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Mexico: Egg Price Hike Causes Speculation

On 22 August, 2012, the Mexican Secretariat of Economy publicly acknowledged the sudden and considerable rise in the price of fresh eggs, a staple food in the Mexican diet. The Secretariat also announced the ceasing of tariffs imposed on the import of eggs, seeking to stabilise the market, reduce the price of the product and ensure supply for the population.

However, the increasing price of such an important food product has generated commercial speculation and malpractice, which, in turn, have led to discontent and suspicion among consumers. Meanwhile, most authorities have limited their response to condemning the facts [es].

The professor and economist Arturo Damm Arnal [es] expressed his disapproval of the strategy launched by the Secretariat of Economy:

Cualquier estudiante de economía que haya cursado Economía I sabe 1) qué son los precios, 2) qué tareas desempeñan, y 3) qué se requiere para que las desempeñen de la mejor manera posible, razón por la cual sabe cuáles son las consecuencias de la manipulación gubernamental de los precios misma que, más allá de las buenas intenciones del manipulador —sin olvidar que de buenas intenciones está empedrado el camino al infierno— siempre termina siendo un tiro por la culata, algo que, por lo visto, no acaban de entender en la Secretaría de Economía, que muchas veces actúa como si fuera Secretaría de Antieconomía, olvidando (lo cual supone que alguna vez lo supieron, lo cual puede implicar suponer más de la cuenta) lo que todo estudiante que haya cursado Economía I sabe: que la manipulación gubernamental de precios impide que, ante los fenómenos de escasez o sobreoferta, los mercados se ajusten hacia el equilibrio.

Any economics student that has studied ‘Economics I’ knows 1) what are prices, 2) what role they play, and 3) what is needed to make things work in the best possible way. This means that the student knows what the consequences are of government manipulation of prices. These consequences (far from being good intentions of the manipulator, which, we must not forget that all good intentions lead to hell) always end up backfiring. This seems to be lost on the Secretariat of Economy which often acts more like a Secretaruat of Anti-Economy. They forget (well, saying forget suggests that they once knew, which suggests they were doing more than assuming) what every student that has taken ‘Economics I’ knows: before phenomena of shortages or oversupply, government manipulation of prices stops the markets making their own adjustments to achieve an equilibrium.

Furthermore, in his Twitter account (@ArturoDammArnal) [es] Professor Damm Arnal stated:

@ArturoDammArnal: El que el gobierno autorice la importación de huevos es muestra de lo mucho que falta para tener verdadero libre comercio. ¡Qué verguenza!

Photo: J. Tadeo

Photo: J. Tadeo

@ArturoDammArnal: The fact that the government is authorising the importation of eggs shows how far off we are from having a free market. How shameful!

Moreover, the Head of Government for the Federal District, Marcelo Ebrard (@m_ebrard) [es], announced the distribution of eggs at a regular price in Tlalpan (south zone), the biggest territorial extension area of the 16 areas that comprise the Federal District.  This was done to guarantee the supply of eggs to the capital.

However, this has been deemed to be a populist measure as interpreted [es] by some Mexicans:

@m_ebrard: Hoy trailer de huevo a 20 pesos en Tlalpan

@m_ebrard [es]: Today a trailer with eggs for 20 pesos in Tlalpan

The communicator Diane Pérez (@DraDianePerez) [es] made the following recommendation to those affected by the rise in price:

@DraDianePerez: Si no quieres ser víctima de la especulación y los altos costos del huevo, evita su consumo hasta la estabilización de su precio. Favor RT

@DraDianePerez: If you do not want to be a victim to the speculation and rise in egg prices, stop eating them until the price stabilizes. Please RT

Meanwhile, Twitter user @rojomon9 [es] shared with her followers the way in which she heard the news:

@rojomon9: Llevaba dos meses sin ver un noticiero mexicano, le pongo a Lopez Doriga y lo primero que veo es “a este país nunca le han faltado huevos”

@rojomon9: It has been two months since I have seen a Mexican newscast, I put on Lopez Doriga and the first thing I see is “this country has never lacked eggs” ["huevos" has a double meaning in Spanish; the sentence can also be read as "this country has never lacked courage"]

Regarding the news that this essential product was imported by the United States of America (once customs duty had been lifted), users like Anonymous Hispano (@anonopshispano) [es] asked the following question:

@anonopshispano: Ingresan a México las primeras 400 toneladas de huevo de EU – http://ow.ly/d9Kvy  ¿Y por qué precisamente tenían que ser de EU?

@anonopshispano: In come the first 400 tons of eggs from the USA http://ow.ly/d9Kvy  Why exactly did they have to come from the USA?

Twitter user Antonella Torrinco (@TonyTorrinco) [es] noted that the price of a kilo of eggs had almost reached the daily minimum wage, which in the Federal District is $62.33 Mexican pesos (approximately €3.66 or $4.75 US dollars):

@TonyTorrinco: Mientras tanto en México el precio del kilo de huevo esta a punto de igualar al salario mínimo

@TonyTorrinco: Meanwhile in Mexico the price of a kilo of eggs is nearly at the same rate as the minimum wage

Finally, the Twitter user Juan Ciudadano (@ZapataMty) [es] took the opportunity to compare the increase in the price of eggs with the resolution about to be declared by the Electoral Tribunal of the Federal Judicial Branch (TEPJF) about the validity of July's presidential elections, which were contested by one of the candidates that did not win the election.

@ZapataMty: El HUEVO y el TEPJF pueden causar “revueltas” en México. -En los próximos días Pongan atención al precio del Huevo y al fallo del tribunal.

@ZapataMty: The EGG and the TEPJF could cause “revolts” in Mexico [play on words, "huevos revueltos" meaning scrambled eggs]. In the coming pay attention to the price of eggs and the tribunal's decision.

Considering that 46.2% of the Mexican population lives in poverty and that around 12% of the economically active population earn the minimum wage [es], the sudden and excessive increase in price for such a widely consumed product is bad news for millions of Mexicans.

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