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UNCLAS SECTION 01 OF 03 MEXICO 000146 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD PGOV MX
SUBJECT: CAN AGRICULTURE SECRETARY WEATHER POLITICAL 
TURBULENCE? 
 
¶1. (U) This message is based on Embassy FAS reporting. 
 
¶2. (SBU) Summary:  Agriculture Secretary Cardenas has become 
the favorite whipping boy of the entire ag community.  There 
was no surprise that the rhetorical heat from NAFTA opponents 
has risen since the January 1 implementation of the final 
opening of Mexico's corn, dried bean, milk powder and sugar 
markets.  They have been demanding re-negotiation of the 
trade agreement's agricultural provisions for years.  But the 
clumsy handling of new rules governing Mexico's farm support 
programs, which all farm sectors feel were rammed through 
with little chance for input from affected sectors, seem to 
have alienated even those farmers who have benefited from 
NAFTA.  On top of all this, price hikes for gasoline, other 
inputs, and commodities in general have given critics of the 
Calderon Administration further ammunition.  There are 
persistent rumors in the press and on the Internet that 
Cardenas, who skipped out of a scheduled January 10 
appearance at a high-level bilateral meeting on agricultural 
trade issues, will be replaced sooner rather than later. 
None of our GOM contacts report anything firm to either 
support or refute such rumors, but as Calderon reorganizes 
his Cabinet, Cardenas' near-total lack of support in the 
agricultural community must weigh heavily.  End summary. 
 
 
Cardenas Rejects Demands to Re-Negotiate NAFTA 
--------------------------------------------- - 
 
¶3. (U) There are sectors of the Mexican agricultural 
community that have taken great advantage of NAFTA, such as 
fruit and vegetable exporters and livestock owners who 
benefit from cheap imported feed.  Opponents of the free 
trade agreement, however, warn that the final lifting of 
trade barriers could spark even more migration from Mexico's 
devastated countryside and leave Mexico dependent on the U.S. 
for corn and beans, both staples of the Mexican diet.  In 
fact, U.S. corn and bean exports to Mexico are not expected 
to rise dramatically this year, since Mexico had already been 
allowing more corn imports than required by NAFTA in the 
years leading up to final liberalization.  Also, Mexican corn 
farmers primarily grow the white maize used to make tortillas 
for human consumption, and thus are not in direct competition 
with U.S. corn exports, which consist of yellow corn for 
animal feed.  With regard to beans, their consumption is 
falling in Mexico as consumers turn increasingly toward meat 
for their protein, a development facilitated by the 
availability of U.S. yellow corn for feed.  But even though 
the economic facts on the ground do not lend support to the 
anti-NAFTA arguments, they continue to resonate emotionally 
for many Mexicans and provide a convenient rallying cry for 
poor farmers who feel they have been ignored for decades. 
 
¶4. (U) The main groups that have been protesting NAFTA are 
the: 
 
-- National Farmers Confederation (CNC - closely tied to the 
Institutional Revolutionary Party (PRI) which ruled Mexico 
for seventy years and is now one of the two main opposition 
parties).  The CNC represents mainly medium and small 
growers.  Several PRI lawmakers and governors are members of 
this group.  Cruz Lopez, CNC's president, has pointed out 
that domestic corn farmers fear they will go out of business 
due to their inability to compete with imports from the U.S., 
thus leaving Mexico dependent on the United States for its 
basic food needs.  "There is an abyss between the subsidies 
we receive and those of the Canadian and U.S. farmers," Lopez 
has stated.  "For us, it is very important to guarantee to 
the Mexican people that we can produce corn and beans." 
 
-- Cardenista Peasants Central (CCC) and the National 
Association of Trader Companies (ANEC).  Both these 
left-leaning groups have criticized the GOM for its lack of 
attention to the repercussions of full NAFTA opening.  Max 
Correa, CCC's leader, has told Mexican media that "if this 
refusal to protect national growers continues on the part of 
the government...the countryside could take the path of 
weapons and the guerrilla.  It is not a catastrophic vision, 
it's a reality."  He also brandishes the statistic that since 
NAFTA's entry into force, it has lost nearly 3 million farm 
jobs and seen massive migration from the countryside to the 
U.S.  An estimated 80 percent of the 400,000 Mexicans who 
annually migrate to the United States are from rural areas. 
 
 
MEXICO 00000146  002 OF 003 
 
 
-- Lawmakers in both chambers of the Mexican Congress have 
also asked the GOM to re-negotiate NAFTA's agricultural 
provisions.  Members of the leftist Democratic Revolutionary 
Party (PRD - currently the largest congressional opposition 
party) have called on Calderon's administration to re-open 
the trade agreement and remove corn and beans from the list 
of unprotected goods.  They have also suggested recourse to 
the WTO.  The center-left PRI (the third largest 
congressional party behind the ruling center-right PAN and 
the leftist PRD) has been somewhat more cautious, but there 
have been recent rumblings that some PRI senators are leaning 
toward their PRD colleagues.  Although initial analysis 
indicates there is no way these politicians could compel the 
GOM to re-negotiate NAFTA, such a coalition could increase 
political pressure on the Administration to address 
agricultural concerns. 
 
