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### Viewing cable 09MEXICO2205, PUSHED BY HIGHER FOOD PRICES, POVERTY IS UP IN MEXICO  SINCE 2006

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09MEXICO2205 | 2009-07-27 18:06 | 2011-02-14 12:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Mexico
Appears in these articles: http://wikileaks.jornada.com.mx/notas/acuerdo-entre-gobierno-y-partidos-de-oposicion

`

    VZCZCXRO7452
    RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
    DE RUEHME #2205/01 2081820
    ZNR UUUUU ZZH
    R 271820Z JUL 09
    FM AMEMBASSY MEXICO
    TO RUEHC/SECSTATE WASHDC 7621
    RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
    RHMFISS/DEPT OF ENERGY WASHINGTON DC
    RUEATRS/DEPT OF TREASURY WASHINGTON DC
    RUEHRC/USDA FAS WASHDC
    RHEHAAA/NSC WASHINGTON DC
    INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE

` `

      UNCLAS SECTION 01 OF 02 MEXICO 002205

    SIPDIS
     SENSITIVE

    STATE FOR WHA, WHA/MEX, WHA/EPSC, EEB
    STATE FOR USTR (MELLE)
     FAS FOR OCRA/ZANIN
     USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD
    TREASURY FOR IA  ENERGY FOR WARD, LOCKWOOD AND DAVIS

    E.O. 12958: N/A
     TAGS: ECON EAGR EAID SOCI PGOV MX
    SUBJECT: PUSHED BY HIGHER FOOD PRICES, POVERTY IS UP IN MEXICO  SINCE 2006

    ¶1. (U) SUMMARY. Rural and urban poverty have shown a significant  uptick in Mexico since 2006, despite a general decline since 1992  and despite the economy's strong performance. According to  semi-independent analysis based on official 2008 figures, poverty  increased from 42.6% in 2006 to 47.4% in 2008 (asset-based poverty).  Most observers point to the global increase in food prices as having  pushed many Mexicans into poverty. Release of this politically  sensitive information was reportedly delayed by agreement between  the government and opposition parties until after the July 5th  legislative elections. Other indicators are more positive, for  example, the increased number of senior citizens covered by pensions  or social security. Overall coverage of the population by the  government's social programs has also increased. The topic has  become part of a contentious political debate. However, as the GOM  faces pressure to reduce spending in light of a decline in oil  revenues, poverty programs could become a target -- even though  Finance Secretary Carstens has publicly stressed that poverty  programs would not suffer budget cuts, nor would security or health  programs. END SUMMARY.

      RELEASE AFTER THE ELECTIONS
    ---------------------------

    ¶2. (SBU) Using GOM statistical agency INEGI's 2008 income survey's  figures, CONEVAL, a semi-autonomous government agency that was  established to review and evaluate the GOM's social development  plans, released its 2008 study two weeks after the July 5  legislative elections. The analysis was performed with the  assistance of the United Nations Development Program (UNDP). It is  generally known that the political party officials agreed to  postpone the release of the study until after the elections, a  common practice in Mexico. Since then, the GOM, whose public  finances have been squeezed, and the PRI, winners of the legislative  elections, have been sparring about what steps to take regarding  Mexico's fifty-odd social and anti-poverty programs. President  Calderon and his Secretary for Social Development Ernesto Cordero  have called for rationalizing the programs and evaluating their  efficiency.

    ¶3. (U) Most observers point to the increase in global food prices  and the increase in the value of the government's basic "food  basket". Fluctuating global cereal and oilseed prices have largely  contributed to a rise in domestic prices. Since NAFTA, Mexico's  economy has been largely open to food imports, with grain and  oilseed prices pegged to quotes on the Chicago Board of Trade (where  corn futures spiked to $4.50 per bushel last month). More than a  third of domestically-consumed corn, a basic staple of the  lower-income Mexican diet, is imported, as is 80% of the rice.

    RECENT UPTICK BUT LONG-TERM TREND IS POSITIVE  --------------------------------------------- -

    ¶4. (U) CONEVAL released the 2008 poverty figures July 18, in which  the main headline was that poverty had increased from 42.6% in 2006  to 47.4% in 2008 (asset-based poverty). This uptick occurred despite  a downward trend for poverty since 1992, as well as the economy's  strong performance, high oil prices and rising incomes. According  to CONEVAL's analysis released every two years, poverty in Mexico  has been in decline since 1992, when data collection began. The 2008  figures show that there are over 50.6 million Mexicans now living  under the poverty line. In 1992, 53.1 percent of Mexicans were  under the poverty line. These numbers got worse during the 1995-1996  financial crises, but returned to their overall downward trend in  1998.

      OTHER MEASUREMENTS  -
    -----------------

    ¶5. (U) Another measure of poverty that has shown an increase is what  Mexicans call "nutritional poverty", (food-based poverty) a  measurement of a family's ability to purchase the basic food basket.  In the report, those in this category increased overall from 13.8%  in 2006 to 18.9% in 2008. Of the 19.4 million Mexicans who fall  into this category, 12.2 million reside in rural areas and 7.2  million live in urban areas. On the bright side, the report  signaled a decline in the number of families living in homes with  dirt floors, from 22.3% in 2006 to 18.9% in 2008. Truancy rates for  children between ages 8 to 12 also continued to decline from 1992 to  2008, from 5.1% to 2.1%. Finally, coverage of the population by the  government social programs has also increased from 49.9% to 55.9%  from 2006 to 2008.     MEXICO 00002205 002 OF 002

    ¶6. (SBU) COMMENT. One of the government's main challenges is  achieving achieve sustained growth so as to significantly reduce the  existing social inequalities and poverty rates and reach its 2012  goal of reducing the number of Mexicans living in poverty.  Unfortunately, figures such as these were destined to be election  fodder and it is no surprise that the government delayed their  release. Most analysts, including Secretary Cordero, point to the  global increase in food prices (cereals, oil seeds) as having pushed  many Mexicans into poverty. Cordero called on the Congress to  increase funding for the government's social programs in the 2010  budget. But he and President Calderon have also talked publicly  about rationalizing and refocusing Mexico's fifty plus anti-poverty  programs, many of which have "political clients", such as the  agricultural producer associations linked to the PRI. Current budget  constraints may make these numbers even more of a political issue  than anticipated. Given the positive impact of the government's  star social program, Oportunidades, the PRI will fight hard to get  state control over this transfer program to get more political  support in the run-up to the 2012 presidential election.
    FEELEY

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