1. RECENT POLICY DEVELOPMENTS
IN THE MEXICAN
AGRICULTURAL SECTOR
Andrés Casco Flores
San Diego, California
Febrero 2000

2. OUTSTANDING ASPECTS OF THE RURAL ECONOMY
SAGAR
OUTSTANDING ASPECTS OF THE RURAL ECONOMY
IN MEXICO
For the period , the share of the agri-food sector in the Gross Domestic Production was on average 11.4 per cent .
ESTRUCTURE OF THE GROSS DOMESTIC PRODUCTION 1998 p/
FUENTE:
Elaborado con base en
datos
del INEGI. p/
Cifras
preliminares
correspondientes al PIB
trimestral.
Other Activities
20.8%
Services
68.2%
Agriculture, forestry and
fisheries
5.8%
Processe Food, Beverages and
Tobacco
5.2%

3. OUTSTANDING ASPECTS OF THE RURAL ECONOMY
SAGAR
OUTSTANDING ASPECTS OF THE RURAL ECONOMY
IN MEXICO
Productivity in units of less than 5 ha. ranges from tons.
Productivity in larger units migh reach 8-10 tons.
0-2 ha
100.0
16.8
5.4
57.8
20.0
2-5
26.8
8.0
49.6
15.7
70% of the
producers
5-10 ha
100.0
37.7
9.6
35.8
16.9
10-18
44.9
10.3
28.5
16.2
>18
61.8
10.5
24.3
3.4
30% of the
producers
Total Income
Agriculture
Livestock
Non Agriculture Activities
Migration from Mx to US
Total
100.0
40.9
9.2
36.4
13.5

4. AGRICULTURAL POLICY IN MEXICO AND SUPPORT PROGRAMS IN THE RURAL SECTOR
SAGAR
AGRICULTURAL POLICY IN MEXICO AND SUPPORT PROGRAMS IN THE RURAL SECTOR
PROCAMPO
Applicable since 1994 for supporting the income of the producers of grains and oilseeds.
The eligible crops are: maize, beans, wheat, sorghum, rice, soybean, safflower, cotton and barley.
The elegible acreage must be used in crops, livestock, forestry or conservation uses.
PROCAMPO has benefit an average of 13.7 millions of ha. annually. More than half of the total acreage benefited belongs to producers with less than 10 ha. per unit of production, and represents more than one fourth of their income.

5. SAGAR
ALIANZA PARA EL CAMPO
This Program operates under a decentralize scheme. The decisions are taken at local level in an Agriculture State Council.
Federal and State support complement producers investments.
The main programs of Alianza para el Campo are:
Ferti-irrigation Rural Equipment
Mechanization Elementary Technical
Improved Seeds Assistance
Genetic Improvement Training and Extension
Prairies

6. MARKETING SUPPORT PROGRAM FOR GRAINS AND OILSEEDS
SAGAR
MARKETING SUPPORT PROGRAM FOR GRAINS AND OILSEEDS
The main objectives of this Program are:
offset the negative factors that have an effect on the marketing of grains and oilseeds, and
support under a selective approach, targeted to products and regions with structural problems.
In 1999, marketing support payments, for specific regions, were granted to soybeans, rice, wheat, sorghum, cotton and maize.
Marketing supports are allocated through public auctioning.
Buyers that requires the lowest subsidy and commits themselves to pay a certain price to the producer receive these supports

7. RISK MANAGEMENT SUPPORT PROGRAM
SAGAR
RISK MANAGEMENT SUPPORT PROGRAM
The main objective of this program is to support producers expected harvest income, through hedging instruments for management of risks related to the fluctuations in the international prices.
The eligible crops for receiving supports for hedging are:
MAIZE COTTON
WHEAT SORGHUM
SOYBEANS

8. THE EXTINTION OF CONASUPO
SAGAR
THE EXTINTION OF CONASUPO
Since the crop season Spring-Summer 1998/99, CONASUPO ceased to buy corn and beans.
In the past, CONASUPO bought to producers at a guarantee price. It operated the warehouses in production and consumption areas, and was in charge of the whole logistics.
CONASUPO supplied maize to the “tortilla industry” at subsidized prices.
In December of 1998, price controls for “tortillas” were abolished.

