Voluntary Report - public distribution **Date:** 1/15/2003

**GAIN Report Number:** MX3008

MX3008

**Mexico**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, Issue #2**

2003

**Approved by:**

![](media/image1.wmf)William L. Brant

#### U.S. Embassy Mexico City

**Prepared by:**

Jorge Sánchez

**Report Highlights:**

\"NAFTA SUPERCEDES THE CONSTITUTION\"\*NATIONAL FARMLAND AGREEMENT
AMENDED\*GOVERNMENT NOW READY TO \"ANALYZE\" NAFTA\*CNC & GOVERNMENT
NEGOTIATE AGRRICULTURAL POLICY\*MARKET ASSYMETRIES BETWEEN THE UNITED
STATES AND MEXICO\*POLITICAL INTERESTS CLOUD FARM WORKER PROTESTS\*FOX
ENCOURAGES FARMERS\*PRD CONGRESSIONAL LEADERSHIP FURTHER SEEKS
RENEGOTIATION OF NAFTA\*THE SOLUTION TO END FRUIT AND HORTICULTURE
CONTROVERSIES CORPORATION\*\"NAFTA IS GOOD FOR BUSINESS\"\*HIDALGO AND
TLAXCALA GOVERNORS ASK TO RENEGOTIATE NAFTA\*\"THEY DON\'T CALL HIM THE
GARLIC KING FOR NOTHING\"\*CRITICISMS RAIN ON USABIAGA\'S PARADE\*NAFTA
WORSENS AGRICULTURE\*CONGRESS PUTS IN ITS TWO CENTS\*NAFTA: A THREAT TO
NATIONAL SECURITY?\"\*\"NATIONAL CATTLE FARMING WILL LOOSE 64 PERCENT IN
VALUE\"\*FARM WORKER GROUPS DEMAND FOX \"LIVE UP TO HIS PROMISES\"\*CNC
FINDS COMFORT IN NEW LEADER\*NATIONAL GOVERNORS\' COUNCIL JOINS
PROTESTING GROUPS\*\"NAFTA CAN BE NEGOTIATED\"\* STRONGLY CONTEMPLATING
BIOTECH\*FOX BESTOWS ELECTRIC AND DIESEL SUBSIDIES

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\], \[MX\]

Welcome to Hot Bites from Mexico, a weekly review of issues of interest
to the U.S. agricultural community. The topics covered in this report
reflect developments in Mexico that have been garnered during travel
around the country, reported in the media, or offered by host country
officials and agricultural analysts. Readers should understand that
press articles are included in this report to provide insights into the
Mexican \"mood\" facing U.S. agricultural exporters. Significant issues
will be expanded upon in subsequent reports from this office.

DISCLAIMER: Any press summary contained herein does NOT reflect USDA's,
the U.S. Embassy's, or any other U.S. Government agency's point of view
or official policy.

# 

# "NAFTA SUPERCEDES THE CONSTITUTION"

On January 6, 2003, at the National Farm Workers Council (CNC)
conference in Boca del Rio, Veracruz, state governor, Miguel Alemán
Velasco proclaimed that "NAFTA was above the Constitution," and backed
President Fox's statements against NAFTA renegotiations. "For us this is
a treaty, but for the United States, it is an agreement, this is not the
same; it is the law because it was approved and ratified by an act of
Congress and, unfortunately is above the Constitution," noted Mr. Alemán
Velasco. CNC disagrees and continues to insist on renegotiating NAFTA.
CNC President Heladio Ramírez López argued that the, "government should
apply safeguards and other mechanisms to protect its farm sector."
(Source: La Jornada, El Financiero, 1/7/03).

