What Was Promised, What Was Delivered, and How We Can Do Better with NAFTA Renegotiations
“NAFTA’s impact on small-scale agriculture in Mexico and an Agenda for Reforms”
- Mexico didn’t “win” NAFTA (and especially not small farmers)
* Low growth and high poverty in the agricultural sector. Mexican growth overall averaged only 2.6% yearly over the NAFTA period to date. This rate is far below the previous period and below almost all other Latin American countries during the same period. Mexico’s low growth rate levels out to negligible growth per capita under NAFTA and has been insufficient to improve basic standards of living or generate jobs for its population, including that part of the population forced out of the countryside to the cities to seek employment. The growth rate in the agricultural/livestock sector was only 1.7% annual average, about zero per capita.
Growth in Mexico has also been below the US, despite starting at a much lower level. This means that the promises of convergence between the two economies, brought about by a higher growth rate in the less developed country, turned out to be false and instead the inequalities deepened between nations and, especially, within nations.
The number of people living in poverty grew under NAFTA to 55.3 million in 2014—nearly half the population. Twenty-eight million men, women and children experience hunger (food poverty) and they’re concentrated in the rural areas where food is—or was—grown. Agriculture’s contribution to the GDP dropped from 5% to an average 1.87%.
* Flood of imports, industrial production in the hands of transnational corporations and the loss of food sovereignty.
From near self-sufficiency in the staple corn in particular, Mexico now imports 46% of basic foods–about a third of corn–almost all of it from the United States. In 2016 that came to a record of nearly 14 million tons. Mexico has a negative trade balance in agriculture, although the past few years it has been slightly positive with the US mostly due to avocados and seasonal vegetables. The idea of ‘exports versus imports’ blurs the line because huge agribusiness transnationals like Cargill, ADM and others that moved into Mexico after NAFTA do both, and reap benefits on both sides. Although they are the face of “free trade” in the sector, they also receive hundreds of millions of dollars in subsidies from both governments every year.
* Loss of livelihoods and migration
As U.S. exports to Mexico rose, producer prices plummeted. This affects even producers who are largely subsistence farmers. Mexico’s rural sector lost 4.9 million jobs, which was only partially offset by job creation in agro-export crops, leaving a net loss of more than two million farmers forced off the land. This meant an estimated 6 million people of working age were forced to leave the countryside to cities or the US, mostly young men. [i] While urbanization is a tendency worldwide, forced migration from the countryside under free trade has intensified in Mexico with few possibilities of employment in industry and without free choice.
In many cases, that leaves women to try to make a living for families off remittances and crops that they often have to sell below the price of production, and often without full recognition of their land tenure rights. Their families are separated as they combine survival strategies between farming at home under worsening conditions with sending some members to work in the U.S. Shortly after NAFTA, half a million Mexicans a year were migrating to the United States; in the NAFTA period, some 8 million Mexicans have migrated north. The pace has dropped off considerably in recent years, leaving a negative net migration flow as more are deported or return than new arrivals.
44% Mexican migrants from rural area sinc nafta despite 255 poopularion there.
Calculations vary, but undocumented workers make up half to 70% of the estimated 2.5 million farmworkers in the United States. These workers are unable to exercise basic labor and human rights and live under the threat of imprisonment and expulsion. Substandard labor conditions are a form of unfair support for U.S. agricultural profits and a violation of basic human rights.
This vicious policy cycle of: imports-displacement-forced migration-criminalization that thousands of migrants are caught in, makes no sense on the surface of it until one examines who benefits. On both sides of the border, agribusiness producers win while family farmers and farm workers lose out.
* Elimination and prohibition of government support programs
The preliminary results of a survey on the impact of NAFTA of 54 campesino organizations in 19 states reveals that one of the major negative impacts has been the loss of government programs to support small farmers, who make up 85% of corn-producing farms in the country. This includes the elimination pre- and post-NAFTA state support programs to provide storage facilities, price supports, marketing, credit, fertilizers, etc. Family farmers in Mexico need a managed sector to guarantee livelihoods, access to quality food and transitions to sustainability. So do farmers in the United States.
* Increased use of water, pesticides and agrotoxins.
The implantation of the industrial model of large-scale agriculture in northern Mexico has increased the use of pesticides, herbicides and other agro-toxins. For example, annual expenditures on pesticide imports rose from approximately $104 million in pre-NAFTA years to over $545 million in 2012.
Year-round irrigated production is depleting scarce water supplies in the semi-arid north where Cargill and others produce. The country has so far staved off the entry of GMO corn due to concerns of contamination and social impact as the world center of origin of maize, but pressure from Monsanto continues.
The increase in maquiladora industries of 30%[i] between 1994 and 2005 caused high levels of pollution, toxic waste and water shortages, especially in the border region. Between 1993 and 2004, toxic pollution from manufacturing more than doubled in a number of Mexico’s border states.[ii] The OEDC estimated that Mexico lost $ due to environmental degradation in 2010 alone.[iii]
VICIOUS POLICY CYCLES: All these impacts have a direct effect on the United States. In addition, NAFTA’s strangling of Mexico’s rural sector has propelled the growth of organized crime: poppy cultivation grew from 5,000 hectares in 1995 to 32,000 in 2016, While growth is largely due to increased demand in the United States, high poverty and unemployment facilitates recruitment in the Mexican countryside.
