Americas Policy Report The Mexican Farmers' Movement: Exposing
the Myths of Free Trade
by Laura Carlsen | February 25, 2003
Even long-time Mexico observers
sat up and took notice on January 31. The march that day by campesino organizations,
which counted on the support of unions, universities, and civil society groups,
broke the mold in a city accustomed to large demonstrations.
By the time they reached the Zócalo, the
sum of the tidy contingents-each filed behind its identifying banner-came to
nearly a hundred thousand. Not since agrarian reform under President Lázaro
Cárdenas in the late thirties had so many campesinos marched in the nation's
capital. And perhaps not since the revolution had such a diverse crowd united
behind such radical demands. The farmers no longer demanded government programs
to alleviate their poverty or help sell their products. The central demands
of the march-renegotiation of the agricultural chapter of NAFTA and a far-reaching
national agreement on rural development-shot straight to the heart of the neoliberal
model and called for a new vision.
The reemergent Mexican farmers' movement reflects
not only the serious crisis in the country's rural sector but also a crisis
of faith in free trade itself. With the common slogan "El campo no aguanta más"
(The countryside can't take it anymore), a wide range of rural organizations
have set off a national debate on NAFTA. As a result, some of the fundamental
myths of the free trade model are being questioned as never before in Mexico.
The Myth of the Free Market
The first is the myth that free trade exists at
all. Mexican farmers are quick to point out that reality deviates far from the
logic of free trade-namely that prices are determined by the laws of supply
and demand, and that the product produced most cheaply and efficiently always
wins. Three major factors-subsidies, financing, and oligopolies-have created
distorted market conditions made-to-order for the world's most powerful U.S.-based
transnational corporations. As a result, small farmers south of the border are
being driven off the land.
The first distortion comes in the form of U.S. government
farm subsidies. The 2002 Farm Bill authorizes a whopping $248.6 billion in farm
supports. Federal government subsidies now make up 40% of the U.S. net farm
income. Though they ostensibly serve to keep family farmers afloat, actually
the billions in subsidies flow disproportionately to corporate farmers. Along
with export-import financing, they assure that huge food and agriculture transnationals
increase their profits and global reach. Mark Ritchie of the Institute for Agriculture
and Trade Policy (IATP) notes that U.S. export subsidies end up in the pockets
of the world's largest grain traders, primarily Cargill and Archer Daniels Midland.
What does this do to the Mexican market? A recent
IATP analysis of the year 2001 reveals that corn cost an average of $3.41 a
bushel to produce in the U.S. and sold on the international market for $2.28
a bushel. Food First, a California-based policy institute, reports that California
rice costs between $700 and $800 an acre to produce but receives $650 an acre
on the world market and that U.S. wheat is exported at 46% below cost.
There's a name for this-dumping-and it is supposedly
prohibited under both NAFTA and World Trade Organization (WTO) rules. According
to the above calculations, the over five million tons of U.S. corn sold in Mexico
in 2001 carried a dumping margin of 25%. Analyses from past years show dumping
margins of over 30%. Dumped U.S. surpluses erode producer prices; the value
of Mexican corn dropped 64% between 1985 (when Mexico signed the General Agreement
on Tariffs and Trade-GATT) and 1999. They also leave Mexican producers without
a market. The United Nations Development Program estimates that worldwide U.S
farm subsidies cost poor countries about $50 billion a year in lost agricultural
Mexican farmers cannot and should not be forced
to compete with grains sold at less than U.S. production costs. They lack credit,
economy of scale, fertilizers, chemical weed and pest controls, farm equipment
and, most importantly, significant government supports. As U.S. farm support
increases, Mexican government programs have followed IMF prescriptions and all
but disappeared. During the period from 1990 to 1994, Mexican farmers received
33.2% of their yearly income from the government. For 1995 to 2001, that figure
had dropped to 13.2%.
In addition to subsidized prices, cheap and ready
access to U.S. financing has played a key role in the glut of grain imports
to Mexico, which has devastated domestic prices. In 1996 the international price
of corn rocketed due to fears of shortages. Despite the high cost, that was
the year Mexico more than doubled imports.
