The effects of agricultural domestic and trade liberalization on food security: Lessons from Mexico

The paper is dedicated to examine the implications of agricultural trade liberalization within the North American Free Trade Agreement (NAFTA) for food security in Mexico. Since NAFTA implementation has almost 20 years of existence, the Mexican experience is relevant to draw lessons for other emerging economies in South East Asia involved in regional free trade agreements. Taking into consideration agricultural heterogeneity in Mexico at both production and regional levels, the main objective of the paper is to evaluate empirically the effect of NAFTA and domestic reforms on Mexico´s agricultural prices, production, trade and food security with special attention to Mexico´s non-competitive crops under NAFTA: grains and oilseeds and maize (the major food staple of Mexico). The study shows that some of the official expectations about the effects of NAFTA have not been realized: e.g. domestic production of maize has increased. In order to explain unexpected trends, I propose that particular reactions of subsistence household farmers to market-price changes and subsidies to commercial farmers producing staples explain unforeseen trends. With respect to food security during NAFTA, I find that per capita food consumption in Mexico has increased, partially at the expense of “import dependency” and “self-sufficiency”. However, what causes concern is that income inequality and poverty prevails, meaning that food security has not been granted for all Mexicans. I conclude that food production and security can increase in Mexico by “reforming the reforms” in a market oriented and globalized context by a long run effective policy design that favors the provision of public goods and that integrates social policies with productive policies for rural households with a competitive potential.