A Tale of Two Tortillas

Cindy Zimmerman

There are two sides to the stories out this week about the increased cost of tortillas in Mexico, being blamed partly on increased demand for corn to be made into ethanol.

One is that it will cause the poor in Mexico to go hungry because they can’t afford to pay more for the basic staple of their diet.

The other side is that Mexican farmers, who are among the country’s poor, are making more money because of the higher prices.

As first reported in the LA Times, high corn prices are wreaking havoc on Mexico’s inflation rate and forcing shoppers to pay more for eggs, milk and tortillas. But they’re a godsend to farmers such as Victor Manuel Amador Luna.

With world corn prices riding high on strong demand from U.S. ethanol producers, Amador is looking to expand production on his farm about 125 miles east of Mexico City in the state of Puebla. He planted most of his 222 acres with corn this year and would like to buy more land.

Other news outlets have picked up the story and run with it on different angles, like this AP report which places part of the blame for the higher tortilla prices on corporate monopolies.

The San Francisco Chronicle put it this way:
Just why tortillas cost so much remains murky.

Corn prices are spiking in the United States, with crop yields low and demand high. The production of the gasoline additive ethanol has taken off in the past year, consuming millions of bushels of corn.

But Mexico grows most of its own corn for consumption. And the yellow corn used for ethanol and livestock feed is different from the sweet white corn that’s ground into masa for handmade tortillas, although some mass-produced tortillas are made from yellow corn.

Mutters about monopolies and price gouging have been rising, leading Mexico’s antitrust agency to say on Thursday that it will investigate hoarding and price manipulation.

Besides investigating, the Mexican government is importing 650,000 metric tons of duty-free corn in an attempt to drive down tortilla prices.