Mexico - Ejido reform : avenues of adjustment five years later (Vol. 2 of 2) : Economic adjustment and institutional reform : Mexico ' s Ejido sector responds - background papers

Document of The World Bank Report No. 18897 ECONOMIC ADJUSTMENT AND INSTITUTIONAL REFORM: MEXICO'S EJIDO SECTOR RESPONDS VOLUME 11 BACKGROUND PAPERS DRAFT July 1, 1999 Environmentally and Socially Sustainable Development Sector Management Unit Mexico Country Management Unit Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Mexican New Peso $1.0 = N$ FISCAL YEAR January 1 to December 31 WEIGHTS MEASURES Metric System MAIN ABBREVIATIONS AND ACRONYMS ECLA Economnic Commission for Latin America GDP Gross Domestic Product GOM Govermnent of Mexico INDA National Institute for Agrarian Reform (Instituto Nacional de Desarrollo Agrario) NPR National Protection Rate NAFTA North American Free Trade Agreement PROCEDE Program to Title Ejiditario Rights and Parcels (Programa de Certificaci6n de Derechos Ejidales y Titulos de Solares Urbanos) PROCAMPO System of direct income support payment to producers RAN National Agrarian Registry (Registro Agrario Nacional) SAGAR Ministry of Agriculture, Livestock and Rural Development (Secretaria de Agricultura, Ganaderia y Desarrollo Rural) SARH Ministry of Agriculture and Water Resources (Secretaria de Agricultura y Recursos Hydraulicos) SRA Ministry of Agrarian Reform (Secretaria de Refonna Agraria) Vice President Shahid Javed Burki Director Olivier Lafourcade Acting Sector Director John Redwood Sector Leader Adolfo Brizzi Task Team Leader Louise Cord The following individuals contributed to the preparation of this study: Messrs./Mrnes. Louise Cord (task manager); Benjamin Davis (agriculture, capital mnarkets, income and migration analysis); Pete Lanjouw (non- agricultural activities and poverty); Pedro Olinto (land nmarkets); Elizabeth Katz, Ana Lucia Moreno, Maria Correia (gender); Estanislao Gacitua- Mario, Carlos Munoz, Quentin Wodon, Fernando Rello, Juana Sandoval, Josefina de la Soledad (social capital and case studies); Louise Cord, Quentin Wodon (govemrnment programs) Nathalie Olsen, Gladys Lopez-Acevedo, Alberto Valdes (incentive framework); Claudia Binder, Ronna Montgorncry, Enmma Calderon, Todd Diehl (research assistance); Patricia Eyenga (production assistance). The team gratefully acknowledges the advice and support received from Alberto Valdes (World Bank), Alain de Janvry and Elisabeth Sadoulet (University of California, Berkeley). Financial assistance was received from the Mexico Country Department, DEC and LCSPR, as well as the Finnish and Spanish trust funds. Peer reviewers are John Nash and John Heath. Finally, the team expresses its deepest appreciation to the staff of the Secretariat of Agrarian Reform, and in particular, Lic. Leopoldo Zorilla Ornelas, Lic. Hector Robles Berlanga, Lic. Marco Antonio del Castillo, Lic. Laura Munoz Rojas and Lic. Leticia Manzanera Herera y Cairo, for their assistance and support.  Economic Adjustment and Institutional Reform: Mexico's Ejido Sector Responds Table of Contents Background Paper 1: Introduction ....................................................................... 5 Nathalie Olsen, FAO/CP ....................................................................... 5 Background Paper 2: Poverty and the Non-Farm Economy in Mexico's Ejidos: 1994 - 1997 ......... 39 Peter Lanjouw, DECRG ....................................................................... 39 Background Paper 3: The Impact of the Ejido Reforms on Land Markets in Mexico .......... ........... 64 Pedro Olinto, DECRG ........................................................................ 64 Background Paper 4: Social Capital and Land Titling in Mexico's Ejido Sector .............................. 83 Louise Cord and Estanislao Gacitua-Mario(LCSES), and Quentin Wodon (LCSPR) ....................... 83 Background Paper 5: Gender and Ejido Reform ....................................................................... 101 Elizabeth Katz, Consultant ....................................................................... 101 Background Paper 6: Government Programs ....................................................................... 113 Louise Cord, LCSES and Quentin Wodon, LCSPR ....................................................................... 