# NATIONAL FARMLAND AGREEMENT AMENDED

On January 6, 2003, the National Farmland Agreement was modified by its
corresponding administrative agency after moderate farm worker groups,
members of the Permanent Agricultural Council (CAP), and Farm Worker's
Torch (linked to the PRI party) showed strong opposition to NAFTA
renegotiations. The Agreement's main focus was the revision of Mexican
agricultural policy and its corresponding commercial policy.
Additionally, the Agreement seeks to establish a food production
sovereignty program as a legal requirement and to protect repressed farm
workers. (Source: La Jornada, 1/7/03).

# "CNC'S ILL-TREATMENT OF USABIAGA MAY CAUSE SOCIAL TURMOIL"

On January 6, 2003, PRI Senate leader Humberto Roque Villanueva warned
against "instigating comments" made by Agriculture Secretary Javier
Usabiaga at the National Farm Workers Council in Boca del Rio. Senator
Roque claims, "egregious comments against the CNC members could be grave
for the future of the farmland and provoke social turmoil."
Consequently, Center for Human Rights representative Miguel Agustín Pro
Juárez claims that as NAFTA's agricultural chapter enters into its final
phase, Mexican agriculture will be fully "demolished" and this will
bring forth "disastrous" consequences to the food production and to the
rights of millions of farm workers. (Source: La Jornada, 1/7/03).

# GOVERNMENT NOW READY TO "ANALYZE" NAFTA

On January 7, 2003, Under Secretary of State Ramón Martín Huerta said
that the federal government was now ready to "analyze" NAFTA's
agriculture chapter with the protesting farm worker groups. Mr. Martín
Huerta indicated that the federal government's disposition was to
listen, discuss, analyze and try to understand social problems. However,
no date has been agreed upon by any of the parties for this discussion.
(Source: El Financiero, 1/8/03).

# 

# CNC & GOVERMENT NEGOTIATE AGRICULTURAL POLICY

On January 7, 2003, the CNC decided to negotiate with the federal
government on the National Farmland Agreement. CNC seeks to make
domestic agricultural policy adjustments that will legally allow
Congress to request a revision of NAFTA's agricultural chapter. (Source:
El Financiero, 1/8/03).

# MARKET ASSYMETRIES BETWEEN THE UNITED STATES AND MEXICO

PRI Senator Fidel Herrera Beltrán proposed that Mexico follow through
with the opening of its agriculture market in accordance with the NAFTA
agreement. However, "we should implement complementary plans with the
United States and Canada to fix market asymmetries, " affirmed the
senator. Government must play a strong role in the market to prevent
damage from imperfect information. Open markets rely on sufficient
information in order to determine proper value. On the eve of the NAFTA
market opening, Senator Beltrán has called for a national producers
meeting to be held in the port of Veracruz to discuss strategic economic
plans for the future of Mexico's agricultural sector vis-à-vis the
United States and Canada. According to the Senator, too many bad
experiences could disrupt trade. (Source: Milenio Diario, 1/8/03).

# POLITICAL INTERESTS CLOUD FARM WORKER PROTESTS

As congressional and senatorial elections grow closer and closer
(beginning of July), President Fox is being challenged by an
opposition-led Congress and political activists that use these groups as
a means to further their cause and curry political gains. Agriculture
Sector Support Services (ASERCA) Director, José Rodolfo Farías Arizpe
declared that farm worker organizations that merely seek to protest, are
not only irresponsibly undermining domestic productivity, but "clouding"
farmland development efforts. These "are the farmland's worst enemies,"
stated Mr. Farias Arizpe. (Source: Reforma, 1/8/03).

# FOX ENCOURAGES FARMERS

On January 8, 2003, President Fox, in the state of Zacatecas, exhorted
farm worker groups to avoid the use of violence. He moralized, "the road
to violence is not the solution to our problems; legal recourse is, the
way to open dialogue, planning and implementation of programs." In
regard to the changes to NAFTA's agriculture chapter demanded by the
protesting groups, President Fox left the door open for renegotiation.
President Fox claimed he had met with all of the farm worker groups on
January 6, 2003 to ensure his political commitment to Mexican farmers.
He explained that in that meeting there was a commitment to reduce
electric input costs by 9 percent of current costs in order to ensure
that production costs decrease; thereby helping producers be more
efficient and competitive. (Source: Notimex, 1/8/03).

