Economic surplus implications of Mexico's decision to phaseout genetically modified maize imports.

Abstract

The Mexican government has decided to ban imports of genetically modified (GM) maize, to rely on agroecology for maize production to satisfy domestic yellow maize requirements. No economic impact assessment of this policy decision was made public, and the implications of this decision for users of yellow maize and consumers are significant. This article measures the economic surplus generated from Mexican GM yellow maize imports and domestic conventional yellow maize production over the last 20 years, and projects the economic surplus generated over five years from adopting agroecology for yellow maize production. We explore three likely scenarios and find that in all of them, yellow maize processors lose almost twice as much economic surplus as producers. In the most conservative loss estimate (Scenario 1), the surplus loss in five years is equivalent to 35% of the economic surplus generated over the last 21 years from GM maize imports and domestic Mexican conventional production. In all simulated Scenarios, between 2024 and 2025 the price of a metric ton of yellow maize will increase 81percent because of the change in production systems (from conventional to agroecology). These financial losses will ultimately factor into the prices consumers pay for poultry and red meat products, resulting in higher domestic retail food prices.