113 Appendices available upon request: Ejido: Case Studies, Estanislao Gacitua-Mario, LCSES The Adjustment Strategies of Mexican Ejidatarios in the Face of Neoliberal Reform, Benjamin Davis, IFPRI Compendium of Descriptive Statistics on 1994-97 Ejido Survey   BACKGROUN1D PAPER 1: INTRODUCTION Nathalie Olsen, FAO/CP Quantitative Analysis of the Evolution Of Market Price Support in Agriculture, 1992-97 Summary In the last decade, broad-based reforms at both the sectoral and macroeconomic levels have led to a fundamental restructuring of the incentive system and institutional framework of the agriculture sector in Mexico. In the mid-1980s, Mexico's economic paradigm began to shift from a state interventionist model to a market-based economy. Within this context, a radical program of agricultural policy reform was launched in 1989 aimed at increasing the sector's market orientation, reducing government regulation and further liberalizing trade. Price policy reform included: (a) the elimination of guaranteed prices for wheat, sorghum, barley, rice and oilseeds; (b) the withdrawal of the state from procurement and marketing functions (except for maize and beans); and (c) the elimination of input subsidies on seeds, fertilizer, pesticides, machinery and diesel fuel. A system of direct payments replaced policies market price support in both input and output markets. This study focuses on the evolution of price support in output markets from 1992 to 1997 and the impact on the incentive framework. The main objective of the analysis is to look at the effects of price and trade liberalization on agricultural production. The overall performance of the agricultural sector since the deepening of the reform process began in 1989 has been poor with agricultural growth consistently lower than overall economic growth. The results from this study show a clear deterioration of the incentive framework since the early 1 990s, which may, in part, explain the relatively poor performance of the agricultural sector. The first indication of this deterioration is the decline and/or stagnation in real producer prices. Real producer prices for some of the major crops fell dramatically (maize, beans, wheat and tomatoes), while for other crops, real producer prices remained constant (sorghum) or increased slightly (rice and soybean). Coffee is the only commodity which experienced large real price increases. A second indication of the deterioration in the incentive structure is the gap between domestic and world market prices in real terms. For the most important commodities included in this analysis, real producer prices either fell more steeply than world market prices (maize, beans, wheat) or declined while world market prices rose (tomatoes). Real domestic prices of sorghum, soybeans and coffee actually increased relative to real world market prices. A third indicator of the deterioration of the incentive structure is the gap between domestic and world market prices in nominal terms, as measured by the nominal protection rate (NPR). The results indicate that the price gap between domestic and border price equivalents significantly increased after the devaluation at the end of 1994. A summary of the main findings can found below in Box 1:  Box 1 - Summary of Main Findings * From 1992 to 1997, real producer prices fell for maize, beans, wheat (except in 1996 when world market wheat prices were very high) and tomatoes; real producer prices rose for rice, soybeans, and coffee; and real producer prices for sorghum remained relatively constant from 1992-94, rose in 1995, but dropped back to 1992 levels by 1997. * From 1992 to 1994, price support in output markets (as measured by NPRs) was somewhat positive (maize, rice, coffee and tomatoes) and slightly negative (beans) for some commodities. A few commodities were heavily taxed (wheat, sorghum and soybeans). * From 1994 to 1997, domestic producer prices for all the commodities included in the analysis were far below world market equivalents (except for coffee and rice in some years). There was some recovery in domestic prices in 1997 (for maize, beans and soybeans). . With the exception of pre-1994 guaranteed maize prices, guaranteed and negotiated (floor) prices have been set at levels well below their border price equivalents. It is striking that domestic market prices have also remained well below border price equivalents. Since the elimination of guaranteed prices in 1989, market prices have generally been higher than negotiated prices. . NPRs for maize fell from positive values in 1992 and 1993 to highly negative values in 1994-96. There was some recovery in 1997. For beans, the NPR fell from slightly negative values to very large negative values. Sorghum has been consistently taxed throughout the entire period. The greatest change in protection occurs for maize and beans. Given the phasing out of effective market price support for these crops, one would expect a decline in protection rates to roughly zero, but not the high degree of taxation which occurred. * For other grains and oilseeds, wheat, sorghum, and soybeans have been consistently taxed from 1992-97. The treatment of rice has been more variable, with positive NPRs in 1992 and 1997. * For cash crops and exportables, there is a dramatic change from support to coffee and tomato producers in 1993 to heavy taxation in 1994. While coffee recovered (and NPRs became positive in 1996), tomato producers still face very low producer prices. * The regional analysis indicates a degree of variation in the level of protection/taxation of producers between states. There is, however, little regional variation in NPRs for maize, beans, sorghum and soybeans. The lack of variation in the regional NPRs of maize and beans are attributable to the continuation of pan-Mexican and pan-seasonal guaranteed prices. In sharp contrast, regional variation is high for rice, coffee and tomatoes. Regional price variation for wheat is moderate. 