Increase in demand for corn as biofuel has sent its prices soaring.
The fire under the open stove crackles as Catalina Mendez prepares dozens of the handmade corn tortillas she sells every day. Her tiny business has barely broken even, she says, since the recent U.S. demand for ethanol biofuel made from corn began pushing up the price of the local corn. “Not that I would stop now even if I was making nothing,” the 69-year-old says, slipping in and out of Nahuatl, the language spoken by the Aztecs. “Making tortillas is in my blood.” A symbol of national unity, corn is king in Mexico. But for how long?
The first shudders came at the beginning of the year, when President George W. Bush told America he wanted to produce 160 billion litres of renewable fuels by 2017. As the price of corn futures on the Chicago stock exchange went up sharply, so did the price of tortillas at hole-in-the-wall shops in barrios across Mexico. The shock of paying 50 per cent more overnight for their staple food sent thousands of people on to the capital’s streets. The Government hesitated, but by February had negotiated a price freeze that is still in force today.
At a press conference this month, Agriculture Minister Alberto Cardenas attempted to dispel the disquiet. Mexican agribusinesses had responded by growing 1million more hectares of corn, and Mr. Cardenas waved statistics indicating a 12 per cent increase in the summer harvest in the State of Sinaloa, where three quarters of the national production is concentrated.
But questions remain. The additional 1 million hectares growing corn means 1 million fewer hectares available to produce other crops. Because fewer beans — the second most important staple in the Mexican diet — have been planted, their price has gone up, too.
The stickiest issue is perhaps the impact on Mexico’s 2 million small-scale corn producers who are the backbone of what is left of its rural economy — already in such decline that many keep afloat only with money sent home by relatives working in the U.S. Dearth of infrastructure, lack of machinery, inadequate information, and weak motivation are just some of the reasons behind the uncompetitive Mexican small farmer. Mr. Ramirez says he expects to harvest two tonnes of corn from the hectare he planted this year — less than a sixth of the yields expected by the agribusinesses in Sinaloa. The corn ethanol bandwagon is passing by farmers like him.
A campaign, Sin Maiz No Hay Pais (No Corn, No Country), trying to bring together all the fears and complaints was launched this month.
Meanwhile, Mexico’s politicians look as though they are feeling the pressure to jump on the biofuel bandwagon and join the United States and Brazil, the world’s leader in producing sugar cane-based ethanol. Nagged by the knowledge that the country’s oil reserves are dwindling, Mexico’s Parliament passed a law four months ago to encourage a home biofuel industry to start. But the bill is expected to be amended with a ban on using corn as a fuel source.