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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.

2828
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<<
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. >>


Interesting that ONCE AGAIN, environmentalists are willing to sacrifice the interests of poor people in order to carry out their policy objective to protect an abstraction called "nature."

Cheap U.S. corn has been a huge export product that has been feeding a good deal of the world at low cost for decades. With the ethanol program, farmers are getting a bonanza of high prices and the United States is getting a bonanza of foreign exchange from corn sales. Of course, the people consuming that food are paying sharply higher prices.

Personally, I find it FAR better policy to be taking energy for fuel out of the ground as oil rather than out of the mouths of hungry human beings, but environmentalists are SO entranced with their alternative fuel idea that nothing else matters much.



Seattle Pioneer



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...lets see how price controls works out in this case...

I can guarantee I know exactly how it will turn out.

Does the phrase "let them eat cake" ring a bell?
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Personally, I find it FAR better policy to be taking energy for fuel out of the ground as oil rather than out of the mouths of hungry human beings, but environmentalists are SO entranced with their alternative fuel idea that nothing else matters much.

I don't care if people use corn for energy as long as it is done through the free market.
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<<Personally, I find it FAR better policy to be taking energy for fuel out of the ground as oil rather than out of the mouths of hungry human beings, but environmentalists are SO entranced with their alternative fuel idea that nothing else matters much.

I don't care if people use corn for energy as long as it is done through the free market.
>>


It's not, of course. The only reason there is alcohol in gasoline is government regulation.

Watering people's gasoline with alcohol is a dirty as watering someone's beer.



Seattle Pioneer
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"Personally, I find it FAR better policy to be taking energy for fuel out of the ground as oil rather than out of the mouths of hungry human beings, but environmentalists are SO entranced with their alternative fuel idea that nothing else matters much."

Apparently this person hasn't realized yet that at some point (if not already) the peak of oil production will limit how much 'ehergy' you can extract from the ground.

It is not only the 'environmentalists' but everyone associated with energy realize that within 50 years, most of the USA transportation industry, home heating, and the 100,000 products made from oil will need to be made from other things, since oil production will be less than half of what it is today, and world population will likely be 50-100% higher than today at current rates of growth.

You can't have your cake and eat it.

You want energy? There has to be a source for it, and the 'ground' resources are finite and diminishing.

Already, oil use in the 3rd world is declining. THey can't afford it...which means their food prices are going to start to rise (look at world grain reserves, now approaching ZERO within a few years). In five years, look to negative reserves (meaning you have burned through all your stored grain reserves) THEN imagine 10-20% of world grain/corn production going to fuel production for those who wish to afford it.

t.





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It's not, of course. The only reason there is alcohol in gasoline is government regulation.

Watering people's gasoline with alcohol is a dirty as watering someone's beer.


I wasn't suggesting that the market is currently a free market. I was suggesting that I wouldn't have a problem with people choosing to use corn for energy of their own free will instead of choosing it because of government mandates and subsidies.

The subsidies are all the more ridiculous because of the simultaneous existence of tariffs on imported ethanol. It couldn't be more obvious that the purpose of the government subsidies is to reward corn farmers rather than to encourage clean fuels.
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The subsidies are all the more ridiculous because of the simultaneous existence of tariffs on imported ethanol. It couldn't be more obvious that the purpose of the government subsidies is to reward corn farmers rather than to encourage clean fuels.

I don't think it's really that obvious. The way I see it, the US is telling the rest of the world this: "If it's okay for you to impose tariffs on our agricultural products, it's okay for us to impose tariffs and subsidies to prop up what you've put at an economic disadvantage. If ethanol producing countries don't like it, they should be with us against your tariffs and for free trade, not on your side against us."

This is what the WTO's stalled Doha round of global trade talks is/was about. I'm sure there is a component of internal political pandering for votes from the ag interests, but when you put the whole "climate change" issue into its geopolitical context, the rest of the world wants to have its cake and eat our lunch too.

I'm against the US subsidies and I'm against the US tariffs and I hope the tortillas we eat in the US are not imported from Mexico but made with ingredients we shipped to Mexico. I'm also against protectionist trade policies in other countries, but the only votes I get there are with my wallet and my US ballot.

1HF
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