AGRICULTURE

By 1970, the agricultural boom following Mexico’s agrarian reform had come to an end. Agriculture, which had accounted for roughly 20 percent of government investment between 1942 and 1956, received only 7 percent by the mid-1960s. Bank lending shifted from agriculture to industry. Declining prices for agricultural products—the result of deliberate government policy—transferred capital from agriculture to urban interests. During the 1970s, increases in grain prices continued to lag behind inflation.130

Mexico’s agrarian reform, which conservatives continued to resent, was often blamed for the post-1960s stagnation in agriculture. However it was not agrarian reform per se that undermined agriculture. South Korea, Japan, and Taiwan all had post-Second World War agrarian reforms and subsequently enjoyed strong agricultural growth. Mexico’s failure was to view agrarian reform as a never-ending process rather than as a single event, as the Asian reforms were. On-going, often demagogic, Mexican land reform measures led to rural unrest and made investors reluctant to invest in agriculture for fear of losing their capital. Due to agrarian reform regulations, extremely small ejido properties could not be consolidated into more productive units.

As Mexico’s agricultural growth slowed and its population soared, Mexico lost its food selfsufficiency. During the 1970s, grain imports became so massive that they created costly bottlenecks in the rail system. In 1980, Mexico imported 12 million tons of grain.131

Since the 1960s, as is characteristic of nations becoming more affluent, Mexico experienced a sharp rise in cattle, hog, and poultry production as producers catered to the dietary tastes of the rapidly expanding middle class. The soaring demand for meat led to the conversion of cropland from producing wheat and corn to producing animal feed. In 1960, only 5 percent of cropland was used for animal feed, while by 1980, more than 23 percent was. This shift of domestic production to animal feed led to an increase in grain imports to feed people.132

Also beginning in the 1960s, winter vegetable exports soared. Between 1961 and 1968, their exports grew from 105,000 tons to 294,000 tons. Much of this export production came from Sinaloa, on the Pacific Coast, which has a comparative advantage over its main competition, south Florida. Florida experiences occasional freezes, while Sinaloa never does. Sinaloa also enjoys low-cost labor, government-financed irrigation works, and good rail transportation.133

Rather than being consumed directly, food was increasingly processed. This included longdistance transport and agro-industrial conversion to some product such as packaged breakfast cereal. To the economist, these trends were positive since with each stage of processing—canning, boxing, labeling, and transporting to vendor—more value was added. However, as many of these operations were mechanized, less labor was needed. In the Bajio, between 1960 and 1983, one million jobs were lost as exported fruits, broccoli, cauliflower, and other vegetables replaced corn.134

Under President De la Madrid (1982—1988), food self-sufficiency was abandoned as a goal. Policy makers decided to rely on the notion of comparative advantage, producing and exporting what Mexico could produce most efficiently and relying on imports to bridge gaps in food supply. Food henceforth was to be treated simply as another commodity.135

As a result, between 1982 and 1990, public spending on agriculture declined by 8 percent a year. This reflected government austerity following the 1982 debt crisis and the desire to bring market forces back into the agricultural sector. There was a abrupt unilateral opening of the Mexican market to agricultural imports. The reduction in government spending also reflected the view of neoliberal planners who felt that most small farmers were redundant due to their inability to compete in the marketplace. Farm policy in the 1980s, following the U. S. model, promoted farm consolidation and capital intensive monoculture. Not surprisingly, as the countryside was starved for funds, agricultural production increased by only 1.1 percent a year between 1980 and 1992, and imports of basic foods rose from 8.5 million tons in 1981 to 10 million tons in 1988. By 1992, per capita agricultural production was below that of 1965.136

Salinas further reduced government involvement in the agricultural sector. As a result, the area benefiting from government-subsidized credit declined from 23 million hectares in 1988 to fewer than 5 million by 1995. The Salinas administration also privatized the industries supplying inputs such as fertilizers and improved seeds. Since then, producers have had difficulty in obtaining high quality, competitively priced seeds and fertilizer.137

Salinas successfully promoted amending Article 27 of the constitution to allow ejidatarios to sell, rent, and mortgage ejido land. After some 250 million acres had been distributed during the course of the land reform, his administration declared there would be no further distribution of land.

