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US exports to Canada Mexico NAFTA subtotal

785 241 1,026

77 29 106

695 2,310 3,005

69 247 316

1,001 2,411 3,412

109 301 410

847 5,401 6,248

135 881 1,015

1,027 2,311 3,338

117 282 399

Total world (including NAFTA)

39,432

4,145

34,581

3,800

58,921

7,161

50,968

8,239

41,123

5,103

US imports from Canada Mexico NAFTA subtotal

323 0 323

30 0 30

356 0 356

39 0 39

258 0 258

29 0 29

332 0 332

51 0 51

200 0 200

24 0 24

Total world (including NAFTA)

323

30

356

39.0

258

29

332

51

234

27

Note: Besides yellow, most other corn products are white. Source: USDA Foreign Agricultural Service (FATUS) database, 2004.

Table 5.17

US yellow corn trade with NAFTA partners, 1993–2003 (volume in thousands of metric tons and value in millions of dollars)

Country

1993

1994

Volume Value

Volume Value

1997

Volume Value

1996

Volume

Value

1995

Volume

Value

can farm households eat what they produce, they are isolated from the price effects of NAFTA and trade with the United States.

In addition to small and inefficient land holdings, there are multiple reasons for low agricultural productivity in the central and southern states. Poor transportation and irrigation networks are part of the prob- lem. It is three times more costly to deliver corn by rail from Sinaloa to Mexico City than by shipping from New Orleans via Veracruz.142 Access to credit is notoriously difficult. Credit provided to the agricultural sector was 21 percent larger in 1983–90 than in 1996–2000.143 Rural financial markets are “personalized” operations with little or no collateral required but at very high costs (Giugale, Lafourcade, and Nguyen 2001; Oxfam 2003). Without government guarantees, Mexican commercial banks hesi- tate to provide loans because of the historically high default rate on agri- cultural loans and the record of large-scale debt forgiveness. As a partial answer, the Mexican government created Financiera Rural in 2002, which aims to provide access to microcredits for farmers to buy machinery, equipment, and technology.

  • 142.

    See “Floundering In a Tariff-Free Landscape,” The Economist, November 28, 2002.

  • 143.

    Moreover, most credit on easy terms goes to large farmers. Procede, established in 1993,

provided property titles for rural households that could be used as collateral for loans. How- ever, even though Procede issued more than 3 million property rights certificates, house- holds did not get much credit in return. See Davis et al. (2000) and Larre, Guichard, and Vourc’h (2003).

336

NAFTA REVISITED: ACHIEVEMENTS AND CHALLENGES

Institute for International Economics | www.iie.com

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