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Executive summary

Since the beginning of the North American Free Trade Agreement (NAFTA) in 1994, Mexico has experienced a dramatic deterioration in its ability to grow its own food. This has been particularly true for basic grains and meats, foods that flooded Mexico with cheaper exports from the United States after NAFTA eliminated most of the trade restrictions Mexico had used to protect its farmers from foreign competition. Many of those U.S. exports were especially cheap because the U.S., during much of the post-NAFTA period, exported products at prices below what it cost to produce them, one definition of the unfair trade practice known as dumping.

As the Institute for Agriculture and Trade Policy (IATP) has documented, in 16 of the 28 years since NAFTA took effect, the U.S. exported corn, soybeans, wheat, rice and cotton at prices 5-40% below what it cost to produce them. IATP refers to these percentages as dumping margins. With post-NAFTA export volumes of key food crops surging, Mexican producers of these crops saw prices fall precipitously. The foreign competition and low prices dampened Mexico’s domestic production, prompting a steady rise in the country’s dependence on imported foods.

Given their relative importance in Mexican agriculture and diets, corn and wheat are of particular concern. Prior to NAFTA, Mexico was nearly self-sufficient in corn, importing just 7% of its needs. That rose to 30% in 2006-8 under the deluge of cheap imports, and it now stands at 38%. Wheat production has fared even worse, with import dependency rising from 18% before NAFTA to 66% now. Mexico now imports 48% of its grain and oilseed consumption, with just 52% produced in Mexico.

The purpose of this report is to assess how U.S. agricultural dumping of cheap exports has contributed to Mexico’s loss of food self-sufficiency. We focus on the most recent period of agricultural dumping, from 2014 to 2020, when key U.S. crops were exported at below what it cost to produce them, building on a 2009 Tufts University study of the first post-NAFTA wave of dumping, from 1997 to 2005.

The government of Andrés Manuel López Obrador came into office in 2018 vowing to address Mexico’s rising import dependence. "We are going to produce in Mexico what we consume,” promised López Obrador during his campaign. His government has prioritized five key foods — corn, wheat, beans, rice and dairy — with a series of government programs designed to restore some measure of self-sufficiency. Here, we focus on the impact U.S. agricultural dumping has on those staple foods.

We find that:

• After the 1997-2005 period of U.S. dumping, when dumping margins were between 10% and 40%, prices rose with the food-price crisis spurred by the U.S. corn ethanol boom, the 2007-8 financial crisis and a severe drought in 2011. But by 2014 export prices returned to dumping levels, with dumping margins averaging between 6% and 27% through 2020 depending on the crop. Market disruptions from the COVID-19 pandemic and the Russia-Ukraine war raised crop prices in 2021.
• U.S. exports to Mexico have continued to increase in the last 12 years, not at the exponential rates immediately following NAFTA but generally faster than Mexican production has risen. As a result, Mexico’s import dependency for the five priority foods has continued to rise to between 14% and 80%. It has also risen for key meat products.
• U.S. dumping cost Mexican corn and wheat producers nearly $6 billion in lost value for their crops. With U.S. exports of corn and wheat entering Mexico at dumping margins of 10% and 27% respectively from 2014 to 2020, domestic producer prices were lowered by comparable percentages. Collectively, Mexican corn farmers lost $3.8 billion in value for their crop while wheat farmers lost $2.1 billion.
• While the López Obrador administration’s efforts to stimulate domestic production have the potential to reduce import dependency, there is limited evidence through 2022 that they have resulted in significant increases in production. In part, this is due to U.S. dumping in the first two years of the administration, as cheap imports and low prices reduced the incentives for Mexican farmers to increase their output.
• International prices are now relatively high, thanks to pandemic disruptions and the Russia-Ukraine war. This may stimulate increases in domestic production, but previous rises in import dependency leave Mexican importers with very high bills. Corn imports alone cost Mexico nearly $5 billion last year. Since 2000, Mexico’s costs of importing corn, wheat, beans and rice jumped sevenfold in nominal terms, from $979 million to $7.2 billion.

International crop prices are projected to return to low levels in coming years. U.S. agricultural dumping is not a thing of the past: It is a feature of U.S. industrialized agriculture prone to overproduction and below-cost prices to farmers. This is not just bad for Mexican farmers forced into competition with more industrialized U.S. farms. It is bad for U.S. farmers and rural communities, as low prices undermine local economies and leave farmers dependent on an expensive but inefficient set of government subsidies.

