Subsidies for Price Risk in Grains: The Case of Maize in Mexico. Issue 1 (2nd January 2017)

• Record Type: Journal Article
• Authors: Echanove, Flavia
• Is Part Of: Journal of Iberian and Latin American research. Volume 23:Issue 1(2017)
• Page Start: 46
• Page End: 61
• Publication Date: 2017-01-02
• Subjects: Agricultural policy -- contract farming -- maize -- Mexico; Civilization, Hispanic -- Periodicals; Language and culture -- Spanish-speaking countries -- Periodicals; Latin America -- Periodicals; Spain -- Periodicals; Portugal -- Periodicals; 909.097561
• DOI: 10.1080/13260219.2017.1309676
• Languages: English
• ISSNs: 1326-0219

Abstract

Abstract: Across the globe, grain farmers face considerable volatility in international prices for their harvests, now considered commodities. Several years ago, the Mexican government implemented subsidy programs to protect farmers and firms from the risks entailed in price volatility. In this article, I analyze the characteristics and limitations of these programs as well as effects on maize producers and feed enterprises in the state of Puebla, Mexico. Among the findings is the fact that while these programs offer important advantages to the participants, the buyer-seller contracts are often breached as a result of climatic disasters, differences in relative prices (international versus open market), and changes in international exchange rates. The program resources are also concentrated in the hands of a few producers and firms, as well as geographically. I reflect on the need to reorient agricultural policy in Mexico, directing the resources devoted to the government hedging strategy to less regressive programs, such as direct income support for the producer.