Proponents of legalizing the sale of ejido land felt that such sales would allow the creation of larger, more efficient farming units that would attract capital that the ejido was unable to attract. In addition, private owners would be more willing to invest in their own land since they would no longer have to worry about the land being expropriated for the land reform. Salinas himself stated, “The reforms to Article 27 returned to peasants decision-making power in the ejido and ended massive state intervention in its internal life.” Critics denounced these changes as counterrevolutionary and claimed they would further concentrate land in the hands of a few. In any case, the peasant movement and its intellectual allies were so weak that they were unable to effectively oppose the end of land reform.138

Many saw Salinas’s reforms as marking the end of the ejido, which at the time of the 1992 reform constituted 52 percent of Mexican territory. Most ejidos, however, continued intact, highlighting their positive aspects. Their biggest success was contributing to eight decades of rural stability. The ejido also proved to be as productive as private farms of the same size, while at the same time giving dignity to generations of participating peasants. As environmental issues now loom larger, it is noteworthy that the ejido is more energy efficient, fosters biodiversity, and uses fewer chemical inputs. Ejidos and privately held small farms, since they rely more on manual labor and animal traction, have a positive energy output (as measured in kilocalories) while large units relying on mechanization and manufactured inputs have negative energy balances.139

A third shift in agricultural policy under Salinas was embodied in NAFTA, which facilitated tariff-free import of agricultural products. Many products, such as bananas and coffee, which are produced by only one NAFTA signatory—Mexico—were allowed into the U. S. tariff-free beginning in 1994. Other crops considered sensitive, such as corn and beans, remained protected by import quotas and tariffs for as long as fourteen years. Beginning in 2008, corn and beans could cross the U. S.—Mexico border without tariffs or quotas, just as manufactured goods did.140

Mexican planners felt that NAFTA would result in land, labor, and capital being shifted from corn to other crops, such as fruit and horticultural production, in which Mexico has a comparative advantage. Many displaced agricultural workers, it was assumed, would enter the labor market and be employed in jobs with higher productivity. Philip Martin, an agricultural economist at the University of California, Davis, commented: “We understood that the transition from corn to strawberries would not be smooth. But we did not think there would be almost no transition.” Instead of switching to export crops, the farmers exported themselves.141

A few thousand large growers, roughly 5 percent of all producers exporting fruits, vegetables, and livestock, have found considerable success under NAFTA. Most of these farms are relatively large and are associated with foreign firms. Between 1994 and 2005, Mexican agricultural exports tripled to $8.3 billion.142

NAFTA has produced some not-so-welcome trends. Between 1982 and 2007, agricultural imports soared from $1.8 billion to $19.3 billion. Between 1993 and 2007, Mexican agricultural output increased by 1.5 percent annually. However, this growth was spotty. Grain and oilseed production plateaued at 30 million tons, the level reached at the beginning of the 1980s. The anticipated investment in agriculture never arrived. FDI in agriculture declined from 1.6 percent of all investment in 1990 to 0.02 percent in 2001. As investment has been directed to manufacturing exports and oil development, agriculture declined from 12 percent of GDP in 1970 to 6 percent in 2007.143

A major reason for this lack of investment and growth is that, as a result of NAFTA, Mexican agriculture must compete with U. S. agriculture, which enjoys fertile, well-watered soil, a temperate climate, and massive government subsidies. While commodity prices have fallen to international levels, Mexican farmers are saddled with expensive credit, machinery, and electricity, as well as high transportation costs as a result of poor highways. U. S. farmers have higher yields than their Mexican counterparts. U. S. corn farmers, for example, produce nine tons per hectare, while Mexicans produce only 2.9.144

The results of competing with U. S. agriculture are both social and economic. A study by the Carnegie Endowment found that in the decade after NAFTA took effect some 1.3 million small farms had been displaced by the flood of farm imports. Mexico became increasingly dependent on food imports from the United States. In 2008, 53 percent of the wheat Mexico consumed, 80 percent of the rice, and 27 percent of the corn were imported.145

Small corn growers, who produce a dietary mainstay that is regarded as a symbol of life itself, have been especially hard hit by the imports permitted under NAFTA. Three million corn producers suffered when the price of corn in Mexico plunged from $5 a bushel in 1995 to $1.80 in 2000 due to the opening of the market to international competition. Many corn producers had few other alternatives and thus were reluctant to give quit producing, even if the economics of growing corn Were poor.

The risk that comes with dependence on imported grain became apparent as the use of biofuels in the United States surged. Between 1993 and 2008, Mexican corn production increased from 18 million tons to a record 24 million tons. However, as there were increases in both population and meat consumption, the dependency on imports to feed both people and livestock increased. In addition, as almost 20 percent of the U. S. corn crop was devoted to producing ethanol, U. S. corn prices doubled within a year. Since Mexico imports so much U. S. corn, the increase in U. S. corn prices resulted in Mexican tortilla prices rising by more than 60 percent in some places. Speculators added to the price increase. Rather than the free market neoliberal planners had envisioned, at each stage of the food supply chain there is a very high degree of concentration that makes food prices ripe for speculation. Grupo Maseca, for example, controls 85 percent of the market for corn flour.147

This spike in tortilla prices threatened social stability since it is the dietary staple of Mexico’s poor. To keep tortillas affordable, the government allowed the import of an additional 650,000 tons of corn above the 8 million tons imported in 2006. As ecologist Lester Brown commented, “In this world of high oil prices, supermarkets and service stations will compete in commodity markets for basic food commodities such as wheat, corn, soybeans, and sugarcane.”148