6  Introduction In the last decade, broad-based reforms at both the sectoral and macroeconomic levels have led to a fundamental restructuring of the incentive system and institutional framework of the agriculture sector in Mexico. In the mid-1980s, Mexico's economic paradigm began to shift from a state interventionist model to a market-based economy. A liberal trade regime was slowly instituted, current and capital-account convertibility was established, public enterprises, including banks, were privatized and government regulation of the financial, transportation and utility sectors was sharply reduced. At the macroeconomic level, fiscal discipline and structural reform brought a sharp decline in the fiscal deficit and inflation. Within this context, a radical program of agricultural policy reform was launched in 1989 aimed at increasing the sector's market orientation, reducing government regulation and further liberalizing trade. Trade liberalization, which was initiated gradually in mid-1985 and consolidated after Mexico joined GATT in 1986, was further intensified with the adoption of NAFTA in 1994. Reforms included the elimination of quantitative restrictions and licensing requirements for imports and exports, tariffication and the reduction of tariffs below GATT levels. Price policy reform included: (a) the elimination of guaranteed prices for wheat, sorghum, barley, rice and oilseeds; (b) the withdrawal of the state from procurement and marketing functions (except for maize and beans); and (c) the elimination of input subsidies on seeds, fertilizer, pesticides, machinery and diesel fuel. A system of negotiated prices was put into place for many of the above-listed crops in the early 1990s, while guaranteed prices for maize and beans were maintained. Prior to 1994, agricultural policy supported producers through three mechanisms. First, guaranteed prices in output markets were thought to be well above their border price equivalent. Second, input prices to producers were set below border price equivalents. Third, fiscal transfers to agricultural producers were effected via credit policy, and public investment in agricultural infrastructure and services. Starting in 1994, a system of direct payments replaced price subsidies in both input and output markets. The 1994/95 devaluation, meanwhile, effectively eliminated the agreement prices, as well as the guaranteed prices for maize and beans. A system of floor prices was established for the latter two staple crops following the devaluation, and the incentive framework for agriculture was expected to dramatically improve, after the devaluation, given its status as a tradeable sector. However,, the overall performance of the agricultural sector since the deepening of the reform process begun in 1989, has been rather poor, as evidenced by the following trends in agricultural GDP': * First, agriculture's share in total GDP, which is small to begin with, declined even further from 6.7% in 1986 to 5.6% in 1996. * Second, agriculture has performed poorly relative to the manufacturing and service sectors. Figure 1 shows GDP in constant pesos for the various sectors. Except for 1995, GDP growth in the manufacturing and service sectors is significantly higher than in agriculture. * Third, the relatively stagnant growth rates of the agricultural sector, as indicated by Figure 1 and Table 1 below, suggest that the sector is relatively removed from the Crop production is roughly 60-70 percent of the GDP of farmning, forestry and fisheries. The cornmodities included in this analysis represent roughly 45 percent of the total value of crop production (annuals and perennials). 7  rest of the economy. The agricultural sector shows lower growth than other sectors when the economy is expanding, and the same slow growth rate is maintained when the overall economy is contracting (1995). Figure 1: Real GDP by Sector Real GDP by Sector . . Iu . ... .J . . .......... . 1.9::X . L_.............. =............. .. .. .............. t - - . , 0 ) ]. D. j - --.