Wednesday, May 16, 2007

What's That Got to Do With the Price of Tortillas?

Before moving off of the food or fuel question, we must address the aforementioned topic of the price of tortillas. While this is now old news, it apparently slipped under the radar for many as most seem to think it is a joke when addressed in general conversations. (Try it. Read this short piece and, for more information, the full article linked to it. Then mention this information in casual conversations with your friends, family or coworkers. In general settings, you’ll get a baffled response. Let us know what kind of response you get by posting your comments here.) The issue of the price of tortillas was brought to CARE’s attention through a small mention at the end of a feature in the Energy Tribune magazine. While the Energy Tribune is a trusted source, more research needed to be done. A simple Google search pointed to articles done on the topics from both the Washington Post and the New York Times—just to name a couple of the more notable sources. Here is a summary of what we found: (edited primarily from the Washington Post article for brevity)

Tens of thousands of workers and farmers filled central square in Mexico City on January 31 to protest spiraling food prices. Most analysts agree that main cause of increase in price of tortillas has been spike in corn prices in United States as demand for corn to produce ethanol.

Mexico is in the grip of the worst tortilla crisis in its modern history. Dramatically rising international corn prices, spurred by demand for the grain-based fuel ethanol, have led to expensive tortillas. That, in turn, has led to lower sales for vendors and angry protests by consumers.

The uproar is exposing this country's outsize dependence on tortillas in its diet--especially among the poor. Tortilla prices have tripled or quadrupled in some parts of Mexico since last summer.

"Going ahead, it looks very good for high corn prices," said William Edwards, an agricultural economist at Iowa State University.

In another place, a rise in the cost of a single food product might not set off a tidal wave of discontent. But Mexico is different. "When you talk about Mexico, when you talk about culture and societal roots, when you talk about the economy, you talk about the tortilla," said Lorenzo Mejía, president of a tortilla makers trade group. "Everything revolves around the tortilla."

Poor Mexicans get more than 40 percent of their protein from tortillas, according to Amanda Gálvez, a nutrition expert at the National Autonomous University of Mexico. Modern-day tortilla makers use "an ancient and absolutely wise" Mayan process called "nixtamalizacion," Gálvez said. The process is straightforward. Large kernels of white corn are mixed with powdered calcium and boiled, then ground into a dough with wheels made of volcanic rock. The resulting tortillas are more pliable and more durable than those typically found in U.S. stores. Mexicans say tortillas are their "spoons" because they use them to scoop up beans, and can serve also as their "plates" because they're sturdy enough to hold a pile of braised meat and vegetables.

Gálvez said she believes the price increase is already steering Mexicans toward less nutritious foods. The typical Mexican family of four consumes about one kilo--2.2 pounds--of tortillas each day. In some areas of Mexico, the price per kilo has risen from 63 cents a year ago to between $1.36 and $1.81 earlier this month.

Many poor Mexicans, Gálvez said, have been substituting cheap instant noodles, which often sell for as little as 27 cents a cup and are loaded with less nutritious starch and sodium.

There is almost universal consensus in Mexico that higher demand for ethanol is at the root of price increases for corn and tortillas. Ethanol, which has become more popular as an alternative fuel in the United States and elsewhere because of high oil prices, is generally made with yellow corn. But the price of white corn, which is used to make tortillas, is indexed in Mexico to the international price of yellow corn, said Puente, the Mexico City economist.

Mexico, which counts corn as one of its major agricultural products, now faces a shortage and will now have to import more than 800,000 tons of corn from the United States and other countries.

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