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MEXICO: Experts Denounce Slant in Corn Subsidies

Emilio Godoy

MEXICO CITY, Sep 15 2010 (IPS) - The Mexican government’s subsidies for corn (maize) production since 1994 have benefitted large- and medium-scale growers, to the detriment of small farmers, according to a new study by Mexican and U.S. researchers.

The report published this week, “Subsidising Inequality: Mexico’s Corn Policy Since NAFTA,” was a collaborative effort by experts from Mexico’s private Centre for Economic Research and Teaching (CIDE), and the U.S. Woodrow Wilson Centre for International Scholars and the University of California in Santa Cruz.

“We don’t know for certain whether the subsidies have reached those intended, or whether they have been used for the purposes for which they were designed,” said Mauricio Merino, a CIDE researcher and one of the contributors to the 193-page report released in Mexico, and sponsored by the U.S.-based William and Flora Hewlett Foundation.

The study focuses on the government programmes Procampo, which is direct farm subsidies; ASERCA, support and services for agricultural marketing and trade; and the Farm Alliance (Alianza para el Campo), launched since 1994, when the North American Free Trade Agreement (NAFTA) entered into force.

In that period, the Mexican government has spent more than 20 billion dollars in direct aid to maize growers, particularly in the northern states along the U.S. border.

Maize, a staple in the Mexican diet, played a strong role in pre-Hispanic cultures, and remains an emblematic crop in the Mesoamerican region, which extends from Mexico through Central America.

According to John Scott, a researcher from the University of California and one of the contributors to the study, some of the subsidies are so aggressive that they actually increase inequality. He pointed to the contradiction that even though there are subsidies for social programmes, the farm subsidies can nullify their effects.

Government figures show that Mexico has some 3.2 million maize growers, of which more than 2 million grow the crop for their own consumption. National production was 24 million tonnes in 2009, and this year is expected to reach 26 million, according to Mexico’s National Confederation of Maize Producers.

The farmers here mostly grow white maize for human consumption, and import yellow maize for animal feed. In 2010, those imports will total an estimated 9 million tonnes.

Once NAFTA (signed by Canada, United States and Mexico) took effect, Mexico created a series of financial mechanisms to compensate its farmers as they faced the new trade liberalisation. One of those, Procampo, reached 2.5 million farmers.

According to “Subsidising Inequality,” Procampo, with a current budget of about 1.25 billion dollars and whose mission has been extended to 2012, excludes most of its target population and is slanted to favour wealthier producers.

The bias in favour of large and medium producers is even more present in most of Mexico’s other agricultural subsidy programmes, states the text.

From 1994 to 2009, Procampo spent more than 13.3 billion dollars, according to the Subsidies to Farming in Mexico project, of the non-governmental research centre, Fundar.

As trade liberalisation increased, especially following the Uruguay Round of trade negotiations (1986-1994) that led to the creation of the World Trade Organisation, Mexico had to eliminate its support mechanisms for farmers, such as guaranteed pricing.

“Before liberalisation, the subsidies were concentrated in the areas of highest productivity,” Gustavo Gordillo told IPS. He served as Mexico’s undersecretary for Agriculture from 1988 to 1994, the period when NAFTA negotiations took place.

Something is also awry among the subsidies the government gives sectors such as water, electricity and gasoline, which share some of the negative traits of farm subsidies: they’re unfocused and inefficient.

Who receives the subsidies and how much? The report notes that while the leading maize subsidy programmes appear to be quite transparent, in practice they are lacking in both transparency and accounting.

In this sense, Procampo is the most advanced, although its list of beneficiaries has not been updated as often as it should, while the state programmes are more opaque. For example, Merino filed a complaint more than a year ago with the government agency in charge of auditing the system, saying resources were going to public officials.

Study coordinator Libby Haight, of the University of California, said there is evidence that the funds have been diverted — adding that she wonders about the true costs of this lack of transparency.

While federal farm spending has grown significantly since 2001, employment in the sector has fallen, according to the report. From 1991 to 2007, the number of agricultural jobs in Mexico dropped from 10.7 million to 8.6 million.

In Scott’s opinion, social security programmes are needed for subsistence farmers in order to provide a different set of services to a sector that is quite different from the large-scale farm operations.

“There is a basic problem, and that is what type of countryside are we visualising? There have to be differentiated policies,” agreed former agricultural official Gordillo, who also once served as the Latin American and Caribbean director of the United Nations Food and Agriculture Organisation.

Mexican farmers face an additional threat: genetically modified maize. The Agriculture Secretariat (ministry) has already issued 24 permits for experimental cultivation of GM corn, which has come under fire from environmental groups and traditional maize farmers associations.

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