More investment in irrigation and technology is needed to reduce Mexico’s chronic dependence on U.S. imports.
BY GUILLAUME CORPART MULLER AND MANUELA D'ANDREA
March 2009 marked a historic moment for Mexico’s agricultural sector. After years of debate and open confrontation between private companies and environmentalists, the Mexican Ministry for Agriculture changed the Bio-Safety Law, which regulates the use of genetically modified organisms (GMO), to allow the planting of genetically modified corn for experimental purposes. This is the first of several steps which will eventually lead to the commercialization of transgenic corn – or GM corn -- in Mexico by the end of 2011.
Across the globe, corn is the second most important genetically modified crop, second only to soybean. The rapid spread of GM corn is based on the promise of improved crop yields. Companies marketing GM corn say crop yields can increase by as much as 15 to 20 percent compared to traditional local varieties. As a result, GM corn has been welcomed by the Mexican government as a solution to the country’s chronic corn supply deficit and its dependence on U.S. imports.
MOST IMPORTANT CROP
Corn has always been Mexico’s most important crop and the basis of Mexican diet. But despite being the birthplace of corn and the world’s fourth largest corn producer, Mexico cannot meet internal demand. In 2008, the country imported roughly 8 million tons of corn -- mainly yellow corn for animal feed – a 40 percent increase over import levels 20 years ago. By opening up the market to GM corn, the Mexican government hopes to increase domestic production and lower imports. However, embracing GM corn alone will not be enough to bring Mexico’s farming sector up to international agribusiness standards.
The United States is the global frontrunner in GM corn. Since its first introduction in 1996, the percentage of cropland planted with transgenic corn in the U.S. has skyrocketed. According to the U.S. Department of Agriculture, 80 percent of the 32 million hectares planted with corn in 2008 were genetically modified varieties, up from only 25 percent in 2000. Thirteen years after the introduction of GM corn, studies indicate that the increase in crop yields resulting from the implementation of genetic engineering has been limited, an average 3-4 percent. However, the overall U.S. average crop yield shows an important and constant trend towards stabilization following the introduction of GM corn.
Stabilization of crop yields means more consistent outcomes for farmers, thus reducing the impact of adverse weather conditions, insect infestations and other calamities. This guarantees better overall income flows for farmers, which in turn triggers new investments in farming equipment and technology, and an increase in overall production. This kind of virtuous cycle would be welcome in Mexico where the majority of farmers still depend on favorable weather conditions to guarantee a stable income.
Indeed, the reality of Mexican agriculture is far removed from that of its northern neighbor. Mexican corn production is characterized by low technology and small-scale agriculture. Of the 2 million Mexican corn producers, 85 percent cultivate fields smaller than five hectares, using mainly indigenous varieties. Hence, most are subsistence farmers, producing only enough for their own families’ consumption.
In addition, almost 90 percent of Mexican corn is produced in the spring-summer season, indicating that only a small part of the cropland benefits from irrigation, which would allow a second harvest in the autumn season. Finally, 26 percent of national production is concentrated in the southeast of Mexico, a region characterized by traditional agriculture – with some practices dating back to the ancient Mayas – minimum investment, and a high dependence on government subsidies.
Given these severe limitations, it will be hard for GM corn to make inroads among Mexican producers. And for GM corn to have a significant impact, a number of other changes in Mexican agriculture will need to take place. Improving the overall technology level of farmers will be of vital importance, together with promoting and implementing a number of commonly accepted best practices. These include:
- Crop rotation, which helps prevent soil depletion and erosion, thus maintaining soil fertility, and helping to control weeds and pests;
- Investment in irrigation systems, which could capitalize on the favorable climatic conditions, especially in the southern region of the country; and
- Closer collaboration among national, as well as international, research institutes to improve and further adapt local corn varieties to meet the micro-climatic conditions of the country.
GM corn represents an opportunity for Mexico to increase its domestic corn supply in the medium-to-long term. Even if crop yields won’t dramatically improve after the introduction of GM corn, stabilization of farm incomes will help spur producers to invest in technology and mechanization. However, in order for GM corn to have a significant impact on production, efficiency and competitiveness, the government as well as private companies promoting this new technology will have to tackle the realities of Mexican farming: low technology levels, lack of investment and widespread resistance to change.
Guillaume Corpart is Associate Managing Director of Market Intelligence in Kroll’s Mexico City office. Manuela D'Andrea is a Market Intelligence Analyst, also based in Mexico City. This article is republished with permission from Kroll Tendencias, the company’s monthly newsletter.