Much ado about tortillas and ethanol

But is the real villain here biofuels? What about trade rules written at the behest of multinational agribusinesses?

Published April 6, 2007 9:14PM (EDT)

Biofuel critics have been quick to finger corn-based ethanol as the chief villain responsible for the spiraling price of Mexican tortillas over this past winter. It has been exhibit No. 1 in making the case against the premise that biofuels can effectively substitute for fossil fuels.

On March 16, the Environmental and Energy Study Institute (EESI), a nonprofit organization "dedicated to promoting environmentally sustainable societies," held a two-hour panel discussion on the topic: "Biofuels and Tortillas: A U.S.-Mexican Tale of Chances and Challenges."

This week, EESI posted an audio recording of the panel discussion on its Web site. I just finished listening to the first speaker, Victor Quintana, a professor of sociological theory and social movements at the Universidad Autonoma de Juarez, Chihuahua, and a leader of the rural grass-roots organization Frente Democratico Campesino. Quintana, a longtime critic of globalization, sketched out a more complex view of why tortilla prices shot up than what we've been hearing so far in the food vs. fuel debate.

Quintana said that when tortilla prices rose in January, the government blamed ethanol. But there were other factors, including an increasing demand for grain by livestock owners, increases in gasoline and electricity prices, and the dominant role in the corn marketplace enjoyed by the American agribusinesses Cargill and Archer-Daniels-Midland, which owns a big stake in Mexico's biggest tortilla maker, Gruma. As an example, Quintana asserted that Cargill and Gruma had sold 98 million tons of white corn originally intended for human consumption as livestock feed. The diversion of that corn played a critical role in pumping up tortilla prices.

The government, said Quintana, was helpless to do anything, since as a result of acceding to Washington Consensus demands for privatization and trade liberalization, in addition to the requirements of NAFTA, its long-standing mechanisms for controlling grain prices and ensuring sufficient grain supply had been abandoned. For example, Mexico no longer maintains a strategic grain stockpile.

It has been well-documented by critics of globalization that one of the chief consequences of trade liberalization between the United States and Mexico is that it became cheaper to import corn than to produce it locally.

Thus leading to Quintana's grand summation:

"Mexican government policies have fostered growing food imports and a decline in per capita production of grain and the concentration in just a few hands of the marketing and production of corn and corn flour. This has not meant cheaper and better food for consumers, nor has it meant better working conditions or incomes for campesinos. Quite to the contrary, since the coming into force of NAFTA, two million campesinos have abandoned the countryside because they can't compete with U.S. production of corn at artificially low prices."

"Just to give you an idea, for each 30-ton container of corn that Cargill imports to Mexico we send back two undocumented migrants from the countryside."

From Quintana's perspective, the real problem is not that the rise in corn prices resulting from the boom in ethanol contributed in part to the rise in tortilla prices, but that as a result of "reforms" that handed control over the grain market to American corporations, Mexico lost control over food policy. "We have lost our food sovereignty," he lamented.

This is a key distinction that needs to be made at every opportunity. There may well be ways to sustainably farm energy crops that generate income for rural farmers without causing a crimp in food supplies for poor people. But as long as the rules of the game are written to benefit multinational corporations whose sole goal is to maximize profit -- not sustainability, not affordable food staples, and definitely not social equity -- then all we can look forward to is market manipulation with deleterious downstream impacts for the environment and social welfare.

High grain prices do not have to be a disaster. If the profits generated go to small farmers, they could be a huge boon for rural economies in the developing world, especially if local governments maintain the power to cushion the impact on poor urban dwellers. But if the local farmers have already been wiped out by unfair competition from giant agribusinesses, and the profits are concentrated in the hands of the wealthy, then the age of biofuels most likely will not end very well.

We have an opportunity, now, says Quintana, to make significant changes.

"A cycle of energy and food is drawing to a close -- the cycle of low international prices for basic cereal grains and the predominance of hydrocarbons is coming to its close. In this cycle the key actors were the agribusiness corporations and the oil corporations. It depends on us that the next cycle of food and energy will not see just a change in control from the oil transnationals to the biofuel transnationals, but that it needs to be a cycle in which energy and food are dominated by small and medium producers in local communities."

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization How The World Works Latin America Mexico