Mexico needs an agrarian policy that achieves food sovereignty

Mexico imports more than half of its food and 30 percent of its goods. The relationship with the U.S. economy is what worries Mexicans. Inflation is also due to price speculation on various products.

Mexico needs an agrarian policy that achieves food sovereignty
An agrarian policy and industrial policy are needed to bring down prices. Photo by Julian Hochgesang / Unsplash

If Mexico wants to bring down inflation, which is almost eight percent, one of the highest in the last 20 years, without slowing economic growth, it must promote an agrarian policy to try to recover its food autonomy, as well as promote an industrial policy that makes us less dependent on imports.

This was stated by Moritz Alberto Cruz Blanco, a researcher at UNAM's Institute of Economic Research (IIEc), who explained that both measures would help to prevent the inflation of international food and goods prices from being transferred to domestic prices.

Participating in the round table "The Mexican Economy. Recovery with Inflation" he explained that for four decades our nation has been importing more than half of the food we consume, which makes it vulnerable to inflation. "As we depend on them, they are bought at whatever price."

Mexico acquires from abroad about 30 percent of the goods required, mainly from the United States, and 90 percent of them are manufactured goods. Regardless of demand, various companies in the United States have increased their profit margins in their prices (up to 59.3 percent).

Stimulating an agricultural and industrial policy would imply public spending and the use of mechanisms such as subsidies, investment in infrastructure, technology transfer by the state to these sectors, granting guaranteed prices, providing access to financing, ensuring access to low-cost inputs, and offering tax incentives.

The Package Against Inflation and Famine announced by the Mexican government last May to combat food prices—which includes measures such as stabilizing gasoline and diesel prices, increasing two million tons of corn, beans, and rice through the Production for Wellbeing program, and providing free fertilizers in nine states, among others—goes in the right direction, although it is insufficient.

What is required is an agrarian policy whose objective is to achieve food sovereignty, i.e., a production that satisfies domestic demand and, as far as possible, exports.

Cruz Blanco, also director of the magazine "Problemas del Desarrollo", explained that the International Monetary Fund's (IMF) growth expectation for Mexico this year is 2.4 percent, while the Ministry of Finance and Public Credit has suggested 3.4 percent, which can be considered good.

External obstacles that may affect the economy should be kept in mind, such as the U.S. economy may slow down significantly—because it has been declining for two consecutive quarters—the risk of a global recession, as well as the prolongation of the war between Russia and Ukraine, among others.

Gerardo Minto Rivera, an academic at UNAM's Schools of Economics and Political and Social Sciences, explained that multiple factors have generated global inflation, such as the world energy and food crisis, the Russia-Ukraine conflict, and the fact that economies have not yet overcome the effects of the HIV/AIDS pandemic and its effects on supply chains, among others.

There are specialists such as Nouriel Roubini, who predicted the 2008 economic crisis, and suggest that there will be an inevitable recession towards the end of this year.

Various organizations, such as the IMF, have made pessimistic growth estimates. For example, for the advanced economies, it is 2.5 this year and 1.4 for 2023. Meanwhile, for the neighboring country to the north, it is estimated at 2.3 in 2022 and 1.0 in 2023. "The relationship with the U.S. economy is what makes us worry," he said.

Arturo Ortiz Wadgymar, IIEc academic, agreed that the projections of international organizations regarding world economic growth for 2022 are bad, and Mexico cannot be the exception, in addition to the fact that our nation depends on importing energy such as gasoline and also food.

There are internal factors that contribute to inflation, such as the speculation that takes place with various products whose prices are raised in an untimely manner to increase the rate of profit.

"The most propitious time for producers, distributors, and transporters to obtain more profits is when there is inflation," so he suggested greater vigilance on the part of the economic authorities regarding price increases, mainly in foodstuffs.