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 Editorials | Issues | May 2008 
Mexico's Steps Against Food Inflation Draw Mixed Response
 Paul Kiernan - Dow Jones
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 |  | More aggressive policies are required. If we don't take care of the entire production chain, this global wave of inflation will eat us, and the prices will drive our products out of the country.
- Pablo Trejo, PRD member |  | | | |
Mexico City - A set of measures decreed by President Felipe Calderon to mitigate the impact on Mexico of rising global food prices has drawn a mixed bag of responses from opposition politicians and special interest groups.
The measures include removing or loosening import tariffs on staple food products such as wheat, rice, corn, soy, milk and beans, in order to give Mexico access to potentially cheaper supply lines from countries with which it doesn't have trade agreements.
In addition, the measures aim to stimulate domestic food production by eliminating import tariffs on fertilizers, offering preferential credit terms to small farmers and hastening the modernization of irrigation techniques. They also will subsidize gasoline prices to keep them at present levels and offer direct income support to 5.3 million low-income families to help cover rising food prices.
Opposition politicians have been quick to slam the package, which Calderon announced Sunday.
Ruth Zavaleta, president of the Lower House of Congress and a member of the left-wing Democratic Revolution Party, or PRD, said Tuesday the measures were a "band-aid" that doesn't reach to the core of the problem.
Pablo Trejo, a PRD member of the lower house Finance Commission, said Monday that Calderon's measures are only likely to solve the problem "for a short time."
He said the cause of the food crisis, rather than scarcity, is speculative hoarding in global markets by investors expecting continued price increases, and that Mexico must become self-sufficient in food.
"More aggressive policies are required," Trejo said, adding, "If we don't take care of the entire production chain, this global wave (of inflation) will eat us, and the prices will drive our products out of the country."
Jerico Abramo, a member of the lower house Economy Commission and the opposition Institutional Revolutionary Party, or PRI, called for more subsidies for Mexican farmers.
"If the government doesn't look to subsidize producers, instead removing tariffs so that foreigners enter the country with low-quality grains, I don't think that's the solution," Abramo said, calling the measures "an aspirin."
Local newspaper Reforma reported Tuesday that Mexico City Mayor Marcelo Ebrard, a PRD member, also criticized the plan, and the National Confederation of Farmers, or CNC, called the package "very weak and inefficient."
The CNC, an umbrella group for hundreds of agricultural organizations representing both large and small farmers, said the measures would allow other countries cheap access to the Mexican market while primarily benefiting larger industrial producers rather than small farmers.
"The results of this will be minimal because these are not presenting a solution to the global food crisis," Cruz Lopez Aguilar, who heads the CNC's executive committee, said in a statement.
Mexico's Confederation of Industrial Chambers, or Concamin, released a statement promising that "there will be no food shortage" and expressing support for the measures.
Legislators of the ruling National Action Party, or PAN, have said they expect the policy to be both effective against food inflation and supportive of domestic agriculture.
HSBC Global Research, in a summary of the measures, said "it is clear that a more competitive agricultural sector should enhance production and eventually lead to lower prices."
The bank added that it expects "a certain lag" to the effects of the program, with food prices continuing to rise "over the next couple of months at least."
Mexico's annual inflation was 4.8% as of mid-May, but overall food prices were up 9.2% from a year ago. Some products have seen even bigger increases, with cooking oil up 51%, rice 34%, bread 22% and wheat flour 30%.
paul.kiernan(at)dowjones.com |
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