Shucks for NAFTA
A disputed presidential decree in the Mexican nation-state aims to outlaw genetically modified corn by 2024 and gradually phase out the herbicide glyphosate.
Shucks for NAFTA
Après moi le déluge! [After me, the flood] is the watchword of every capitalist and of every capitalist nation. Hence Capital is reckless of the health or length of life of the labourer, unless under compulsion from society.
Capital, volume I
US capital, cornered
MEXICO CITY, MX – A disputed presidential decree in the Mexican nation-state aims to outlaw genetically modified corn by 2024 and gradually phase out the herbicide glyphosate. To various environmentalists and health-conscious consumers, this may seem like a positive move. However, we must be reminded, as Karl Marx noted: the bread of the poor is always quite different from that of the rich1.
Cargill
The United States has a well-known obesity problem. Mexico, on the other hand, surpassed the United States in 2013 to take the title of world leader in obesity.
Like many states, Mexico obtains the vast majority of its corn from private corporations, including significant commodity dealers like Cargill (CARGIL.UL) and Bunge. In a pre-NAFTA North America, Mexico spent approximately $1.8 billion annually on food imports. After NAFTA, Mexico spends roughly $24 billion annually on food imports as of 2011. Unsurprisingly, a significant portion of these exports from the United States to Mexico consist of unhealthy commodities such obesogenic foods.
For instance, exports of high fructose corn syrup, a highly caloric sweetener from the United States to Mexico have increased since NAFTA by a ratio of 863. The effects on the health of the residents of the Mexican nation-state are costly and palpable.
In 2009, the American company Cargill, Inc. filed a lawsuit against the Mexican government on behalf of Cargill de Mexico, a company that sells high fructose corn syrup. The lawsuit was filed after Mexico attempted to impose a 20 percent tariff on the manufacture and sale of soft drinks containing the substance. Cargill claimed that this action violated Article 1102 of the National Treatment, and the NAFTA panel agreed. The Mexican government was compelled to pay more than $77 million as a result2.
Cargill reported $114.695 billion in sales and $3.103 billion in profits for the year 2018. The company is the biggest producer of chicken in Thailand and supplies roughly 22% of the US domestic meat market. It also imports more goods from Argentina than any other company. The Cargill operations process every egg used in America’s McDonald’s.
In federal court, the International Labor Rights Fund sued Cargill, Nestlé, and Archer Daniels Midland in 2005 on behalf of young people who asserted they had been trafficked from Mali into Côte d'Ivoire and were being forced to labor on cocoa bean plantations for 12 to 14 hours each day without pay, with scant food and rest, and with regular physical abuse. Every third worker on the plantations under investigation was a child, according to the report's findings.
Sweet Corn
The United States corn industry has been adamant that it cannot easily or quickly switch to producing non-GMO corn in order to comply with the upcoming Mexican ban. Meanwhile, Brazilian and Argentine producers have told Mexican bureaucrats that they will be unable to compensate for the expected loss.
According to John Linder, a former president of the National Corn Growers Association and a director at MAIZALL, the vast majority of corn in the U.S., Brazil, and Argentina is grown using genetically modified seeds, «and there is simply no way to change this quickly enough to meet Mexico's import demands».
The head of the National Corn Growers Association, Angus Kelly, claimed that so far negotiations between U.S. and Mexican officials to revoke the proposed ban have «not been fruitful and have simply resulted in a lose-lose situation».
«They haven’t found a workable solution, and they’re pretty dug in, so we’re saying, ‘Alright, Biden Administration, y’all been good on a lot of things, but you’ve got to update USMCA, the United States Mexico Canada Agreement...».
Since all know that the West always prioritizes the concerns of the global south3, thus Angus Kelly continued:
«The most vulnerable people in Mexico would suffer the most because so many of these issues concerning the anti-GMO movement impact the poorest people the hardest. We simply can't understand how [Lopez Obrador’s GMO ban] would benefit Mexico's most vulnerable and overall population».
The cost of moving edible commodities from one country to another will reach 2 trillion dollars by the end of this year, an increase of more than 33 percent over the amount recorded before the pandemic, which in turn has caused the cost of these commodities to skyrocket, said Maximo Torero, chief economist of the Economic and Social Development Department of the Food and Agriculture Organization of the United Nations (FAO).
Financing these import costs in developing countries is becoming more difficult given the increase in the cost of credit and currency devaluations, among other repercussions of monetary policies implemented in several countries to curb inflation, Torero explained during the seventh world congress on rural and agricultural finance held in Michoacán. One of the risks with this escalation in credit costs is that the most vulnerable nation-states will not have access to food, including other commodities in the production chain, such as fertilizers, he added.
Shucks for the the northern neighbor too
According to a recently published report by the undoubtedly unbiased4 consulting firm World Perspectives, Inc., if Mexico follows through on the decree, «the economic repercussions will be disastrous for US farmers» – and Mexican consumers5.
