CORN AND NAFTA: AN UNHAPPY ALLIANCE

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Author: Alejandro Nadal
Date: 20 June 2000
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Alejandro Nadal | 20 June 2000 | Seedling - June 2000



June 2000

CORN AND NAFTA: AN UNHAPPY ALLIANCE

ALEJANDRO NADAL

Mexico is the centre of diversity for corn and its stock of germplasm has contributed in a decisive manner to global production of corn. It is the country’s most important staple and an important source of livelihood support. However, the North American Free Trade Agreement (NAFTA) threatens the ability of Mexican farmers to continue to grow this important crop and the ability of consumers to afford it. It also presents a serious threat to Mexican growers’ ability to conserve and develop these genetic resources. Short-sightedness and short-term fiscal gains on the part of the Mexican government mean that NAFTA is pushing to eradicate corn’s curators from the agricultural landscape. Such a move will have a profound impact on local and global food security in the 21st century.

 

It is well known that that corn (Zea mays) originated in Mexico and that Mexican farmers have played a critical role in the evolution of the plant’s genetic variability. As the plant’s history unfolded, early corn races were transported to a wide variety of ecological niches in which many distinct varieties developed. Mexico became a centre of genetic diversity for corn, and its stock of germplasm has contributed in a decisive manner to global production of corn. Even the industrial varieties grown in the US Corn Belt are close descendants of the first Mexican landraces.

Mexico is home to thousands of varieties of corn. The germplasm bank maintained by CIMMYT (the International Center on Maize and Wheat) in Mexico has 10,965 accessions, of which Mexican varieties comprise one third. The Mexican government-owned gene bank managed by INIFAP (the National Institute for Agricultural and Forestry Research) has an additional 570 accessions. Mexican germplasm has played a critical role in improving corn cultivated in tropical regions in relation to yield, pest resistance, growth cycle, drought resistance and protein content. It has also been instrumental in increasing yields in temperate varieties. Mexican varieties and their derivatives have been used in 43 countries in Latin America, Africa and Asia.

During the first half of the 21st century, it is expected that most of the demand for corn will come from developing countries. Little additional land is expected to come under cultivation in these countries, thus production increments will have to come from greater yields. Mexican corn’s genetic variability will have an important role to play in improving production, together with germplasm developed in South America and Africa.

In spite of the importance of Mexican corn’s genetic variability, the North American Free Trade Agreement (NAFTA) looks set to undermine and erode it. NAFTA presents a serious threat to Mexican growers’ ability to conserve and develop these genetic resources. Between 1992 and early 1993, Mexico negotiated NAFTA with the United States and Canada. Probably the single most important element in NAFTA was the inclusion of Mexico’s most important crop – corn. More than one fifth of Mexico’s active population of 39 million people work in the agricultural sector. About three million of these are corn growers, who generate about 18 tons of the country’s most important staple in two agricultural cycles.

Opening up the market

Prying open the Mexican market had been an objective of the powerful North American corn producers’ lobby since the 19th century. With an annual production of 240 million tons, the US is the largest producer of corn in the world, and carries a critical weight in determining the international price of this basic commodity. From the Mexican government’s perspective, including corn in NAFTA would enable the country to focus on more labour-intensive crops and to free up the fiscal resources used to subsidise inefficient corn producers. There is great heterogeneity in Mexico’s corn sector and poor producers with low yields coexist with those producing yields comparable to those found in the US. Average national corn yields are less than 2 tons per hectare, compared with 10-12 tons in the US. Mexico’s policy makers felt that the subsidies needed to support domestic growers were unjustified. By purchasing corn from the US, where it is produced at roughly 40% of the Mexican rate, the government promised that consumers would also benefit from lower corn prices.

Another consideration was the objective of ensuring a constant stream of cheap basic foodstuffs that would enable the Mexican economy to maintain low wages, help to control inflation and increase its capacity for capital accumulation. This is a shortsighted approach since the impoverishment of farmers would inevitably become an obstacle to growth, given the economy’s inability to provide gainful employment for these rural producers when they are forced to migrate to urban areas. Rhetoric concerning Mexico’s comparative advantages and consumer welfare was just a rationalisation for a short term capital accumulation strategy. The decision to open Mexico’s corn sector to US imports handed this country’s massive tortilla market over to a group of powerful industrialists. (Tortillas, or roasted corn pancakes, are the most important corn product in Mexico). These business leaders were close to Mexico’s top decision makers at the time, and they continue to benefit from government handouts to prevent tortilla prices rising.

