Monday, May 20, 2024

Mexico places temporary 50% tariff on white corn exports

The Mexican government has announced a temporary 50% levy on exports of white corn, in an attempt to control rising prices of the staple commodity.

The decree, published in Mexico’s official federal gazette on Monday, will remain in effect until June 30, 2023.

“The supply and production of white corn in our country are important factors in determining its price and, therefore, also of the various consumer products made from it,” the decree states.

“In order to guarantee a sufficient supply, it is necessary to maintain national production in our country and ensure market conditions that allow stabilization of its price.”

The decree notes that white corn makes up 89% of Mexico’s grain production, with 332 kilograms per capita consumed annually in the country. Much of this is in the form of tortillas, which are a key source of calories in the Mexican diet.

According to data from Mexico’s national statistical institute (INEGI), the average price of tortillas in Mexico showed a 19% annual increase at the close of 2022, with some cities experiencing much larger price hikes.

This is part of an overall pattern of high inflation in the country, particularly in basic consumer goods, which the government has attempted to control by temporarily eliminating tariffs on imports of staple foodstuffs.

“One of the central tasks of the current administration is to establish a wage recovery policy, which cannot be disconnected from purchasing power, because in a scenario of high inflation, wage recovery is limited by price increases,” the decree on corn exports argues.

However, the tariff’s impact is likely to be minimal, given that the vast majority of Mexico’s white corn production is already consumed locally. Mexico produced almost 23 million tons of the grain in 2022, of which only 238,000 tons were exported between January and October, while 614,000 tons were imported.

Mexico is currently in trade tensions with the United States over President López Obrador’s move to ban imports of genetically modified (GM) corn for human consumption by 2024. While Mexico is self-sufficient in white corn, it imports large quantities of yellow GM corn from the U.S., mostly for use in livestock feed.

With reports from Reuters and El Financiero

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