In trying to reverse decades of rural neglect and U.S. dumping, the Mexican government is swimming against some very strong tides, currents made only more treacherous by a trade agreement that severely limits what strokes Mexico can employ. Reducing import dependence and increasing domestic production of priority food crops are worthy goals, for a variety of reasons: poverty reduction, rural development, increased resilience to price and supply shocks, greater control over the quality of the food Mexicans consume and even national security.

Trade practices such as agricultural dumping are unfair and are proscribed by a range of international trade agreements. As we show in this report, U.S. dumping undermines Mexico’s legitimate efforts to stimulate domestic production of priority food crops and reduce its dependence on imports.

Three decades of unfair trade

Since the beginning of the North American Free Trade Agreement (NAFTA) in 1994, Mexico has experienced a dramatic deterioration in its ability to grow its own food. This has been particularly true for basic grains and meats, foods that flooded Mexico with cheaper U.S. exports after NAFTA eliminated most of the trade restrictions Mexico had used to protect its farmers from foreign competition. Many of those U.S. exports were especially cheap because the U.S., during much of the post-NAFTA period, exported products at prices below what it cost to produce them, one definition of the unfair trade practice known as dumping.

The impacts were especially dramatic for two of the country’s key staple crops, corn and wheat. Corn is the iconic staple of the Mexican diet, economy and culture, with some three million farmers cultivating a wide range of native and hybrid varieties for tortillas, tamales and a sumptuous array of other foods. U.S. corn exports to Mexico increased more than 400% between the early 1990s and 2006, while low U.S. export prices helped drive down the prices Mexican producers received for their corn by 66% by 2005, adjusting for inflation. While not as central to Mexican culture and cuisine, wheat had become a core staple grain, thanks in part to the Green Revolution research done on the crop in Mexico.¹ Under NAFTA, U.S. wheat exports ballooned nearly 600% by 2006, with low export prices driving producer prices down 60%. Rice, another important grain, saw U.S. exports jump more than 500%, forcing down Mexican producer prices by 55%.²

While NAFTA generated a boom in Mexican exports to the U.S. of off-season crops such as tomatoes, strawberries and avocados, the country has seen the continued weakening of its capacity to grow a significant share of its own staple foods. As Figure 1 shows, Mexico’s dependence on imports has grown steadily since NAFTA for key food crops and products.

For each crop, the three bars present the share of Mexican consumption accounted for by imports. The light blue bar offers a pre-NAFTA baseline for the average import-dependence for the three-year period 1990-2. The dark blue bar is for 2006-8, after NAFTA liberalization and a nine-year period of U.S. dumping, with the red bar presenting the most recent data available for 2019-21. In nearly every case, there has been a steady and significant rise in import-dependence. Given their relative importance in Mexican agriculture and diets, corn and wheat are of particular concern. Prior to NAFTA, Mexico was nearly self-sufficient in corn, importing just 7% of its needs. That rose to 30% in 2006-8 under the deluge of cheap imports, and it now stands at 38%. Wheat production has fared even worse, with import dependence rising from 18% before NAFTA to 66% now. Mexico now imports 48% of its grain and oilseed consumption, with just 52% produced in Mexico.³

The Mexican government is now seeking to reverse these trends. The government of Andrés Manuel López Obrador came into office in 2018 with a sweeping mandate to reverse decades of pro-free-trade policies and rural neglect.

"We are going to produce in Mexico what we consume,” promised López Obrador during his campaign. “We are in a tremendous crisis because we depend on foreigners for what we consume. There is no food sovereignty."

Through a coordinated set of policies, the government has set out to increase food self-sufficiency in five priority foods: corn, wheat, rice, beans and dairy. All the measures are consistent with existing trade agreements, which limit the use of protective tariffs, the most common measure used historically to increase domestic production while shielding domestic producers from international competition. Those programs include:

• Producción para el Bienestar, roughly translated as “Production for Well-Being” — The López Obrador government has shifted its agricultural subsidy programs to favor small and medium-scale farmers, increasing access to technical assistance and inputs, including fertilizers. The government is using some of the programs to promote a transition to agroecological practices.
• Sembrando Vida (Sowing Life) — An agroforestry initiative subsidizing the widespread planting of trees on small-scale farms to improve soil fertility, slow erosion, increase soil carbon sequestration and increase staple-crop production.
• Precios de Garantía (Support Prices) — Has the goal of providing small and medium-scale producers of priority food crops with remunerative prices to incentivize local production, with public procurement providing healthier local foods to schools, hospitals and other public institutions.

