From maize to haze: Agricultural shocks and the growth of the Mexican drug sector

This article examines how commodity price shocks experienced by rural producers affect thedrug trade in Mexico. Our analysis exploits exogenous movements in the Mexican maizeprice stemming from weather conditions in U.S. maize-growing regions, as well as export áows of other major maize producers. Using data on over 2200 municipios spanning 1990-2010, we show that lower prices differentially increased the cultivation of both marijuana and opium poppies in municipios more climatically suited to growing maize.

This increase was accompanied by differentially lower rural wages, suggesting that households planted more drug crops in response to the decreased income generating potential of maize farming. We also Önd impacts on downstream drug-trade outcomes, including the operations of drug cartels and killings perpetrated by these criminal groups. Our Öndings demonstrate that maize price changes contributed to the burgeoning drug trade in Mexico, and point to the violent consequences of an expanding drug sector.

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