PRD CONGRESSIONAL LEADERSHIP FURTHER SEEKS RENEGOTIATION OF NAFTA

On January 9, 2003, the PRD party congressional leadership presented
before Congress a position paper with compelling political suggestions
in favor of renegotiating NAFTA's agricultural chapter. The position
paper mainly argued that: (1) during the 9-year period of the NAFTA
signing, major differences in production practices have adversely
affected Mexico's agricultural growth and has dragged this sector into a
huge commercial deficit; (2) the opening of the agricultural sector is
not accompanied by an internal policy relating to any current economic
activity, and thus makes NAFTA anachronistic; (3) market liberalization
will only benefit large producers and will continue to bring small and
medium-size farmers to their knees; (4) Mexico's agricultural sector is
already one of the most liberalized in the world, even compared to that
of developed nations, like the United States, which protect its farmland
by closing their agricultural markets to foreign competition. The
position paper offers a compromise that strongly exhorts the Executive
Branch to renegotiate NAFTA's Chapter 7 "Agricultural Sector Sanitary
and Phytosanitary Measures" with hopes of a short-term of protection of
domestic agriculture production. (Author: Congressman Ramón León
Moralez) (Source: Gaceta Parlamentaria, 1/8/03).

THE SOLUTION TO END FRUIT AND HORTICULTURE CONTROVERSIES CORPORATION

Agriculture Sector Support Services (ASERCA) announced it devised a
120-day plan to mitigate controversies in fruit and horticulture
markets. This plan will not only involve an assessment of current
problems but will also involve a consultation process with producers.
The plan will be managed by the Solution to End Fruits and Horticulture
Controversies Corporation, an independent subsidiary of the Mexican
Department of Agriculture. Program sub-director, Ernesto Maldonado
stated that the program could be used by commercial producers to
ameliorate farm worker uprisings. The program will mainly serve as a
forum for dialogue and problem solving, but will also conduct NAFTA
conflict resolution and dispute settlement training sessions. This
program will not be free; producers will have to pay an annual fee of
5,000 pesos (USD \$500) for this added service. (Source: El Mercado
Agropecuario, 1/6/03).

# "NAFTA IS GOOD FOR BUSINESS"

On January 8, 2003, President Fox stated publicly his reservations and
disdain against renegotiating NAFTA. He proclaimed, "NAFTA is good for
business" and explained that any postponement or renegotiation "would
only make us loose more than we gain." President Fox's reaffirmation of
the Executive Branch's point of view runs counter to the opinion of the
majority of the people who would like to see renegotiation of NAFTA's
agricultural chapters. He added, "Our government is totally open to
share and discuss viewpoints, plans and projects." "But, renegotiation
will be a step in the opposite direction to that of progress." (Source:
La Jornada, El Universal, El Financiero, Reforma, 1/9/03).

**HIDALGO AND TLAXCALA GOVERNORS ASK TO RENEGOTIATE NAFTA**

On January 8, 2003, Hidalgo and Tlaxcala state governors, Manuel Angel
Núñez Soto and Alfonso Sánchez Anaya respectively pleaded in favor of
renegotiating NAFTA's agricultural chapter. They agreed that producers
are at a competitive disadvantage with producers from the United States
and Canada, "who both receive high levels of government subsidies, even
though these are prohibited in the NAFTA clauses." (La Jornada, 1/9/03)

