With the objective of lower the price of the tortillathe federal government published a Decree that temporarily reformed (until June 30), the Law on General Import and Export Taxes, with what was imposed a 50% tariff on the export of white flour corn. The foregoing, because, at the national level, in the 4 years of AMLO, the price of tortillas increased from $14 to $22 per kilo, an increase of 54% and there are still almost 2 years to go. In comparison, in the 6 years of Enrique Peña Nieto, the price increased only 16%, going from $12 to $14 per kilo, data from the federal Ministry of Economy.
Here in Sinaloa, the leading state in the production of white corn with 20% of the national supply, it is incredible that the tortilla costs $25 per kilo.
In this stage, Society wonders if this Decree will lower the price of tortillas and on the other hand, producers are concerned about the possible impact on the management of the Base and the commercialization of corn.
To answer both questions, it must be pointed out that Mexico, the country of origin of corn, produces only 27 million tons, of which 88% is white corn and 12% is yellow corn.
However, national consumption, which includes human, livestock and industrial consumption, amounts to 44 million tons, so we have to import 17 million tons (95% yellow corn and 5% white corn), a food dependency of 39 % of imports.
This dependence makes us vulnerable to variations in international market prices, which, added to the structural deficiencies of the tortilla shops, such as the high costs of labor, electricity and gas, has given the tortilla makers the perfect excuse to increase the price of tortillas, however, what nobody says is that the price of corn represents only 15% of the cost of tortillas.
Likewise, Mexico is self-sufficient in white corn, we produce 24 million tons and human consumption is 20 million tons, the rest goes to the livestock sector. In addition, the export of white corn represents only 0.9% of national production, which means that limiting exports will not help to lower the price of tortillas.
If the federal government really intends to lower the price of tortillas, it should implement a support and financing program for tortilla makers, which allows them to acquire new machinery and equipment to be more efficient, with the aim of reducing their operating costs and providing them with subsidies. to electricity and gas.
On the other hand, in February, producers will negotiate the new Corn Base, so this Decree and the strength of the exchange rate limit the possibilities of exporting corn, which is a mechanism to regulate the price, this situation weakens the strength negotiation and could bring down the Base.
I will give you an example, with the 49 dollars of the Base last year, the price is located at $5,900 per ton of corn, which is insufficient to cover the production costs, so a Double Base is required.
In conclusion, this Decree is an impromptu decision by the federal government, which does not take producers into account, but the most unfortunate thing is that it will not lower the price of tortillas, but it could complicate the commercialization of corn.
MORENISTA Strategy #25: create a problem and then present a solution.
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That is why I ask you, dear reader: how much will the BASE of corn collapse with this Decree?
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