NAFTA and Mexico's maize producers

Abstract

The fall in the producer price of maize that will accompany implementation of trade liberalization and NAFTA has led to dire predictions of falling incomes and labor displacement in Mexican agriculture. We use a household survey of the ejido sector to show that a majority of maize producers are in fact not producing for the market and will consequently not be directly affected as producers by a drop in the price of maize, while a significant share will benefit as consumers. For the net sellers, we explore the determinants of two solutions to a falling maize price: diversification toward high value crops and modernization of maize production. For both of these, results show the fundamental importance of reconstructing supportive institutions for marketing, credit, and technical assistance in replacement of the services formerly offered by government and subsequently discontinued under state contraction.