When NAFTA was negotiated, corn and most other agricultural commodities
were relatively cheap. In fact, agricultural commodity prices generally were mired in a
decades-long slump, which ended only recently with rising prices in the mid-2000s and then sharp spikes in 2006-7 and 2010-11. Before then, importing corn was a relatively
inexpensive policy option. Rising prices changed all that. Mexico’s food import bill just
from the United States was $2.6 billion in 1990, grew to $6.4 billion in 2000, and by
2011 had jumped to a record $18.4 billion. Even with the rapid increases in Mexico’s
agricultural exports to the United States, the country’s agricultural trade balance
worsened, going from a small surplus in 1990 to a deficit of $1.3 billion in 2000, to a
disastrous $4.6 billion in the price-spike year of 2008, and remained high at $2.5 billion
in 2011. The costs of corn imports account for a rising share of Mexico’s agricultural
trade deficit, reaching $2.6 billion in 2011. In the last two years, Mexico’s corn import
costs accounted for the entire agricultural trade deficit. (See Figure 4.) Under NAFTA,
the volume of imports had increased dramatically, and now so had the unit price.ฃ