Monday, July 23, 2012

Enrique Peña Nieto's biggest challenges will be economy and environment, not drug cartels

MGRR News Analysis: The global economy -
El Universal columnist says that it's more about poverty than drug-running

*Updated Dec. 27*
Mérida, Yucatán -
When he walks into Los Pinos, Mexico's White House, on Saturday, Dec. 1, president Enrique Peña Nieto probably will be thinking less about the vicious Los Zetas drug cartel and more about rock-hard farmland in Kansas. Such was the suggestion yesterday (July 22) of columnist Jorge Zepeda Patterson, writing in Mexico City's prestigious El Universal. His editorial, La crisis que viene ("The coming crisis") will leave the reader with sobering thoughts about the immediate future of the Mexican state and its 112 million citizens.

Patterson makes a strong case using impressive - depressing might be a better word - statistics. Let's start with a snapshot of Mexico's economy as the present administration comes to a close and a new leader prepares to take office. MGRR reported on that topic Feb. 10, and Patterson relied upon exactly the same numbers in his analysis (Increasing poverty and rising state debt result in poor economic report for Mexico).

Here are the key facts from MGRR's report:

"Mexico is a country of about 112 million, with a median age of 26. The government says that in 2008, 48.8 million of its citizens lived in poverty. That number has now risen to 52 million. Of those, 10.5% are said to subsist in conditions of extreme poverty, and 35.8% in moderate poverty. Only 19% of the Mexican population is said to be outside the range of vulnerability to poverty.

"The worldwide economic downturn which began in 2008, coupled with the rising cost of food (both domestically produced and purchased from abroad), has cast more people into the ranks of the moderately or severely impoverished, according to government sources. The weakened American economy on which Mexico is so dependent, plus the yet unresolved European economic crisis which could well result in the collapse or dramatic down-scaling of the euro, are other contributing factors commonly cited by experts."

But Patterson paints an even bleaker picture than MGRR did six months ago. He claims that of Mexico's impoverished (who, by the way, represent over 46% of its population), more than 31% were living in extreme poverty at the end of March. Such poverty in Mexico is often referred to as pobreza alimentaria - virtual starvation. Every day, more than 16 million Mexicans struggle to find something to eat and something to feed their families.

U.S. drought felt far to the south
Those disturbing numbers are only the beginning of Mexico's, and Mr. Peña Nieto's, challenges, however. Mexico must import a huge amount of corn and soybeans from the United States every year. Much of that country is undergoing the most severe drought in nearly six decades, driving farm prices sky high and leading to widespread shortages of many agricultural products.

Patterson points out that U.S. corn prices hit an historic high last week, at $325 a ton, and soy beans prices did likewise, at $633 a ton. Harvests of both crops are expected to be the lowest in at least 20 years, and may be insufficient to satisfy world demand, regardless of what buyers are prepared to pay. All of this spells severe problems for Mexico, where the price of tortillas (the national staple, and generally made of corn rather than flour) has risen 61% in recent months. Add to these agrarian woes the fact that Mexico's minimum wage (1,800 pesos, or $135 per month) has lost 25% of its purchasing power since 2000, and one has a recipe for disaster, says Patterson. He writes (translated by MGRR):

"It's impossible to predict what social and political impact this additional economic pressure will have on the masses. And there's yet another aggravating factor. The escape valve of Mexicans heading to the United States (in search of jobs) has greatly diminished in recent years, due to the beefing up of (U.S. state) laws targeting illegals and undocumented workers.

"Peña Nieto will be facing the accumulated effects of the deteriorating lives of Mexicans, especially the most marginalized. That deterioration constitutes a brewing cauldron . . . for crime, resentment and eventually for protest and (national) mobilization."

How will all of this play out after Dec. 1? "We'll know sooner rather than later," opines Patterson.

Dec. 27 - In a day trip yesterday to San Pablo del Monte, in Tlaxcala, president Peña Nieto promised a local crowd that the twin focuses of his new PRI government would be ensuring sufficient food for all and promoting job growth. "The goal is that Mexico becomes a more just and equal society, where all may enjoy a life of dignity - especially the marginalized." If only it were as easy as it sounds.

Feb. 16, 2013 - A nine year old drug addict dies alone on Jalisco street
Dec. 19 - Enrique's challenging homework
Nov. 16 - Gross economic disparity still a hard fact of Mexican life
Nov. 11 - Seven of 10 Mexican households report food shortages
Oct. 17 - "Ending poverty" key focus of incoming PRI government
July 21 - Mexico facing greater political crisis this year than in 2006
April 23 - AMLO: Economic inequality is the primary cause of Mexico's insecurity

Nov. 8 - Drought tracker: Dryness worsens in Kansas, Oklahoma
Oct. 29 - Drought taking big bite out of Kansas cattle herds
Sept. 21 - A Sharply Increasing Trend in U.S. Layoffs
Aug. 9 - Drought worsens in key farm states
Aug. 8 - At least a million people in the Mexican state of Oaxaca face pobreza alimentaria.
Aug. 3 - Yucatán gran prices soar in face of U.S. drought
Aug. 3 - Poverty in Mexico, with a child's face
Aug. 2 - México compra 1.5 millones de tons de maíz a EEUU
Aug. 2 - Drought may cost U.S. economy $50 billion
July 29 - 28 million Mexicans spend almost 60% of their income just to eat
July 26 - Report shows U.S. drought rapidly intensifying
July 25 - U.S. food prices likely to rise 3-5% in 2013 due to drought
July 25 - Wheat flour prices rise 22% in Quintana Roo, squeezing bakeries
July 24- Inflation hits 18 month high in Mexico. Through July 15, the annualized rate of inflation was 4.45%, the highest since the end of 2010 when it hit 4.55%. Government analysts say most of the recent increase is attributable to rising chicken and egg prices, occasioned by an outbreak of avian influenza in some parts of Mexico earlier this month. Poultry flocks have been destroyed in hard hit regions to prevent contagion.

Farmer in Gardner, Kansas, just outside of Kansas City, examines ruined corn crop - and his soy beans are in the same condition. July 23, 2012 - Drought’s wide impact, on the family farm and on the city block, is likely to last for years (by The Kansas City Star)

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