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Corn flour Market

Concentration Analysis For Mexican


Case

INTEGRATION
Tortilla

Corn Flour

12%

Minsa estima tener una participacin de


mercado del 23.5%, que sumado a la
participacin aproximada del 71% de Maseca y
representa aproximadamente el 95% del
volumen de harina de maz en Mxico
Minsa estimates a 23.5% market share, adding
Maseca approximate market Share of 71%, it
represents the 95% of total flour corn Volume in
Mxico.
(2011) Annual Report : Grupo Minsa

Corn

Source: Anlisis de la cadena de valor maz-tortilla, Secretara de Economa (2012).

SOCIAL JUSTICE
Distribution of monetary income and tortillas consumption (Mexican households, 2012)

Household
decile

Monetary Income Beverage and


(Monthly)
food expenditure

Tortillas
monthly
consumption
(pesos)

Tortillas
Tortillas
consumption as
expenditure
share of
share of total
monetary
expenditure
income

Tortilla Price
(Kilogram)

Tortillas
Monthly tortillas consumption
consumption
share of
(Kg per
Beverage and
household)
food
consumption

$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

8.50%
9.30%

III

$47,250.87

$18,817.17

$1,922.09

4.07%

11.02%

$12.32

0.82

10.20%

IV

$59,738.72

$21,271.36

$2,014.57

3.37%

11.55%

$12.32

0.65

9.50%

$73,345.85

$23,352.76

$1,946.15

2.65%

11.15%

$12.32

0.53

8.30%

VI

$89,387.45

$25,550.21

$1,991.63

2.23%

11.41%

$12.32

0.43

7.80%

VII

$110,881.68

$29,356.77

$2,025.58

1.83%

11.61%

$12.32

0.35

6.90%

VIII

$141,407.82

$32,558.40

$1,923.63

1.36%

11.02%

$12.32

0.27

5.90%

IX

$194,953.81

$37,672.82

$1,691.68

0.87%

9.70%

$12.32

0.2

4.50%

$427,737.28

$53,254.21

$1,430.04

0.33%

8.20%

$12.32

0.09

2.70%

Total

$1,199,245.10

$269,745.10

$17,448.86

26%

100%

$12.32

6.52

100%

Distribucin del ingreso monetario y del consumo en tortillas realizado por los hogares de
Mxico en 2012.

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

Intuitive evidence of possible negative externalities due regressive effect in household


purchase power in tortillas price increase.

CORN FLOUR MARKET


o

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

Impulse response function: Price changes of main inputs doesnt explain flour corn price
changes.

Pcornflour f ( Pcorn , PElectricity , FuturePcorn )

Respuesta Impulso del PMAIZ-Insumos

.020

Market Share

(Market Share) ^2

GRUMA
MINSA
Harimasa
Cargill
Otros

72%
24%
2%
1%
1%

5,184
576
4
1
1

Herfindahl-Hirshman Index

5,766

.016

Amplitud

Producer

.012

.008

.004

.000
1

10

Tiempo
PHARINA
ELECTRICIDAD

Source: Elaboracin propia con informacin de SE.

PMAIZ
PFUTURO

Dataset: 71 observations, from July 2008 to mars 2015 with a monthly periodicity.

TORTILLA
Variables
Tortilla Price

Ln_ptortilla
Ln_pcorn
Ln_pflour

Coef.
-0.0217398
0.620953

Ln_electricity

-0.0118413

_cons

2.631438

White Corn Price

Ln( Ptortilla ) 1 2 Ln( Pcorn ) 2 Ln( Pcornflour ) 3 Ln( Pelectricity )


Corn Future Price

INPC Energy

Instrumental variables (Instrument:Corn) estimation


shows that an price increase of 1% corn flour price
causes an 0.62% increase of tortilla price.

Source: Bloomberg, INEGI, Banco Mundial, CONEVAL.

FINDINGS
Corn flour market is highly concentrated. This situation causes
insensibility in corn flour prices with inputs price.
Another major finding is the high pass through from corn flour price
to tortillas price.
This high concentration in Corn Flour market and the pass through to
Tortillas market could cause negatives externalities in tortillas
demand because it has a regressive effect in purchase power.

Conclusions
We urge to regulate the corn flour market in order to
release the upper market (Tortillas) from high prices. This
case of study requires a deeper analysis taking in account
regional effects (laws, unions, etc.) and including markets
interactions. Also, there is better data available in INEGI to
make regional analysis.

Related Interests