- But neither did US family farmers.
Mexicans complain that U.S. farmers are dumping products below cost of production due to high US government subsidies. US subsidies averaged $16 billion year between 2002-2007, while in Mexico the total for all farm support programs came to $1.3 billion in 2004. But these billions of dollars are not helping U.S. farm families. Their comment to the USTR reads: “Prioritizing overproduction of US agricultural products for trade locks in a pattern of low farmgate prices and fails to address very real problems of farmers’ ability to stay on the land and the environmental sustainability of US agribusiness. These problems will be exacerbated not solved, simply by increasing exports for multinational agribusiness firms.”
In both countries, as prices go down small farmers have responded by producing more to compensate, and prices continue to fall. This only benefits the traders and speculators.
During NAFTA negotiations, Mexican farmers realized they had far more in common with US family farmers than they thought.
- So who did benefit? Transnational agribusiness corporations
The main thing US and Mexican farmers have in common is that both are up against a handful of transnational food corporations that dominate the international market, manipulate public policy, and gain markets and production capacity under NAFTA. They have won huge awards from the special tribunals (see Cargill in the fructose-sugar case) to the detriment of small farmers in Mexico, who hold 80% of farms.
Corporate control of the food system locked in by NAFTA not only starves people in Mexico. It imposes a profoundly unhealthy food system for the entire region. Mexico now has villages where malnutrition exists alongside obesity among the poor, due to the cheap processed food imported from the United States. With talk of renegotiation, citizen movements are again heating up and seeking each other out across borders to protect their health, their livelihoods and their rights. What we eat, how we eat, and even if we eat will depend on their efforts.
A Beneficial Trade Agreement for Small Farmers
So what would a beneficial trade agreement look like for Mexican small farmers? The results of the surveys show small farmers are not afraid to leave NAFTA behind. They propose: (from UNORCA survey, Chapingo University, ANEC and others):
- Remove basic foods from the agreement, replacing the agricultural chapter with one oriented to reducing dependency on US surpluses, and restoring and supporting local production. This includes the basic foods included in Mexico’s Rural Development Law: corn, sugarcane, beans, wheat, rice, sorghum, coffee, eggs, milk and meat and fish. Mexico’s Constitution was reformed in 2011 to include the right to “nutritional, sufficient and quality food”, a right the current system fails to guarantee.
- Restore government programs, establishing inventory management and national grain reserves. The government should also provide programs to increase basic foods production, support agro-ecology networks, rebuild the domestic market and create storage facilities so farmers don’t have to sell at whatever prices coyotes offer at harvest.
- Create long-term programs, multi-year planning, credit and an effective rural development bank.
- Reject IP rules that inhibit seed saving. Mexico does not have this now and it would be a death sentence for Mexican small farmers and seed biodiversity.
- Reject new biotech without adequate environmental and social impact studies. Respect the country’s right to regulate or limit technologies deemed harmful like GMOs in Mexico. The Trump administration mission to deregulate private industry may mean pressure to lower testing times and standards. This must not be allowed since it could do permanent damage to the farm economy and the planet.
- Add immigration chapter: Include the right to migrate, the right to stay home and full labor rights for migrant farmworkers, other workers and their families.
Agriculture makes multiple contributions to society besides commodity production: employment and income, social security and stability, it’s a mechanism of environmental, biodiversity and scenery protection; it creates food cultures and is a part of diversity and identity. Food sovereignty has long been recognized as a critical element to national sovereignty. Mexican farmers not only reject an asymmetrical trade agreement that destroys their livelihoods and their communities, they also reject being told this is the only way after two decades of failure.
To compete with U.S. agribusiness on their terms would mean adopting the transnational-dominated model of agriculture and driving even more small farmers out of business, just as has been happening under NAFTA for 23 years. This would be an unmitigated social and environmental disaster in Mexico. Thousands of campesino farmers have held out despite seeing their standards of living reduced. A fair trade and investment agreement must recognize and provide incentives for their contribution to feeding the world and employing its population.
The corporate myth that this system works—an international market driven by prices and speculation- has destroyed livelihoods and jettisons the lessons of nine thousand years of culture, domesticated agriculture, biological and agricultural diversity, and environmentally sustainable indigenous and campesino economies. Trade and investment are not policy goals. They’re tools. The way we’re using these tools now is not working for the majority. The old premise that what’s good for international trade and investment is good for everyone turned out to be flat-out wrong.
We now have an opportunity to raise these issues and talk about what’s needed. This briefing is an important part of that process, which will go beyond this stage of talks.
This paper was presented by Americas Program director Laura Carlsen at a Congressional Briefing in the U.S. Congress on June 29, 2017.
[i] Hufbauer, Gary and Jeffrey Schott. 2005. NAFTA Revisited: Achievements and Challenges. Peterson Institute, p. 170. Retrieved from: http://www.iie.com/publications/chapters_preview/332/03iie3349.pd
[ii] NAFTA: 20 years of Costs to Communities and the Environment. Sierra Club, et.al., March 2014. p. 6
[iii] OECD. 2013. “Mexico Can Do More to Promote Socially-Inclusive Green Growth.” Retrieved from: http://www.oecd.org/newsroom/mexicocandomoretopromotesocially-inclusivegreengrowth.htm