Chilpancingo Declaration for Food Sovereignty in Mexico issued 1-26-2007
The united organizations of the National Union of Autonomous Regional Campesino Organizations (UNORCA), collaborating at the national summit, “Corn, Tortillas and Food Sovereignty” on January 26th in Chilpancingo, Guerrero, Mexico declare that:
We oppose the rise in prices resulting from the speculative and monopolistic practices of the big commercial businesses that control the Mexican corn market. We demand that the government implement a policy that encourages domestic production, as well as adequately regulate both supply and prices of staple crops and staple foods.
The roots of corn and tortilla price increases include:
The implementation of NAFTA’s open market policies, the elimination of CONASUPO (the National Company of Popular Subsistence), the actions of the State Corn Market Regulatory Board, and the formation of policies based on the principles of comparative advantage have left the market for the Mexican population’s principle food source and the principal crop of campesinos in the hands of a small number of transnational corporations.
The Mexican government has discouraged domestic corn production, arguing that it cannot remain competitive with US corn. It has proposed instead to increase corn importation beyond even the levels established in the NAFTA negotiations through a reduction of tariffs. As a result, the country’s level of dependence on imports has intensified. In 1993, Mexico produced 18 million tons of maize domestically and imported only 350,000 tons (2 percent), but has consistently imported over 5 million tons of maize annually since 1996. By 2006, imported corn had reached 33 percent of the total overall consumption, at 10.7 million of the total 33 million tons.
Despite the lack of farmer protection, with a 48% increase in real prices since NAFTA, and the lack of supportive government policies, Mexican corn farmers—the majority of them campesinos—have managed to increase production steadily, surpassing 20 million tons in 2006.
The government dismantled CONASUPO at the end of 1998, and the corporations Cargill, Maseca-Archer Daniels Midland, Minsa-Arancia-Corn Products International, and Agroinsa positioned themselves as the primary purchasers of the Mexican corn harvest. These corporations are also the principal importers of corn from the US and have been beneficiaries of shipping subsidies and SAGARPA (Mexico’s Department of Agriculture) subsidies. In the US, three companies, of which Cargill and ADM are two, control 70% of corn exports.
The current increase in the price of tortillas, resulting from the increase in corn prices, is caused by corporate speculation, and the Mexican government’s lack of regulatory planning for the corn market.
Last year, ASERCA, (Subsidies and Services for Agricultural Commercialization), the governmental agency that facilitates futures trading, subsidized exporting and channeling of 1.5 million tons of white corn into the meat industry. The company Maseca exported 600,000 tons of corn from the state of Sinaloa to the US and South America. Other purchasers sent 500,000 tons of white corn to domestic meat producers in Sonora, Sinaloa, Jalisco and Nayarit. ASERCA did not consider increases in demand and price increases on the international market. Thus Mexican farmers received a lower price for their white corn than the price set for imported yellow corn for tortillas.
The demand for yellow corn for ethanol production in the world market has increased every year since 2000. Last year, capitalizing on the rise in prices and a shortage of white corn on the international market, ADM and other agro-giants reported extraordinary earnings. They bought corn in the fall and winter of 2005 to 2006 from producers in the states of Sinaloa and Tamaulipas at 1,450 pesos a ton and in the spring and summer of 2006 at 2,200 pesos, but by the end of December they were able to command 3,000 to 3,500 pesos a ton, leading to an explosion in the price of corn tortillas.
Fifty-one percent of tortillas consumed in the country are made from whole corn masa, and 49% are made from corn flour. The corn flour industry is highly concentrated in Mexico with four companies now dominating the market. The Maseca Industrial Group holds 73% of the market share, while the companies Minsa, Agroinsa, and Harimasa comprise the bulk of the remainder. Annual consumption of corn including imports, as reported by the National Chamber of Corn Industrialization, was 5.5 million tons in 2004; 3 million tons were distributed by these four companies alone.
The role of the Mexican government:
The pact between the actors in the corn-tortilla cartel, coordinated by Acting President Felipe Calderón in an attempt to halt the rise in tortilla prices, quickly disintegrated. It had been based on joint agreements that lacked enforcement power, often lacked economic viability, and was reliant on the political goodwill of cartel agents.
The government intended to fix the maximum price of corn at 3,500 pesos a ton, which would cap the recent price inflation, yet mainly benefit the storage and processing industries that have purchased most of the ownership rights from corn producers.
