Since the transitionperiod of the North American Free Trade Agreement (NAFTA), some marketinterventions have been drastically reduced. However, some reversal of thistrend has occurred in recent years with the introduction of a target incomeprice program for some crops and an increase in energy and irrigationsubsidies.


The target income programprovides direct support to producers of corn, wheat, sorghum, barley, cotton, anda few other crops in certain regions of the country that have a marketablesurplus.  The electricity program lowers the price of electricity used foragricultural activities. The electricity price is set at $0.03 per kwh, whichis one fifth of the price paid by urban consumers. Additionally, the diesel program reduces the price of diesel used for agriculturalactivities by providing tax concessions. The effective price paid by farmers is 44% less than the market price.


Corn and Sorghum

        The target price forcorn was 1,650 pesos/MT (about $3.71/bu) in 2004.

        Corn producers alsoreceive an income subsidy support through the government program PROCAMPO. Aflat-rate payment of 963 pesos/ha (about $37/ac) was given for corn in2005.  Farmers with productionareas of between 1 and 5 ha (2.5 and 12 ac) received approximately 1,160pesos/ha ($44/ac) in 2005.

        Since theimplementation NAFTA, the out-of-quota bound tariff on corn has been reducedfrom 206% to 37% for 2006.  Duringthis period, the TRQ quota has increased from 2.5 MMT (approximately 98 millionbu) to 3.515 MMT (138 million bu). Out-of quota tariff will reduce to 18.4% for 2007 and to zero after2007.

        Target income forsorghum producers was 1,270 pesos/MT (about $2.85/bu) for 2004.

        Sorghum producersreceive the same flat-rate payments per hectare as corn producers. 

        The bound tariff ratefor sorghum is 45% and the applied rate is 7.5%.



        In 2004/05, the targetprice for cotton was $0.64/lb.

        Cotton producers alsoreceive a per hectare income support subsidy through PROCAMPO.

        Mexico applies a 7.5%tariff on cotton (not carded) imports and a 10% tariff on carded cotton.  The bound rates are 38.1% for cardedcotton and 45% for not carded cotton.



        The target incomesupport price for rice was 2,100 pesos/MT ($8.43/cwt) in 2004.

        Rice producers alsoreceived an income support payment through PROCAMPO.

        The applied importtariff on rice is 7.5%.  The boundrates are 27% for unmilled and 45% for milled.



        The target income support price for soybeans in2004 was 3,000 pesos/MT ($6.74/bu).

        Soybean producers alsoreceive a per hectare payment through PROCAMPO.

        With reforms in Mexico's domestic crop supportprograms, imports have virtually displaced domestic soybean production.  Nearly all imports come from the UnitedStates.

        The bound tariff rate for soybeans is 33% and theapplied rate is 5%.



        The Mexican Governmentmaintains domestic sugar prices above international prices through differentpolicies. The price since 2000 has averaged around $0.235/lb.

        The over-quota tariffon raw sugar is $0.338/kg ($0.15/lb) and $0.36/kg ($0.16/lb) for refined sugar.

        Numerousfinancing-related subsidies such as debt restructuring, borrowing concessions,and government-backed financing for mills are also given to the sugar sector.



        The target incomesupport price for wheat was 1,800 pesos/MT ($4.34/bu) in 2004.

        Wheat producers alsoreceive a per hectare payment through PROCAMPO.

        The wheat TRQ has anin-quota rate of 50% and an out-of-quota rate of 67%.