The Center for the Study of Rural Change in Mexico
(CECCAM) reports that an overriding incentive for importers both in 1996 and
in other years has been financial. U.S. exporters and government export-financing
organisms, particularly the Commodity Credit Corporation (CCC), offer low-cost
loans to Mexican importers buying U.S. grains. Although rates have decreased
in recent years, prevailing credit rates in Mexico in the mid-1990s were over
30%, while the CCC offered between 7 and 8%. For Mexico-based import companies,
the CCC's sweetheart rates were like rain in a drought.
The Mexican government, facing the same tight money
problem following the 1995 devaluation crisis, looked to the same solution.
The $100 billion bailout orchestrated by the Clinton administration in response
to the peso crisis included a $1 billion credit that obligated Mexico to purchase
corn directly through the CCC program. In the single year between 1995 and 1996,
corn imports rose 120%-double the quota stipulated under NAFTA, and all imports
were tariff-free. Mexican importers assumed over $1.5 billion in CCC credits
that year, and Mexican producers were sold down the river.
Free trade cannot exist in the context of global
oligopolies. In contrast to a World Bank report that 73% of Mexico's rural population
lives in poverty (a significant increase over the pre-NAFTA period), the major
U.S. agribusiness transnationals have grown by leaps and bounds under the auspices
of the free trade model. As international traders with both export and import
activities, many receive a triple subsidy under NAFTA: 1) as exporters of below-cost
U.S. farm products, 2) as recipients of direct export subsidies, and 3) as Mexican
importers. They also get Mexican subsidies; for example, Cargill receives the
lion's share of subsidies in the state of Sinaloa-Mexico's most heavily subsidized
agricultural state. Couple that with the added advantage of wiping competition
off the map through below-cost prices and the deal is complete.
None of these factors stem from farmers' productivity-the
culprit in the failure of farmers to compete, according to Mexican Secretary
of Agriculture Javier Usabiaga. Instead, these factors converge to stack the
deck against Mexican small farmers.
In light of all these negative tendencies, planners
predicted that the majority of Mexican corn farmers would have left the sector
by now. They were wrong. Figures for the year 2001 show that national corn production
actually grew by 10% compared to 1994. Nearly three million Mexican farmers
throughout the country still grow corn. How, and even more importantly, why,
do these farmers persevere against the global- market odds?
The answer is that in spite of all that's been said,
the Mexican farming sector is indeed highly subsidized, though not by a government
concerned with assuring the viability of agriculture and the security of the
country's food supply. Mexican farmers themselves, and particularly southern
farmers living in poverty, are subsidizing national corn production. The subsidies
come from unpaid family labor, from small-scale commercial activities, and from
the more than $9 billion in annual remittances sent home by Mexicans working
in the United States.
The remittances have a dual role. First, the money
sustains agricultural activities that have been deemed nonviable by the international
market but that serve multiple purposes: family consumption, cultural survival,
ecological conservation, supplemental income, etc. Second, by sending money
home, migrants in the U.S. seek not only to assure a decent standard of living
for their Mexican families but also to maintain the campesino identity and community
belonging that continue to define them in economic exile. Their money, whether
individual or organized, subsidizes rural infrastructure, farm equipment, inputs,
and labor and conserves cultural identity.
The combination of these personal subsidies and
subsistence tenacity account for the otherwise unaccountable growth in corn
production in Mexico-despite the overwhelming "comparative disadvantages" of
a distorted international market. They reflect a deep cultural resistance to
the dislocation and denial inherent in the free trade model.
- The Myth of "Comparative Advantages"
The U.S Grains Council estimates that in Mexico
only 1.7 to 2 million hectares have the capacity to produce close to the U.S.
standard of 8 tons of corn per hectare (2.47 acres). The strong implication
is that farmers tilling the remaining 6.5 million hectares currently in corn
production should look for other work.
The first reason why these marginal corn producers
still have not become factory workers or mango growers is that they can't. The
idea that Mexican agriculture can be restructured to exploit comparative advantages
on the international market is a pipe dream. The characteristics of Mexico's
land and climate limit regions where fruits and vegetables-the NAFTA "winners"-can
be grown, and investment is concentrated in a very few regions in the north.
