Mexico City.- For the National Agricultural Council (CNA), the current crisis that exists among corn producers is a problem that could be prevented by maintaining exchange rate hedging programs and grain purchase schemes, even though they are cheaper than solving the current problems.
Luis Fernando Haro, general director of the organization, calculated that continuing with the traditional coverage plan that was in place would have cost 10 percent of the impact that the current conflict between producers who ask for a higher price than the one set by the Government for ton of corn
According to CNA figures, having contracted coverage for this year in the face of exchange rate variations would have cost 2 billion pesos, since payments are made between the public and private sectors, while providing solutions to the current problem will cost about of 20 billion pesos.
“It would have been resolved with 2 billion pesos, it is what it would have currently cost the Government to be able to reach the objective prices that the producers are asking for, which are 7 thousand pesos (per ton) for corn, 8 thousand for wheat and 12,500 for sorghum,” he said.
For the manager, the greatest peak of the crisis has not yet been seen, because in the absence of solutions, the despair of the producers increases.
“I think we are not seeing the worst scenario yet, but it is in the very short term, as the issue of harvests progresses. There is a problem in storage capacity, which can put even more pressure on what is happening in some states like Sinaloa, Tamaulipas, Sonora,” Haro said.
Meanwhile, Juan Cortina, president of the CNA, explained that corn buyers will look for the best prices in the global market, which is lower, because if they don’t, they will lose profitability in their businesses.
He pointed out that given the disappearance of programs that the State already operated, the experience that existed in the past was eliminated to mitigate crises such as the current drop in prices, higher production costs and excess supply.
“Unfortunately it is a problem that the Government created by removing all these programs, this is not a new thing, it is a problem that has been had in the past, but the people who entered did not want to understand and now we are in this very problem serious,” he said.
He considered that the problem is already there and that the longer it takes to find a solution, it will worsen given the expectation that the depreciation of the peso will continue, competition from the United States, and the greater supply of grains.
Given this, he pointed out that although the CNA partners plan 10-year strategies, it is necessary for public policy to provide certainty.
It should be remembered that the current administration canceled programs such as Contract Farming, which allowed grain production to be placed at an established price before harvesting, and coverage was no longer purchased to be replaced by schemes such as Segalmex.
For specialists, this model worked the first years due to the exchange rate, adverse weather conditions for crops, and even because of the war in Ukraine where prices kept rising, however, this year with the reduction of costs in the futures market, Mexican producers accuse a payment per ton of corn lower than the cost of production, for which they ask that the Government intervene to order the grain market.
Since last week, in producing states such as Sinaloa, Sonora and Tamaulipas, corn and wheat producers have been demonstrating with blockades and asking for a work group to solve the drop in prices.