By January 2024, glyphosate and GM corn are to be phased out, according to the plan signed by President Andrés Manuel López Obrador on January 1, 2021. This brings anxiety to the agricultural sector in the land of the free, given how United States is the main provider of the 17 million tonnes of GM corn that Mexico buys each year.
The study predicts the US corn industry would suffer losses of $3.56 billion in the first year after a complete ban, and $5.56 billion in the second. The corn sector would experience a $13.61 billion economic loss over the projected 10-year period.
Follow the Maze
Transgenic corn cannot currently be grown commercially in Mexico6.
However — and there is always a however, it appears — there are no challenges to the entry of maize imports, the majority of which are GM corn from the United States.
Mexico permitted the introduction of 72 transgenic events of herbicide-tolerant corn — primarily glyphosate — between the years of 2002 and 2018 to be utilized in direct human consumption and food processing. Nevertheless, no licenses for the importation of new transgenic corn crops intended for human food or animal feed have been approved during this presidency.
Additionally, in October 2021, Bayer was denied a permit by the Comisión Federal para la Protección against Riesgos Sanitarios for the upcoming importation of a glyphosate-resistant GM corn event.
Solving the Maze
On October 3, President López Obrador launched an agreement on anti-inflationary and anti-cost liberalization signed with 15 of the largest agri-food corporations operating in the country, nine of which have corn as their main input and have been fierce advocates of unrestricted corn imports: Gruma-Maseca (Gruma reported revenues of US$3.8 billion for 2014).
Gruma produces and commercializes corn flour and tortillas in the United States, Europe, and China. Gruma Corporation currently holds headquarters in China, based in Shanghai.
A project of the US-based Organic Consumers Association (OCA), Organic Consumers Association Mexico (ACO) reported that samples of white and yellow maize flours sold under the Maseca brand tested positive for glyphosate residues and its primary metabolite. The main component of Monsanto's Roundup weedkiller is glyphosate. Maseca's claims that they are selling a "natural" and "nutritious" product are deceptive, according to Ronnie Cummins, international director of OCA.
"Until the company agrees to source only non-GMO grains for its products, consumers in Mexico and the US who are concerned about pesticide contamination and GMOs should seek out organic non-GMO alternatives to Maseca flours."
Under this treaty, the Mexican government granted the firms a single, universal license for the import and distribution of food and inputs and exempts them from all permits and taxes, including health and foreign trade taxes.
This agreement has begun to bear fruit for the companies, which have already committed to deliver 400,000 tons of white corn from South Africa.
The World Health Organization designated glyphosate as a probable human carcinogen in March 2015.
The Kernel of Truth
Senators Chuck Grassley (R-Iowa) and Joni Ernst (R-Iowa) — both members of the Agriculture Committee — begged USTR Katherine Tai to intervene in Mexico's decision to stop importing genetically-modified corn after directly hearing from Iowa farmers. By January 2024, the planned prohibition would effectively phase out imports of 90% of American grain. Currently, 16 million tons of corn are exported annually from Iowa to Mexico.
In their letter to the ambassador, the Iowa senators declared:
«Any interruption to [corn export] shipments will severely affect our farmers and the state’s economy, and have dire economic consequences for the entire Corn Belt7. President Obrador’s decree is not only a non-starter for America’s farmers, but it is also impossible to implement…
Despite overtures to the Mexican government for nearly two years, there is little indication from the country’s leadership that it will adhere to its commitments under USMCA. The time has come for the Office of the United States Trade Representative (USTR) to intervene on this issue».
White corn, which is used to make the country's traditional tortillas, is largely produced domestically in Mexico, but yellow corn is employed in industrial foods like cereals and sauces, as well as livestock feed. It has been imported in large quantities for decades, primarily from U.S. suppliers.
Flakes for NAFTA
Bloomberg reported last month, however, that the "Mexican President Andres Manuel Lopez Obrador signaled he's softening his stance on a planned ban of a type of US corn amid US government pressure."
"AMLO said […] that he's thinking about allowing genetically modified yellow corn imports for livestock feed." This is a shift from previous government statements calling for the abolition of GMO corn by early 2024.”
During a routine news conference, Lopez Obrador attempted to assuage investor concerns by stating that the prohibition only applied to yellow maize that was GM and intended for human consumption.
Regardless, Mexico's decree may be in violation of the United States-Mexico-Canada (USMCA) trade agreement, according to U.S. Secretary of Agriculture Tom Vilsack, who met with Mexican government representatives on Monday of this week.
After the United States threatened legal action over Mexico's intention to ban genetically modified (GMO) corn in 2024, Andres Manuel Lopez Obrador announced that he was pursuing an agreement with Washington.
