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Will Lifeblood Tortillas Get Cheaper in Mexico?

By Allan Wall



Tortillas are Mexico’s staple food, and have been since pre-Hispanic times.



The tortilla is eminently flexible. You can serve or eat anything on it — beef, pork, chicken, eggs, cheese, potatoes, etc., or any combination thereof. Some tortillas are made of wheat flour, but the original form (and the one I prefer) is made of corn.



Some Mexican families eat tortillas at every meal, including breakfast. The tortilla is intimately linked with Mexican culture. When Mexicans select from a stack of tortillas, they bypass the top tortilla, which is the coldest. Hence derives the old adage that “so-and-so is as scorned as the top tortilla.”



A year ago the price of tortillas was running at under $6 pesos [US$0.55] per kilogram. But now tortillas are more expensive, depending on the region, as prices have gone up to $10 pesos [US$0.91] or even $15+ pesos [US$1.37] per kilogram. And in general, prices in the poorer south are higher than in the north.



Fifteen pesos for a kilo might not sound like much, but to a poor Mexican family that subsists on tortillas it’s a real problem. And it’s become a political problem as well.



While visiting Chalco, in the State of Mexico, President Felipe Calderon was confronted by an angry housewife who shouted at him, “Hey, lower the price of tortillas and milk or we won’t have anything to eat!”



So what is Calderon’s tortilla strategy?



Calderon has ruled out the use of subsidies or price controls, which would have been the old solution. But given the social nature of the problem, he wants to do something.



The president declared that, “The government cannot decide the price of these products. But that will be no excuse for us not to act to protect those who have the least.”



Calderon’s strategy is to keep an eye on prices, prosecute speculators and price gougers, distribute low-cost corn to the poor as part of the Conasupo program, and increase the supply of white corn by purchasing more of it from the United States.



The current scarcity of corn in Mexico increases its cost, and some Mexicans have proposed a strategic corn reserve to deal with times like this.



On the other hand, Guillermo Ortiz, who heads Mexico’s central bank, says the increase in the price of white corn is not sufficient to explain tortilla price increases. Ortiz blames middlemen speculators who resell the corn before it’s even made into tortillas.



Seeking to keep a lid on prices, PROFECO, the Mexican consumer protection agency, has met with tortilla marketers and arrived at an accord, seeking to keep prices low, but their ability to do so depends on other factors. The tortilla business, after all, doesn’t exist in an economic vacuum.



Opposition party Mexican politicians however are far from satisfied with Calderon’s strategy. The PRD (Party of the Democratic Revolution) and the PRI (Institutional Revolutionary Party) have joined together to call on Calderon to put pressure on tortilla producers, including the Maseca and Cargill corporations, to reduce prices.



The PRD, while calling for “nutritional sovereignty,” opposes the corn importations that already exist (mostly yellow corn used for animal feed), and is against dropping tariffs on corn and beans in 2008 as mandated by the North American Free Trade Agreement, or NAFTA.



Javier Gonzalez Garza, the PRD coordinator in the lower house of congress, declared, “This country cannot depend on the corn production of foreign nations.” But Mexico has a long way to go to reduce its dependence on the United States, the world’s largest corn producer.



Most U.S. corn exported to Mexico is yellow corn (primarily for livestock feed, and the production of starch and corn syrup, but increasingly for direct human consumption), but a growing proportion of exports are white corn (the principal corn crop grown in Mexico and used primarily for human consumption).



Another issue is genetically modified corn, popular among U.S. growers but controversial in Mexico. The PVEM (Mexican Green Ecological Party) opposes the importation of GM corn.



In response to the tortilla price increase and related matters, the FAP (Broad Progressive Front) coalition, which includes the PRD and other parties, unions and organizations, is planning a major protest mobilization of labor and farm groups to pressure the Mexican government to enact wage increases and other measures.



To sum up, when you talk about tortillas in Mexico you are dealing with a complex of economic, scientific, nationalistic and cultural issues. Felipe Calderon has his plate full in dealing with these challenges.