Additionally, the government planned to increase the tax rate without tariffs in order to open the market dominated by these four Mexican corporations. Yet a scarcity of white corn exists on the international market, and yellow corn is being sold at more that $160 US per ton before factoring in storage costs. Corn shipping is a slow process—often taking upwards of a month per shipment—and therefore subjects importing countries to a greater risk of loss due to price fluctuation. Though the pro-import legislation is new, the practices perpetrated by the government and underlying conditions are not: discouraging of domestic production, gambling on unstable imports, and volatility in domestic corn prices are all tied to international market prices.
When the price of tortillas jumped eight and a half pesos per kilogram, it marked a 40% price increase that hampered the ability of millions of Mexicans to afford a dietary staple.
Further, the new policies benefit corn flour processors and tortilla distributors that can make adjustments in their profit margins, while disadvantaging the 70,000 tortillarias and small mills that make tortillas from whole corn. Maseca, Wal-Mart, and Mimbo use their control over prices to absorb much of the national tortilla market and displace small mills and tortillarias.
We demand that the Mexican government:
• Implement a real policy that encourages production of the population’s basic foods, especially corn, tortillas, and other foods designated as “basic and strategic” according to the “Food Security and Sovereignty” chapter of the Rural Sustainable Development Law. This policy should encourage domestic production by campesinos.
• Renegotiate the agriculture chapter of NAFTA and eliminate any commercial agreements on “basic and strategic” products for food sovereignty, especially corn and beans.
• Establish a floor price for corn and other basic food products that compensates the costs of production and that establishes a comparable standard of living to producers in the countries with which Mexico trades.
• Establish a mechanism by which the state regulates the market for corn and other basic foods, to be responsible for the regulation of prices, supply, imports, and exports. This mechanism should ensure that producers receive at least the floor price, and that consumers have access to basic foods at a reasonable price. In the event that the market alone fails to ensure reasonable prices, this mechanism should guarantee them with subsidies.
• Establish programs that encourage the commercial organization of producers, in which campesinos have preference, and eliminate subsidies to the biggest producers, corporate sellers, and processors of agricultural products.
• Introduce an antitrust initiative to discourage the monopolistic concentration of the basic crops market, which prohibits the organization of corporate cartels and the domination of important segments of the market by a small number of holders.
• Prohibit the planting of transgenic corn in the Mexican countryside, as this increases dependency of campesinos and producers on transnational seed producers, as well as threatens the diversity of corn varieties that exist in Mexico, while bringing minimal benefits.
• Establish programs to encourage modernization of small mills for whole corn with an aim to guarantee their efficiency and increase their profitability.
• Develop regulatory and strategic reserves and banks of basic crop genes, both on the state level and for campesinos. The campesino reserves should be subsidized by state grants and should allow the campesinos to hold reserves long enough to enable them to take advantage of price increases and to prevent price speculation.
• Guarantee a ceiling sale price of corn to small mills and protect against temporary price spikes. The government should also guarantee a maximum sale price of tortillas to consumers, subsidized by the State if necessary.
Speculation and artificial inflation of corn and tortilla prices have taught us that the market for basic crops should not be controlled by a small number of large corporations, and it is necessary that the state re-assume a strong regulatory role.
The volatility in corn prices on the international market, coupled with substantial price inflation in the last year, has brought to light the problems that accompany import dependency. This illustrates the need to create a national food sovereignty policy, with a focus on campesino production as its cornerstone.
Policy Recommendations:
• Establish policies that promote food sovereignty through campesino subsistence agriculture and organic production.
• Establish policies that promote production of corn from traditional Mexican seeds, and create nation- and region-wide seed banks to protect genetic heritage.
• Establish a new program for corn production that earmarks two million hectares of land for corn cultivation, principally for farmers with less than five hectares of land, and that provides various forms of support to farmers.
• Establish policies that finance and assist campesino-owned corn storage and distribution businesses.
• Designate 70% of the resources of the Rural Finance System to support corn production by small farmers.
• Strengthen campesino training and education.
• Strengthen producer/campesino culture.
• Use windfall oil profits to designate a fund for food production.
Action Plan for UNORCA:
• Hold conferences on corn, tortillas and food sovereignty in all states.
• Create information networks for UNORCA in all states and municipalities.
• Insist that the Sustainable Rural Development Law and its chapter on Food Security and Sovereignty be enforced.
• Prepare a campesino caravan to Mexico City, and march on January 31 from the Angel of Independence statue to the Zócalo.