# "THEY DON'T CALL HIM THE GARLIC KING FOR NOTHING"

"How could we ever compete with Mr. Usabiaga's farms, if we could fit 10
of our farms into three of his," said Guanajuato farmer, Fidel Fernández
Villegas, after reading that his fellow home-state resident, Secretary
of Agriculture, Javier Usabiaga, had the nerve to exhort farmers to
develop their land and stop complaining about what they lack. "Usabiaga
owns seven major ranches and about 25 wells. He is one of the few
farmers who are able to export and will benefit from NAFTA," said Mr.
Fernández Villegas. "He doesn't have the same problems we do; his (Mr.
Usabiaga's) wells run 8 to 10 inches deep, while ours run 4 to 6. One of
his ranches encompasses 600 acres, while ours are only 115 acres.
Moreover, he is one person, while we are 28 living off one piece of
land," he said. (Source: Reforma, 1/9/03).

# CRITICISMS RAIN ON USABIAGA'S PARADE 

On January 8, 2003, leaders from nearly every political spectrum of
agricultural organizations condemned Mr. Usabiaga's statements at the
CNC annual conference, where he suggested that the solution to
developing a profitable farmland was to work harder and simply produce
more. The farm groups say that this type of response not only bears
testimony to Mr. Usabiaga's callous policy making, but also indicates
his lack of ability in understanding the real problems being brought
forth. They say that his business-vision and self-interest compromise
the rural sector's future. In addition, legislators from the PRI and PRD
parties accuse him of being "insensitive, clumsy and incapable of
solving Mexico's agricultural problems. Mr. Usabiaga is desperately
hanging on to his position as Secretary of Agriculture and will need
nothing short of a political hat trick to survive. (Source: Reforma,
1/9/03).

# NAFTA WORSENS AGRICULTURE

With the advent of the most recent NAFTA tariff phase-out, the
agricultural sector's lack of competitiveness and self-sufficiency has
been in the limelight. Mexican agricultural subsidies are minute
compared to those of the United States, Canada, or the European Union;
this affects domestic product competitiveness because international
prices are highly subsidized and are more competitive than Mexico could
ever be. Mexico must target its strengths and strategize on
strengthening these competitive sectors in order to export at higher
levels. (Source: El Financiero, 1/9/03).

# CONGRESS PUTS IN ITS TWO CENTS

On January 9, 2003, political party leaders met with farm groups "The
Farmland Can't Stand Anymore" and El Barzón, both of whom have
membership in the Permanent Agricultural Council (CAP). The
Congressional Joint Political Conference reached the conclusion to
participate in the discussion of the National Farmland Agreement and
help solve Mexico's dire agricultural situation before it is too late.
(Source: El Financiero, 1/10/03).

# NAFTA: A THREAT TO NATIONAL SECURITY? 

In reference to NAFTA Article 2202 and 801, the PRD political party made
its demands to renegotiate NAFTA's agricultural chapter official. On
January 9, 2003, Senate leader Jesús Ortega warned Congress that if
NAFTA was left to run its course, it could drag the country into a
situation of instability that could put national security at grave risk.
(Source: Milenio Diario, 1/10/03).

"NATIONAL CATTLE FARMING WILL LOSE 64 PERCENT IN VALUE"

On January 10, 2003, domestic cattle farming "will lose 64 percent of
its value once NAFTA enters into full effect." This speculation comes
from the 25-percent net loss in the cost of meat suffered since 2000",
informed representative Jaime Mantecón. The Commission of Cattle Farming
member announced that the new policy would restrict beef and milk
imports. The Congressional PRD Caucus presented to Congress its position
paper to renegotiate NAFTA's agricultural chapter. (Source: La Jornada
1/13/03).

# FARM WORKER GROUPS DEMAND FOX "LIVE UP TO HIS PROMISES"

On January 11, 2003, the Department of Agriculture (SAGARPA) ended the
dialogue between President Fox and the farm worker groups "The Farm Land
Can't Stand Anymore", El Barzón, and the Permanent Agricultural Council
(CAP). The farm groups have made public their discontent with President
Fox's poetic demagoguery and now ask him to "live up to his promises."
The farm groups added that, "they are the only groups protesting the
revisions of NAFTA's agricultural chapter," and requested that President
Fox exclude all other groups from the dialogue that detract from their
main focus. (Source: Reforma, 1/13/03).

