Duty-free U.S. corn imports force Mexico GMO debate

By Mica Rosenberg - Analysis

SAN SALVADOR EL SECO, Mexico (Reuters) - Cheap U.S. corn will flood into Mexico in January when trade barriers are lifted, pitting local farmers against each other over how to protect the crop that has fed Mexico for thousands of years.

Mexico is to scrap import duties of U.S. corn on January 1, under the North American Free Trade Agreement, or NAFTA, in a move that will allow the world's No. 1 producer to expand its market in the country that claims to have discovered corn.

Mexican growers are debating whether to turn to genetically modified strains of corn to resist the U.S. challenge, or to mechanize production but keep local corn strains GMO-free.

Either way, millions of Mexican farmers, many of them living just above subsistence, will struggle to compete with heavily subsidized U.S. corn despite high international corn prices.

"All the inequalities leave us unprepared for the opening," said Carlos Salazar the head of a national corn growers' association who works with farmers in the eastern town of San Salvador El Seco, where flat fields of corn and cactus stretch for miles below three snow-capped volcanoes.

Corn tariffs have gradually been phased out since the trade deal was implemented in 1994, and imports of yellow corn from the United States to Mexico have skyrocketed by about 240 percent compared to the decade before NAFTA. Mexico imported over 7 million metric tons of U.S. yellow corn in 2006.

Imported yellow corn, mostly used for animal feed, now accounts for close to 35 percent of local consumption and is likely to increase next year.

The biggest worry for Mexican farmers is that zero barriers could give U.S. producers incentives to grow more white corn, Mexico's principal crop, which is used to make tortillas and other famed foods.