Mexico’s tortilla prices rise on corn costs

Jeff Tyler Jan 12, 2007

KAI RYSSDAL: Here’s a commodity we don’t talk about much. Corn futures hit a 10-year high today, up 5 percent to $3.96 a bushel, if you’re interested.

Not much of a concern to most in this country outside the ethanol business, probably. But in Mexico rising corn is a crisis because tortillas are a staple. Marketplace’s Jeff Tyler has more.

JEFF TYLER: Tortilla prices are higher all over Mexico. In some parts of the country, they’re reportedly up 400 percent. Economics professor Ignacio Trigueros is based in Mexico City.

IGNACIO TRIGUEROS: The increase has been substantial. There has been an increase in some types of tortilla close to 100 percent.

He points to increased demand for corn-based ethanol in the U.S., which has boosted commodity prices on the world market.

St. Louis, Missouri-based Rick Tolman with the National Corn Growers Association says Mexico is the second-biggest export market for American corn — yellow corn, that is. He says the Mexican government rarely allows U.S. farmers to sell white corn, the kind used to make tortillas.

RICK TOLMAN: Typically, they only allow us to export yellow corn into Mexico, which goes into livestock channels. And they protect their white-corn market for their domestic, local producers. So, only on occasion do we export white corn down into Mexico, and generally it is when they are short.

Some observers blame market manipulation. One company, Gruma, controls as much as 70 percent of the country’s tortilla market. Gruma officials did not return calls before broadcast.

If the company is fixing prices, it could face fines of around $6 million. Meanwhile, the government is increasingly anxious to find a way to lower prices for this common staple in the diet of the poorest Mexicans. It says it’s actively searching for cheaper sources of white corn.

I’m Jeff Tyler for Marketplace.

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