Challenges and opportunities for nafta Plusthird Annual North American agrifood Market

Integration workshop

Eduardo Paláu

Caades Sinaloa

Primer Lugar Nacional en Exportación de Hortalizas

Fuente: Cierre de Ciclo CNPH

Valor De La Exportación A U.S.A.

Basados En Precios FOB Nogales Az.

0

100

200

300

400

500

600

700

800

MDD 368 306 418 366 512 473 515 720 558 611 621 531 589 651 656

90-91

91-92

92-93

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

M. D. D.

1990-2005: 78.26%

Tasa de Crecimiento Anual: 4.48%

Fuente: Cierre de Ciclo CIDH

TMAC= 19.7%

producción de Trigo Sonora miles de toneladas

1,687.720

1,430.694

1,583.582

1,669.031

1,504.4221,439.295

1,147.890

1,072.538

1,180.889

1,345.205

1,154.430

989.562

1,625.561

1,533.300

1,685.200

1,299.800

574.600

1,046.069

1,396.910

1,249.159

1,280.000

1,578.525

1,278.680

1,242.120

1,242.524

-

200.000

400.000

600.000

800.000

1,000.000

1,200.000

1,400.000

1,600.000

1,800.000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Producción trigo sonora

Superficie Sembrada de Trigo en Sinaloa 1990-2004(Miles de Hectáreas)

91.24

31.4142.11

199.24

75.42

149.98

125.13

28.26

44.24 42.10

57.05

25.19

95.76

63.25

46.59

y = -59.649Ln(x) + 185.41

R2 = 0.8652

20

40

60

80

100

120

140

160

180

200

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004*

Uso de las Tierras de Riego en Sinaloa

TOTAL = 800,000 HECTAREAS

Challenges and opportunities of nafta plus

The Mexican Growers perspective

Eduardo Paláu

The Search for NAFTA Plus and Strategic bargain in the North American agrifood

sector

What is Nafta: but, More important to México

• Control of inflation ( 1987 : 159%)

• Institutionalize the modernization of Mexico: Economic reform ( started in 82)¿ Second generation reform?

• Dismantling of institutions ( including corruption and vices) ¿creation of new ones?

• ¿political Reform?

• Nafta: a transition period for competitiveness..

• TRQ for Corn and beans: useless, until 2001, when congress put limits to over the quota)

dumping

Institute for Agriculture and Trade

Policy

Montana

Dumping margins us agricultural productsUs dumping margin in 5 main productsUs dumping margin in 5 main products

Producto/ Año Trigo Soya Maíz Algodón Arroz

1990 30% 4% 10% 32% 20%

1991 38% 8% 16% 23% 17%

1992 23% 3% 7% 42% 11%

1993 31% 12% 26% 49% 18%

1994 26% -9% 4% 25% 2%

1995 23% 8% 11% 19% 21%

1996 18% -12% -26% 16% 6%

1997 27% -23% 12% 24% 3%

1998 30% 1% 21% 40% 13%

1999 42% 27% 30% 50% 20%

2000 43% 24% 33% 50% 19%

2001 44% 28% 18% 63% 20%

2002 43% 16% 11% 65% 34%

2003 28% 10% 10% 47% 26%

Mexico China

• Mexican vegetable producer tipycal size: 270 has. 666 acres.

• Green houses 1,200 has. 40% “malla sombra” 60 % state of the art

• Typical size: 10 -15 hectares and expanding by jumps of 10 has.

CaliforniaSinaloa 04/05

product yuans kg dólar kg% labor input

dólar kg dólar kg

Green bell pepper 0.615 0.074 53.5% 0.33 0.128

China ( 2003)

cost of production China California Sinaloa

¿Comparative Advantage or Competitive Advantage?

A changing score• Matured green tomatoes in the 80´s

• Long Shelf life tomatoes “ The vine tomatoes” de

los 90’s de Sinaloa.

• The tomato war through time.

• vegetable production < 10% of 800,000 has. The

rest corn, sorghum, beans, garbanzo.

¿Competitive Advantage?

• Strategic Competitiveness is not granted

forever.

. In function of response capacity to changes

in the environment

• Enterpreneurship capacity and

• Innovation capacity

Input costs

Country seed Nitrogen

USA 1.05

dlrs./1000

seeds

72.62 dlrs./ha

México 1.87

dlrs./1000

seeds

71.14 dlrs./ha

Labor: In USA most of it is not paid, highly productive with capital intensive

technology

lo -mid

Mexico

Horas de Trabajo ( mano de obra ) por hectárea 5.2 6.4 48

Sin pago 4.7 5.7 n.d.

pagado 0.5 1.0 48

porcentaje de granjas con mano de obra pagada. 18% 17% 100%

lo -midMano de obra contratada actualizada al 2002 x ha dls/ ha 3.62 8.12 95

costo mano de obra 2002 dls/ hr - ha 7.33 8.22 1.98

EUA

Análisis comparativo Mano de Obra EUA y México

LOW MID

dls por hectárea

LOW MID

The middle cost producers are 38% higher thab US cost; The lowest cost producers in Culiacan

are 57% higher than US efficient low cost producers.

Comparativo de Costos de Producción Mexico - Estados Unidos

Dlrs./Ton

80 78

108

148

51

146

0

20

40

60

80

100

120

140

160

BAJOS MEDIOS ALTOS

Mexico ( aluvión + barrial) Estados Unidos (ARMS 02)

57 % arriba el costo de Méxicosobre el costo de EUA

38 % arriba el costo de Méxicosobre el costo de EUA

1.3 % arriba el costo de Méxicosobre el costo de EUA

Kevin Muslow: toward a nafta policy

conclusion• The process of globalization is irreversible.

• Reading several papers, the NAFTA plus and others from previous workshops (no all them) It appears there is a great deal of consensus about this matter. Free trade bring greater economic efficiency. I believe so, but I don´t see how. A Distinction is made about economics and politics. But when it comes to pure economics in market access is applied and made part of the political wisdom. When it comes to migration, Is is politics that is imposed into economics. When it comes to a matter of market access, yes it brings economic efficiency. But when it is a matter of labor migration, no, the political reality does not accept it.