¶5. (U) There have been numerous protests against NAFTA in the 
new year.  Police had to break up one demonstration organized 
by CNC, CCC, and other dissidents that took place outside the 
venue where Secretary Cardenas was meeting with other farm 
groups on January 10.  Cardenas used the occasion to clarify 
that there would be no re-negotiation of NAFTA, indicating 
that both the U.S. and Canada had rejected the idea and 
pointing out that Mexico had more to lose than to gain from 
such a move, given its bilateral trade surpluses with both 
its North American neighbors.  President Calderon and Economy 
Secretary Eduardo Sojo also have made strong public comments 
 
SIPDIS 
about the clear net benefits NAFTA has generated for Mexico. 
Nonetheless, NAFTA continues to be a rallying point for 
disaffected farm groups and a mega-march that will end in 
Mexico City's central plaza (the Zocalo) is being planned for 
January 31.  CCC, CNC, and ANEC, among others, are planning 
to participate. 
 
New Rules of Operations 
----------------------- 
 
¶6. (SBU) NAFTA opposition has been a long-standing part of 
Mexico's political landscape.  Adding to the usual complaints 
that the opening to corn and beans will devastate small 
farmers, are concerns about the recently implemented increase 
in the gasoline tax, and concerns about rising prices for 
other inputs and commodity prices in general.  Most 
importantly, there is considerable anger about recent changes 
in the Agricultural Ministry's (SAGARPA) rules of operation 
in farm programs, which all farm sectors feel were rammed 
through with little chance for input. 
 
¶7.  (SBU) Although the agricultural budget was increased 15% 
for 2008 (to approximately USD 18.5 billion), on December 31, 
2007 SAGARPA published new rules to streamline farm support 
programs.  Each group that has long benefited from having a 
piece of agricultural support funds, fears that the changes 
will reduce their share of the pie.  The controversy is over 
new operational rules for the "Concurrent Special Program for 
Sustainable Rural Development. The Special Program aims to 
improve rural livelihoods and agricultural productivity and 
competitiveness.  Among other things, the new rule changes 
consolidate 46 programs into 8, and centralize control in the 
federal government, cutting state-level groups out of 
decisions on who gets support and money. In order to reduce 
the procedures for farmers to seek benefits, the new rules 
reduce the ability of groups representing farmers to be 
involved in allocating support funding.  Many of these 
groups, especially those claiming to represent small farmers, 
have long been accused of being more concerned about 
delivering votes for political parties than benefiting 
farmers. Because the new rules seek to benefit the poorest 
farmers, commercial farmers, including those most supportive 
of NAFTA, fear they will receive less money. 
 
¶8.  (SBU) During December, in a contentious and agitated 
appearance before Mexico's Congress, Secretary Cardenas was 
accused by opposition members of being inept, insensible, 
arrogant and a liar, and was asked to consider resigning. 
Cardenas explained that the new rules were designed to 
eliminate red tape and corruption by making resources 
available directly to agricultural workers.  He remarked that 
several "social leaders" were not comfortable with the 
changes, noting that the changes represented an attempt to 
eradicate "corruption and illicit enrichment" benefiting 
leaders of groups representing agriculture. 
 
 
MEXICO 00000146  003 OF 003 
 
 
¶9.  (SBU) While agricultural groups have known for some 
months that SAGARPA was seeking to modify these operational 
rules, the speed with which the new rules were published 
seems to have surprised everyone.  On the surface, the 
changes sounded like much-needed reforms to eliminate many of 
the numerous hurdles people faced when seeking benefits.  The 
surprise early release, however, seems to have united the 
full range of agricultural groups in opposition.  In addition 
to complaints noted above, the CNC and CCC complain that the 
rules were published unilaterally without taking into 
consideration their proposals. 
 
¶10.  (SBU) While the CNC had been relatively quiet in the run 
up to the final implementation of NAFTA, the announcement of 
the new operational rules for support programs has made them 
more animated and militant.  At their annual meeting on 
January 7 and 8, they called for President Calderon to honor 
the 2003 National Accord for the Countryside, which calls for 
renegotiation of NAFTA to eliminate corn and beans from the 
agreement. After its annual meeting, the CNC reversed its 
previously announced position and said it would participate 
in the CCC and ANEC-announced mega-march on January 31 in 
Mexico City, that will start in Chihuahua and pick up 
protesters and tractors along the way. 
 
Changes at the Ag Ministry? 
--------------------------- 
 
¶11. (SBU)  Industry and political sources are rife with 
rumors about personnel changes to appease the sector's 
disenchantment with Secretary Cardenas who has managed to 
upset major agricultural producers, processors, state 
agricultural leaders, small producers, and the Mexican 
Congress.  All have publicly expressed a lack of confidence 
in Cardenas and the need for change.  Even as recently as 
this week the PRI faction in the lower house called Cardenas 
stubborn and deaf to the needs of agriculture for his failure 
to respond at all to their calls to reexamine the effects of 
NAFTA on Mexican farmers.  Calderon's recent sacking of both 
his Secretary of Interior (Gobernacion) and Social 
Development (SEDESOL) foreshadow additional changes.  Some 
suggest; however, that Agriculture Under Secretary Lopez 
Tostado, directly responsible for the new rules that have 
upset the industry, will take the fall.  Finally, others 
suggest that all of the SAGARPA leadership team should go. 
 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA