 6:33:07 PM PST by ZOOKER ( How can you have any pudding if you don't eat your meat?)
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To: ZOOKER
Those who don't have relatives in del Norte could be in trouble...

And will be under more pressure to move north. When you remove economic barriers between nations, people will tend to migrate and merge.

12 posted on 01/09/2007 6:37:00 PM PST by A. Pole (Hugo Chavez: "Huele a azufre, pero Dios está con nosotros")
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To: A. Pole

No tortillas?

Permítales comer pan!


13 posted on 01/09/2007 7:03:02 PM PST by ApplegateRanch (Islam: a Satanically Transmitted Disease, spread by unprotected intimate contact with the Koranus.)
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To: A. Pole

We don't like barriers, but we don't like migration and merger either.


14 posted on 01/09/2007 7:34:47 PM PST by lucysmom
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To: rpgdfmx
And exactly how are they to make a living?

It is not America's responsibility to provide jobs for Mexico. The fact that Bush and Fox were so cozy didn't help either country, did it?

15 posted on 01/09/2007 11:04:45 PM PST by janetgreen
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To: A. Pole

That was my first thought. They've been complaining like crazy that our subsidized corn has been selling for less than it costs them to grow it. They've been saying we're putting their farmers out of business, and have been particularly upset because corn is such a vital part of their culture. Now when corn prices go up, they're complaining about that.

"Corn prices in Mexico have climbed sharply over the past year following widespread speculation in markets for both locally produced and imported grains, due to uncertainty about how much U.S. corn would be available for Mexican importers."

Speculation, that's the operative word here.


16 posted on 01/10/2007 6:41:44 AM PST by TKDietz (")
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To: TKDietz
They've been complaining like crazy that our subsidized corn has been selling for less than it costs them to grow it. They've been saying we're putting their farmers out of business, and have been particularly upset because corn is such a vital part of their culture. Now when corn prices go up, they're complaining about that.

You would complain too! Now their farm are destroyed and they became dependent on US agribusiness (the later employing their displaced farmers as "undocumented" laborers) and their food costs more. Typical bait and switch tactics.

17 posted on 01/10/2007 6:49:38 AM PST by A. Pole (President Putin: "We certainly would not want to have the same kind of democracy as they have in Ira)
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This isn't related to NAFTA, it's related to the price of corn being high in the US, and due to the push toward ethanol (E85 fuel etc) this problem isn't going away. There are other problems in Mexico which are also partly to blame:

Mexico to legalize drugs, Measure decriminalizes personal use
Posted on 04/29/2006 2:37:45 AM EDT by South40
http://www.freerepublic.com/focus/f-news/1623630/posts

Mexico legal-drug bill condemned (OK Personal Use)
San Diego Union | April 29, 2006 | Tony Manolatos, Anna Cearley and Pauline Repard
Posted on 04/29/2006 10:38:33 AM EDT by radar101
http://www.freerepublic.com/focus/f-news/1623715/posts

U.S. cautious on Mexico plan to legalize drugs
MSNBC.com | April 29, 2006 | Staff
Posted on 04/30/2006 2:12:05 PM EDT by CrawDaddyCA
http://www.freerepublic.com/focus/f-news/1624194/posts

Mexico's Fox to OK drug decriminalization law
Reuters | 3 May 2006
Posted on 05/02/2006 9:08:26 PM EDT by Aussie Dasher
http://www.freerepublic.com/focus/f-news/1625661/posts


18 posted on 01/10/2007 8:38:25 AM PST by SunkenCiv ("I've learned to live with not knowing." -- Richard Feynman https://secure.freerepublic.com/donate/)
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To: A. Pole

I don't think there were any bait and switch tactics being employed. It's just the way things worked out. There really hasn't been a corn shortage. Supplies were a little lower than expected mainly because of drought. But the main thing moving prices now is speculation. There is a fear that corn supply will be really tight because so much corn is expected to be used by the ethanol industry. Farmers in this country are likely to plant several million more acres this year than last and if the weather is good and yields are as high as they could be corn prices will tank again and Mexican farmers will be in the same boat they've been in in years past. The market will be flooded with cheap American corn. It is winter time in Mexico too though. They can gear up and plant more corn when planting season comes. The difficulty of course will be knowing how much to plant. Corn futures may be trading high now, but will corn prices be high come next harvest? We'll see.


