Introduction

Regarding the behavior of consumption and production per capita in Mexico from 1980-2010, two points in time have been observed where the production per capita has almost fully supplied the consumption: in 1982 when the consumption surpassed by 3.5 kg, and in 1993 when the consumption surpassed by 1.5 kg. Likewise, it can be observed that the behavior of consumption and production is similar in spite of the gap between both having grown in recent years. It is estimated that on average consumption exceeds production by more than 45 kg in the course of the entire period. The gap between consumption and production grew larger and was surpassed by 54 kg between the period of 1994-2010; this is contrary to the period from 1980-1993 when the gap was 10 kg below the average of the entire period.

Furthermore, from 1985-1997 86% of consumption was supplied by national production whereas from 1998-2010 coverage decreased to 77% on average. The difference between consumption and production has been compensated through imports mainly deriving from the United States. Defining the dependence index as the national consumption ratio covered by imports, this index has been 14% and 23% for the aforementioned periods.

On the other hand, the Agencia de Servicios a la Comercialización y Desarrollo de Mercados Agropecuarios (Service Bureau for the Commercialization and Development of Agro-livestock Markets, ASERCA for its acronym in Spanish) highlights that around 66% of the maize harvested in Mexico is used to feed livestock (^{ASERCA, 1997}).

From this reason results the relevance in analyzing the determining factors of the supply and demand of maize in Mexico, as well as reviewing the behavior of the market before and after the entry into force of the North American Free Trade Agreement (NAFTA). There is evidence that this treaty affected the agricultural sector, increasing maize imports.

In 2010, the Food and Agriculture Organization (FAO) of the United Nations proposed the dependency index for the import of grains as one of its food safety indicators, which provides an estimate three times a year and consists in measuring how much of grain imports represent the apparent1 consumption. By utilizing the proposed method to estimate the dependency index of the maize imports in Mexico, in 2011 it can be observed that 35% of maize consumed in the country was imported. In fact, after the trade openness in 1994 and up until 2011, the dependency index ranged around 23%, whereas in the previous period (1980-1993) it was seven points below this value.

Mexico's dependency on maize imports places it in an unfavorable position with regard to exogenous changes. ^{González-Rojas et al. (2011)} highlight that currently the production of maize-based ethanol in the United States has intensified; in 2010 it was 116 million tons and for 2020 it is estimated that it will be 140.3 million tons. Following this line of thought, should the maize sown area of the United States be reduced by 10%, the price of imported maize in Mexico will increase by approximately 9%. Both facts will have negative effects on imported maize due to the dependency and vulnerability of the sector with regard to international competition.

The dependency created towards American maize is due in great part to the synchronization of the harvest prices, according to the Sistema de Información Agropecuaria y Pesquera (Information Service of Agro-livestock and Fishery, SIAP for its acronym in Spanish) (2007) in Mexico. Since 1994, the prices were set through the pricing agreement policy; subsequently, in 1996 the rules were modified to pave the way for the policy of indifference pricing. Through this policy, producers sell to the industry based on the international prices and it is the federal government who pays the difference regarding the target price. However, this is equated to the international price of yellow maize number 2, which in the United States is approximately 20% lower than white maize.

Figure 1 shows that international prices are lower than the rural average price during the period of 1980-2011, but always follow a similar pattern. In this period, the rural average price was 3 685 Mexican pesos per ton, whereas the international price was 2 141 Mexican pesos per ton, and therefore the national price was 1 544 Mexican pesos per ton. The prices and other monetary variables utilized in this study are deflated according to the Índice Nacional de Precios al Consumidor (Mexican National Consumer Price Index, INPC for its acronym in Spanish) and shown in 2010 values per ton greater than the international price. After 1986, the rural average price started to gradually decrease and subsequently, in 1994, it decreased once more. From 1994- 2011, it can be observed how these prices start to converge so that in 2010 the international price was slightly greater than the registered price in the country.

Sources: rural average price: based on information from the Servicio de Información Agroalimentaria y Pesquera (SIAP), http://www.siap.gob.mx/agricultura-produccion-anual/; international price: based on information from the U.S. Department of Agriculture, http://www.usda.gov/wps/portal/usda/usdahome.

Figure 1. International price of maize and rural average price in Mexico, 1980-2011. 

^{Saad (2004)} describes how since 1990 there has been a constant decrease in the price of maize in Mexico. 1994 is considered a key year because it is the year in which high prices were in effect and the subsidies to producers covered 47% of the produced value. In 1995, with high international prices and the devaluation, the internal prices improved. Subsequently, in 1996-1997 the international maize price maintained a downward tendency. From then on, and without protection plans from foreign trade, the price of maize has fluctuated with the international price leaving the producers exposed to the fluctuations of the international market, every time in a more direct manner.

The statistics on foreign trade indicate that the annual average of maize imports was 2.5 million tons in the period of 1980-1994 and 6.2 million tons from 1995-2011. The quantity of imported maize since the enactment of NAFTA until 2011 was greater by 3 million tons on average with regards to the previous period from 1980-1993, year in which NAFTA was signed. Considering the apparent consumption as the result of subtracting exports from production and adding imports, it can be observed that from 1994 the apparent consumption grew more than the national production, generating imports with a growing tendency (Figure 2).

