Tortilla Prices Could Double After Mexico Increases Tariffs on White Corn by 50 Percent

A worker weighs tortillas at a tortilla factory in Mexico City, on Sept. 21, 2022. (Alfredo Estrella/AFP via Getty Images)

Mexican president Andres Manuel Lopez Obrador announced that his country will begin imposing a 50 percent tariff on imports of genetically modified (GM) white corn, a move the president hopes will boost domestic production of the agricultural staple and stop imports of GM corn, but has officials and Mexican residents concerned.

“White corn is of the utmost importance in the diet of Mexicans, with an annual per capita consumption of 346 kg, and it is the grain with the highest production in the country with an 88.2 percent participation in the national production of grains,” President Lopez Obrador said in a decree on June 23. “That the supply and production of white corn in our country are important factors in determining its price and, therefore, also of the various consumer products made from it, mainly tortillas, therefore, to promote the strengthening national production, the internal market and the productive chain of said grain, as well as ensuring market conditions that allow stabilizing its price, it is pertinent to temporarily modify the tariff.”

Lopez Obrador says the new tariff will reduce inflation, but a Mexican agriculture consultancy group, Grupo Consultor de Mercados Agrícolas (GCMA), disagrees.

“Through an analysis, GCMA [explains] that these measures go against the policies adopted to reduce the damage of inflation and will have no effect on the disagreements expressed by national grain producers, regarding the purchase prices,” the organization said. “The new measure to raise the tariff on the import of white corn by 50 percent, far from addressing a public policy issue, is another distraction measure by the federal government to avoid addressing the crisis that corn producers are experiencing in the northwest and northeast of the country.”

Trade Dispute Between Mexico, United States, and Canada

The decree will be in force until the end of the year and occurs amid a trade dispute between Mexico and its North American trade partners, Canada and the United States, over (GM) corn.

But agriculture officials say this move could potentially negatively impact Mexican consumers and possibly even American farmers in the long run.

“This has been ongoing for over a year first they were going to have tariffs on all imported corn, yellow dent is by far the largest corn they import, it is used for livestock feed,” Texas agriculture commissioner Sid Miller told The Epoch Times. “In negotiations, we’ve negotiated that now they say they’re only going to have the tariff on white corn which we don’t sell much of at all.”

Miller said the bad news will be for the Mexican people who could see prices jump out of control.

“The bad news in all of this is it’s going to hurt their consumers more than American farmers or trade between the United States and Mexico because it will drive up the cost of everything made with white corn, corn tortillas, enchiladas, the whole thing.”

Office of the U.S. Trade Representative chief agricultural negotiator Doug McKalip and U.S. Department of Agriculture under secretary for trade and foreign agricultural affairs Alexis Taylor also recently issued a rebuke over the new tariff put in place after meetings with the Mexican government.

“Mexico’s proposed approach, which is not grounded in science, still threatens to disrupt billions of dollars in bilateral agricultural trade, cause serious economic harm to U.S. farmers and Mexican livestock producers, and stifle important innovations needed to help producers respond to pressing climate and food security challenges … We made it clear today that if this issue is not resolved, we will consider all options, including taking formal steps to enforce our rights under the U.S.-Mexico-Canada agreement.”

Reaction From Mexican Residents

What further complicates matters with Mexico’s new policy to increase the tariff on white corn by 50 percent is that parts of the country are presently undergoing a drought, making it difficult for white corn production to happen domestically.

“Mexico is already experiencing the negative effects of lack of water. In recent years, the central and northern regions of the country have experienced water shortages due to increased droughts,” stated the Mexican Institute for Competitiveness (IMCO) think tank in a report. According to data from the World Bank, the average annual availability per capita in the country went from 10,000 cubic meters (m 3 ) in 1960 to 4,000 in 2012. It is estimated that by 2030, this availability in Mexico will drop below 3,000 m 3 per inhabitant per year.”

The combination of an increase in droughts and an increase in the tariff for white corn has some Mexican residents frightened the price of a common staples like the tortilla will dramatically increase.

“Prices for tortillas have already risen to 20 pesos from before COVID,” Pablo Gutierrez, who runs a taco stand in Guadalajara, Mexico, told The Epoch Times. “If it doubles to 40 pesos [the equivalent of nearly $2], I'll be out of business.”

Gutierrez’s taco stand, which is in the colony of Chapultepec, usually sees lines stretching down the avenue, especially at night.

“If I raise my prices, the people won’t come as much,” he said.

The price for several other common staples, like tomatoes, have also gone up.

“This is a mockery,” Tavy Gujarro, also of Guadalajara, told The Epoch Times.”The tortilla is a fundamental part of Mexican food, and low-income people are the ones who will be most affected.”

Gujarro and his family rely on the basic staple as the average monthly salary is close to only $1,600 a month, though many make much less.

“I have two jobs, and I make 1,000 pesos [$58] a week,” Gujarro said; he works as a waiter and as a construction worker.

Last week, Lopez Obrador said the United States “might take us to a [USMCA] panel,” but said he was unwilling to change his position on the use of GM corn for human consumption because he believed it was a matter of “public health.”

“We have the proof,” he told reporters at a press conference.