NAFTA’s Rural Legacy: Dumping, displacement, and dependency

Originally Published on Medium on December 15,2019

Migrant from rural Mexico awaits transport to the United States. (Photo: © David Bacon dbacon@igc.org)

The following is excerpted from Chapter 8 of Eating Tomorrow: Agribusiness, Family Farmers, and the Battle for the Future of Food (New Press 2019).

The North American Free Trade Agreement (NAFTA) provoked a wave of migration to the United States. Many of those migrants were coming from the post-NAFTA disaster that was rural Mexico.

The country’s three million maize farmers were under assault. Their government had eliminated key agencies that supported small-scale producers, such as CONASUPO, which bought and marketed basic grains at supported prices. In its modernization push, the government had also forced through a modification of the Mexican constitution, written in the wake of the Mexican Revolution in the early 20th century, which recognized communal rural property, as ejidos or as communal lands in indigenous areas. The constitutional reform created a path to privatization, which many feared would result in the dispossession of poor farmers. And then there were NAFTA’s reduced tariffs. To deepen the assault, the government had unilaterally decided to forego the transition periods for most agricultural tariffs, which would have phased them out over 5-15 years to allow a more orderly adjustment of these sensitive markets. From day one of NAFTA, Mexico opened its doors and maize farmers got no transitional tariff protection.

U.S. goods certainly poured through those open doors. By 2007, U.S. exports to Mexico of wheat, cotton, and rice had all increased more than 500% over pre-NAFTA levels. Meat exports jumped as well, with beef up 278%, poultry 363%, and pork a remarkable 707%. Soybean exports went up 159%. Maize exports increased more than 400%.

Worse still for Mexican farmers, those imports entered at dumping-level prices, below what it cost to produce them. In part, that was because the U.S. Congress added insult to NAFTA’s injury with its 1996 farm bill. The Orwellian “Freedom to Farm Act” eliminated all vestiges of supply management, which had been the cornerstone of U.S. agricultural policies since Henry A. Wallace introduced them during the Great Depression. Their demise meant that the U.S. government no longer used a mix of price supports, reserves, and land set-asides to manage the precarious balance between supply and demand, which without government intervention often saw supplies outstripping demand and prices falling to unsustainable levels. Surprise: the reforms created an immediate crisis when prices plummeted. Millions of acres of land that had been held out of agriculture came back into production. Land planted to eight major U.S. crops increased 6% and crop prices fell, prompting a farm crisis that threatened to provoke a run on rural banks. The government stepped in with a series of emergency payments to farmers, which evolved into the mix of farm subsidies we see to this day. Farm program costs increased from their pre-1996 levels of around $10 billion per year to around $20 billion per year.

So Mexican farmers weren’t just facing an import flood of competitively priced farm products, they were being asked to compete with dumped goods.... (...read the full excerpt on Medium...)