On the up: Exports of food products are growing and diversifying

The Mexican agriculture for export segment closed 2016 with a rare trade surplus and with exports up 13.7% for a value of $14.74bn. This meant it surpassed both tourism and oil as a source of foreign revenues and also overtook Canada to become the top exporter of agricultural goods to the US. A range of products from raspberries to pork showed significant growth and demonstrated the diversity of Mexican offerings. Despite uncertainty over future US trade policy, development of new agricultural projects suggests a fertile outlook for 2017.

Star Crops

Several products had a bumper 2016: mango exports rose by 158%, coffee by 91%, beef by 84% and avocados by 46%, according to the Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación, SAGARPA). Such performance was backed by three strong fundamentals, Francisco Javier Calderón, deputy director-general of economic studies at SAGARPA, told OBG. “First, we had no adverse climate issues such that have affected farming in recent years; second, with the exception of fertilisers and some machinery the sector imports very little and so benefits from a weaker peso; and third, the government has worked to build a strong brand for Mexican agricultural products and we are seeing their promotion strategies bear fruit.” The year’s performance was built on a decade of consistent growth: from a 2006 baseline of $836m, exports have since grown by 115.7%.

Greenhouse Effect

One underexploited area in Mexico that has potential for major growth is greenhouse horticulture. According to Oscar Woltman, president of the Mexican Protected Horticulture Association, greenhouse products accounted for just 5% of export value in 2016, but the segment has been growing at a rate of 8-10% in recent years and there are 40,000 ha of land under cover, mostly in the north-west. “Protected agriculture in Mexico is based on four key products: tomatoes, peppers, cucumbers and aubergines,” he told OBG, “but we are starting to see a move into new products such as berries. In the next five years I expect to see a consolidation of the segment and to move into higher-value products and new markets such as the Middle East and Asia.” According to SAGARPA, in the first 10 months of 2016 raspberry production soared by 111% year-on-year; October’s bumper crop of 54,332 tonnes equalled 80% of production for the whole of 2015.

Eastern Promise

Diversification of export markets has sped up in recent years. In December 2015 Mexico signed sanitary protocols with China to export corn, berries, beef, tobacco and dairy to the Asian giant. That same month a direct flight opened from Guadalajara to Henan, running three flights a week with a capacity of 120 tonnes of perishable goods. From 2010 to 2015, avocado exports to China grew from $4000 per year to over $24m.

Deepening trade ties with Japan should help boost export of meat products, pineapple and sugar. “The agricultural sector is a big winner from the free trade agreement with Japan,” said Calderón. “We already export $1bn a year in agricultural and food products and this has the potential to grow significantly.” Several Mexican meat and fish producers have also received halal certifications necessary to export to Middle Eastern markets. “To reach distant markets Mexico has to focus on quality,” he added. “Particularly in the meat industry, we have worked hard to gain the necessary sanitary certifications, transferring a weak industry into one of the agricultural export sector’s major strengths.”

While the US is unlikely to be replaced as Mexico’s key export market any time soon, a focus on bringing quality goods to new markets should provide the sector with a comfortable buffer in the coming years.