Thread: Crops from U.S. cause trade worries in Mexico

http://www.chron.com/disp/story.mpl/bus ... 71964.html

Jan. 15, 2007, 10:14PM
Crops from U.S. cause trade worries in Mexico
Poultry is next as NAFTA opens agricultural doors from the north


By PETER S. GOODMAN
Washington Post

PEGUEROS, MEXICO — Even as his village emptied, Pedro Martin stayed behind. His schoolmates abandoned the scrub-covered hills of central Mexico for the land they called El Norte. They mopped floors in Fresno, poured concrete in Tempe and tended other people's children in Galveston, measuring their lives in dollars.

Martin worked at a poultry farm. His wages rose to 2,000 pesos per week, about $185. Meager by the standards of the north, it was enough to build a brick house with white tile floors. Enough to buy a car, and to stay in the village and watch his three boys grow, resisting the pull the United States exerts on much of rural Mexico.

"Up north, even though they pay more, you're not necessarily living as well," Martin said. "You feel out of place. Here, you can walk around the whole town and it's comfortable. Life is easier."

But now Martin worries that globalization is about to shake life in the central Mexican state of Jalisco. Already much of Mexico's farm country has been overwhelmed by an influx of crops from the United States in the years following the North American Free Trade Agreement. Over the next two years, the final provisions of the trade pact kick in, opening Mexico to unlimited imports of poultry from its northern neighbor. Mexican farms will compete directly with an American agribusiness nurtured by subsidies on the corn that feeds the birds.

"If a lot of chicken comes in from the United States, we're not going to be able to maintain our farms," said Martin, 39. "What's going to happen? People are going to get fired. People are going to go north."


High hopes for jobs
In the early 1990s, as politicians in the three countries of North America sold the pact, they promised it would spur enough development in Mexico to create millions of jobs, raise wages and diminish the lure of the north.

But since 1994, the year NAFTA took effect, not enough jobs have materialized for Mexico's swelling working-age population. Meanwhile, the U.S. has been a magnet for Mexican laborers willing to take on low-paying, unpleasant work. More than 6.2 million Mexicans now live in the U.S. illegally, according to Mexico's National Council of Population. Two-thirds arrived after NAFTA.


Taking a gamble
For Mexico, as for most developing countries, free trade was a gamble. It opened the world's most lucrative market, the United States, to wares produced in Mexico's factories, and to produce grown on Mexican soil. But it also lifted protections on Mexico's manufacturers and farmers, bringing an influx of products from the north.

As NAFTA's final provisions take effect next year, tying Mexico's fortunes more tightly to world markets, how will its economy adjust? And how will the latest wave of trade liberalization alter the calculations for millions of Mexicans wanting to stay home but constantly feeling the tug of the north?

NAFTA did bring Mexico foreign investment. Jobs at its maquiladoras more than doubled from 540,000 to 1.13 million between 1993 and 2004. But in other factories, employment has slipped and average wages have fallen by 5 percent.

Economists emphasize that any assessment of NAFTA must include the financial crisis that savaged Mexico in 1994 and 1995. Some assert that without NAFTA and the exports it fueled, Mexico's recovery would have been slower. Many also say that Mexico has squandered opportunities for growth.

The clearest reason why Mexico has not prospered under NAFTA is found on the farm, the workplace for about one-fourth of the population.

From 1993 to 2003, exports of American agriculture to Mexico more than doubled, climbing from $3.6 billion to $7.9 billion, according to Gary Hufbauer and Jeffrey Schott in their book, NAFTA Revisited. Over a similar period, Mexico lost nearly 2 million agricultural jobs, according to Mexico's National Employment Survey.

Mexico's agricultural exports to the U.S. also surged, climbing from $2.7 billion in 1993 to $6.3 billion in 2003. Huge farms have been developed to grow artichokes, tomatoes and other produce for the U.S. market. But those farms, many launched with American investment, typically pay about $13 a day. That's not enough to keep workers from leaving.

Pedro Martin, still at home while so many friends and relatives live in another country, is intent that his three boys stay in Mexico.

On a recent morning, shiny SUVs pulled into Pegueros, their license plates advertising the riches of Texas, Virginia and California. People were returning for Christmas.

Martin professed no envy. His sister and her two boys are crammed into an $1,100-a-month apartment in San Francisco. The boys have to work to help pay the rent.

"They're thinking of returning," Martin said.

His own boys are growing up with the fresh air and broad vistas of Jalisco.

This is really good news the high price of corn is going to give an incentive to start to plant corn in villages again. The purchase of yellow corn by the new ethanol plants has made American corn more expensive. The industrial farmers seeing the price of yellow go up then switch their fields over from white. This creates a shortage of white corn since so many of the village farmers have left from Mexico and have stopped producing corn. With higher
prices village fields will be taken out of fallow and put to corn.