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Y-. |-GCP 5- Fan dFa"e 1I Table 1: Real Growth in Gross Domestic Product (% real change; 1993 constant prices) 1992 1993 1994 1995 1996 1997 Total GDP 3.6 2 4.4 -6.2 5.1 7.3 Agricultural GDP -1 3.1 0.9 1 1.2 37 Ag. GDP as % of total GDP 5.8 5.5 5.2 5.7 5.3 Source: INEGI and Economist Intelligence Unit, 1998. Objective. This study focuses on the evolution of price support in output markets. The objective of the analysis is to look at the impact of the liberalization of price and trade policy on agricultural producers. Methodology. Changes in the incentive structure in the agriculture sector are evaluated in terms of (a) the evolution of real producer prices, (b) changes in relative prices, and (c) by calculating nominal protection rates (NPRs) for the major commodities in the period 1992-97. The commodities included are importables (maize, beans, sorghum, wheat, rice and soybeans) and exportables (coffee and tomatoes). This paper considers only price support in output markets (as measured by NPRs). Due to lack of data on input prices and on the cost structures of production, it was not possible to analyze the combined effect of price intervention in output and input markets on agricultural value-added. It was not possible to calculate effective rates of protection (ERPs) based on existing data on crop budgets (for different crops, by agro-ecological zone, type of producer, farm size, type of farm-irrigated vs. rainfed) and the evolution of input prices. Similarly, producer subsidy equivalents (PSEs) were not estimated because the data on budget --penditures in agriculture cannot be broken down by crop. While it is common practice to Iume that expenditure by commodity is proportional to each commodity's share in total value of production, this assumption is not justifiable in the case of Mexico. 8  The next section provides an overview of the evolution of Mexico's agriculture policy and reform program in the last decade. Section III looks at the evolution of real and relative producer prices. Section IV presents the main findings of the output market price support analysis (NPR calculations). Agricultural Policy and Reform This section briefly reviews reforms in price, trade, input and credit policy during the last decade. Price Policy From the mid-1960s to the mid-1980s, the main objective of Mexico's agricultural policy was to ensure the provision of inexpensive food supplies to consumers. Self-sufficiency in beans, cereals and oilseeds was a priority. The government's pricing strategy was to support producers with prices above world market levels while maintaining consumer prices below producer prices. The National Basic Foods Company (CONASUPO) was created in 1965 to intervene in the purchase, processing and distribution of a large share of domestic agricultural output. Until 1989, CONASUPO set producer prices for maize, beans, wheat, sorghum, barley, rice, soybeans and other oilseeds. CONASUPO purchased directly from producers at guaranteed prices and controlled imports through the issuance of import permits; staple crops were sold to state enterprises and private processors and retailers at prices equal to or below the purchase price. Purchase prices were the same throughout Mexico and did not vary between regions, providing an implicit subsidy for transport and storage costs in remote areas. The federal govemment absorbed all financial losses. The share of domestic production purchased by CONASIJPO varied from year to year, but ranged from 10-65 percent of marketed grains and beans. As part of the reform program, in 1989, CONASUTPO discontinued the purchase of wheat, barley, sorghum, rice, soybeans and other oilseeds, and, thus, guaranteed prices were eliminated. To alleviate transitional difficulties in marketing resulting from underdeveloped private distribution facilities, poor infrastructure and price fluctuations, negotiated prices (precios de concertacion) were set by the government in agreement with producers and buyers. Since maize and beans are the most important staple crops in Mexico, CONASUPO continued their purchase after 1991, but at a reduced premium (which was actually negative in 1994). An increase in the guaranteed price in 1991 led many farmers to switch from traditional crops to maize and beans. In addition, tariffs on imports remained in place (albeit at reduced levels) to encourage domestic production. Following the devaluation in 1995, floor prices for maize and beans were set at below world market prices. The share of production purchased by CONASUPO subsequently dropped significantly (see Table 2 below). Table 2: CONASUPO Purchases as Share of Marketed Production (%) Conmmodity 1992 1993 1994 1995 1996 1997 Maize a/ 40 64 64 27 11 24 Beans b/ 57 54 36 31 19 14 Al 70% of total production of maize is rnarketed. B! 60% of total production of beans is marketed. Source: CONASUPO 9  In 1991, ASERCA (Support and Services to Agricultural Marketing) was established to promote private agricultural markets and to implement negotiated prices. ASERCA compensates buyers of wheat, sorghum, soybeans and other oilseeds for the difference between the