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Oaxaca Trip: NAFTA and Mexico’s Small Farmers

Posted January 21, 2010 by Ted Hesson

While in Oaxaca last week, I wrote a post about global debt and how it relates to Mexico. Although the post was an abbreviated history on the subject, I felt like it gave an overview of the lecture that our group had heard from our Witness for Peace delegation leaders.
The lecture touched on the effect of structural adjustment programs—those are when a lending body (ie, International Monetary Fund) asks a borrowing country (ie, Mexico) to make changes to their economy so that the country will hypothetically attract more foreign investment.
Structural adjustments might mean any number of things for a country: privatizing national industries, cutting public services, devaluing currency, or removing price protections and subsidies. All this is done under the premise that the country will become sexier to foreign investors.
According to what we learned on the trip, these changes didn’t bode very well for low-wage earners in Mexico. Since the 1980s, when the country first started borrowing from the World Bank and the International Monetary Fund—thereby rejiggering the Mexican economy through structural adjustments—minimum wage has increased by only 136 percent, while the cost of basic goods has risen 371 percent. The income of the poorest 20 percent of Mexicans fell from 5 percent of the national income in 1984 to 4.3 percent in 1992.
Then came NAFTA in 1994, which hit the Mexican agricultural sector hard. As part of the agreement, Mexico had to eliminate all tariffs on agricultural imports by 2008 (from what I understand, there are no longer any tariffs on agricultural goods).
That meant that small Mexican farmers wouldn’t be able to compete with subsidized U.S. imports, including corn. According to a 2002 article in Business Week, the average Mexican farmer then received $722 in annual subsidies, while U.S. farmers stand to collect $20,800 per year.
From 1990 - 2000, the market price for corn decreased 58.3 percent and and market price for beans decreased 45 percent.
Decreased subsidies hurt Mexican agriculture, but there are other NAFTA-related factors that affected this sector of the economy, as well. Support to small farmers from the Mexican government has declined by 31.26 percent since NAFTA came into effect, and the Mexican government has not enforced pre-NAFTA quota rules, which would limit agricultural imports.
In a country where 10 million people—a quarter of the workforce—live off the land, the inability to compete has increased poverty and forced more people to consider migrating, either to the U.S. or other parts of Mexico. Since NAFTA was enacted, 2 million people have been displaced from the agricultural sector while the rural poverty rate has climbed to 85 percent.
Here’s what the Witness for Peace information packet has to say about the change:
“Because [small farmers] can no longer produce food that is cheap enough to compete with U.S. imports, an increasing number of Mexican farmers have been forced to abandon the countryside. This is disrupting the social and cultural fabric of rural Mexico. It is not unusual for a small Mexican town to have lost half its population to migration over the past twelve years.”
In the small villages across the state of Oaxaca, the history of corn cultivation goes back thousands of years. But with rapidly growing Mexican imports—1/5 of corn consumed by Mexicans is now imported—those traditions seem headed for extinction.
With that in mind, our group traveled to the rural Mixtec village of San Juan Sosola, which I’ll talk about in my next Oaxaca blog post, which will most likely arrive on Monday (I’m taking tomorrow off).

For the rest of the Oaxaca trip posts, click the tag “oaxaca.”