The purpose of this report is to assess how U.S. agricultural dumping of cheap exports has contributed to Mexico’s loss of food self-sufficiency. We focus on the most recent period of agricultural dumping, from 2014 to 2020, when key U.S. crops were exported at below what it cost to produce them. This updates a 2009 Tufts University study of the first post-NAFTA wave of dumping, from 1997-2005.⁴ Though international prices are now high, thanks to pandemic disruptions and the Russia-Ukraine war, they are likely to return to low levels.⁵ Further agricultural dumping could again undermine Mexico’s efforts to stimulate domestic production of its priority food crops.

Import dependence and U.S. dumping

Mexico’s rising levels of import dependence are closely related to the flood of cheap imports from the U.S. since NAFTA. Cheap imported crops and animal products can displace domestically produced goods. Even when they don’t, they put downward pressure on local prices, making it harder for domestic producers to earn a living from their farms while reducing incentives to produce.

That is aggravated by agricultural dumping, when crops and products are exported at below what it cost to produce them. High farm subsidies have been blamed for U.S. agricultural dumping, but the causes are more complex. Industrialized agriculture, if left unregulated, has a natural tendency toward overproduction. Chronic overproduction, in turn, pushes down prices as supply outstrips demand. Subsidies make up some losses for some farmers, but prices remain low. When export prices fall below the costs of production (allowing for transport and handling costs), that is considered an unfair trade practice known as dumping. (See Appendix 2 for more on U.S. agricultural dumping.)

IATP has documented U.S. dumping of key agricultural commodities since 1998.⁶ After the 1996 Farm Bill dismantled the last vestiges of U.S. government policies designed to boost prices by limiting overproduction, U.S. dumping of key commodity crops became more commonplace. By IATP calculations, from 1997-2005 corn, soybeans, wheat, cotton and rice were exported at prices between 12% and 38% below production costs.⁷ IATP refers to these as “dumping margins.” After a brief period of higher prices following the 2007-8 food crisis, U.S. dumping resumed in 2014. Between 2014 and 2020, dumping margins for those same crops were between 5% and 28%. Only the disruptions of the pandemic and the Russia-Ukraine war pushed prices above production costs since 2021. (See text box on our methodology.)

That first period of agricultural dumping cost Mexico dearly. As Wise documented in his 2009 study, the post-NAFTA surge in exports made Mexico particularly vulnerable as U.S. export prices depressed domestic prices.⁸ The result was rising import dependence and weakened domestic production in most crops. As Table 1 shows, domestic production declined for four of those five dumped crops, with only corn production showing surprising resilience. 

The table shows: the rise in U.S. exports from before NAFTA to 2006-8 (using three-year averages to account for annual variations); the average dumping margins for the nine-year period; the drop in real producer prices from before NAFTA to 2005; the impact on domestic production from before NAFTA to 2006-8; and the “dumping losses” incurred by Mexican farmers. This is the lost value of Mexican farmers’ crops attributable to, for example, the 19% dumping margin for corn, which depressed domestic prices by a commensurate amount. Over nine years, corn farmers are estimated to have lost $6.6 billion to dumping. Wheat farmers also suffered large losses of more than $2 billion.

That earlier study included meats because they showed dramatic increases in U.S. exports, more than 700% for pork. IATP has not calculated dumping margins for animal products due to the technical difficulties of assembling reliable data. Wise’s 2009 study estimated one portion of dumping: the extent to which beef, pork and poultry prices were lowered by their access to below-cost corn and soybeans, the key ingredients in feed which account for the largest operating costs for factory farms. He estimated dumping margins just from below-cost feed at 5-10% for pork, poultry and beef. As with the commodity crops, U.S. exports pushed down producer prices in Mexico and producers there saw $3 billion in lost value due to below-cost feed used to produce those meat imports.

A note on data and methodology

The methodologies and data sources used in this report are presented in detail in Appendix 1. Data are primarily from U.S. and Mexican government sources, as detailed in the appendix. To provide some clarity, we note the most important elements of the methodology and terminology here:

Time periods — For the growth in U.S. exports and trends in Mexican production, we use three-year averages to smooth annual variations, reporting two periods:

• Pre-NAFTA baseline of 1990-2, prior to NAFTA’s implementation in 1994, through 2006-8, after the 1997-2005 period of U.S. dumping had its impacts.
• From 2006-8 through 2018-20, to capture more recent trends through the end of the 2014-20 period of dumping, and prior to the disruptions of the pandemic and the Russia-Ukraine war.

