by Ana de Ita*
The turbulence in the agricultural markets, provoked by Russia’s war in Ukraine has already led to a sharp increase in prices of cereals and oilseed that impacts all countries, but in the case of those like Mexico, who are heavily dependent on imports, it can jeopardize their capacity to feed their populations.
Since the signing of the old North American Free Trade Agreement, many voices, including those of peasant organizations and agricultural economics researchers argued the importance of not leaving Mexico’s food sources to the whims of the free market. President López Obrador proposed reaching food self-sufficiency when national production only covered 75 percent of consumption (2018), but by 2020 the problem had gotten worse and the figure had dropped to 73.2 percent.
The Russian invasion of Ukraine places Mexico in a very vulnerable situation. In the world, the prices of basic grains, principally corn and wheat, of which Russia and Ukraine are important producers and exporters, have risen since the beginning of the conflict, by 21 and 33 percent as of May 5th, according to data from the Agricultural Markets Consulting Group (GMCA). The Russian Federation has prohibited the export of cereals until June of 2022, while Ukraine’s exports have decreased considerably and its capacity for sowing in the next cycle has been reduced. As such, further increases in the costs of tortillas and bread, essential goods, seem imminent.
Last year, Mexico was first place in the world for corn imports, with 18 million tons — according to the GCMA data, as there are no official figures — that amounts to 39.6 percent of the consumption, with a production of 27.492 tons. These record imports surpassed the 17 million in 2018, the highest volume from the previous administration, and rose in value to 5 billion 147 million dollars, 2 thousand more spent than a year before, due to the increase in volume and the value of the grain in the external market, but which still didn’t reflect the rise in prices caused by the war.
Under the current government, the production of corn has stayed above 27 million tons, but below the 28.2 and 27.7 million tons reached in 2016 and 2017. Although Mexico’s corn imports come almost completely from the United States, the increase in demand for the grain from nations like China, that were supplied by Ukraine, diminishes its availability and has already provoked substantial price increases.
The case of wheat is not better, now that for 2021 the production as well as the imports are at the same levels as those of 2018, with a production of 3, 280 million tons and imports of more than 5 million, which make up 61 percent of consumption. In 2021, 700 million dollars were paid for those imports. Ukraine is the third largest provider of wheat to Mexico, though it only represents 5 percent of the volume.
Maybe one of the most serious effects that has yet to show itself in all of its severity is the decrease in supply of fertilizers and the rise in its prices. Russia is one of the top exporters of fertilizers and Mexico’s top provider. The GCMA estimates that last year Mexico used 5.4 million tons of fertilizer and only produced 2 million, with Russia contributing a million. Since the end of March, there has been a sharp rise in the prices compared to the previous year, of between 120 and 187 percent, depending on the product in question (data from GCMA).
The use of chemical fertilizers began in the middle of last century as part of the Green Revolution and was generalized and extended to almost all parts of the world. Industrial agriculture is highly dependent on the use of these inputs. In Mexico, 70 percent of farmers use them, including small farmers; 40 percent use organic fertilizers and others employ both. Hence, the increase in prices of chemical fertilizers will affect both Mexican agriculture as a whole and could cause a decrease in the already weak national production if they become scarce or are inaccessible due to their costs.
The seizure of two trailers loaded with fertilizers by Guerrero campesinos this week demonstrates the kind of social conflict that could explode in this scenario.
* Director at the Center of Studies for Change in the Mexican Countryside (CECCAM)
This article was published in La Jornada on May 7th 2022. https://www.jornada.com.mx/2022/05/07/opinion/011a2pol English interpretation by Schools for Chiapas.