It is important to note that in the NAFTA negotiations, yellow corn and white corn, two distinct commodities in the international market, were treated as one and the same commodity. Mexico’s growers engage essentially in the production of white corn, while US growers produce yellow corn, most of which is used as livestock feed and about a quarter of which is exported, mainly to China, Japan, Europe and, in growing quantities, to Mexico. In spite of significant price differentials, with white corn priced a full 25% above yellow corn in international markets, NAFTA treated these two varieties as the same commodity.

A central pillar of NAFTA was the immediate replacement of the corn tariff system with a a tariff-rate quota (TRQ) system. The TRQ aimed to bring domestic prices in line with international prices by gradually phasing out tariffs on all imports over a fifteen-year period starting in 1994. All basic grains (including wheat, rice and sorghum) were subjected to a rapid process of trade liberalisation and TRQ systems were established for corn, barley and kidney bean (another important staple). In the case of corn, an initial tariff-free quota of 2.5 million tons was established, which would increase by 3% per annum.

The aim of this system was to protect domestic producers during the transition period, but it has failed miserably. In practice, all corn imports since 1994 have been tariff-free (more than 5 million tons in both 1998 and 1999). Foregone fiscal revenues since NAFTA’s inception are estimated at more than $2,000 million dollars, a figure comparable to fiscal appropriations for the entire agricultural sector for the same period. According to official sources, the tariff was not applied to excess imports for fear this would cause an increase in tortilla prices. This in turn, it was argued, would accelerate inflation. These arguments sound very hollow given that tortilla prices have increased by a factor of 5 since NAFTA entered into force, while subsidies to the flour industries (especially the two largest firms, MASECA and MINSA) have almost doubled during the same period.

The Mexican government’s failure to implement the system of tariff rate quotas effectively eliminated all protection barriers for corn producers. Corn prices were cut in half between 1994 and 2000 and domestic prices rapidly became aligned with international prices, as can be seen in the graph below. Even the effect of the 1995 devaluation was cancelled during this period and the livelihoods of millions of corn growers and their families were laid on the line. In addition, PROCAMPO, the income support mechanism established in 1994, lost half its value in real terms and was insufficient to compensate producers for the price reductions.

During this six-year period the agricultural sector experienced a reduction of public support in other key areas such as credit, infrastructure, research and development and technical assistance. The key public sector agency used to regulate support prices for basic agricultural commodities was dismantled in 1998, long before it could fulfil its role in the 15 year transition period. Thus, corn producers face the stark reality of reduced prices in the context of a severe curtailment in credit, investment in infrastructure and a reduction of the remaining support mechanisms.

According to the official studies justifying the inclusion of corn in the NAFTA, proof of the inherent inefficiency of Mexico’s corn producers was found in the comparison between average production yields in Mexico (2 t/ha) and the United States (12 t/ha). This difference in productivity is explained by the very capital intensive agricultural experience in the US, which relies on the use of heavy machinery, chemical inputs and high-yielding varieties. The deep, well-drained soils of the midwestern plains, together with a very regular rainfall pattern, offer the ideal setting for the use of these inputs. This has led to a strong specialisation in a limited number of breeds capable of high yields, with five or six lines dominating the corn-producing landscape. While yields may be impressive, this agricultural model comes with significant costs to the environment, sustainability and genetic diversity. The vulnerability of such specialisation was demonstrated in 1970 when the Southern corn leaf blight epidemic wiped out 25% of the US corn crop.

In sharp contrast, the vast majority of Mexico’s corn growers rely heavily on a wide variety of landraces as their main guarantee against crop failure. Producers of corn in more marginal areas, such as uplands or tropical and subtropical environments, encounter many sources of risk and uncertainty, and the most important technological asset at their disposal is the genetic variability of their corn.

Corn’s careful curators

Every year, approximately two million corn growers in Mexico engage their attention and collective experience in the art of selecting seeds for the next agricultural cycle. The seeds are selected according to their ability to respond to the environmental and physical characteristics of the regions in which the farmers operate. Most of these planters grow their corn in mountainous areas and their plots are subjected to an irregular rainfed regime. Their plots are located in sloping terrain or in the valleys, and these upland production conditions frequently include poor soils, strong winds, early frost, and diverse pests. In the lowlands, close to the coastal plains or in some inland depressions, the tropical environment entails difficult production and post-harvest conservation conditions due to pests and poor soils.