19 posted on 01/10/2007 9:44:48 AM PST by TKDietz (")
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To: SunkenCiv
What the heck do Mexican personal use drug laws have to do with the price of corn? That's their business. When Mexican organized crime bring drugs in this country and distribute them it's our business, but that's an entirely different topic.

As for the price of corn in this country being high, I would argue that it's still actually pretty darned low. Corn prices are up some now, mostly because of lower than expected yields last year caused by drought conditions and speculation about how much corn the ethanol industry will use, but in the grand scheme of things corn is still cheap in this country when you look at historical prices and factor in inflation. Corn prices had been staying around the same with minor fluctuations for a decade or more even though everything else has gotten more expensive, including the costs involved with growing the corn and getting it to market. What's happened is that American farmers have been perhaps too good at growing corn. They've overproduced and that has driven prices down. The government is in large part to blame for this because they've used subsidies to ensure that corn farmers make it even though they keep driving prices down. The government will set a target price for corn, a price they think farmers need to get to stay in business, and then when the market price is lower than the target price they'll pay subsidies on every bushel of corn produced to make up the difference between the target price and the actual market price. This encourages farmers to overproduce.

The price of corn going up is actually not such a bad thing. The higher the price of a bushel of corn, the less the government will pay in crop subsidies. Not only that, but farmers in other corn producing nations that complain about our subsidized corn flooding foreign markets will actually be in a lot better shape now because they will be able to get a fair price for their product. Then maybe, just maybe, we'll see less migrant workers form Mexico coming up here for work because their will be work for them at home.
20 posted on 01/10/2007 10:35:54 AM PST by TKDietz (")
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To: SunkenCiv
This isn't related to NAFTA, it's related to the price of corn being high in the U.S.
Yes, it is. Mexico, under NAFTA agreements, ended agricultural subsidies. The U.S. and Canada both continued them, often under different names (fuel subsidies for farmers, corporate tax breaks for agribiz, etc.) This is a HUGE issue in most of the world.

The reporting on drug laws was misleading. The Fox administration's iniatives would have ended the loophole under which people avoided prosecution by claiming very large amounts of controlled substances were for "personal use." Mexico -- and a lot of other countries -- allow what in the U.S. would be an "affirmative defense" in drug possession cases for "medical necessity." The proposed laws simply spelled out what was the largest amount of substances that could be considered under that defense. Somehow, the U.S. press got it bass-ackwards and reported it as "legalizing" those substances. NOT THAT IT HAS ANYTHING TO DO WITH THE PRICE OF CORN... though, narcotics are probably the only agricultural produce Mexican farmers can sell without running into barriers put up to protect agribiz.

21 posted on 01/10/2007 10:40:22 AM PST by rpgdfmx
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To: TKDietz

Obviously, it means that formerly productive farmers are otherwise employed in the drug trade, which is more lucrative, even after a corn price increase.


22 posted on 01/10/2007 10:41:13 AM PST by SunkenCiv ("I've learned to live with not knowing." -- Richard Feynman https://secure.freerepublic.com/donate/)
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To: SunkenCiv
This isn't related to NAFTA, it's related to the price of corn being high in the U.S.
Yes, it is. Mexico, under NAFTA agreements, ended agricultural subsidies. The U.S. and Canada both continued them, often under different names (fuel subsidies for farmers, corporate tax breaks for agribiz, etc.) This is a HUGE issue in most of the world.

The reporting on drug laws was misleading. The Fox administration's iniatives would have ended the loophole under which people avoided prosecution by claiming very large amounts of controlled substances were for "personal use." Mexico -- and a lot of other countries -- allow what in the U.S. would be an "affirmative defense" in drug possession cases for "medical necessity." The proposed laws simply spelled out what was the largest amount of substances that could be considered under that defense. Somehow, the U.S. press got it bass-ackwards and reported it as "legalizing" those substances. NOT THAT IT HAS ANYTHING TO DO WITH THE PRICE OF CORN... though, narcotics are probably the only agricultural produce Mexican farmers can sell without running into barriers put up to protect agribiz.

23 posted on 01/10/2007 10:41:48 AM PST by rpgdfmx
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To: rpgdfmx

Obviously, if the US and Canada are continuing agricultural subsidies but in disguise, they must be dreadfully ineffective subsidies, or there wouldn't be any sales of corn in the US, or there would be exports to Mexico, thus no Mexican dilemma.


