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Mexico is putting price controls on tortillas to protect the poor from increases in tortilla prices caused by rising prices of corn. The AP reports (HT: Noah Yetter):

President Felipe Calderon signed an accord with businesses on Thursday to curb soaring tortilla prices and protect Mexico's poor from speculative sellers and a surge in the cost of corn driven by the U.S. ethanol industry. The corn tortilla is the basic staple of the Mexican diet and is especially crucial for the poor. The accord limits tortilla prices to 8.50 pesos ($0.78) per kilogram and threatens to use existing laws to achieve prison sentences of up to 10 years for company officials found hoarding corn. Some stores have been selling tortillas for as much as 10 pesos ($0.91) per kilogram.

It also raises quotas for duty-free corn imports to 750,000 metric tons (826,733 U.S. tons), most of which will come from the United States.

The measure is to be reviewed for possible modifications on April 30.

"The unjustifiable price rise of this product threatens the economy of millions of families," Calderon said. "We won't tolerate speculators or monopolists. We will apply the law with firmness and punish those who take advantage of people's need.

Why is corn getting more expensive?

The rise is partly due to U.S. ethanol plants gobbling corn supplies and pushing prices as high as $3.40 a bushel, the highest in more than a decade.

So because of a bad law in the United States (the requirement to put ethanol in gasoline), the Mexicans have decided to pass a bad law that can only lead to a tortilla shortage.

But wait. There's another source of high corn prices in Mexico. Re-read that earlier line:

It also raises quotas for duty-free corn imports to 750,000 metric tons (826,733 U.S. tons), most of which will come from the United States.

Quotas? Mexico keeps out American corn? Wait a minute. Didn't the United States sign a free trade agreement with Mexico, the North America Free Trade Agreement? I guess there was a exception for corn. Or a very slow phase-in. Maybe we should call it NAMTA—the North America Managed Trade Agreement. Or maybe NAFTA stands for the North American Fair Trade Agreement because it protects Mexican corn farmers from unfair competition by American corn farmers.

Getting rid of corn quotas would be a lot better way to help the poor than imposing price controls on tortillas.
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Interesting, lets see how price controls works out in this case, maybe it will prove informative in cases which may come up here, of which i can't think of any.

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