A study released in early December 2009 argues that American agricultural dumping has cost Mexican farmers billions of dollars since the implementation of NAFTA in 1997. While the report, written by Timothy A. Wise, the Director of the Research and Policy Program at the Global Development and Environment Institute in Tufts University, focussed on eight agricultural products traded between the United States and Mexico, it noted that Mexican corn producers were affected the most by this dumping. This impact is directly related to the high subsidies given to US corn farmers, resulting in part from the powerful sway of this lobby group in the United States Congress.

Wise's study shows that over the period 1990-92 to 2006-08 exports of corn, including cracked, from the United States to Mexico rose from 2.014 million metric tons to 10.330 million metric tons, or 413 percent. Over the same period, dependency on imports for corn from the US rose from 7 percent to 34 percent in Mexico and the producer price of corn in the country dropped by 66 percent. This study found that a major reason for this surge in corn imports was that high subsidies received by the American agricultural sector allowed the sale of corn across the border at prices substantially below the actual cost of production. Corn exports to Mexico by American companies averaged a price 19 percent lower than their cost of production. Mexican farmers, whose subsidies are well below those of their counterparts in the US, unsurprisingly have had a great deal of difficulty competing with this discounted corn. Wise estimates that the increase in reliance on subsidized American corn, combined with the decline in price, cost Mexican farmers US$6.571 billion over this period. When including the seven other important agricultural products (soybeans, wheat, cotton, rice, beef, pork, and poultry), Wise found that dumping of subsidized agricultural goods from the United States into Mexico cost Mexican farmers US$12.832 billion. The study does not address the export of subsidized agricultural products from Canada, which receive lower subsidies than those in the US, but remain an issue for Mexican farmers.

On January 1, 2008, Mexico removed the last of its tariffs on American and Canadian agricultural imports in the culmination of a 14-year phase out under NAFTA. Mexican farmers protested this move, and asked that the government renegotiate the terms of the trade agreement. In protests during the subsequent months, hundreds of thousands of farmers gathered in Mexico City to criticize the trade liberalization. In a CNN interview of February 1, 2008, farmer Armando del Valle argued that while the NAFTA agreement was unlikely to go away, "all producers should be under equal conditions, and as Mexicans, we are not working under the same terms as our neighbors up north."

Farmers in both developed and undeveloped countries face an increasing challenge, as the value of agricultural goods has fallen consistently since 1960. The Food and Agricultural Organization (FAO) of the United Nations reported in 2004, "over the past four decades, real prices for agricultural commodities declined by about 2 percent per year."  While there has been a spike in agricultural prices over the last few years, Wise expects the decline in real value to continue. Without subsidies or tariffs, farmers in developed nations would be hard pressed to compete in the global market. Farmers in developing countries, however, often live in poverty unheard of in developed nations, which actually gives them a comparative advantage in their cost of production.

Related

• From the PNA Library: Oxfam: "Dumping Without Borders: How US Agricultural Policies Are Destroying the Livelihoods of Mexican Corn Farmers" 4
• From the PNA Library: Obama Reaffirms Promise to Renegotiate NAFTA 5
• From the PNA Library: "Bon Anniversaire NAFTA: The Elusive and Asymmetrical Benefits of a Decade of North American Integration" 6
• New York Times December 15, 2009: "Dumping on Mexico" 1
• Reuters Mar 7, 2008: "Mexico farmers quietly plant banned GM corn" 8

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