CORPORATE CRIME REPORTER
Mexican
Authorities Probe Cargill for Hoarding White Corn
21 Corporate Crime Reporter 8, February 13, 2007
What’s a burrito without a tortilla?
Just plain old beans and rice.
That’s why there’s a crisis in Mexico.
The price of tortillas has jumped over the last month from 6.4 pesos (58 cents) a kilo to 8.5 pesos (77 cents) today.
Mexican authorities are investigating whether Cargill and two large tortilla companies – Maseca and Minsa – have hoarded white corn supplies with an eye toward hiking the price.
In Mexico, it’s a crime for anyone to hoard food and increase the price without justification. (And in Mexico, tortillas are made of white corn, not yellow corn – it’s the law.)
Federal consumer protection and antitrust authorities in Mexico are investigating whether the Minneapolis grain giant and the other targeted companies hoarded white corn supplies to drive up the price of corn and tortillas.
Cargill denies it engaged in any hoarding or illegal activity.
“On January 16 the Mexican consumer protection authorities visited us at our facility in Jalico,” said Cargill Mexico spokeswoman Laura Tamayo. “We said this corn is for sale. They asked how much is here. We said 17,000 tons. They gave us a document saying what we said and what they said. On January 25, they came back and we said we had 18,000 tons. This time they said – you haven’t sold the grain. We said – no this is a different grain. This grain just came from the harvest. The one you visited before is gone. This is now new grain. They didn’t believe us. So they seized the 18,000 tons. Nobody can do anything with that grain. It is exhibit A in their case.”
In
total, the Mexican consumer enforcement authorities seized 118,000 tons of grain
from Cargill and other companies.
Tamayo said Cargill denies wrongdoing and categorically denies the company is
hoarding corn.
Tamayo also said that Mexican antitrust authorities are investigating Cargill’s activity in the white corn market.
She also denies any antitrust wrongdoing.
“Mexico produces 22 million tons of white ton per year,” Tamayo said. “Out of that amount, Cargill buys two to three percent for our clients – that’s 600,000 tons per year to supply our 3,000 tortilla maker clients. There are a total of 67,000 tortilla makers in Mexico.”
If Cargill and the other companies aren’t manipulating the market in corn and tortillas, why the hike in tortilla prices?
“There are two big harvests in Mexico – the spring harvest and the winter harvest,” Tamayo said. “The problem came with the winter harvest. It didn’t rain when it had to rain. The harvest was 30 percent its usual size. Second, the international prices of corn affects the price of corn here. And the feed industry bought more grain than they usually do.”
She said that Cargill does import corn from the U.S. – but she couldn’t say how much. She denied that NAFTA had anything to do with the price of corn or tortillas.
Tamayo said that two weeks ago a Senator by the name of Monreal from the PRD party filed a criminal complaint in the judiciary "against those responsible for this crisis."
“We
are confident that Cargill will not be charged in this case,” Tamayo said.
“This is a political issue, not a market issue. Tortilla is the basic
ingredient in our diet. It has more to do with the political reality than with
the market."
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