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Mexico: Agribusiness

Agribusiness

Overview Return to top

Mexico is among the top 15 world leaders in the agribusiness industry with 27,300 hectares of permanent cropland. Mexico is also 10th in the world in terms of meat production, providing a total of 4,911 metric tons of red meat alone. In 2012, Mexico was rated 5th in poultry production and 3rd in egg production globally. In 2011, Mexico reached 4th place in poultry products, producing 2.8 million tons worldwide, 6th place in beef production with 1.8 million tons, and 17th in pork production with 1.2 million tons.

Other sub-sectors that registered the most dynamic growth were: corn production with an increase of 17.6%, beans with an increase of 17.9 %, dairy sector with an increase of 2.7%, and cattle 2.1%.

In 2010, Mexico showed an increase of 5.8% in the production of its 50 most important crops, which represented 86% of the total national agricultural production.

The growing agribusiness sector demands modern agricultural machinery, more efficient technology, fertilizers, enhanced pesticides to protect crops, animal feed, and packaging equipment. A table on tractor by power follows:

Agricultural Heavy Equipment (tractors with models before 2010) HS Code 87019003

 

2010

2011

2012

Total Exports

7,106,409

6,008,976

5,882,994

Total Imports

45,142,513

58,940,034

57,961,129

Imports from the U.S.

37,379,887

50,609,646

48,934,932

Agricultural Heavy Equipment (tractors with HP between 140 & 180 HP) HS Code 87019005

 

2010

2011

2012

Total Exports

3,157,925

1,277,558

228,209

Total Imports

1,410,899

1,623,601

739,347

Imports from the U.S.

213,412

268,252

475,777

Agricultural Heavy Equipment (tractors with HP between 106 & 140 HP) HS Code 87019006

 

201

2011

2012

Total Exports

348,020

0

6,541,546

Total Imports

3,646,013

2,899,301

792,003

Imports from the U.S.

2,948,766

2,863,174

273,444

Agricultural Heavy Equipment (all other tractors) HS Code 87019001+ Code 87019099

 

2010

2011

2012

Total Exports

222,852,455

340,437,230

396,674,389

Total Imports

137,345,273

171,657,071

181,544,491

Imports from the U.S.

74,319,297

101,846,590

95,518,153

Figures are in millions of U.S. dollars.

Source: Secretaria de Economia-SIAVI

Best Prospects/Services Return to top

The agribusiness industry in Mexico is a sector in continuous and steady expansion with an average annual growth of 2%, driven in part by strong consumer demand and limited production potential due to reduced land availability, poor transportation infrastructure and high feed prices. With 9% of the nation’s foreign direct investment devoted to agribusiness, there is significant long-term growth potential. In addition, the government has invested over $700 million in the sector during the past 5 years. With a large land area and a diverse range of climates, Mexico is well suited to large-scale agricultural production. The highly fragmented state of Mexican farming leaves significant room for consolidation and increasing yield.

Modern Agricultural Machinery: This particular sector presents suppliers with strong opportunities, as 70% of Mexican agriculture is still harvested through manual labor utilizing rudimentary tools. Less than 20% of croplands are irrigated, leaving crops dependent on seasonal rains or irrigation through mobile water pumps. Federal government infrastructure development programs have provided this sector with $300 million for this purpose alone.

With sales in the U.S. predicted to flatten, Mexico holds strong promise in comparison. U.S. firms lead in irrigation technology, commercial mowers and farm dairy equipment. Focused effort to uncover sales opportunities on the part of U.S. exporters of such equipment has the potential for long term rewards as the Mexican agribusiness market begins to build capacity to meet growing local demand.

Fertilizers: Mexico has no national fertilizer industry which results in farmers either fertilizing their crops with traditional products or not fertilizing at all. During 2010, farmers and organizations continued to express their discontent with the high price of imported fertilizers. Affordable fertilizers have strong market potential for U.S. firms in the agricultural sector.

Pesticides: Pesticides is another sector with virtually no national competition, and with harvestable land increasing yearly, there is strong market demand. These products have also received heavy subsidies by the federal government for small producers.

Packaging Equipment: General packaging equipment has also had a very considerable increase in demand due to producers’ desire to begin packaging their own products. This is the case for the poultry and meat processing industry. Exports require standardized packaging and labeling requirements, which needs advanced technology and machinery that is not produced in Mexico.

Opportunities Return to top

There is virtually no national competition for agribusiness technology and equipment since 90% of products in this sector are imported, presenting an enormous opportunity for U.S. firms. U.S. products are most often the first choice for Mexican companies due in large part to the U.S. product reputation for excellent quality, innovation, and efficiency.23

The government’s focus on improving infrastructure can only improve Mexico’s agribusiness market in the long-term, creating a more attractive location for foreign direct investment. In addition, laws are slowly changing to allow for majority foreign ownership in some circumstances.

The performance of the Mexican economy is one of the most important factors affecting future agribusiness related purchases. The large number of free trade agreements that Mexico signed has created a more open and globalized economy, affecting local producers’ demand and ability to compete with international and subsidized products.

Mexico’s large population of more than 110m provides a large and growing opportunity for U.S. agribusiness products and machinery. Almost 55% of the Mexican population is 24 years old and younger and represent a strong voice in the family’s purchasing decisions. Per capita consumption and total food consumption is expected to grow between 24% - 30% (in nominal, local currency terms), driven by population growth as well as a growing prevalence of grocery retail chains.

With rising disposable incomes, increasing ownership of refrigerators and microwaves and busier lifestyles, new and innovative food products are eagerly embraced in the Mexican marketplace. Based on these consumer trends, forecasts are highly optimistic for growth in prepared food consumption in the Mexican market for the medium and long-term.

Resources Return to top

Secretaria de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

www.sagarpa.gob.mx/

Comisión Federal para la Protección contra Riesgos Sanitarios

www.cofepris.gob.mx/

Asociación Nacional de Comercializadores de Fertilizantes

www.anacofer.com.mx/

Administración General de Aduanas

www.aduanas.sat.gob.mx

Asociacion Mexicana de Horticultura Protegida

www.amhpac.org

For more information on the agribusiness sector in Mexico, please contact:

Juan Herrera, Commercial Specialist

U.S. Commercial Service, U.S. Consulate Guadalajara

Juan.Herrera@trade.gov

Tel: (011-52-33) 3615-1140 ext. 103

Fax: (011-52-33) 3615-7665