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Corn flour MarketConcentration Analysis For Mexican

Case

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INTEGRAT

Source: Análisis de la cadena de valor maíz-tortilla, Secretaría de Economía (2012).

Corn Flour

12%

“

Minsa estima tener una participa

mercado del 23.5%, que sumadparticipación aproximada del 71% derepresenta aproximadamente el 9volumen de harina de maíz en

Minsa estimates a 23.5% market shareMaseca approximate market Share o

represents the 95% of total flour corn VMéxico.

(2011) Annual Report : Grupo

Tortilla

Corn

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Distribución del ingreso monetario y del consumo en tortillas realizado por los hogMéxico en 2012.

Intuitive evidence of possible negative externalities due regressive effect in household

purchase power in tortillas price increase.

SOCIAL JUSTDis t r ibut ion of m onetary incom e and tor t i l las consum pt ion (Mexican households , 2012)

Householddecile

Monetary Income(Monthly)

Beverage andfood expenditure

Tortillasmonthly

consumption(pesos)

Tortillasconsumption as

share ofmonetaryincome

Tortillasexpenditure

share of totalexpenditure

Tortilla Price(Kilogram)

Monthly tortillasconsumption

(Kg perhousehold)

I $19,784.30 $12,194.84 $1,041.87 5.27% 5.97% $12.32 2.04 II $34,757.32 $15,716.56 $1,461.61 4.21% 8.38% $12.32 1.12 III $47,250.87 $18,817.17 $1,922.09 4.07% 11.02% $12.32 0.82 1IV $59,738.72 $21,271.36 $2,014.57 3.37% 11.55% $12.32 0.65 9V $73,345.85 $23,352.76 $1,946.15 2.65% 11. 15% $12.32 0.53 8VI $89,387.45 $25,550.21 $1,991.63 2.23% 11.41% $12.32 0.43 7

VII $110,881.68 $29,356.77 $2,025.58 1.83% 11.61% $12.32 0.35 6VIII $141,407.82 $32,558.40 $1,923.63 1.36% 11.02% $12.32 0.27 IX $194,953.81 $37,672.82 $1,691.68 0.87% 9.70% $12.32 0.2 X $427,737.28 $53,254.21 $1,430.04 0.33% 8.20% $12.32 0.09 2

Total $1,199,245.10 $269,745.10 $17,448.86 26% 100% $12.32 6.52 1

Source: Elaboración propia con datos de la ENIGH de 2012 y Banco de México de diciembre de 2012.*Cifras en miles de pesos.

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CORN FLOUR MAR

Source: Elaboración propia con información de SE.

Producer Market Share (Market Share) ^2

GRUMA 72% 5,184 MINSA 24% 576

Harimasa 2% 4 Cargill 1% 1 Otros 1% 1

Herfindahl-Hirshman Index 5,766 .000

.004

.008

.012

.016

.020

1 2 3 4 5 6

PHARINA ELECTRICIDAD

o Herfindahl Index: : The market concentration is above desirable levels (2,000).

o Impulse response function : Price changes of main inputs doesn ´ t explain changes .

),,( corn y Electricit corn FutureP P P f Pcornflour

Dataset: 71 observations, from July 2008 to mars 2015 with a m

A m p

l i t u d

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Variables

Tortilla Price

White Corn Price

Corn Future Price

INPC Energy

TORT

Source: Bloomberg, INEGI, Banco Mundial, CONEVAL.

Instrumental variables (Instrument:Corn) estishows that an price increase of 1% corn

causes an 0.62% increase of tortilla

)()()( 3221 cornflour corntortilla L P Ln P Ln P Ln

Ln_ptortilla Coef.Ln_pcorn -0.0217398Ln_pflour 0.620953

Ln_electricity -0.0118413

_cons 2.631438

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We urge to regulate the corn flour market in order torelease the upper market (Tortillas) from high prices.case of study requires a deeper analysis taking in accountregional effects (laws, unions, etc.) and including marketsinteractions. Also, there is better data available in INEGI to

make regional analysis.

Conclus