Thursday, February 01, 2007

The Relationship Between Gas Prices and Tortillas

What happens when Americans want cheaper gas? Poor Mexicans starve. The price of tortillas has risen to 45 cents per pound in some areas of Mexico where the minimum wage is still less than US$5 dollars a day. A bushel (56 pounds) of corn has risen on the Chicago Board of Trade by over US$2 dollars since the end of 2005 to US$4 dollars; the US supplies about a quarter of Mexico's corn imports. This has been caused by the surge of interest in ethanol as an alternative fuel.

On Wednesday, tens of thousands of workers and farmers filled the central square of Mexico City to protest the spiraling food prices. Mexico's President Felipe Calderon announced a pact to freeze prices on January 18th, but the pact was with less than 10% of tortilla producers in the country. Left-wing parties joined the protesters and handed out ears of corn, which in itself has ramifications for the US as many Latin America countries have moved towards Leftists governments; the most recent of which was Ecuador with the inauguration of Rafael Correa on January 15th as Ecuador's President. For the left-wing parties, the issue of tortillas has become a new rallying point. Many of the Mexican protesters blame the government, one protester said "We’re here because the government always takes advantage of the poor. First it was tortillas, but we’re not stupid; if tortillas go up, everything else does too."

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