US weekly maize sales dropped by 67% to 602,700 mt, with Mexico buying the majority of the crop, a report released last week. Data from the US Department of Agriculture (USDA) indicated on Thursday that US weekly net corn sales fell by 67% to 602,700 mt in the week ending November 24, with more than half of the total being acquired by Mexico.
A Common Cornfield
“All labor” Marx wrote in Capital, “is originally first directed towards the appropriation and production of food.”
Under López Obrador’s administration more than 10% of the population8 in Mexico experiences food insecurity. In nine of the poorest Mexican states, that percentage rises to between 25 and 35%.
Still, the U.S. government continues to ask Mexico not to halt its corn exports, both for animal feed and human consumption. The White House Trade Representative, Katherine Tai, reiterated this request to Raquel Buenrostro, Secretary of Economy, in a meeting they held in Washington.
"Ambassador Tai re-emphasized the importance of avoiding any disruption in U.S. corn exports to Mexico for both feed and human consumption, and adherence to a science and risk-based regulatory approval process for all agricultural biotechnology products in Mexico," said the U.S. Trade Representative (USTR) in a press release.
According to data from the World Health Organization (WHO), NAFTA caused a drastic change in eating habits in Mexico, with more calories, carbohydrates and sugars. The abandonment of the milpa diet became more evident.
This change in the dietary habits of the Mexican population was defended, at the time, as a bastion of progress. The ‘primitive’ elements of the Mesoamerican diet paled in comparison to the colorful processing of the American edible commodities.
The arguments utilized resembled what, in Tools for Conviviality, Ivan Illich stated:
It has become fashionable to say that where science and technology have created problems, it is only more scientific understanding and better technology that can carry us past them.
The cure for bad management is more management.
The cure for specialized research is more costly interdisciplinary research, just as the cure for polluted rivers is more costly nonpolluting detergents. The pooling of stores of information, the building up of a knowledge stock, the attempt to overwhelm present problems by the introduction of more science is the ultimate attempt to solve a crisis by escalation.
As an example of Illich’s remark, we present the huitlacoche: a source of the essential amino acid lysine, which the body requires but cannot create. It contains levels of beta-glucans and proteins equal or superior to most edible fungi. The fungus is rejected by American and European diets as most farmers see it as blight.
However, genetic engineering, perceived as a 'neutral' application of science, sees the huitlacoche element of the corn as a pest. The USDA devoted years of research to eradicating huitlacoche through fungicides and hybrid corn species that are resistant to its spore.
"Genetic engineering […] implies, first of all, arrogance. The main element of GMO is the homogenization and standardization of corn. It is exactly the opposite to the diversity of corn. Thinking that in this place here, Oaxaca, that is the world center for the creation of corn where we have the greatest variety of corn, to have GMO implies having the destruction of our variety through the use of GMO.
One of the problems with the case of corn is that you know you have open cross-pollination through the winds. If you have here one plant with GMO you can contaminate a whole area. This will create with one single element the destruction, the homogenization of the plant.
The destruction of our diversity, and, in time, the creation of dependency on the companies that will sell to you or will force you to pay for your own corn. It is exactly arrogance, hubris, homogenization, destruction of diversity, and destruction of autonomy…" said Gustavo Esteva, founder of Oaxaca’s Universidad de la Tierra (University of the Earth).
Esteva dedicated his life to scholarship and solidarity with peasant and Indigenous peoples. He took part in the Zapatista insurrection and rose to prominence as one of the movement's most important negotiators and counselors.
Sowing Seeds of Discord
According to the ETC Group, 10 companies commanded 40% of the commercial seed industry 25 years ago. Today, only two corporations hold a monopoly: Bayer, which purchased Monsanto, and Corteva, which was formed by the combination of DuPont/Pioneer and Dow. The majority of the Mexican commercial seed market, including about 90% of the market for commercial corn seed, is controlled by these two companies.
The Syngenta Group (owned by ChemChina) and BASF are the two companies that come in behind them in the seed industry. They jointly control a majority of the Mexican market and more than half of the globe’s.
“The world’s largest agrochemical-seed firms have fortified their market control via consolidation and mega-mergers. Now they are feverishly investing in high-tech and digital technologies to further expand their already-solid oligopoly. That’s why the world’s biggest data companies – Apple, Alibaba, Amazon, IBM, Google, Baidu and Microsoft, among others – are now tightly entangled with industrial food production” stated the ETC Group9.
The world's largest asset management companies, including Blackrock, Vanguard, and State Street, are behind the greatest shareholders in the grocery retailing conglomerates Kroger (USA), Costco (USA), Ahold Delhaize (Germany), Carrefour (France), Tesco and Walmart (USA).
Coincidentally, and while pursuing the GMO corn ban, the same López Obrador granted a tariff-free license to the American multinational corporation Walmart. On October of 2022, Walmart de Mexico posted a net profit of 12 billion MXN. The State announced it would end bean and white corn exports, and ease sanitary measures on key foods to ‘combat inflation’.
