I’d been doing a lot of research on illegal immigration and immigration reform these past few years and one question that I kept asking myself is: what is motivating these illegal immigrants to leave Mexico to the U.S.? One of the big reasons for the increase in illegal immigration in the past two decades has been the bad effect of NAFTA on Mexico’s agricultural workers. Ever since NAFTA was enacted in the early 1990s, it has had both positive and negative effects on the Mexican economy. One of the negative effects has been with Mexico’s poor farmers and agricultural workers. When Mexico signed the NAFTA agreement, Mexico agreed to get rid of its subsidies to agricultural products like corn. The United States, though, didn’t have to take away its subsidies to its farming products. So many Mexican farmers couldn’t compete with the lower prices of the American corn, wheat, soybeans and other products that flooded the Mexican market after NAFTA was passed, and a result was that 2 million agricultural jobs were lost in the 1990s and early 2000s. Before NAFTA, illegal immigration was actually in decline. After NAFTA, many of the agricultural workers who lost their jobs migrated to the United States to look for work. This is one of the reasons that illegal immigration grew in the 1990s and early 2000s.
According to a study study by the Wilson Foundation
Yet Mexico still lost 20% of its farm jobs between 1991 and 2007, with the total number falling from 10.7 million in 1991 to 8.6 million in 2007. A comparison of the 1991 and 2007 agricultural censuses shows that the total jobs lost in family farming far outnumber those created in export agriculture. Agriculture’s share of Mexico’s jobs overall also fell substantially from 23% in 1990 to 13% in 2008.
Under the NAFTA treaty in the early 1990s, Mexico agreed to stop subsidizing agricultural products like corn while the U.S. kept subsidizing their farmers. American substantially increased its exports of agricultural goods like corn and wheat to Mexico, and Mexican farms couldn’t compete with the lower prices. Here is a report from the Tufts University:
With the opening of the Mexican economy under the North American Free Trade Agreement (NAFTA), Mexican agriculture came under new competitive pressures from U.S. exports. High U.S. farm subsidies for exported crops, which compete with Mexican products, have prompted charges that the level playing field NAFTA was supposed to create is in fact tilted heavily in favor of the United States. This paper assesses the costs of U.S. agricultural policies to Mexican producers by examining the extent to which the United States exported agricultural products to Mexico at prices below their costs of production, one of the definitions of “dumping” in the WTO.
We estimate “dumping margins” for eight agricultural goods – corn, soybeans, wheat, rice, cotton, beef, pork, and poultry – all of which are heavily supported (directly or indirectly) by the U.S. government, were produced in Mexico in significant volumes before NAFTA, and experienced dramatic increases in U.S. exports to Mexico after the agreement. We find that:
U.S. exports of the eight supported commodities analyzed here have increased dramatically since the early 1990s, rising between 159% and 707%.
For supported crops, the “dumping margins” – the percentage by which export prices are below production costs – from 1997-2005 ranged from 12% for soybeans to 38% for cotton.
Assuming Mexican producer prices were depressed by the same percentage as the dumping margins, below-cost exports cost Mexican producers of corn, soybeans, wheat, cotton and rice an estimated $9.7 billion from 1997-2005, just over $1 billion per year.
Corn showed the highest losses. Average dumping margins of 19% contributed to a 413% increase in U.S. exports and a 66% decline in real producer prices in Mexico from the early 1990s to 2005. The estimated cost to Mexican producers of dumping-level corn prices was $6.6 billion over the nine-year period, an average of $99 per hectare per year, or $38 per ton.
According to this McClatchy article:
Mexican negotiators who signed the NAFTA agreement hoped that small corn farmers thrown out of work by rising imports of cheap U.S. corn would be absorbed into jobs in the fruit and vegetable export industry or in manufacturing.
“That turned out to be incorrect. The numbers of people displaced from family farming were much, much higher than the number of new wage jobs,” said Jonathan Fox, an expert on rural Mexico at the University of California at Santa Cruz.
Then U.S. corn imports crested like a rain-swollen river, increasing from 7 percent of Mexican consumption to around 34 percent, mostly for animal feed and for industrial uses as cornstarch.
