White corn exports hit with 50% export tariffs as Mexico tries to keep grain in the country

17 Jan 2023 --- The Mexican government has introduced a 50% tariff on white corn exports, one of the country’s staple foods. The levy will be in place until at least June and comes as Mexico tries to stabilize prices and keep the essential white corn, usually used for tortillas, in the country.

“The supply and production of white corn in our country are important factors in determining its price and, therefore, of the various consumer products made from it,” says the decree published in Mexico’s official gazette.

The government is also concerned about maintaining an adequate commodity supply and reducing food inflation. 

The gazette details how corn is a “basic food” in Mexicans diets and an important source of calories, with a per capita consumption of 332 kg per year.

Fighting food inflation
The country suffered consistent double-digit food inflation during every month of 2022, starting the year at an 11.9% inflation rate and ending it at 12.7%, according to the Mexican National Institute of Statistics and Geographic.

Corn is a “basic food” in Mexicans diets and an important source of calories, with a per capita consumption of 332 kg per year.Last October, the nation’s Federal Consumer Protection Agency explained that the country doesn’t have problems with demand-driven inflation – like the US – but with maintaining a stable and adequate supply of foodstuff. 

Most of Mexico’s major food producers halted all their white corn exports – as well as sardines and scrap metal used for food containers – in October in order to tackle soaring prices. 

The nation’s target was to lower by 8% the costs of commonly consumed 24 food staples, with a target of a 3% reduction between October 2022 and February 2023 of corn prices.

However, according to the National System of Information and Market Integration, the average price per KG of a tortilla is currently – as of yesterday – 22.12 pesos (US$1.18) compared to 21.72 pesos (US$1.16) at the start of October.

Ineffective tariffs
Protectionist moves to keep prices under control have not always played out as intended by national governments. The Mexican government is on track to miss the price targets they set when they introduced defensive trade measures last October.

Indonesia moved in April last year to lower palm oil prices through a palm oil export ban that was proven too effective as prices spiraled down far more than authorities wanted. Indonesia removed the ban some weeks later, however vegetable oil prices have continued to go down month after month and are now at a March 2021 low. 

In Argentina, attempts to control inflation by blocking beef exports have proved unsuccessful, with food inflation increasing to 95% in December 2022.

Meanwhile, a regulatory move to ban wheat exports in India didn’t prevent price leaps, with the local government admitting that it boosted local prices.

By Marc Cervera