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Baja Government Attempts to Stave Off Corn Shortage

The rising price of corn is raising a political uproar in Baja as tortilla prices skyrocket. A projected diminution in the corn harvest due to frost blight in Baja and other corn-growing regions has led to market manipulations from both free-marketeers and the Mexican government.

A trainload of 25 toneladas of corn recently arrived in Baja from the state of Querétaro, the government’s first shipment of a promised 4000 tons to offset the staggering cost of tortillas to the average Mexican household.

The price of corn has more than doubled since January, rising from the equivalent of about $350 a ton to $680 a ton (as of March 7). According to Baja California agricultural secretary Antonio Rodríguez Hernández, the rise in price is due to speculators in the commodities markets anticipating an impending shortage, since the frost-bitten cornfields are not due to be harvested until June.

Tortilla manufacturers have been buying corn at the higher prices and are passing along the increase to their customers, arousing a political uproar from consumers that has led to governmental efforts to beat down the markets by flooding them, at least temporarily, with surplus corn reserves.

Baja economic development secretary Alejandro Mungaray Lagarda said that the State has no intention of trying to compete with private suppliers of corn; the State wants to support the small-time tortilla manufacturers who, when the price of corn grows, are forced out of the economic loop by the big national tortilladoras.

Source: Frontera

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The rising price of corn is raising a political uproar in Baja as tortilla prices skyrocket. A projected diminution in the corn harvest due to frost blight in Baja and other corn-growing regions has led to market manipulations from both free-marketeers and the Mexican government.

A trainload of 25 toneladas of corn recently arrived in Baja from the state of Querétaro, the government’s first shipment of a promised 4000 tons to offset the staggering cost of tortillas to the average Mexican household.

The price of corn has more than doubled since January, rising from the equivalent of about $350 a ton to $680 a ton (as of March 7). According to Baja California agricultural secretary Antonio Rodríguez Hernández, the rise in price is due to speculators in the commodities markets anticipating an impending shortage, since the frost-bitten cornfields are not due to be harvested until June.

Tortilla manufacturers have been buying corn at the higher prices and are passing along the increase to their customers, arousing a political uproar from consumers that has led to governmental efforts to beat down the markets by flooding them, at least temporarily, with surplus corn reserves.

Baja economic development secretary Alejandro Mungaray Lagarda said that the State has no intention of trying to compete with private suppliers of corn; the State wants to support the small-time tortilla manufacturers who, when the price of corn grows, are forced out of the economic loop by the big national tortilladoras.

Source: Frontera

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Comments
6

A couple of notes. First, price of corn tortillas are subsidized by the government, so prices haven't risen sharply; a kilo of tortillas (2.2 lbs) costs around 16 pesos (less than a dollar and a half) and they can be found even less expensive in the large supermarkets (although the quality isn't as good as the independent makers). Second, while there may be a shortage in Mexico due to some frost, the price of corn has risen sharply world wide due to increased usage of corn for biofuel. Commodities speculators are taking positions in the futures markets based almost entirely on that fact.

March 14, 2011

Refried, you have the basic reason for the runup in corn prices well pegged. Making ethyl alcohol for motor fuel is just crazy, especially in the US. Even if we diverted our entire corn crop to fuel--which can never happen--it would not replace our need for foreign petroleum. Corn doesn't just show up in tortillas. It is fed to hogs, steers, and poultry. When the price of corn goes up, that percolates through to meat and eggs and many other foods, driving their prices up.

I had the impression that subsidized tortillas went away about 15 years ago. But I must admit that it has been about that long since I bought a kilo of them in TJ or Tecate. For a long time, a kilo was only about 35 cents! You paid slightly more if they were wrapped in a bit of newsprint paper than if you took them unwrapped.

If we want to hold the line on food prices, the first step is to insure there is plentiful corn available for feeding livestock and for feeding ourselves.

March 14, 2011

When I first lived here, I think that tortillas were 50 U.S. cents per kilo. And wow, you took them home still hot and ate some with just butter and they were amazing. So far as the government fixing the price, my understanding is that they do, but I could be wrong about that - it could have gone away some years ago. My wife would know, I'll ask her when she gets home tonight.

March 14, 2011

Using corn for biofuel is stupid. There is just no energy benefit to using plant biomass for liquid fuel. It is not a sustainable strategy.

For example:

Corn requires 29 percent more fossil energy than the fuel produced, switch grass requires 45 percent more, wood biomass requires 57 percent more, soybean plants requires 27 percent more and sunflower plants requires 118 percent more fossil energy than the fuel produced.

How was the analysis done? In assessing inputs, such factors as the energy used in producing the crop (including production of pesticides and fertilizer, running farm machinery and irrigating, grinding and transporting the crop) and in fermenting/distilling the ethanol from the water mix.

Although additional costs are incurred, such as federal and state subsidies that are passed on to consumers and the costs associated with environmental pollution or degradation, these figures were not included in the analysis. So along with inflationary pressure on the plant for other uses, it actually costs even more.

The problem is the U.S. is desperate in trying to replace these liquid fuels for oil. But producing ethanol or biodiesel from plant biomass is a bad plan, because you use more energy to produce these fuels than you get out from the combustion of them. The government spends more than $3 billion a year to subsidize ethanol production when it does not provide a net energy balance or gain, is not a renewable energy source or an economical fuel. Further, its production and use contribute to air, water and soil pollution and global warming.

March 15, 2011

There are very few fuel sources currently employed for use that do not somehow add to global pollution. As such, I have long suspected that amazingly wealthy and powerful commodities speculators have had something to do with the use of grains and corn in the manufacture of fuel, so far as "donating" to their favorite government representatives to buy into it.

The most simple and cost effective thing to do is to continue to pull fossil fuels out of the ground. Yes, it pollutes. But if we - humanity in general - are willing to walk a fine line between destroying the planet and living somewhat comfortably, we could use the time we buy in order to develop truly green energy sources, such as finding a way to harness hydrogen without using fossil fuels in order to do so.

I doubt this will happen, though. Whoever controls the oil reserves controls the future, right? Except I think that some elitists have discovered that, when packaged properly, oil might as well be corn or soybeans or any other commodity that a good writer and a handful of scientists can market as a more "responsible" way to provide energy to the world. Instead of simply controlling the future, they are then controlling the futures markets.

March 15, 2011

Odd that we've seen nothing more reported on this alarmist matter. Was it all just a scare, or has corn actually increased in price that much?

June 14, 2011

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