[AGL] take 2/Clinton's legacy

[Harry Edwards]

Mexico's corn farmers see their livelihoods wither away
  Cheap U.S. produce pushes down prices under free-trade pact

  - Monica Campbell and Tyche Hendricks, Chronicle Foreign Service and  
Chronicle Staff Writer
Monday, July 31, 2006


(07-31) 04:00 PDT Atlacomulco, Mexico -- Tending his sun-drenched  
half-acre cornfield, Jose Davila represents a part of Mexico that may  
fade away as the pressures of free trade intensify.

"I'm an antique," said the hunched 90-year-old farmer. "Who wants to  
work all day in the sun and earn so little? All the younger people now  
look for jobs in factories or construction. Either that, or they go to  
the United States."

The growing dilemma that Mexico's 2 million corn farmers face as the  
tariffs that protect them shrink under the North American Free Trade  
Agreement was an issue in this month's presidential election. And as  
the United States wrestles with already high levels of illegal  
immigration, some experts say the demise of Mexico's peasantry deserves  
serious U.S. attention.

"The Bush administration has sought to control immigration at the  
border, but that's virtually impossible," said Harley Shaiken, director  
of UC Berkeley's Center for Latin American Studies. "The beginnings of  
immigration are in the displacement of farmers in Mexico."

An estimated 1.5 million agricultural jobs have been lost since NAFTA  
went into effect in 1994.

Tariffs protecting beans and corn, including the white corn Mexicans  
use for tortillas, which make up a third of their diet, are to end in  
January 2008. That is exposing Mexican corn farmers -- two-thirds of  
whom subsist on 12 acres or fewer and 90 percent of whom lack  
irrigation -- to competition with U.S. farmers who are so highly  
mechanized they can produce a metric ton of corn with a half-hour's  
labor, according to the U.S. Department of Agriculture.

American corn exports to Mexico -- now one-fifth of the corn consumed  
there -- have more than tripled in NAFTA's first 10 years, and the USDA  
predicts they will double again in the coming decade.

"Prices have fallen ever since NAFTA," said Davila's son, Casto, 67,  
who helps his father tend the cornfield, which depends on central  
Mexico's May-September rainy season. Some of the corn they grow feeds  
their livestock, while they sell some and use some themselves.

After buying fertilizer, renting a tractor to plow crops and laboring  
in the fields, the Davilas barely break even with corn prices at a  
rock-bottom 2.5 pesos, or 25 cents, per kilogram (2.2 pounds).

"Farmers here have long felt abandoned," said Casto Davila, who earns  
the bulk of his income from his small housing construction company.  
"The signal from the government is that we're better off selling our  
land."

The Mexican government has helped ease the transition to free trade  
with cash subsidies to farmers, but those, too, are to be phased out in  
2008.

World Bank economist Daniel Lederman predicted, however, that Mexico's  
next president will face pressure to continue aiding agriculture, which  
employs 20 percent of the population. And he said 2008 is unlikely to  
bring a dramatic economic shock.

"In practice, you've had free trade already," said Lederman. "I'm not  
sure that 2008 is when the sky falls."

During Mexico's recent presidential campaign, the two leading  
candidates, left-leaning Andres Manuel Lopez Obrador and conservative  
Felipe Calderon, disagreed on how to provide relief to the country's  
struggling corn farmers. Lopez Obrador insisted he would not honor the  
2008 deadline, which he said threatened to put corn farmers out of  
business, and he vowed to increase subsidies and offer growers  
low-interest loans.

Calderon, the election's apparent victor, who comes from the ruling  
National Action Party, called Lopez Obrador's policies paternalistic  
and unsustainable. Like President Vicente Fox, Calderon believes Mexico  
must modernize and diversify its agricultural sector in part by  
instructing farmers to grow more profitable crops such as organic  
vegetables and herbs.

"We need to consider alternatives that will make life in the  
countryside more competitive," said Ernesto Cordero, Calderon's  
economic adviser.

"We cannot keep hanging on to programs that depend on subsidies and  
more subsidies," Cordero said. "Why not test other crops and, at the  
same time, build up infrastructure in agriculture areas so that  
producers can transport their products more easily?"

Yet cultural resistance and distrust of government may keep some  
farmers from signing on to a new way of work.

"They say we should grow broccoli and asparagus, but where's the  
training program?" said Casto Davila. "Do they expect us to take on new  
methods, invest in new tools, and then suddenly find a new market for  
our goods?"

Modernizing peasant agriculture is important, but the effect will be  
modest at best, said UC Berkeley's Shaiken.

"There's no way peasant farmers in Oaxaca are going to be competitive  
with highly subsidized, very productive farms in Iowa," he said.

Cordero said he and others on Calderon's economic team would meet with  
agriculture leaders in coming months to define how such training  
programs should work. Meanwhile, Calderon has pledged to extend  
government programs that modestly subsidize small farmers. He also  
backs expanding efforts to produce ethanol from corn.

Calderon has indicated he won't spend precious political capital  
pushing the Bush administration to reopen NAFTA.

"It's more useful for us to spend our energy on ways to strengthen  
Mexico's manufacturing sector and build up our infrastructure than to  
push for changes on the agricultural front," said Cordero.

Free-trade advocates say the squeeze that Mexico's peasant farmers are  
feeling is an unfortunate but necessary byproduct of entering the  
global economy.

"Trade gains are broad, and trade pains are very specific," said Tim  
Kane, director of international economics at the Heritage Foundation in  
Washington, D.C. "A few people feel the pain, lose jobs, get displaced.  
That's what Mexico is experiencing. That's the path to progress."

The pain actually could be an incentive for farmers like the Davilas to  
adapt or move on, he said.

NAFTA has stimulated growth in factory jobs, especially in border-based  
assembly plants, said the World Bank's Lederman, and that has helped  
absorb displaced farmers and deter migration to the United States.

But manufacturing growth has not kept pace with the need for new jobs  
created by a growing population and a shrinking farm sector, said  
Sandra Polaski, director of the Trade, Equity and Development Project  
at the Carnegie Endowment for International Peace.

"At the end of the day, most of the migration comes from the  
countryside," she said, adding that the additional downward pressure on  
corn prices in 2008 "will be a reason (farmers) send labor outside the  
household, whether to Mexican cities or across the border."

Polaski suggested that the United States borrow a page from the  
European Union's integration handbook and make major investments in  
Mexico's economic and educational infrastructure as the richer European  
countries did to prevent massive migration of workers from poorer  
countries like Portugal and Greece.

"The United States must care," Shaiken said, "because the United States  
must face the consequences."

E-mail Tyche Hendricks at thendricks at sfchronicle.com.

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