24 posted on 01/10/2007 10:52:31 AM PST by SunkenCiv ("I've learned to live with not knowing." -- Richard Feynman https://secure.freerepublic.com/donate/)
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To: SunkenCiv
"Obviously, it means that formerly productive farmers are otherwise employed in the drug trade, which is more lucrative, even after a corn price increase."

What? The unsuccessful attempts to decriminalize personal use of certain drugs in Mexico that were thwarted last spring have nothing to do with the price of corn. Their internal laws with regard to drug use don't have much to do with anything outside of Mexico. Laws with respect to possession and use of drugs appear to have little relation to demand for drugs and certainly little to do with production of drugs for export. Mexicans have grown marijuana for centuries, and probably for most of that time they've been selling at least some of it up here. Low corn prices or high corn prices haven't really had anything to do with that. The reason they sell so much drugs up here is because we have millions and millions of people up here who like to do drugs with billions and billions of dollars to spend on them. There is nothing new about Mexicans supplying drugs to Americans. They were doing it before the sixties. After drug use surged in the sixties their involvement grew, mainly because they just happen to be the only country on our southern border and that means most all drugs produced in Latin America will go through Mexico before reaching the country that consumes most of the illegal drugs consumed in the world, our country. This was going on long before NAFTA was ever even conceived, and realistically, it isn't going to change anytime in the foreseeable future. Fluctuations in corn prices have nothing to do with it. Corn can go up several dollars a bushel and it will still never be as profitable even as something like cheapo Mexican marijuana that sells in this country wholesale for hundreds of dollars a pound, and certainly nowhere near as profitable as drugs like heroin, cocaine, and meth, that sell in this country for thousands of dollars per pound wholesale. The profits to be made in the drug trade are huge and there will always be plenty of people willing to take the risks involved in that business to share in those huge profits. The wholesale price of corn would have to jump from the less than ten cents a pound it is now (56 lbs. in a bushel) on up maybe even into the hundreds of dollars a pound, or certainly at least many times higher than current prices before some crappy job in the cornfields is going to pull people away from the highly profitable drug trade. You're barking up the wrong tree.
25 posted on 01/10/2007 1:28:34 PM PST by TKDietz (")
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To: A. Pole

Governments and their plans...

Why don't these socialists just free up their economy so that enterprising Mexicans can take advantage of high prices to plant more corn. Duh!


26 posted on 01/10/2007 3:10:34 PM PST by Tolerance Sucks Rocks (“Don’t overestimate the decency of the human race.” —H. L. Mencken)
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To: A. Pole

I'm calling B.S. on this story. I don't believe the kind of corn used to make ethanol is the same kind used to make tortillas. At best the connection is indirect, with acres switched from one type of corn to another.


27 posted on 01/10/2007 3:16:48 PM PST by hlmencken3 (Originalist on the the 'general welfare' clause? No? NOT an originalist!)
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To: Tolerance Sucks Rocks
Why don't these socialists just free up their economy so that enterprising Mexicans can take advantage of high prices to plant more corn. Duh!

Agriculture is a very specific branch of economy. Farmers need stability and predictability of prices. That is why subsidies/regulations/quotas may be needed.

When farmers abandon farms and go to city, they cannot return. Every nation needs some degree of food production secured.

28 posted on 01/10/2007 3:17:28 PM PST by A. Pole (Napoleon Bonaparte:There, is a sleeping giant. Let him sleep! If he wakes, he will shake the world.)
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To: Tolerance Sucks Rocks

I think one of the problems with that is that no one knows what corn prices will be like this year. They can only speculate. American farmers will likely plant several million more acres of corn than were planted last year and if the weather is good and they have a bumper crop the world markets could again be flooded by dirt cheap American corn. Mexican corn farmers are not subsidized like American corn farmers. If the bottom drops out on corn prices our government will pay out enough in subsidies to keep our corn growers in business. Mexican corn growers would do fine if prices remain as high as they are at present, but if prices drop back down as they may very well do, Mexican corn growers will lose their shirts. They're afraid to plant too much corn.


29 posted on 01/10/2007 10:09:06 PM PST by TKDietz (")
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