Mexico today has frozen food prices for six months on over 150 items, and has started a subsidizing food purchases for over ¼ of its population (AP/Yahoo) by sending out vouchers of around 12 dollars per month per person. The inflation rate on foods in Mexico has reached 8 percent while a most other products have leveled out at 4.5 percent (Financial Times).
This sounds like a good idea on the surface, but when looking at that food is a global market this will lead food producers internationally sending their food to where they can get full market price instead of to Mexico at a loss. This will also cause companies who produce refined food products to shut down as they cannot make money producing the product. The end result will be a shortage of overall supply for Mexico, not just higher prices.
Now with a great deal of the Midwest’s corn and soybean crops either washed out or sitting underwater ( NewsDay) there will be even less surplus grain for export from the United States. Some farmers and farmers groups though have already been speaking up about the ethics of Ethanol use and may take action to sell their crops only to food producers exasperating a complex issue (NYPost).
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