“The Yaqui Valley in 2020:

An Uncertain Outlook”

Walter P. Falcon

Past as Prologue

“The problem with history is that it is just one damned thing after another.”

George Bernard Shaw

A Decade of Shocks

Economic• Peso Crisis 1994

• Removal of many subsidies and tariffs in conjuction with NAFTA

• Depressed world commodity prices, 1996-2001

Shocks

Biological

• White Flies----->Soybeans

• Karnal Bunt----->Wheat

• Rusts----->Wheat

Summer Crops

0

20000

40000

60000

80000

100000

120000

140000

1600001988

198

9

1990

1991

1992

1993

199

4

1995

199

6

1997

1998

1999

2000

200

1

2002

Har

vest

ed A

rea (

ha)

SorghumMaizeCottonSoybeans

Shocks

Climate• Drought--a severely negative factor

for all of Valley agriculture

• Cooler temperatures--a positive factor, at least with respect to wheat yields

Logo for the Valley

Irrigation--The Central Question

How does the Valley get started again with an empty reservoir?

Will new water conservation techniques and types of investments (such as pivot and drip) be needed?

Will higher valued crops then be necessary to pay for the new irrigation investments?

Will new forms of irrigation substantially reduce non point source nitrogen runoff/pollution?

One Vision--Opportunities and Problems

More use of Groundwater;More higher valued crops, which means

moving to demand-driven, forward contract systems;

More livestock and aquaculture production;

More point source pollution, more pesticide residues, less nitrogen non-point source runoff.

Whither Cereals in the Valley?

Can Mexican wheat be competitive internationally?

Are new high-yielding wheat cultivars possible which use much less irrigation water?

Is higher-yielding maize a near-term prospect?

Is replacement of wheat with triticale a logical move to avoid wheat pricing problems and to feed the livestock industry?

Profitability

FINANCIAL

-700

-500

-300

-100

100

300

500

Whe

at

Fall

Mai

ze

Sum

Mai

ze

Sor

ghum

Cot

ton

($U

S/ha

)

199119962001

ECONOMIC

-700

-500

-300

-100

100

300

500

Whe

at

Fall

Mai

ze

Sum

Mai

ze

Sorg

hum

Cot

ton

($U

S/ha

)

199119962001

Government Support

Mexico (Total Agriculture)

Producer Support(2002)

$8,080 mil.

PSE--22%

General Services Support$0.710 mil.

United States (Total Agriculture)

Producer Support (2002)$39,559 mil.

PSE--18%

General Services Support$26,594 mil.

Types of Support in Mexico

Producer Support Payments

Market price support--66%Acreage payments--21%Income support--2%Input subsidies--8%Other--3%

Government SupportMexico (2002):Wheat Prod.--3.2 mmtGovernment Support$0.202 mil.Wheat PSE--34%

Maize Prod.--19.3 mmtGovernment Support$1,081 mil.Maize PSE--31%

United States (2002):Wheat Prod.--44.1 mmtGovernment Support$2,611 mil.Wheat PSE--30%

Maize Prod.--228.8 mmtGovernment Support$4,578 mil.Maize PSE--17%

Major Uncertainties Lie Ahead

What does the future hold with respect to:

• Water availability and irrigation design?• Bulk versus high valued commodities?• Crop versus livestock/aquaculture as the dominant systems?• Extent and types of Government support;• Political/economic concern for the ejiditarios?

The Valley in 2020?