The seeds selected by these growers are rich in gene-based mechanisms enabling them to resist pests of all kinds, from weevils to worms and fungi, or to grow even when the first rains are interrupted and plants are at their most vulnerable stage of growth. Some seeds bear plants which are well adapted to poor soils, others produce early-maturing varieties, which are particularly important in upland areas susceptible to early frosts. Others have a hard pericarp (protective coating surrounding the seed) which keep the seeds viable for long periods, important under tropical conditions.

The intense genetic-environment interaction displayed by corn enables the plant to adapt to highly contrasting environments. Mean growing season temperatures can exceed 26º C or may be as low as 12.5º C, and corn can be cultivated from sea level to 4,000 metres above sea level. It can be grown on fully irrigated or semi-arid land, with growing cycles varying between 3 to 12 months. Height can vary from 65 centimeters to four metres. Finally, corn can be adapted to various soil types. This great capacity to adapt to widely differing environments found in Mexico’s rich tapestry of varied ecological niches, makes corn the perfect ally to minimise risks.

In Mexico’s mountainous areas, growers normally sow at least two corn varieties, one which is less productive but matures early and is capable of beating the onslaught of early frosts, and one which is more productive but slower to mature. In many communities, up to eight varieties are employed. The most important factors determining seed selection are the type of soil, drought and wind resistance, response to inputs, vulnerability to weeds, optimum period of fertility, yield, end uses (sale, domestic or ritual), post-harvest conservation and dietary considerations (flavour, grain texture and colour). Normally none of the selected cultivars shows high performance scores in more than one or two of these variables. It is because of this negative correlation, the quest for particular qualities in the corn they grow and the heterogeneity of their growing environments that farmers continue to maintain and enhance the gene pool.

But Mexican farmers’ critical role as curators of the global corn gene pool went unrecognised in the NAFTA negotiations. The fact that the best US hybrid seeds would be outperformed by Mexico’s landraces in most of the environments in which corn is produced in this country was also ignored by government spokespersons. Under conditions of poor soil fertility, hybrids frequently yield less than local landraces. In addition, Mexican highland germplasm displays an exceptional ability to withstand frost and hail, and to emerge from deep planting (an important quality when the initial rains are interrupted) with good quality grain. This capacity of local landraces to outperform modern high-yield hybrids under conditions of biotic and abiotic stress is based on the plant’s excellent adaptive features and this explains why penetration of hybrids in corn production has never reached the high rates obtained in wheat production. In Mexico today the use of hybrid varieties is restricted to about 25% of the corn area.

Another key aspect of corn production in Mexico is that growers relying on local landraces are usually the poorest producers, endowed with very small plots of land (averaging less than 2 hectares), little or no access to credit, limited or minimum use of chemical inputs and usually no mechanical traction. The regions where these producers operate exhibit the highest incidence of rural poverty. As the map below shows, these producers are found in the Central and Southern highlands, in tropical and semi-tropical areas, or in semi-arid regions. Their economic vulnerability is countered mainly through the use, conservation and development of corn’s genetic resources. The harsher the environment, the more innovative the farmers need to be and the more risk-reducing strategies are needed. For this reason, the poorest producers are the most important curators of corn’s genetic resources. But the logic embedded in NAFTA is for these poor producers to depart from the corn sector (if not agriculture altogether) in order to enable the economy attain a higher level of efficiency.

 

Conserving corn’s cultural roots

Corn’s genetic diversity is also related to the presence of different indigenous groups for which corn cultivation is not only a means to ensure physical subsistence, but also part of a deeper social and cultural process. Approximately 60% of corn growers are indigenous peoples. The strong interaction between culture and corn’s genetic variability is illustrated by the fact that many local languages identify more stages of plant development and a richer plant anatomy than conventional botanical literature. Because of the close interaction between social and cultural systems and genetic diversity, the displacement of people and the destruction of social institutions are causes of genetic erosion. For example, collective action by communities where social, family and ritual bonds are strong is frequently required to plant or harvest. But this collective action becomes more difficult as the social base sustaining it is gradually eroded.

