ertheless, subsidized US corn gives US livestock producers a significant feed cost advantage over Canadian livestock producers (Loyns 2002).
To evaluate the liberalization of corn under NAFTA, three issues are cen- tral: the NAFTA agreement itself, agricultural subsidies, and corn prices in Mexico. Under NAFTA terms, Mexican barriers to corn imports were to be liberalized over a 15-year transition period, which gradually phased out the TRQs. There is no evidence of US government pressure to liberal- ize the Mexican corn sector faster than the NAFTA timetable. On its own initiative, Mexico eliminated price supports for corn during the mid- to late 1990s, and corn prices (expressed in US dollars) fell by 22 percent be- tween 1995 and 1998. Lacking alternatives, poor Mexican farmers contin- ued producing corn despite the falling prices; in fact, they increased both the acreage and labor devoted to corn cultivation.
US agricultural subsidies are enormous, second only to the European Union’s, and US corn producers benefit from this largesse.159 While the United States should be held accountable for the fact that agricultural subsidies help drive down the price of corn in Mexico (as well as other commodities in other markets), subsidies are not responsible for the rela- tively low productivity of Mexico’s corn sector. In general, the growth of Mexican agricultural production is lower than its population growth rate. However, the Mexican agricultural sector has historically served as the repository for excess labor, and Mexico has been relatively slow to adopt agricultural technology that would both boost productivity per hectare and reduce demand for farm labor (de Janvry and Sadoulet 2001).
In the long run, international competitive pressure and improved do- mestic farm technology, throughout Mexican agriculture, will induce rural emigration—sending people both to urban Mexico and the United States. Rural-urban migration is an important transmission mechanism for re- ducing poverty, and within Mexico, this process still has a long way to go.160 International comparisons suggest that the Mexican agricultural labor force as a proportion of total labor remains very high. In 2000, the share of workers in Mexican agriculture was about 21 percent, compared with 17 percent in Brazil, 10 percent in Korea, and 2 percent in the United States and Canada.161 One study estimates that radical free trade in agri- culture—the elimination of all tariffs, all Mexican agricultural support pro-
159. Some experts estimate US subsidies for corn are as high as 30 cents a bushel. See Steven Chase, “Corn Farmers Flock to Cancun,” Globe and Mail, September 10, 2003.
160. Recent studies suggest that rural emigration contributed to a very substantial decline in the number of Mexican rural poor. See de Janvry and Sadoulet (2001).
161. Data are based on UN Food and Agriculture Organization FAOSTAT database, 2004.