Tortillas Shortage?

Mexico is putting a price ceiling in place for tortillas.

"The unjustifiable price rise of this product threatens the economy of millions of families," [President] Calderon said. "We won't tolerate speculators or monopolists. We will apply the law with firmness and punish those who take advantage of people's need. . . .

The rise is partly due to U.S. ethanol plants gobbling corn supplies and pushing prices as high as $3.40 a bushel, the highest in more than a decade. "

Of course, if you are a maker of tortillas, and your costs are rising, and you are prevented from raising your prices, will you keep making tortillas? As Cafe Hayek notes, "So because of a bad law in the United States (the requirement to put ethanol in gasoline), the Mexicans have decided to pass a bad law that can only lead to a tortilla shortage."

Another interesting note on the situation: One of the solutions is to raise "quotas for duty-free corn imports to 750,000 metric tons (826,733 U.S. tons), most of which will come from the United States."

This means that Mexico keeps out American Corn, in spite of NAFTA, which results in corn being more expensive than it should be.