Mexico Seeks To Boost Corn Output

Mexico’s government has announced detailed plans for increasing total national corn production by 43% to 30 million metric tons in order to be self-sufficient within the next six years.

The principal target of the new policies is to increase not only producing areas but also productivity in order to strengthen the supply chain of white corn needed for making the key staple tortillas – a corn pancake.

The corn production plan was one of a wide range of reforms aimed at helping Mexican agricultural producers, which President Felipe Calderon announced on Feb. 23.

"With technology, with adequate irrigation, with adequate seeds and fertilizers, and with the financing that must be in place for the farm sector, we have to get up to 10 tons per hectare (roughly 160 bu./acre) in many areas and to 5 tons (80 bu./acre) as a national average," Calderon says.

The average Mexican yield for corn currently reaches only 2.8 tons a hectare (44.6 bu./acre).

Calderon says the low productivity was one of the biggest challenges for Mexico's 1.9 million corn producers, of which 60% are tiny subsistence farmers in areas largely dominated by indigenous communities where new technology has been difficult to introduce in the past.

In a 50-point plan for policy reforms concentrating on the key corn, edible bean, milk and sugar sectors, which combined employ about 3 million families and support the livelihood of an estimated 15 million Mexicans, special priority was given to corn farmers.

Out of a special fund in the 2007 federal budget for agriculture worth about $1.64 billion, the corn sector received the lion's share with about $1.1 billion set aside for investment and other development programs needed by corn producers to achieve the targets in the plan.

The action plan outlines key targets for how Mexico can increase production of yellow corn used as feed grains by the rapidly growing livestock industry, which today rely almost exclusively on imports for its supply.

The plan, a copy of which was obtained by Dow Jones Newswires, says southern and south-central states had vast potential to increase both yields as well as new areas for cultivation.

Among key points in the plan was to increase the yellow corn plantings and raise the use of corn produced under forward selling contracts at attractive prices to producers.

The plan also calls for a complete modernization of outdated farming practices, supported by investment in machinery and service equipment like irrigation systems, stock inventory management and storage logistics.

The plan includes an "increase in the production of certified seeds in partnership with producer organizations and initiate consolidated purchases of inputs to lower the cost of production and improve the crop management."

Editor’s note: Richard Brock, The Corn And Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.