Sources: Imports: based on information from FAOSTAT, http://faostat.fao.org/desktopdefault.aspx?pageid=535&lang=es#ancorG26; production: based on information from the Servicio de Information Agroalimentaria y Pesquera (SIAP), http://www.siap.gob.mx/agricultura-produccion-anual/

Figure 2. Imports, production, and apparent consumption of maize, 1980-2011. 

Before the growing imports of maize due to an insufficient production of the grain in order to supply national demand, the construction of an agro-livestock and fishery productive sector that guarantees the food security of the country has been implemented as a policy objective in the Plan Nacional de Desarrollo (National Development Plan) 2013-2018 and the Gobierno de la República ^{(Government of the Republic) 2013}.

This document has as an objective the determination of the levels of dependency on maize imports through the analysis of supply and demand of this product in Mexico. A system of simultaneous equations is used, which is solved through the two-stage least squares method (2SLS), in order to examine the interaction and impact of variables on the quantity of maize produced and consumed, such as the rural average price of maize, the international price of maize, the input price (urea), income (using the gross internal product as proxy) and the population.

First the concepts of security and food sovereignty are addressed, and the actual policy objective of food security in the country is also studied. Subsequently, through a model of simultaneous equations the main variables that determine the supply and demand of maize in Mexico are identified, and through the estimated values in the system, an index of the dependency on imports is constructed.

Security and food sovereignty

The subject of security and food sovereignty has been widely discussed in Mexico (^{Urquía, 2014}; ^{Rivera et al., 2014}). The current food situation is considered a result of the changes and policy objectives that have been implemented since the middle of last century.

The Ley de Desarrollo Rural Sustentable (Law of Sustainable Rural Development) in section XXVII of article 3 defines food security as: the timely supply, sufficient and encompassing foodstuffs to the population. On the other hand, food sovereignty is defined in section XXXII as: the free determination of the country on matters of production, supply and access to foodstuffs for the entire population, fundamentally based on national production (^{Valero, 2009}).

Along the same line, ^{Curiel (2013)} explains that Mexico has an important challenge. According to the FAO, a country must be capable of producing at least 75% of the foodstuffs it consumes in order to provide food security to its population. In recent years, Mexico has not fulfilled this recommendation of food security in its entirety.

As part of a review of the policies that have been implemented in different six-year terms, ^{Ortiz et al. (2005)} conclude that nowadays there is a foreign dependency on basic foodstuffs. They explain how the change happened from self-sufficiency in the six-year term of López Portillo to sovereignty in the six-year term of Miguel de la Madrid to finally setting food security as a goal in the six-year term of Salinas de Gortari. In this timeline it can be observed how the internal demand for foodstuffs has stopped being self-supplied and has given way to growing imports.

^{Saad (2004)} has studied the behavior of the maize market since the middle of the last century until the beginning of the current century. They examine the difference between supply and demand, finding that from 1950-1965 and from 1991-1993 the production was close to the apparent consumption and foodstuff self-sufficiency could be maintained. On the other hand, from 1965-1969 the production was greater than the apparent consumption of maize; however, they conclude that until 2002 there was a deficit between the production and the apparent consumption, aggravating the situation of food security and giving rise to a foreign dependency with regard to maize due to the growing imports.

Materials and methods

In order to estimate the levels of maize dependency in Mexico during the period of 1980-2011, the functions of supply and demand of maize are determined. In order to fulfill this objective, a model of simultaneous equations is used to be estimated through the two-stage least squares method (2SLS), using the Statistical Analysis System (SAS) program.

Results and discussion

In the structural model there is an adjusted R2 of 69% for the demand equation and of 68% for the supply equation. Obtaining the expected signs of the coefficients (Table 1).

From these estimated coefficients, the coefficients are calculated in the restricted reduced form of the system of equations, such that each endogenous variable is left in function of the corresponding predetermined variables.

With the estimates of the restricted reduced form and the observed values from 1980-2011, the estimated import amounts are calculated. With these and the estimated quantities of apparent consumption, the dependency indices for said period are finally determined. Figure 3 shows the observed (DI) and the estimated (IDTH) indices, as well as the estimated imported quantities (MTH), where a growing tendency for this index can be observed after 1994.

Source: elaborated from the results of the reduced estimators.

Figure 3. Observed (DI) and estimated (IDTH) dependency indices and estimated maize imports (MTH), 1980-2010. 

Conclusions

The index of dependency on maize imports estimated is in general consistent with the index calculated with the observed data on imports and apparent consumption, showing a growing tendency since 1994, thus making the need for forceful measures in favor of food security in Mexico apparent, either through effective incentive programs for production or by establishing a more controlled maize market.

Considering the aforementioned, it is possible to recommend a review of the role that the State has played with regard to the protection of commerce and fostering grain production in Mexico. In this sense, the need for an efficient and effective promoting policy is posed, as well as granting a preferential deal taking into consideration that maize is of great economic importance for a considerable number of homes and also because it is the main traditional foodstuff of the Mexican people.