Biofuels and Tortillas: A US-Mexican Tale of Chances and Challenges

The Environmental and Energy Study Institute and the Heinrich Böll Foundation held Biofuels and Tortillas: A US-Mexican Tale of Chances and Challenges, a discussion on the impacts of US demand for ethanol on world markets, specifically Mexican tortilla markets.

A few weeks ago, hundreds of thousands of Mexicans were taking to the street to protest rising prices for tortillas, a food staple especially for the poorest of Mexicans. While Mexico has been traditionally an exporter of corn, more than ten years into the North American Free Trade Agreement (NAFTA) with Canada and the United States, Mexico has become increasingly dependent on growing corn imports from the United States. In the wake of rapid NAFTA implementation, many Mexican farmers have left the countryside as they were unable to compete with subsidized US commodity prices. More recently, American corn prices have risen substantially as domestic demand for corn has increased for the production of bioethanol, a renewable fuel, and thereby affecting tortilla prices in Mexico. With the US Administration pushing for a rapid expansion of the domestic use of alternative fuels such as bioethanol in next few years, many agricultural experts forecast that US corn exports, including those to Mexico, could decline significantly. For Mexico, this could mean the need to encourage higher domestic production and to reduce its reliance on imports in order to increase the country’s food security.

While the debate on the desirability and increased use of biofuels in industrialized countries is often simplistically and wrongly pitted as “fuel vs. food”, the example of the Mexican tortilla price crisis does illustrate that the linkages between biofuels, agricultural trade policies, rural development strategies, both domestically and abroad, should be explored and analyzed more thoroughly.