How the rising price of corn made Mexicans take to streets
by Jerome Taylor
July 02, 2007, The Independent (UK)
Mexico was ablaze in late January. Just two months after the election of Felipe Calderon as Mexico’s President, protests had broken out across the country.
Thousands of people were marching on the main cities calling on their pro-free trade businessman President to halt a phenomenon threatening the lives of millions of Mexicans.
In their hands the protesters clutched cobs of corn, the staple crop that makes tortillas and for many of Mexico’s poor the main source of calorific sustenance in an otherwise nutritionally sparse diet.
Over the past three months the price of corn flour had risen by 400 per cent. Despite being the world’s fourth largest corn producer and a major importer of supposedly cheap American corn, millions of Mexicans found the one source of cheap nutrition available to them was suddenly out of reach.
Poor Mexicans, who normally expect to set aside a third of their wages for corn flour, had always been particularly vulnerable to price fluctuations in the corn market, but a four-fold increase was both unheard of and potentially catastrophic.
The reason for such a substantial increase in the price lay north of the border. In order to wean itself off its addiction to oil, the US was turning to biofuels made from industrial corn like never before. Farmers in Mexico and America had been replacing edible corn crops with industrial corn that could then be processed into biofuels, leading to a decrease in the amount corn available on the open market.
As corn imports and domestic production dropped, greedy wholesalers in Mexico began hoarding what supplies they could get their hands on, forcing the price of corn to rise astronomically. Eventually tortillas became unaffordable, so people took to the streets.
President Calderon found himself caught between a rock and a hard place. On the one hand were the corn importers and major multinationals who would not look kindly on any government intervention on the free market. On the other side were Mexico’s teeming poor, the vast majority of the population who already viewed Mr Calderon as a discredited pro-business leader that ignored the needy.
In the end, Mr Calderon compromised. He capped the price of flour at 78 cents per kilogram but made the scheme voluntary for businesses. So far the price has largely stabilised but many are becoming increasingly concerned that Mexico’s tortilla wars were simply the sign of things to come. “Recently there’s been a huge increase in the demand for industrial corn for the production of ethanol which inevitably pushes up the price of food stuffs,” says Dawn McLaren, a research economist at the W P Carey School of Business in Phoenix, Arizona. “But if we get a particularly bad harvest or if a weather system like El NiÃ±o strikes we could be really stuck.”
Mrs McLaren says that as the West looks to replace its oil, poor people will pay the price. “It doesn’t strike me as a very good idea to start using yet another vital and limited resource to wean ourselves off oil,” she said.