negotiated price and the equivalent world market price so that buyers are indifferent between purchasing domestic and imported crops. ASERCA payments are presented in Table 3 below. Table 3: ASERCA Payments (current pesos/ton) Year Sorghum Wheat Rice Soybean Cotton 1991 47 61 107 1992 69 175 97 170 1993 104 81 120 138 1994 28 217 74 118 970 1995 74 300/500 1996 74 1997 1387* 950* * floor price (not just subsidy element) in pesos per ton Source: ASERCA (1996 and 1997) In 1994, the Program of Direct Payments to the Countryside (PROCAMPO) was set up to compensate producers for the elimination of trade protection and farmn income support under NAFTA. It was predicted that price liberalization for maize and beans would result in income losses for producers who since 1990, had switched to these crops as market price support programs for competing crops were gradually eliminated. PROCAMPO area payments are provided to farmers who traditionally planted crops with guaranteed prices, such as maize, beans, wheat, cotton, sorghum, rice, barley and oilseeds (soybean, cebada), and are based on acreage planted to these crops in 1990-93. Because payment is not linked to crops currently cultivated, this instrument avoids the incentive distorting impact of market price support. PROCAMPO payments are presented in Table 4 below. In the autumn-winter season of 1997, almost three million agricultural producers received PROCAMPO payments (totaling 7,544 million pesos and covering almost 14 million hectares); of the area covered, roughly 80 percent was rainfed farrn land (PROCAMPO, 1997). Payments were to remain constant in real terms, but as shown below, payments in real terms fell by 15 percent from 1994 to 1997. Table 4: Noniinal and Real PROCAMPO Payments (pesos/hectare) 1994 b/ 1995 1996 1997 A-W S-S A-W S-S A-W S-S A-W S-S Real payment a/ 330 338 374 323 294 295 278 284 Nominal payment 330 350 400 440 440 484 484 556 a/ Real payments in constant 1993 pesos. b/ A-W and S-S refer to auturm-winter and spring-summer cycles. Source: ASERCA (1997) Trade Policy Mexico has traditionally been a net impo. of grains and oilseeds, yet until the mid- 1980s trade policy w -. based on import substitutiois policies. While imports of most agricultural products were duty-f,. import permits were required. Permits were issued by the Secretariat of Commerce (SECOFI) based on the gap between domestic production and consumption. In the mid-1980s, Mexico began to liberalize its trade regime. In 1986, Mexico joined GATr, and reduced import permit requirements to less than thirty percent of t - value of total imports. In 10  1987, Mexico went beyond the GATT ceiling tariff rate of 50%, and reduced the maximum tariff rate to 20% (compared to 100% in 1986). By 1990, twenty percent of the value of agricultural imports were duty-free with the remainder subject to import tariffs ranging from 5 to 20 percent. All quantitative restrictions were converted into tariffs or tariff quotas under NAFTA in 1994 and under GATT in 1995. Mexico's export policy has been less restrictive than its import policy. In the 1980s, most exports required licenses to ensure domestic supply of basic foodstuffs with fixed retail prices and to control exports of cash crops. These requirements have been gradually eliminated, and in 1994 all export licenses were abolished. Coffee and tomato exports, the most important cash crop exports, are not subject to any restrictions or taxation. Almost all of Mexico's agricultural trade is with the U.S.: more than 75 percent of agricultural imports into Mexico originate in the U.S. and almost 90 percent of exports are destined for the U.S. Since 1994, tariffs on imports of wheat, sorghum, rice, soybeans have been applied, but at low and declining rates (the maximum tariff is 18 percent). Under NAFTA, all non-tariff barriers to agricultural trade have been converted into tariffs, and are to be phased out by 2008, the end of a 15-year transition period. For those products that previously were subject to import permits, duty-free import quotas were based on trade flows in 1989-91. These quotas are increased annually by three percent. Although maize imports have exceeded the duty-free quota, the above quota tariff of 215 percent has not been applied. Imports of beans have not exceeded duty-free quota levels. Details of the effective tariff regime from 1992-97 are presented in Appendix 1. Input Policy Input prices are currently not subsidized, with the exception of electricity and credit. The federal government had in the past controlled input prices through production monopolies, price subsidies and trade restrictions. Since 1985, however, the state-owned enterprises that subsidized inputs to producers and controlled marketing have been either privatized or liquidated. In 1993, import licenses for most farm inputs were abolished in order to restrain input