López Obrador pointed out that the chain, Walmart, alone distributes 25% of all the food in Mexico.
The deal supplies Walmart with a Single Universal License by the State, expediting all import and trade of food. Walmex became the main issuer in the Mexican Stock Exchange's Prices and Quotations Index, surpassing Slim’s América Móvil.
The USMCA and The Cereal Killer
It was not the evisceration of the ancient syncretic diet the only consequence of the free trade agreement between Canada, Mexico, and the United States.
Prior to NAFTA, Mexico only imported corn and other staple foods when domestic demand was not met by local supply. For the millions of rural Mexicans whose lives depended on agriculture, the price paid for the maize they farmed decreased by 66 percent as a result of the NAFTA-spurred surge of cheap U.S. corn, causing many of them to give up on the activity in order to survive.
About 2 million Mexicans who worked in agriculture and associated fields lost their ways to pay their cost of living between 1991 and 2007. NAFTA membership for Mexico was contingent on reversing land reforms from the country's bourgeois revolutionary era constitution, which eliminated clauses that provided modest plots (referred to as "ejidos") to millions of people living in rural towns. Indebted farmers lost their land when maize prices fell, making it easier for foreign companies to buy valuable acres and turn them into massive plantations10.
With the advent of agribusiness and the removal of constraints on the sale of peasant land, agriculture in Mexico took a hit. Prior to NAFTA, immigration from Mexico to the US primarily originated in four or five Mexican states. Since NAFTA, people migrated from every municipality and state in Mexico, as well as from cities, towns, and small towns.
Although the price paid to Mexican farmers fell as a result of NAFTA, the price of tortillas, a staple meal in Mexico, increased 279 percent in the first 10 years of the agreement. This contrasts against the predictions of free trade theory, which holds that liberalization will benefit imports because all consumers will pay less, whereas harm will only be experienced by those in sectors that are seriously influenced by imports.
According to a study by Public Citizen’s Global Trade Watch11, NAFTA proponents asserted that the deal would raise living standards in Mexico and reduce immigration to the US. During the dispute over NAFTA, the former president of Mexico, Carlos Salinas, famously said that the U.S. had to decide between "accepting Mexican tomatoes or Mexican migrants that will harvest them in the United States."
In the three years before to the implementation of NAFTA, the number of immigrants from Mexico to the United States held steady, according to the Pew Hispanic Center. However, during the first six years of NAFTA, the annual number of immigrants from Mexico had more than doubled, coinciding with a flood of corn that had earned U.S. government subsidies into Mexico.
The bread of the poor is always quite different from that of the rich, reminds us Marx.
The price of food has almost continuously risen, while the price of manufactured and luxury goods has almost continuously fallen.
Take the agricultural industry itself; the most indispensable objects, like corn, meat, etc., rise in price, while cotton, sugar, coffee, etc., fall in a surprising proportion. And even among comestibles proper, the luxury articles, like artichokes, asparagus, etc., are today relatively cheaper than foodstuffs of prime necessity.
In our age, the superfluous is easier to produce than the necessary.
– Karl Marx
Marx and Engels, Collected Works, vol. 19, 254.
Similarly, the U.S. manufacturer of high fructose corn syrup, Corn Products, Inc., filed a lawsuit on behalf of its Mexican subsidiary Arancia CP due to the similar tax in Corn Products International v. United Mexican States. According to Corn Products, this tariff would drive away its suppliers and essentially wipe out the market. And once again the ruling was decided against Mexico, as the tribunal gave Corn Products International a $58.4 million compensation.
C’mon, now.
World Perspectives, Inc is a Washington D.C. based consulting firm providing a wide range of market and policy strategic services to the private and public.
Oh, for economic repercussions to be disastrous for this vulnerable demographic. We can’t imagine what that must be.
La Jornada, Ana De Ita, Maíz transgénico e importaciones: señales encontradas, (https://jornada.com.mx/2022/11/22/opinion/016a2pol), 2022.
Aw.
Hernández-Díaz, S; Peterson, KE; Dixit, S; Hernández, B; Parra, S; Barquera, S; Sepúlveda, J; Rivera, JA (1999-11-29). "Association of maternal short stature with stunting in Mexican children: common genes vs common environment". European Journal of Clinical Nutrition. 53 (12): 938–945.
ETC, Food Barons 2022: Crisis Profiteering, Digitalization and Shifting Power. 2022.
Citizens.org, NAFTA’s Legacy for Mexico: Economic Displacement, Lower Wages for Most, Increased Migration.
Public Citizen’s Global Trade Watch, NAFTA Led to Surge in Migration and Dangerous U.S.-Mexico Border Crossings, 2018.