Behind the recent headlines here in Mexico of massive peasant protests, blocked highways and international crossings, and demands for NAFTA treaty renegotiation lay a few facts about incompetence, corruption, and inefficiency.

The rural sector has brought its disputes to the Big Tamale—as if Mexico City’s 21 million inhabitants did not have enough headaches and two-hour-long traffic gridlocks.  For weeks, a political crisis has raged between the peasant-farmer sector and the federal government over the terms of the NAFTA accords, which liberalize trade and eliminate tariffs between Mexico, the United States, and Canada.  By the end of 2003, the ten-year phaseout will be complete, and almost all duties on agricultural imports between these nations will be eliminated.  This is good news for those who have developed efficient ways to produce quality products worthy of foreign markets but less so for those who had hoped that obsolescence as a way of life would be maintained.

The primary complaint circulating throughout Mexico’s agricultural sector is that U.S. farm subsidies, now averaging $19 billion per year, are part of a pattern of unfair trade policies aimed at flooding foreign markets with cheap U.S. exports.

The conflict centers on grains: corn, sorghum, and wheat, principally.  Corn and beans have long been the Mexican staples.  The fields are still plowed by burro; the seeds, still sown by hand.  Mexico grows the most varieties of corn in the world, and a fungus that grows on the ears of blue corn, huitlacoche, is a famous delicacy.

Mexican farmers historically received no subsidies and battled high interest rates and, according to Karen Brooks, “a land-ownership system that restricts farmers to tiny plots where they can’t produce enough to cover costs” (Knight Ridder, December 31, 2002).  The administration of Vicente Fox now pays out three billion dollars in subsidies for price guarantees and another seven billion in energy and finance subsidies to support the agro-sector, with the majority of the aid going to the more productive northern states.

In the United States, agro-subsidies are not dispersed evenly or based on necessity.  Of the current $19 billion in annual subsidies, 70 percent is allotted to a mere ten percent of producers, mostly to agribusiness, according to the Environmental Working Group (EWG).  And the Cato Institute’s C. Edwards and T. DeHaven say that these grain commodities account for a mere 36 percent of U.S. farm production, whereas fruits and vegetables, which account for 64 percent of agricultural production, get no assistance at all.  Those desperate farmers who require this taxpayer-funded aid include Eli Lilly, Kimberly-Clark, Pfizer, Navistar, R.J. Reynolds Tobacco, ADM, Boise-Cascade, Caterpillar, Chevron, Georgia-Pacific, International Paper, John Hancock Mutual Life, and Mead—all Fortune 500 companies.

The imbalanced distribution of U.S. agro-subsidies “allows 8% of the farms that produce 60% of the food (grains) to expand production at prices the market cannot bear, forcing small and family farms into bankruptcy,” according to the EWG.

Despite the dilemma in both countries, Mexican corn production is actually increasing.  A full 60 percent of Mexican farmland is planted in corn—farmed by three million farmers averaging five dependents each.  This increase may be the result of peasant farmers growing more for their own consumption rather than for regional or national markets.

The costs of rail transport, diesel fuel, and electricity in Mexico are up to three times higher than in the United States.  Some observers argue that Mexico has failed to use the ten-year tariff phaseout period to improve infrastructure and cost efficiency and to promote crop adaptation to climactic and economic realities.  Climates that would succeed in grape production grow corn, regions suited to citrus cultivation grow beans, etc.  And, according to SeniorsUSA/OMO, the Mexican agro-sector is “saddled with artificially high costs because much of the rest of the economy consists of public or private monopolies sheltering behind legal and constitutional barriers to competition.”

The citrus sector is another example of Mexico’s inherent limitations.  In northern Veracruz, the small town of Alamo hosts the majority of Mexico’s tangerine production.  Mile after mile of lush green and orange-dotted orchards carpet the gently rolling plains and hills.  Hundreds of trucks lumber from the orchards to town each afternoon with their 12-ton loads of fruit, leaving a trail of citrus rinds and juice along the way.  Still, the industry is in crisis.  Men between 16 and 70 years old work six hours per day harvesting 20 two-hundred-pound baskets.  The men balance high on narrow wooden ladders while picking tangerines, placing them in bags weighing up to 50 pounds.  When the bag is full, they climb down and dump the harvest into large baskets, weighing a staggering 200 pounds, which they carry by a strap on their foreheads out of the orchard to the waiting truck—all for $19 dollars per day.  No wonder so many Mexicans decide that it is better to enter the United States illegally.

In the tangerine sector, the problems are also local.  The producers lack any internal control or regulation whatsoever, and cutthroat competition has driven prices to unsustainable levels.  Mexican juice companies in Alamo pay producers $50 per ton for lesser “juice-quality” tangerines (plus costs of labor and transport), while the superior table-quality product can fetch up to $160 per ton.  Product quality is excellent, but there are no tangerine exports to the United States, though it is so close—and not because of NAFTA.  Besides self-defeating cutthroat practices among producers and middlemen, the government’s assistance in eradicating the fruit fly has been squandered by local trade and business representatives who steal the donated pesticides for their own use, the surplus of which is sold in local markets—and most local producers cannot afford them.  While one farm may be free of the pest, its neighbor will be infested.  And, as all the fruit is sold in the same market, the whole region’s produce can be affected.  Naturally, as agricultural pests are a threat to the United States, such imports are prohibited.  However, Mexican juice companies benefit from the export prohibition, which causes a local glut in production and unsustainable prices.  Juice producers also slash prices to sink small producers, thus creating monopolies.

Mexico’s foreign minister, Luis Ernesto Derbez, in an effort to combat capital flight to China from all sectors, has proposed yet more concessions, demanding that foreign investors and manufacturers assist in the development of Mexican industry instead of offering more tax breaks and incentives to potential foreign investors.

Fortunately, not all of Mexico’s farmers have hit the streets in protest or cried for government bailouts.  In fact, some, such as Michoacan’s avocado producers, have explicitly told the government “Hands off.”  Mexico produces 900,000 tons of Hass avocados annually, the vast majority in Michoacan, with 250,000 tons destined for the United States.  The 600 regional producers face pressure from Mexican and U.S. packers to lower prices but have united through their trade organization to maintain fair prices for their product—$1.20 per kilo for export, 60 cents for domestic consumption.  Their trade organizations work closely with the U.S.D.A., which monitors production and packing.  In a few more years, California’s avocado production will be sunk by those south of the border who produce higher quality at a fraction of the cost.

Other Mexican agricultural products that benefit from “free trade” are tomatoes, limes, broccoli, cucumbers, asparagus, mangoes, watermelons, and green peppers.  They are filling U.S. markets—instead of the producers filling Mexican highways.  And there are a few in the Mexican polity who promote more progressive policies in the agricultural sector.  Secretary of Economy Fernando Canales Clarion has reportedly encouraged climate-crop adaptation, so Mexico can rescue herself from the results of inefficient farming practices at the grassroots level.

“Free trade” is anything but free.  It requires foresight, business planning, research, product and market development, and investment—in other words, strategy—to succeed in a global market.  

Reinventing sealing wax or cultivating corn on mountainsides is a sure strategy for economic failure, which will simply produce more roadblocks to progress and benefit only the union bosses and political opportunists who prey on the weakest.