price increases following privatization of input producers. Under NAFTA, remaining import duties on new and used-tractors, other machinery, seeds, fertilizers and agricultural chemicals were removed. A summary of policy reforms by input is found below: * Fertilizer and agrochemicals: Subsidies on fertilizer and pesticide distributed through FERTIMEX and ASERCA have been eliminated. Trade restrictions on imports of fertilizers and pesticides have also been removed. In 1943, FERTIMEX, a government parastatal, was established to carry out the manufacture, marketing and distribution of fertilizers. Since 1965, all fertilizer production ( except ammonium sulfate) has been publicly controlled. The state oil firm PEMEX has the monopoly on the production and sale of ammonia that is used to produce fertilizers; until 1992, FERTIMEX was subsidized by PEMEX through low ammonia prices. From 1992-97, world market levels have determined domestic prices for fertilizers. The only crop receiving subsidized pesticides after 1990 was cotton (which is not included in this analysis). * Seeds: Subsidies for certified and uncertified seed have also been removed. Until 1991, seed prices were subsidized through government transfers to the National Seed Production Company (PRONASE). Since 1992, PRONASE competes with the private sector in the certification and sale of certified seeds. PRONASE still produces roughly 40 percent of seeds in Mexico, dominating the market for  certified seeds of maize, beans, and oilseeds. The private sector is active in sorghum seed production and distribution, while wheat seed is produced by producers' associations. * Fuel: Diesel prices are low, but not subsidized. Fuel prices to agricultural producers were subsidized for many years, but are not longer so. Until 1994, a fuel tax concession has provided diesel to farmners at prices 35 percent below the commercial price (0.65 pesos/liter compared to 0.95 pesos/liter). In 1995, fuel prices increased by 35 percent. * Irrigation: Subsidies to irrigation seem to be increasing. While the fiscal cost of water subsidies was negligible in 1993, the cost of these subsidies increased from 4 percent of rural development expenditure in 1995 to over 11 percent in 1997 (Lopez-Acevedo, 1998). The cost of groundwater irrigation in Mexico has been kept below market levels through subsidized electricity rates. Since 1991, however, improving water use efficiency has been a priority, and rates were raised from 0.68 pesos/kWh to 1.39 pesos/kWh in 1993. The fiscal cost of electricity subsidies to the agriculture sector has increased dramatically from 33 million pesos in 1984 to 230 million pesos in 1995. The federal government has also subsidized the costs of operation and maintenance of irrigation schemes. However, since 1992 the responsibility for O&M is being transferred to producers, and the fiscal costs of government support fell from 316 million pesos in 1992 to 230 million pesos in 1995 (OECD, 1997). * Machinery: The use of machinery is no longer subsidized. Below market rental rates on agricultural machinery were provided by SESA (Ejido Services SA) to small farmers and ejidos until its liquidation in 1993. Credit Policy Since the 1980s, interest rates for agricultural credit have been gradually aligned with commercial rates. However, fiscal transfers indicate there is still some element of subsidy in agricultural credit, but that its fiscal cost is declining. The fiscal cost of providing credit to agriculture has fallen from 9 percent of rural development expenditure in 1993 to 3 percent in 1997. In the past, agricultural producers have had limited access to credit due to high levels of production risk, high and fluctuating interest rates and lack of collateral (ejido land was not acceptable as collateral). In the 1980s, the government provided credit at interest rates below reference rates (the 28-day treasury bill interest rate or the average cost of term deposits for banks, the CPP) through BANRURAL (National Rural Credit Bank). These loans were targeted at farmers producing grains, beans and oilseeds in rainfed areas. FIRA (Trust Fund for Agriculture) also provided loans through commercial banks, the terms of which varied with the recipient's level of income and production pattern. The Evolution of Domestic Real and Relative Prices to Producers This section outlines the evolution of real and relative prices to producers at the farm level and the impact on cropping patterns. Real producer prices are defined as the domestic producer price adjusted for inflation as measured by the consumer price index for agriculture (1994=100). Figure 2 below shows that price inflation in the agriculture sector has been higher than inflation in other sectors of the economy (represented by the aggregate CPI). 12  Figure 2 Consumer Price Indices in Mexico, 1992-97 300.0 250.0- --- - - - - . .