Guanajuato growers diversify crops while producers expand operations

In addition to significantly expanding its manufacturing base, Guanajuato has also come a long way in building upon its roots in agriculture. For centuries Guanajuato has hosted a range of agricultural activities, with the sector traditionally being the primary source of income for much of the state. Over the last 20 years in particular many of the state’s farms have modernised their practices and diversified their produce. A major advantage for the state is its varied climate that provides a range of growing conditions over different geographical regions, allowing a variety of crops to thrive. “Guanajuato has focused efforts on developing its agriculture sector because already has an ideal climate, much like California or South Texas,” Agustin Robles, co-founder and CEO of Granjas Robles, one of the state’s top agri-businesses, told OBG.

The northern portion of the state, which mostly has a dry or semi-dry climate, is a cattle-producing region. Meanwhile, the south and south-east of the state is hotter and more humid, having a temperate sub-humid climate, which allows growers to produce various vegetable crops. In terms of generated revenues, produce and livestock account for roughly an equal share of Guanajuato’s agricultural economy.

Diversifying Growth

The state’s traditional crops were worth over $10.9bn in 2016 – with this value split between maize ($6.7bn), sorghum ($1.6bn), barley ($1.5bn) and wheat ($1.1bn) – representing an important source of income for the local economy. However, the state has been expanding into new sub-sectors within the agri-business industry in recent years, and Guanajuato has emerged as a leader within the country when it comes to innovation in the agricultural sector.

Guanajuato’s state government has helped farmers plant and harvest new products, with producers now exporting non-traditional agricultural products such as radishes, dates, figs, garlic, spinach, bell peppers, blackberries, raspberries, onions and cucumbers. Furthermore, the state has become the country’s largest producer of green chilli, broccoli, cauliflower, celery and artichokes, with Guanajuato’s green chilli and broccoli crops generating billions of pesos per year. The state’s industrial farming sector has diversified as producers shift towards new crops and cultivation techniques, with Guanajuato emerging as a major produce supplier for supermarkets in the US and Mexico. Many farms are using new techniques to increase yields and efficiency.

“Guanajuato has a long tradition of growing strawberries, but growers have updated their methods in the last few years, introducing a range of new technologies such as macro tunnels and greenhouses,” José Francisco Gutiérrez Michel, secretary of agricultural and rural development of Guanajuato, told OBG. Gutiérrez Michel also said a substantial number of growers have shifted to organic practices, opening them up to a new niche market.

Plentiful Harvests

The state government has had success in helping farmers produce non-traditional crops. For instance, agave production in Guanajuato increased by almost 425% from 37,630 tonnes in 2012 to more than 197,000 tonnes in 2016, generating sales worth MXN662m ($35.8m) that year, though agave is far from the only success story. Cucumber harvests, for example, surged from 7710 tonnes in 2012 to over 42,089 tonnes in 2016, a yield that generated MXN187m ($10.1m) in revenues, providing a major boost for the state economy. Guanajuato has fostered similar increases in production in a number of other sub-sectors, such as garlic production, which increased from 7333 tonnes in 2012 to 13,162 tonnes in 2016.

Over this same period, the production of other crops has also ramped up: broccoli harvests rose from 189,871 tonnes to 320,268 tonnes, which were worth some MXN1.8bn ($97.3m); celery output increased five-fold from 4884 tonnes to 26,644 tonnes to earn revenues of MXN1.8bn ($97.3m) in 2016; green chilli yields increased from 59,393 tonnes to 101,449 tonnes, topping MXN1bn ($54m); asparagus production increased from 17,169 tonnes to 28,684 tonnes; strawberry harvests rose from 19,600 tonnes to 37,593 tonnes; and jicama harvests almost tripled, rising from 8962 tonnes to 23,268 tonnes. Evidently, there have been substantial shifts in the types of crops being grown and notable improvements in output.

Another emerging crop is leafy green vegetables. Lettuce production increased from 68,056 tonnes in 2012 to 108,385 tonnes in 2016, generating income worth MXN395m ($21.3m) that year. As export revenues rise, Guanajuato’s farmers are gradually expanding production of non-traditional crops. For example, the quantity of melon harvested in Guanajuato more than doubled from 1043 tonnes in 2012 to 2455 tonnes in 2016.

Exporting Produce

Private sector businesses in Guanajuato were quick to shift towards producing frozen and packaged fruits and vegetables, looking to export markets as a source of growth. More recently, however, as transportation infrastructure has improved, new opportunities have emerged for exporters of fresh produce as well. While frozen fruit exports remained relatively stable, rising from $23m in 2012 to $23.8m in 2017, fresh fruit exports have expanded rapidly, jumping from $2.5m in 2012 to $14.6m in 2017. Fresh vegetable exports have experienced a similar leap. In 2012 Guanajuato exported $291.5m of frozen vegetables and $296m of fresh vegetables. By 2017 the state’s frozen vegetable exports increased to $353.8m, a jump of 21% in comparison to 2012. By contrast, fresh vegetable exports surged to $794m, a 168% increase compared to 2012. While frozen food exports increased by double digits, fresh produce exports nearly doubled, a quantifiable example of the state’s increased focus on fresh produce. Exports of fresh and frozen fruit products appear set to continue to expand.

Adding Value

In addition to fresh and frozen food, Guanajuato has also started to export larger quantities of higher value-added products. For example, processed vegetable exports nearly tripled, jumping from $2.4m in 2012 to $9m in 2017. Exports of processed animal and vegetable fats and oils also increased significantly, rising from $5.7m in 2012 to $15.3m in 2017. Guanajuato’s business owners are looking to continue to invest in expanding production of high-value products, as the profits among the state’s leading agri-businesses are increasingly being driven by technology and innovation.

Another key segment of Guanajuato agro-industry is the dairy industry. Among Mexico’s states, Guanajuato is the largest producer of goat milk and the fifth-biggest producer of cow milk. Milk production in the state increased from over 767,000 tonnes in 2012 to nearly 868,000 tonnes in 2016. Additionally, a number of the larger dairy producers in Guanajuato are looking to expand and diversify their operations, with some moving into producing cheese and other dairy products. Demonstrating the growth prospects in the state’s dairy segment, US-based dairy company Schreiber Foods opened a factory in 2016 in Silao, located in the central-west of the state, hiring 275 direct employees.

Similarly, some producers of alcohol have been looking to use local agricultural products to expand their output of alcoholic beverages. Currently, Guanajuato mainly produces tequila, mezcal and beer. The state’s alcohol exports increased from $8.2m in 2012 to $18.4m in 2017, with this likely to rise as other projects come on-stream. For instance, in May 2018 local craft beer producer Cerveceria Guanajuato announced plans to invest MXN7m ($378,000) to expand its factory in León.

Alcohol sales still represent a relatively small portion of Guanajuato’s overall agri-business exports, but they are growing steadily. Local crops and meats are also being used as inputs to produce other consumer products, with a number of manufacturers producing their products within the state, ranging from pet food to cosmetic products. Notably, Nestlé’s Purina opened a $220m factory in the city of Silao in December 2015. This would have contributed to Guanajuato’s animal feed exports increasing from $2m in 2012 to $5m in 2017.

Guanajuato’s agricultural producers will continue to forge ties with other industries and expand production of grains, fruits, vegetables, meat and dairy, while also gradually shifting towards producing higher value-added products such as beer, tequila and pet food. Recent developments have bolstered Guanajuato’s already strong agricultural sector, and private producers are adopting new technology and diversifying their operations towards higher value-added products, boosting the importance of the agri-business industry as a source of revenue.

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Guanajuato chapter from The Report: Mexico 2018

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