Today corn prices hit an all-time high of $7 a bushel. How does this affect Mexico, which gave the world its native maize after European contact? The answer is two-fold: 1) this represents a hardship for the majority of Mexicans while 2) higher prices present an opportunity for large agricultural exports.
As a staple crop for the vast majority of Mexicans, rising corn prices threaten minimal livelihoods. The 75% year-over-year increase in corn prices directly reduces purchasing power and also diverts higher percentages of incomes toward foodstuffs and away from other economic activities.
With Mexico as the world's fourth-largest maize exporter, this should represent an opportunity for major agricultural exporters. The Mexican Agriculture Secretary, Alberto Cardenas Jiménez, explained at the beginning of 2007 that agriculture and maize production were one of the greatest beneficiaries of government intervention. However, Professor Roberto Escalante at la Universidad Nacional Autonoma de México, la UNAM, explains the stratification of investment as favoring large producers, which are few in number compared to the bulk of Mexican farms that are under five hectares. In the aggregate, these large producers receive 75% of around $5 million in subsidies annually, whereas small producers receive 25% of this amount. The subsidies are directed to the most efficient farms in the states of Jalisco, Sinaloa, and Chihuahua. Few funds reach the poorest farmers Oaxaca and Chiapas, which struggle to compete without technical and credit assistance, land reform, etc.
Paradoxically, Mexico sends much of its more diverse white maize to higher-paying markets for export, whereas much of the uniform yellow corn is imported from the United States. Mexico producers approximately 20 million tons annually, a tenth of the quantity produced by the U.S. each year, according to the UN Food and Agricultural Organization.
