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Last updated on April 19, 2014 at 7:50 EDT

Corn Prices Control Everything in Mexico

April 21, 2008

By Oscar Avila

MEXICO CITY – Mexicans feel the pain of record corn prices every day when they buy a staple of the national diet, the corn tortilla. Tortilla inflation has been severe enough to send citizens to the streets in protest.

As Domitila Cruz perused a counter full of chicken parts at the Churubusco market, though, she was about to feel other hardships of the corn boom even if she didn’t realize it.

Corn farmers in Illinois and elsewhere welcome the surging prices, but Mexican farmers and ranchers absorb higher costs to feed corn to cattle, hogs and chickens. That means higher prices for milk, eggs and meat.

The owner of the chicken stand said prices had gone up about 25 percent since last fall. Cruz, a housekeeper, said she often substitutes beans for meat to feed her husband and two young children.

Mexicans have found it hard to swallow the priciness of a crop at the center of their cuisine and their culture. Legend has it that the early Mexicans were made partly of corn.

Mexico produced a record harvest in 2007, about 25 million tons of primarily white corn. That production should have kept supply high and prices stable. However, corn prices in the United States have hit record levels thanks in large part to demand for ethanol, a biofuel promoted by the U.S. government. Because the price of Mexican corn is formally tied to the price of U.S. corn, the aftershocks are felt here. Also, much of animal feed comes from yellow corn, which Mexico imports from the United States.

Mexican agriculture officials say that about 30 percent of the country’s corn is used as a raw material for food production, such as fattening cattle. That explains the domino effect being felt at the Gallo Fino grocery stand in the Churubusco market.

Owner Artemio Toledo has used white labels to tape over the outdated, lower prices. The price of eggs has nearly doubled since last fall. In fact, food prices have jumped across the board, causing Toledo’s regular customers to buy noticeably less.

“This store is like a daily thermometer,” he said. “We hear the protests of the people.”

Higher fuel prices and other factors also are at play, but Mexico’s National Poultry Breeders Union estimates that hikes in corn prices have been a key force behind a 34 percent rise in production costs since last year.

The National Association of Dairy Producers said the corn-price hike has caused layoffs and lower production.

The crisis is so severe that executives in the Mexican agriculture sector held a summit last week where they begged government officials for help.

“The days of cheap food have ended,” said Juan Antonio Pedroza, president of a trade association of Mexican feed producers. “The social impact will be tremendous.”