1. Mexican Agriculture after NAFTA: Are New Policies Needed?
Jaime Malaga and Eduardo Segarra
Texas Tech University

2. President Vicente Fox (4/28/03)
“We will apply all the mechanisms established in the law to reduce the impact on our farmers of “asymmetries” caused by subsidies and agricultural support measures in other countries.”
President Vicente Fox (4/28/03)
(signing the “Acuerdo Nacional Para el Campo”)

3. Overview 10 Years of NAFTA: Mexican perspective
Remaining Liberalization: Concerns
Mexican Policies Under Consideration
Implications for Future Trade

4. Background
NAFTA was part of a substantial agricultural policy change program in Mexico
: Strong policy intervention
1982/83 Debt Crisis-
1986 –Mexico joins GATT
Most important changes occurred
1994 NAFTA implementation begins
2003 Most of Tariffs Barriers eliminated
2008 Free Trade

5. Mexican Domestic Policy Changes
1991 Conasupo Direct price support eliminated (except corn, beans)
1991 Ag. Input subsidies drastically reduced.
1994 All price supports abolished- ASERCA created. (“indifference price”)
1994 PROCAMPO – Direct (decoupled) support to farmers to be affected by NAFTA
1999 Conasupo liquidated
2003 “National Agreement for the Countryside” ?

6. US-Mexico Agricultural Trade (US Million $)
N A F T A

7. Openness of Mexican Agricultural Sector (Ag.Trade/Ag. Production)
N A F T A

8. Mexican Dependency by Main Crops (Imports/Consumption) Before and After NAFTA

9. Mexican Average Dependency Coefficients Before/After NAFTA
83-90
91-93
97-00
CORN
20.2
5.2
19.2
WHEAT
10.3
23.0
45.7
SOYBEAN
63.0
76.0
96.0
BARLEY
11.2
16.5
30.0
SORGHUM
27.0
49.0
39.0
BEANS
12.5
1.2
11.0

10. Mexican Annual Average Production
NAFTA

11. Mexican Annual Average Production Levels 91-93= 1
Mexican Annual Average Production Levels 91-93= 1.00 Major Importable Crops
NAFTA

12. Mexico after NAFTA: (Based on a World Bank Study)
Domestic real prices for major ag. importable commodities have decreased AND followed more closely international prices.
Domestic production levels have not collapsed and in some cases increased (corn, sorghum, beans).
No dramatic rise in rural-out migration
Increasing yields for major importables and exportables (concentrated in irrigated lands)

13. 2003 Mexico’s “Acuerdo Nacional para el Campo”
Background:
2003: NAFTA’s most tariffs/TRQs eliminated
2002: US New Farm Bill
2008: All barriers will be gone (including corn and beans)
2002/03 violent protests and social unrest in Mexico
Details:
8 months of discussions
12,000 participants
4 Mexican Ministries (Secretaries)
Signed by President Fox : April 28, 2003
Budget: 11.7 US Billions (Highest in Mexican history)

14. 2003 Mexico’s “Acuerdo Nacional para el Campo”
Main Aspects
287 points. Ambiguous and too ambitious
Goals include: enhance competitiveness, support prices, subsidize inputs, rural development issues, reduce food dependency, protect environment, food security.
Use of language more political than technical.
Concern about 2 million small farmers to be affected by future NAFTA implementation.

15. 2003 Mexico’s “Acuerdo Nacional para el Campo”
Key Points
Calls for “renegotiation” of NAFTA agricultural terms
Defend Mexican farmers from unfair subsidies from “other countries”
“Comprehensive Evaluation” of NAFTA impacts by Dec 03
Request for a Mexican GMO legislation.

16. Ranking of Mexico as US Export Market Before and after NAFTA
Commodity
Rank in
Rank
Cotton
5 to 18 1
Sorghum
1 to 2
Vegetable Oils
3 to 6
Rice
3 to 9
Dairy
Corn
5 to 10 2
Wheat
16 to 19
2 to 4
Beef 4
Fresh Fruits
5 to 6
Soybeans
4 to 6
2 to 3

17. Summary
NAFTA and Domestic Policy Changes effects are combined in Mexico
Ag. Trade has considerably increased and “Openness” of the Ag. Sector has doubled since NAFTA.
Prices declined and move with international prices
Ag. production has not collapsed (importables) and some yields have increased.
Mexico is now a key market for most US agricultural commodities.
Concern about small corn/bean farmers
Acuerdo para el Campo signed in April: 11 US Billion, vague language, potential impact on US/Canadian exports if protective domestic policy implemented.