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Tue, May 27, 2008 - Page 10 News List

Mexico to cancel tariffs to counter food price hikes


Mexican President Felipe Calderon said on Sunday that the government would eliminate tariffs on wheat, corn and rice as part of a plan to counter rising food prices that have provoked street protests.

Calderon blamed high food costs on global factors, including rising energy prices, soaring food demand in China and India and the use of corn for ethanol production.

But some Mexicans point to the elimination of import protections under the North American Free Trade Agreement, or NAFTA, and several agricultural leaders said Calderon’s initiative would only hurt national producers.

Calderon, a conservative elected in 2006, also said a quota of beans would be imported tax-free and duties on powdered milk would be slashed by half. Tariffs will also end for sorghum and soy pasta.

“We will not allow the poorest families to pay the consequences of a situation created beyond our borders,” he said.

The president promised several measures to help farmers, including modernizing irrigation systems for 214,000 hectares by the end of the year. He said that would be three times faster than the current rate of 60,000 hectares per year.

Calderon said the government would abolish duties on nitrogen fertilizer and chemicals needed to manufacture fertilizer.

And he promised a preferential credit system to help about 500,000 small farmers buy fertilizer and pay after the harvest.

Mexico’s consumer prices rose 4.55 percent in the 12 months ending last month, led by the cost of tomatoes, chicken, bread, avocados, plantains and cooking oil. It was the biggest inflation increase since 2005. Last year, tortilla prices doubled, in part because of the US ethanol boom, provoking street protests.

On Sunday, farm groups accused Calderon of offering only short-term solutions that would do little to help consumers and would hurt producers.

“The government is making emergency imports, but its policy is not accompanied by a serious reflection of the failure of Mexican agriculture,” said Margarito Montes Parra, secretary-general of the General Union of Workers and Peasants.

Small farmers have long complained about dwindling government support programs such as state purchasing agencies and distribution networks.

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