The capacity to conserve, select and develop genetic resources depends on factors at the household, social and institutional levels. At the household level, individual growers transmit from one generation to another the information required to select seeds for their use in different agroenvironments. Farmers also engage in exchanges with other farmers and communities. Experimentation with other varieties and breeding of new varieties is part of a dynamic process in which landraces are used, preserved and refined in multiple cycles through the flow of genetic material. This educational process requires both adequate living standards as well as the support of a strong institutional base. The social fabric that sustains this process is already being damaged through economic pressure, and the capacity to conserve and develop genetic resources may be irrevocably lost. Many corn growers are being forced to migrate. Recent research has revealed that the propensity to migrate is stronger in areas where poor corn growers using local landraces operate. As mid-sized producers are forced out of the corn market, poorer farmers who relied on these farms for employment are driven to labor markets further away. Other sources of income, such as basket weaving or knitting, are also affected by the drop in rural wages because of reduced demand.

In spite of the drop in corn prices and the increase in imports, Mexico’s production has remained stable – so far. But this should not obscure the fact that economic stress on the poorest producers will soon reach a threshold beyond which they cannot survive. The apparent stability in corn production is the consequence of how poor producers respond under stress, relying more on the resources at their command (land), and is not a sign of economic health. Proof of this is the fact that the cultivated surface devoted to corn has increased, while yields have dropped. This demonstrates that there is greater pressure on existing resources.

The situation of subsistence farmers requires special attention. All pre-NAFTA studies justifying the inclusion of corn in the trade pact assumed that subsistence growers would not be affected by the price reductions. It was assumed that because the crops of these producers are not marketed, price cuts would leave them unaffected and, in fact, the reduction of tortilla prices would be beneficial. However, this view ignores the fact that subsistence producers do not live in economic isolation and that many of their needs have to be satisfied through purchases of marketed commodities, which requires cash. Household income is obtained from various sources: local off-farm labour, remittances from migrant workers, and petty sales of grain. These petty sales take place in a buyers’ market and are therefore marked by low prices. The grain sold in this way must be replaced later, in a sellers’ market which imposes higher prices. If the grain deficit is not replaced, the household will have to buy tortilla dough later, exacting even higher costs.

The capacity to carry out the process of conservation and development of corn genetic resources depends on the knowledge base of households and communities. As migration takes place, and as the pressure of poverty is endured, the capacity to conserve and develop these resources is severely diminished. Poverty and migration conspire together to leave behind a deteriorated capacity to select seeds according to relevant criteria, and to identify the specific agro-environments into which each class of seeds can be productively inserted. The process of genetic erosion mediated through the disappearance of the institutional and social base is one of the major threats to Mexico’s corn growers and their capacity to improve their livelihoods.

The first step in this process of genetic erosion is more related to the loss of information on genetic variability than to the loss of specific genotypes. Genotypes may be preserved for some time in gene banks. But because genetic variability is mediated by social groups or institutions, the reduction in genetic variability will take place when the social group acting as curator of this resource disappears. The position of the corn producers in Mexico that perform this important service is increasingly perilous thanks to the economic forces unleashed by trade liberalisation. NAFTA is pushing to eradicate corn’s curators from the agricultural landscape, a move which will have a profound impact on global food security in the twenty-first century.

 

Alejandro Nadal is coordinator of the Science and Technology Program at El Colegio de México. This article is largely based on research undertaken for the World Wild Fund for Nature (WWF International) and OXFAM (UK) on the environmental and social impact of the inclusion of corn in NAFTA. The final report, "Zea Mays: The Social and Environmental Effects of Trade Liberalisation in Mexico’s Corn Sector" is to be published in September 2000. The views expressed in this article are the author’s alone. He can be contacted at anadal@prodicgy.net.mx

 

Main sources:

RL García Barrios et al (1991). Lagunas. Deterioro ambiental y tecnológico en el campo semiproletarizado, El Colegio de México.

• FIDA (1993). Reformas del sector agrícola y el campesinado en México. Informe de la Misión especial de programación a la República de los EU Mexicanos. Informe número 0435-ME. Fondo Internacional de Desarrollo Agrícola (FIDA).

• JE Lothrop (1994). "Research on Maize for Highland Regions", in The Subtropical, Midaltitude, and Highland Maize Subprogram. Maize Program Special Report. CIMMYT, Mexico.

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• S Taba (1995). "Current Activities of CIMMYT Maize Germplasm Bank", in The CIMMYT Maize Germplasm Bank: Genetic Resource Preservation, Regeneration, Maintenance and Use (S Taba, ed). Maize Program Special Report. CIMMYT, Mexico.

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