For Mexican producer price trends, adjusting for inflation, we estimate the change in prices from before NAFTA, 1990-2, to the end of the first dumping period in 2005. This measures the real price impacts on Mexican producers from the post-NAFTA surge in exports, often at dumping prices. We then use three-year averages to estimate producer-price trends from 2003-5 to 2018-20, the end of the most recent period of dumping. The goal is to assess whether producer prices recovered or if they continued to fall from previous low levels.

Dumping margins are presented as averages for the two periods, 1997-2005 and 2014-2020, for the crops on which IATP got data. Those are both periods, interrupted by the 2007-8 food price spikes and the 2011 drought, when export prices were below the full costs of production, defined as average farmer costs of production plus transportation, marketing and government-funded input subsidies. The dumping margin is the percentage by which export prices are below full production costs, one method recognized in international trade. (See Appendix 2 for more on agricultural dumping.)

Farmer losses to U.S. dumping — We assume that producer prices in Mexico are reduced by the percentage of the dumping margin for the years in which dumping took place, a reasonable assumption since the Organisation for Economic Cooperation and Development (OECD) considers U.S. prices for these crops to be the “reference prices” in Mexico.³¹ We apply that to the volume of Mexican production for each crop in those years to estimate the lost value from dumping-related price suppression, e.g., that Mexican corn farmers’ crop would have been worth $3.8 billion more between 2014 and 2020 if U.S. corn exports had not been 10% below the costs of production.

Please see Appendix 1 for more detail and links to data sources.

The table shows:

• The growth in U.S. exports in two periods, from 1990-2 to 2006-8 and 2006-8 to 2018-20. The first period saw an explosion in exports following NAFTA. The second saw continued export growth for most products but at a slower pace.
• The impacts on real producer prices in Mexico for two periods: from before NAFTA to 2005, the end of the first period of dumping; and from 2003-5 to 2018-20, which includes the second dumping period 2014-20, to assess whether producer prices continued their decline or recovered. After producer prices plummeted 48%-68% in real terms immediately following NAFTA, farm prices in Mexico subsequently recovered a small share of that lost value for most food products.
• The impacts of each of the two export periods on Mexican production. For wheat and rice, production dropped due to low prices and import competition in the period immediately following NAFTA. Corn was the notable exception with production expanding 52%. Meat production continued to grow despite lower prices. In the second dumping period, crop production grew but relatively slowly, with the exception beans and wheat, which saw continued production declines.

Between 2014 and 2020, the U.S. was exporting key staples at prices below what it cost to produce them. IATP does not calculate dumping margins for beans, dairy or animal products, so we only report “losses to dumping” for corn, wheat and rice.

Table 3 shows how dumping slowed domestic production and cost Mexican producers. Overall, the data show that U.S. exports have continued to rise for most crops and products since 2006-8, though not as much as immediately after NAFTA. Dairy, pork and poultry exports continued to grow significantly. Dumping margins are slightly lower, but significant. Producer prices for most products recovered somewhat from their 2005 lows, though real prices still fell for dairy, pork and poultry. Domestic production rose for most products, but not dramatically, and it fell for wheat and beans. Dumping losses were significant for corn and wheat, totaling nearly $6 billion over the seven-year period.

A brief analysis of each of the priority crops follows, drawing primarily on U.S. and Mexican government data.

Corn: U.S. dumping impedes self-sufficiency efforts

Corn is far and away Mexico’s most important food crop, and corn for animal feed is the country’s most expensive agricultural import. So, it is the top priority in government efforts to increase domestic production and reduce dependence on imports. The data illustrate how dumped U.S. corn exports have contributed to those problems. As Figure 2 shows, the U.S. has been exporting corn at below production costs since 1990, except during the seven-year period from 2007-13 and in the last two years 2021-2. (For years in which export prices are above production costs, the dumping margin is zero in the graph.) During the recent wave of dumping from 2014-20, dumping margins averaged 10%. Despite downward price pressure due to rising U.S. exports at dumping-level prices, Mexico has remained largely self-sufficient in white and native corn used for direct human consumption. Its import dependence is overwhelming in yellow corn for animal feed and industrial uses. Nearly all the imported corn is genetically modified, which has been a source of controversy in Mexico.⁹