Thus the model exacerbates regional polarization and southern exclusion. Moreover,
foreign investment needed to convert crops and develop export industries has
failed to arrive. Since the onset of NAFTA, 0.3% of all foreign direct investment
went to agriculture-a dismal showing by all accounts
Several sectors already favored by natural resources,
capital, proximity to the U.S. market, and infrastructure have grown during
the NAFTA years, but particularly in terms of rural employment, they offer an
option to very few farmers. Export agriculture also employs some of the most
socially and environmentally harmful methods of food production in the countryside,
including the intensive use of migrant family labor, application of chemical
inputs with severe short- and long-term health and environmental effects, documented
discrimination against women, exploitation of child labor, and violations of
human rights. lose the parenthesis
Post-NAFTA agricultural trade has not always been
a bowl of cherries even for this privileged group. Mexico's agro-export sector
has repeatedly faced trade barriers in the United States. Counter-seasonal tomato
farmers in Sinaloa have fought a permanent battle with their counterparts in
Florida, who have succeeded many times in closing the border to protect U.S.
growers. Often under the pretext of sanitary rules, the same protectionist measures
have been applied against Michoacán avocado farmers.
Still, free marketers insist that Mexican agriculture
merely needs social "safety net" programs to assist while employment adjustments
are made. What they fail to realize is that small-scale corn production is the
millennia-old safety net for all of Mesoamerica. Trying to fit this maize-centered
campesino economy-based on cultural preservation, subsistence, and small-scale
sustainable agriculture-into the free trade model of comparative advantages
is like trying to cram a square peg into a round hole. When Mexican farmers
demand new rural policies and a new pact between the state and rural society,
they are demanding that the non-market contributions of the campesino economy
be recognized as essential to national sovereignty, cultural diversity, and
- The Myth of Free Trade as a Development Model
Since the "lost decade" of the eighties and the
polarization of wealth in the nineties, the "trickle-down" theory has fallen
into disrepute. Even so, today's neoliberals still insist that the poor will
eventually benefit from the model, and all that's needed is for the laggards
to catch up, convert, modernize, integrate, etc. As NAFTA enters its 10th year
and after nearly two decades of trade liberalization under GATT, Mexican agriculture
has steadily lost ground: statistics show 1,750,000 people displaced, as well
as increases in poverty, malnutrition, and school desertion. While President
Fox and his cabinet boast of six billion pesos in agro-export earnings, farmers
point out that that money went into the pockets of fewer than 7% of Mexico's
A major premise of both NAFTA and the proposed Free
Trade Agreement of the Americas (FTAA) is that if a nation stays on the "yellow
brick road" of IMF prescriptions and economic integration, it will reach the
"Emerald City" of U.S. prosperity. These trade pacts offer no alternative routes,
no other destinations. Today, Mexican farmers are saying not only that they
can't compete with the U.S. agricultural model but also that they don't want
to. And they present a long list of reasons why.
One objection encompasses social and environmental
concerns about the U.S. agricultural model. The U.S. model is not environmentally
sustainable due to the large amount of chemical pesticides, herbicides, and
fertilizers applied and the monocropping techniques; it destroys biological,
agricultural, and cultural diversity; it decimates rural employment (2% of the
U.S population make a living farming compared to 25% of the Mexican population);
and it increases social inequities by concentrating land holdings.
The second objection cites national sovereignty
and dependency issues. The free-trade model creates food dependency through
imports (Mexico now obtains 40% of its food from abroad); links the rural sector
to the whims of transnational capital instead of to the nation's consumers and
producers; strangles local and regional markets, and encourages dependency on
transnational seed and chemical conglomerates.
Farmers have also begun to recognize consumer issues:
the U.S. model erodes food quality to the consumer by encouraging junk-food
imports and chemical use, and it inhibits culinary diversity and ethnic-based
food traditions that have high cultural and health value.
