MEXICO CITY, Feb 19 (Reuters) - Mexico's government will pump a record $16 billion into the countryside this year to help farmers cope when trade barriers with the United States and Canada are removed completely in 2008.

Conservative President Felipe Calderon said on Monday the most money ever to be spent on the countryside in a year would go to producers of corn, beans, sugar and milk, many of whom will struggle to compete when trade barriers are lifted.

Mexico, the United States and Canada have been gradually lifting trade barriers since 1994 through the North American Free Trade Agreement (NAFTA), under which trade between the three neighbors is due to be completely free in 2008.

Poor farmers, particularly those growing Mexican staples of corn and beans on small, inefficient plots worry they will not be able to compete with heavily subsidized, high-yield U.S. farms when barriers come down.

Large swathes of Mexico's countryside are emptying as bankrupt farmers emigrate illegally to the United States in search of better-paying work.

"Mexico's countryside suffers the worst poverty and backwardness in our country," Calderon said in a speech presenting the program.

"We must act firmly and with conviction to guarantee our farmers what they need to move forward by giving them opportunities that will stop them having to emigrate," he said.

Calderon said the money, a 15 percent increase on what was spent on the countryside last year, would go to farmers in the form of rural aid and improvements in infrastructure.

A firm believer in free markets, Calderon took power in December after a razor-thin election victory over leftist rival Andres Manuel Lopez Obrador, who said he would freeze plans to eliminate all trade barriers by 2008.

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