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Monterrey, Mexico – At the Mercado de Abastos, a food market in Nuevo Leon, Mexico, prices for foods such as tomatoes, potatoes, beef, and peppers have skyrocketed in the past few weeks, forcing customers to change their shopping habits and tighten budgets, as vendors cut profit margins or risk losing customers.
“You have to buy them; they’re things you use every day,” said Cesar Ramirez, a 66-year-old retired market worker.
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While shopkeepers cite rising oil prices, rising agricultural costs, and growing corruption and crime on Mexico’s highways, international problems are mounting. Rising global oil prices for fuel and fertilisers, driven by fleet disruptions Hormuz Riverit affects producers in Mexico and threatens food security, especially for low-income people.
Elvira Pasillas, a professor at the Western Institute of Technology and Higher Education (ITESO), said that low-income families spend about 70 percent of their income on food. “Not only do they struggle to meet minimal nutritional needs, they also spend almost all of their income on food,” he said.
According to INEGI, the national statistics agency, inflation for 12 months stood at 4.45 percent in April, and the number of consumers rose by 0.20 percent in March. The price of a basic urban food basket rose 8.1 percent in March, outstripping inflation, Pasillas said.
Guillermina Delgado, a 62-year-old housewife, said she has started dividing her shopping, only buying what she needs each week. “Not one thing is cheap anymore,” he said. Whenever possible, they go to the Mercado de Abastos.
Delgado also takes care of his mother, adding to the financial burden on her husband, a construction worker and family breadwinner. Mexico has the highest unemployment rate, which reached 54.8 percent in March. At the same time, Mexico’s gross domestic product (GDP) fell by 0.8 percent in the first quarter, a smaller growth than expected.
“We have an economic crisis that is reflected in a very difficult labor market, with rising inflation and rising food prices,” said Pasillas, who is also an economic research consultant. “This is already posing a serious threat to public health.”
Fuel, roadblocks and extortion
Rising energy prices fueled by the US-Israel war in Iran are also driving up the cost of goods and transportation.
Fabian Dominguez, manager of El Bodegon butcher shop, told Al Jazeera that pork and beef have increased since the beginning of the year. The Meat Council reported that beef prices rose by 16.5 percent in January.
The increase is due to a number of factors, including the end of duty-free imports from Brazil and Argentina, and the spread of corruption that has disrupted cross-border trade. These challenges come as meat consumption in Mexico is expected to grow at an annual rate of 4.5% between 2020 and 2025.
Dominguez said their beef comes mainly from southern Mexico, Canada, and the US. He said that the increase in prices is due to the increase in the price of oil, due to the war in Iran, and the roadblocks set up by gangs or opposition groups.
In recent months, protests by farmers and truck drivers have led to a dramatic slowdown. Protesters want lower fuel prices and better security, as theft and corruption by gangs are on the rise on the country’s highways and rural areas. And as world grain prices have fallen, Mexican farmers have been protesting exports and asking the federal government to guarantee lower prices, similar to the price currently used for oil.
Although an oil producer, Mexico imports more than half of its oil and 75 percent of its natural gas from the US. In order to reduce the increase in oil prices, the Mexican government renewed its voluntary agreement with suppliers and reduced the tax on oil.
However, Pasillas warned that the aid would reduce taxes and affect public finances.
“This will also affect the use of funds, and will seriously affect social programs, especially those that benefit the poor,” he added.
Juan Carlos Anaya, founder of the data analysis firm Agricultural Market Consulting Group, said that security threats, such as extortion, theft, and security rackets, are hindering business operations and raising investment costs. Cuauhtemoc Rivera, president of the Alliance of Small Merchants (ANPEC), added that the expropriation affects every market, from farmers to shopkeepers.
In January, Mexican authorities arrested Cesar Sepulveda Arellano, also known as “El Botox”, who is suspected of killing Bernardo Bravo, a well-known leader in the lemon industry in Michoacan.
The National Agricultural Council praised the incident in a statement: “Insecurity in rural areas and in the supply chain not only puts food producers at risk, but also affects final prices, disrupts markets, and threatens the timely availability of food for all Mexicans.”
Dominguez explained that his clients, especially business owners, did not want to pass this money on to consumers because, in most cases, consumers do not want to pay more. He said his store has already seen a 25 to 30 percent drop compared to last year.
Meanwhile, Graciano Rico, manager of a grocery store that opened a year ago in the market, said they decided to cut their profits by half so as not to lose the customers they have just acquired.
“If we raise prices too much, they will leave and be disgusted with it, and we will lose customers,” he said.
Tomato prices are rising
Store owner Ilda Castro said the high prices of tomatoes, potatoes, and peppers are driving customers, who are facing a big problem, to hunt for prices in several stores. Castro said the price of tomatoes has increased from 20 pesos ($1.15) to 75 pesos ($4.33) per kilogram (2.2lbs).
“We heard that, in the United States, they are paying $65 for a box of 25 pounds, which is more than 1,000 pesos. It is understandable that every farmer likes to send their tomatoes there,” he said.
Last year, the US government imposed a 17 percent tax on Mexican tomatoes, citing “unfair trade practices”, because Mexico makes up about 90 percent of the US imports of fresh tomatoes. Anaya, of the Agricultural Market Consulting Group, said that the price is unfair, saying that, although the loss is not guaranteed, the tax forced the big farmers in Sinaloa to reduce their planting.
Carlos Ramirez, manager of a store that supplies ingredients for restaurants and tacos, said customers are turning to canned tomatoes or offering smaller portions of salsas — a staple of the taco business — to offset rising prices.
Fertilizer production costs are also on the rise, possibly due to rising global fertilizer prices, as Mexico imports 70 percent of its needs. Between January and March, urea prices rose by 47 percent, diammonium phosphate by 57 percent, and mono ammonium phosphate by 54 percent – all fertilizers – according to the Agricultural Market Consulting Group.
However, Pasillas warned that all the results will be seen for a long time, because of the harvest time.
Although there are several factors that affect food prices, Anaya said the main problem is the rise in prices among retail companies.
“The line between consumer and producer is dangerous,” he said. “What can we do along the supply chain?”
The Package Against Inflation and Expenditure (PACIC), a voluntary agreement between the Mexican government and participating companies, aims to stabilize the price of food by listing a basket of 24 essential items at around 910 pesos ($45). Rivera, from ANPEC, said that although the program was designed to provide food baskets to vulnerable and economically disadvantaged families, it is failing to reach them.
“The PACIC food basket is sold in modern retail channels – Walmart, Soriana, and Chedraui – In other words, in supermarkets and stores, especially places where these people can’t afford to buy and don’t want to go,” said Rivera.