9. PRICES OF TORTILLA SAGAR PRICES OF TORTILLA 1996-1999 CURRENT
REAL 1994=100
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Pesos per Kilo
1996
1997
1998
1999

10. TRANSITIONAL SCHEMES FOR MAIZE
SAGAR
TRANSITIONAL SCHEMES FOR MAIZE
In most production areas, the market has substituted efficiently the role of CONASUPO. The “tortilla producers” have become a Key player in this market.
Marketing problems have appeared in those states that generate large surpluses and are far from main consumption areas (especially Sinaloa and Chiapas).
Maize of Sinaloa and Chiapas was included in the marketing support Program operated by ASERCA.
In Sinaloa, three auctions were made for the Autumn-Winter season. The private sector purchased the total amount for this crop.

11. MARKETING SUPPORTS FOR MAIZE
SAGAR
MARKETING SUPPORTS FOR MAIZE
ALLOCATED BY ASERCA
DIRECT ALLOCATION
AUCTION

12. TRANSITIONAL SCHEMES FOR MAIZE IN CHIAPAS
SAGAR
TRANSITIONAL SCHEMES FOR MAIZE IN CHIAPAS
In Chiapas, conditions are more difficult for the development of a free market.
Lack of knowledge of marketing instruments (marketing loans, options, futures, etc).
Lack of producer organizations with entrepreneurial skills.
Deficiencies in railroads and problems in the transport system.

13. CONASUPO´S PURCHASES OF NATIONAL PRODUCTION OF MAIZE
SAGAR
CONASUPO´S PURCHASES OF NATIONAL PRODUCTION OF MAIZE
SHARE % % % % %
1994
1995
1996
1997
1998
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Million Tons
PURCHASES
PRODUCTION

14. TRANSITIONAL SCHEMES FOR MAIZE IN CHIAPAS
SAGAR
TRANSITIONAL SCHEMES FOR MAIZE IN CHIAPAS
Marketing support program was granted through ASERCA to main buyers under an auction system, as well as through direct allocation for firms located in the area.
A trust operated by the State Government has purchased a large part of the crop. It is financed by a credit line; it only purchases on account of the interested buyers.
SAGAR has designed a program to train producer organizations in marketing and provides some support to induce marketing cooperatives.

15. TRANSITIONAL SCHEMES FOR MAIZE IN CHIAPAS
SAGAR
TRANSITIONAL SCHEMES FOR MAIZE IN CHIAPAS
Former CONASUPO infrastructure in the State will be transferred to producers, in a way that enhances the formation of marketing cooperatives. The medium term objective is to create conditions similar of those of Sinaloa.
CONASUPO operated 200 warehouses in the State of Chiapas. Under the new scheme only 102 warehouses were enabled by the State Trust. This fact shows that CONASUPO’s infrastructure was larger than strictly necessary.
The estimated crop production for this season is 450 thousand tons. So far 350 thousand tons have already been marketed by private purchasers.

16. INTERNATIONAL VS DOMESTIC PRICES OF MAIZE
SAGAR
INTERNATIONAL VS DOMESTIC PRICES OF MAIZE
INTERNATIONAL VS DOMESTIC PRICES OF MAIZE
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
Pesos per Ton
CBOT
DOMESTIC

17. AUCTION FOR IMPORTS OF MILK POWDER
SAGAR
AUCTION FOR IMPORTS OF MILK POWDER
Until May of 1999, CONASUPO was the sole importer of milk powder to supply private processors and social programs for low income population.
Milk Powder Imported by CONASUPO
(Metric Tons)
161,440
135,059
158,941
174,381
148,610
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
1994
1995
1996
1997
1998
Source: SECOFI

18. AUCTION FOR IMPORTS OF MILK POWDER
SAGAR
AUCTION FOR IMPORTS OF MILK POWDER
Since the second half of 1999, import certificates are allocated directly to the final user.
The allocation of quotas is based on historical consumption of each firm (for infra-marginal quantities).
For complementary requirements, additional import certificates are auctioned. The result of these auction provide information on market conditions.
DICONSA is also allowed to import directly milk powder for its social program.