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 Business News | January 2007 
Soaring Prices for Tortillas Vex Mexico
 Washington Post
| | A woman holds a sign that says 'Calderon, lower the eggs' during a protest in Mexico City last week. Dozens were protesting a recent increase in the price of eggs and tortillas in Mexico. (Dario Lopez-Mills/AP) |
Nezahualcoyotl, Mexico - Thick, doughy tortillas roll hot off the conveyor belt all day at Aurora Rosales' little shop in this congested city built on a dry lake bed east of Mexico City.
Using cooking techniques that date to the Mayan empire, Rosales has never altered her recipe. Nor did her father, grandfather or great-grandfather.
On good days, neighbors line up for her tortillas. But these are not good days, and sometimes hours pass without any customers.
Mexico is in the grip of the worst tortilla crisis in its modern history. Dramatically rising international corn prices, spurred by demand for the grain-based fuel ethanol, have led to expensive tortillas. That, in turn, has led to lower sales for vendors such as Rosales and angry consumers.
The uproar is exposing this country's outsize dependence on tortillas in its diet - especially among the poor - and testing the acumen of the new president, Felipe Calderon. It is also raising questions about the powerful businesses that dominate the Mexican corn market and are suspected by some lawmakers and regulators of unfair speculation and monopoly practices.
Tortilla prices have tripled or quadrupled in some parts of Mexico since last summer. On Jan. 18, Calderon announced an agreement with business leaders capping tortilla prices at 78 cents per kilogram, or 2.2 pounds, less than half the highest reported prices. The president's move was a throwback to a previous era when Mexico controlled prices - the government subsidized tortillas until 1999, at which point cheap corn imports were rising under the NAFTA trade agreement. It was also a surprise given his carefully crafted image as an avowed supporter of free trade.
"There are certainly some contradictions in Calderon's positions here," said Arturo Puente, an economist in Mexico City.
Calderon's administration portrayed the cap as a get-tough measure that, coupled with his earlier approval of corn imports from the United States and other countries, would stem the crisis.
But Calderon's price cap does not carry the force of law. It is "a gentleman's agreement," said Laura Tamayo, a spokeswoman for the Mexico division of Cargill, a Minneapolis company that signed the pact and is a major player in the Mexican market.
A study by the lower house of Mexico's National Congress showed that many tortillamakers are ignoring Calderon's edict. The average price of tortillas is 6 cents higher than the cap, and some shops are charging between 59 cents and $1.04 above the government threshold.
In another place, a rise in the cost of a single food product might not set off a tidal wave of discontent. But Mexico is different.
"When you talk about Mexico, when you talk about culture and societal roots, when you talk about the economy, you talk about the tortilla," said Lorenzo Mejia, president of a tortillamakers trade group. "Everything revolves around the tortilla."
Poor Mexicans get more than 40 percent of their protein from tortillas, according to Amanda Galvez, a nutrition expert at the National Autonomous University of Mexico.
Galvez said she believes the price increase is already steering Mexicans toward less nutritious foods. |
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