“It’s been roughly a tripling, quadrupling, quintupling of U.S. corn exports to Mexico, depending on the year,” said Timothy A. Wise, the director of research and policy at the Global Development and Environment Institute at Tufts University in Medford, Mass. “Is that a river? Yeah, that’s a lot of corn.
Here is a report by Mark Weisbrot, Stephen Lefebvre, and Joseph Samut for the Center for Economic and Policy Research about the effect of NAFTA on the Mexican economy after 20 years:
NAFTA removed tariffs (but not subsidies) on agricultural goods, with a transition period in which there was a steadily increasing import quota for certain commodities. The transition period was longest for corn, the most important crop for Mexican producers, only ending in 2008. Not surprisingly, U.S. production, which is not only subsidized but had higher average productivity levels than that of Mexico, displaced millions of Mexican farmers.
…As can be seen, there was a 19 percent drop in agricultural employment, or about 2 million jobs. The loss was in family labor employed in the family farm sector. Seasonal (less than 6 months employment gained about 3 million jobs, but it was not nearly enough to compensate for the 4.9 million jobs lost in the family farm sector.
Proponents of NAFTA of course knew that family farms in Mexico would not be able to compete with subsidized U.S. production but argued that displaced workers would shift to higher productivity agriculture (mainly vegetables and fruits for export), as well as industrial jobs. Although vegetable and fruit production did expand considerably (from 17.3 million tons in 1994 to 28.2 million in 2012), and presumably accounted for many of the 3 million seasonal jobs created, it was clearly not enough in terms of employment. From 1994-2000, the annual number of Mexicans emigrating to the United States soared by 79 percent. This can be seen in Table 3, with the annual flow of migrants rising from 430,000 in 1994 to 770,000 in 2000. After 2000, the flow of migrants slowed, with a number of contributing factors: increased border security after the 9/11 attacks; the U.S. recession of 2001 and the prolonged weakness in job creation in the years that followed; and the increased costs and danger of crossing the border.
…It was noted previously that if the Mexican economy had continued growing at the rate of 1960-1980, Mexico would be a high-income country today; and that it would also have become a reasonably high-income country if its pre-1980 growth rate had been restored after NAFTA. There would still be a significant income and wage differential between Mexico and the United States, but the incentive to emigrate to the United States would have been drastically reduced along the way. It is questionable whether immigration reform would have become a political issue in the United States if not for the poor performance of the Mexican economy in the NAFTA years.
NAFTA has its benefits and its flaws, as all things do. And not every critic places sole blame for the decline of agricultural jobs on NAFTA. Some say that part of the decline is just the natural shift from an agricultural society to a more industrial economy. The United States went through the same disruption in the 19th century during the Industrial Revolution when it transitioned from an agricultural nation to an industrial economy. But there is no debate that farm workers have suffered due to the changing nature of the Mexican agriculture economy.
When Clinton lobbied for passage of NAFTA in the early 1990s, he was looking at the free market experiments of China during that time. When China began enacting free market reforms in the late 1970s, it led to a staggering economic growth that lifted many people out of poverty and created a middle class of over 200 million people. I supported NAFTA at the time for those reasons. The free markets have great benefits and great flaws. Free market economies always has winners and losers. NAFTA has done much to help the industrial part of the Mexican economy and helped it become more competitive. I think the shift in the Mexican economy brought on by NAFTA has had profound effects on its agriculture that has severely affected Mexican farm workers who have struggled to adjust.
Here are some youtube videos about NAFTA and illegal immigration:
“Stay: Migration and Poverty in Rural Mexico” – Here is a youtube video about Mexican farm workers struggling to earn a living. The video makers believe investing in rural areas instead can help reduce the pressure to migrate by creating better economic conditions for Mexican farmers to stay
Anthropology Professor Cecilia Balli discusses the forces that have brought immigration, violence and enforcement issues to a head this year. Balli studies the sexual murder of women in Ciudad Juárez, the construction of a border fence and the Mexican anti-drug campaign. She is an award-winning journalist with Texas Monthly magazine and is working on a book about the border fence in the Rio Grande Valley.
John Jay interviews Timothy Wise about the effect of NAFTA devastated Mexican agriculture