# CNC FINDS COMFORT IN NEW LEADER

On January 10,2003, the CNC announced that it will form part of the
National Agricultural Convention and designate former Secretary of
Government Affairs, Diódoro Carrasco Altamirano, as its new
representative to the CAP. CNC said Mr. Carrasco Altamirano will give
adequate representation to the controversial revision of NAFTA's
agricultural chapter. CNC President, Heladio Ramírez indicated that Mr.
Altamirano's appointment "gives further credence to the fact that the
CNC means business when it conducts dialogues with other farm worker
organizations and the federal government." (Source: El Universal,
1/11/03).

# NATIONAL GOVERNORS COUNCIL JOINS PROTESTING GROUPS 

On January 10, 2003, The National Governors Council joined the CAP to
voice its concerns on NAFTA's agricultural chapter. Governor José Murat
stated that the lack of funding for farmers has generated great unease
in the states of Oaxaca, Guerrero and Chiapas. (Source: Milenio
1/11/03).

# "NAFTA CAN BE NEGOTIATED" 

On January 10, 2003, PRD party leader, former Mexico City Mayor and
presidential candidate, Cuautémoc Cárdenas Sólorzano, insisted that
President Fox act on the farm workers' demand. Mr. Cárdenas warned that
"if President Fox shows noncompliance, it will bring about greater
social and political tension." He added, "we don't know how great this
tension will be; maybe if the President attends these matters, then farm
workers could help the agricultural sector be once again competitive."
"NAFTA can be renegotiated", he maintained. (Source: La Jornada, El
Universal, 1/11/03).

# STRONGLY CONTEMPLATING BIOTECH

On January 7, 2003, the federal government officially gave consideration
to the commercialization of biotech crops. After 14 years of banning the
use of such products, the Department of Agriculture (SAGARPA) stated via
press release that "there are certain cases where biotech crops should
be implemented as pilot programs and, subsequently thereafter, into a
commercial phase." The regulation proposing commercialization of biotech
crops will be open for discussion and consultation during a 60-day
period after the final version has been presented to the Federal
Registrar (Diario Official). SAGARPA stated that "the use of GMOs
promises to greatly contribute to a sustainable and less harmful
environment." Sagarpa added, "greater information is an advantage for
GMO consumers and producers, and it is committed to ensuring
biosecurity." (Source: Reforma, 1/13/03).

# FOX BESTOWS ELECTRIC AND DIESEL SUBSIDIES

On January 10, 2003, President Fox announced that in order to stimulate
agricultural competitiveness with the United States and Canada, "we've
decided to reduce the prices on electricity and diesel fuel". Via radio
address, President Fox stated that the electricity and diesel fuel
subsidy would leave costs below that of the United States and Canada.
President Fox, claimed that "Mexico has the best farmers in the world;
what we must do is give them the tools to be competitive, and that is
what we are doing." (Source: Excelsior, 1/12/03).

**REPORTS SUBMITTED RECENTLY BY FAS/MEXICO CITY**

+-------------+-------------------------------------------+-----------+
| ##          | ###### Title                              | **Date**  |
| #### Number |                                           |           |
+-------------+-------------------------------------------+-----------+
| MX3004      | Mexico Initiates Antidumping              | 01/07/03  |
|             | Investigation                             |           |
+-------------+-------------------------------------------+-----------+
| MX3005      | Hot Bites Issue#1                         | 01/08/03  |
+-------------+-------------------------------------------+-----------+
| MX3006      | Poultry Semi-annual Report                | 01/10/03  |
+-------------+-------------------------------------------+-----------+
| MX3007      | Poultry Banned due to END                 | 01/13/03  |
+-------------+-------------------------------------------+-----------+

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