November 20, 1998

Mexicans Lament Proposed End of Tortilla Subsidies

By Adolfo Garza

A Mexico City vendor weighs a kilo to tortillas. For generations, impoverished Mexicans could always count on cheap tortillas -- that era may be coming to an end. Mexico has removed most subsidies from corn tortillas and plans to lift price controls Jan. 1.

MEXICO CITY - For millions of impoverished Mexicans, tortillas are more than just a basic food - they are a reminder of their Aztec ancestors, a daily purchase that brings people together around neighborhood stores.

But an end to tortilla subsidies, proposed by the government over the weekend, has sparked fear among Mexicans that they will no longer be able to afford the heart of their diet and a cheap source of nourishment.

``It's practically the only thing we eat,'' said housewife Mary Huerta, who lined up at a neighborhood tortilla shop to buy her family's daily supply of tortillas for 6 pesos, about 60 cents.

A shopkeeper scooped up the hot tortillas as they dropped off a creaking machine and stacked them onto a towel Huerta had brought to save the 3 cents it costs for wrapping paper.

Finance Undersecretary Martin Werner announced plans Sunday to end most subsidies from corn tortillas and lift price controls Jan. 1. The government is paring spending to help bolster an economy buffeted by the global financial crisis and a sharp drop in oil prices.

``It's really very tough, because we can't get by on what our husbands make,'' said another housewife, Marina Hernandez, a 31-year-old mother of four. She said her husband, a construction worker, makes the minimum wage of $3 a day.

Officials insist the poor will not be left unprotected: they will receive some sort of direct aid to buy tortillas, though how that will work has not yet been announced.

It's unclear what tortillas without any subsidies or price controls might cost. Tortillas that are handmade from premium corn sometimes cost several times the official price at local markets.

But experts are skeptical about the government's ability to create a safety net, given that more than half of the population lives in poverty and most Mexicans earn far less than $10 a day.

Economics professor Ifigenia Martinez, a former senator and an adviser to Mexico City Mayor Cuauhtemoc Cardenas, said the opposition-led Congress may reject the government's plan.

``I don't think the measure could be approved by Congress, where representatives are more conscious about the terrible harm this would have on a considerable part of the population,'' she said.

Liliana Ruiz of the government's National Nutrition Institute said higher tortilla prices are likely to hurt children, senior citizens and pregnant women.

``It could lead to the death of hundreds of children from malnourishment, especially in poverty-afflicted states like Chiapas,'' she said.

As expected, Mexico's tortilla corn-flour producers praised the plan Monday.

``The economy will benefit from a free and open market,'' said Javier Velez, chief financial officer of the country's largest tortilla flour producer, Grupo Maseca.

``This subsidy was very inefficient and expensive because it subsidized 100 percent of consumers'' not just the poor, Velez said.

But Martinez, one of the nation's most respected economists, doesn't think the government's plan makes sense.

``It will not lead to a significant increase in government revenue, or a reduction in spending, but it would cause great harm to a lot of people,'' she said. ``It would be more expensive to try to focus subsidies on a few poor areas than to maintain a generalized subsidy.''

President Ernesto Zedillo and his predecessors have gradually reduced subsidies on other key foods - ranging from flour to oil to beans - in recent years. But until last weekend, the tortilla subsidy was sacred.

``Zedillo and his officials don't care about the people's hardships,'' construction worker Jose Antonio Gonzalez said as he waited to buy tortillas for lunch. ``Everything goes up, but our wages stay the same.''

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