The Mexican farmers' movement is not asking for
a little time and money to attain U.S. stature. When these farmers highlight
asymmetries and call for compensatory funds, they don't aim merely to correct
macroeconomic gaps and promote structural reforms (in fact, an important source
of support from labor and civil society is shared opposition to privatization
of land, oil, and the electrical sector) but rather to develop a sensible and
sensitive national development program. They recognize that the United States
is well-advanced along paths that Mexico dare not tread if the goal is sustainable
development, social equity, and a decent quality of living for all. The new
"state-urban society-rural society" pact that Mexican farmers seek would incorporate
a basic principle: a nation's first moral and political obligation is to assure
a decent standard of living to its inhabitants by developing national policies
that respond to national needs. This includes ensuring the long-term viability
of small farmers rather than negotiating their demise; recognizing the environmental,
cultural, and social contributions of agriculture; and actively defending food
security and quality.
The Myth of the Fail-Proof Policy
Faced with debacle in Argentina and rising criticisms
worldwide, neoliberal planners have systematically refused to acknowledge any
responsibility for their model's failures. This denial of accountability, vital
to the ideological defense of free trade, is being challenged directly by farmers'
demands to revise parts of NAFTA. In response, government leaders from all three
NAFTA countries have ascribed to the text a moral authority tantamount to the
Bible's and have refused to discuss modifications, although the law clearly
Confronted by the negative impacts of NAFTA on Mexican
agriculture, the Fox administration has waffled even more than usual. While
Mexican farmers press to renegotiate the agricultural chapter of NAFTA, the
Mexican government insists that free trade is not the source of farmers' woes.
Defenders of rural policy caution against "throwing the baby out with the bath
water" and insist on the need to surge forward with structural reforms arguing
that the problem is not too much free trade, but too little.
The U.S. embassy has played an unusually active
role, prodding the Mexican Congress and issuing several press releases and official
statements urging Mexico to tow the line. On December 12, embassy staff came
out in force to personally lobby senators, narrowly averting a Senate vote to
freeze tariffs at 2002 levels. One embassy report attempting to justify the
poor results of NAFTA refers to the "Big-Events-Little-Time" problem. The authors
argue that intervening events (mainly the Zapatista uprising and the December
1994 devaluation) and NAFTA's short nine-year span make it difficult to ascertain
cause and effect. On closer examination, this theory and similar dodges serve
to mask a far larger problem that has vexed free trade architects for years:
the "Data-Contradicts-the-Model" problem. Luis Tellez, who participated in NAFTA
negotiations as subsecretary of agriculture under President Salinas, expressed
this problem succinctly in a January forum: "It's not that NAFTA failed, it's
just that reality didn't turn out the way we planned it."
Conclusion: Policies Based on People, Not Myths
If the free market doesn't exist, and if the model
is impoverishing the vast majority of rural producers, should it continue to
be considered the foremost and exclusive organizing principle for Mexican agriculture?
The farmers' movement is saying that it's time to discard the myths and permit
more human values to play a role in agricultural policy.
Mexican farmers not only reject an asymmetrical
trade agreement that destroys their livelihoods and their communities, they
also reject being railroaded onto a one-way street. To compete with the U.S.
means to adopt the U.S. transnational-dominated model of agriculture. Competing
on these terms-the only ones understood by a market driven solely by prices-could
unravel Mexican society. Buying into this corporate myth could jettison nine
thousand years of culture, domesticated agriculture, and biological and agricultural
The month of January 1994 opened with the NAFTA
paradigm of a neoliberal future and closed with an armed Zapatista rebellion
that galvanized national and international support for a "world of many worlds."
January of 2003 opened with NAFTA tariff eliminations to enforce the free trade
model, and the month closed with 100,000 people in the streets calling for immediate
renegotiation of NAFTA, food sovereignty, and a national rural development pact.
These two Januarys are the bookends of a period of disputed definitions in Mexico.
Recently, U.S. congressional members recognized that failure to resolve the
Mexican agricultural crisis would increase migration and complicate relations
between the two nations. But the problem goes beyond migration. The United States
will face serious risks in all aspects of the binational relationship if it
insists on imposing a unilateral future on Mexico. In the not-so-distant future,
Indians and farmers could be joined by thousands from other walks of life demanding
national development that responds to their needs and not to a myth-ridden model.
Laura Carlsen <email@example.com> is an
associate of the IRC's Americas Program and co-editor of Community Control in
a Global Economy (Kumarian 2003) and Enfrentando la Globalización: Integración
Económica y Respuestas Sociales en México (Miguel Angel Porrua
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