Agribusiness Sector In Mexico
With a large land area and a range of climates, Mexico is naturally suited to large-scale agricultural production across a diversified range of products and, having a large population of almost 110 million people, the country provides a plentiful supply of labour, with relatively low wages by developed country standards and also a large market for goods.
As the Business Monitor International foresees, economic growth in Mexico will be bolstered by solid private consumption and robust investment in the coming quarters. As a result, they see Mexican GDP increasing by 3.4% in 2012 and 3.0% in 2013. Therefore, a strong growth is expected in private consumption: 4.2% in 2012 and 4.0% in 2013.
Mexico depends on imports to satisfy national demand in products such as corn, wheat, soy, rice, meat, pork, poultry, sugar and milk.
Mexican agriculture is quite heterogeneous and provides income for more than 20% of the population.
Agriculture: The worst droughts in Mexico’s recorded history caused severe damage to crops in late 2011 and early 2012. Although Mexico is a big producer and exporter of fruit and vegetables, the lack of economic support, out-dated technology, high prices for agricultural products used in daily processes and little training for producers are only some of the main issues that Mexican producers face. Despite these severe droughts, Business Monitor International sees production recovering by 15.6% year on year to 21.50 million tonnes in 2012/13. Moreover, even as sugar consumption is expected to fall by 0.8% in 2012, over the BMI forecast period sugar consumption is expected to grow by 2.1% to 4.28mn tones.
Organic Production: Demand for organic produce is growing at a rate of 32 percent per year. Mexico is among the top 20 producers of organic foods worldwide with 1.3 million acres of land dedicated to organic cultivation.
Forestry (Paper and wood): According to CONAFOR (National Forestry Commission) 70% of the wood used is imported. The main products imported are: paper, cardboard and processed cardboard, wood and processed wood.
Livestock: As the economic climate continues to recover, the BMI expects demand from the livestock sector to pick up once again, as population growth will boost food, seeds and industrial products demand. For the 2012/13 period, consumption is expected to increase by 2.4%, fuelled by increased demand from livestock and poultry sectors. Out to 2016, poultry production is expected to expand by 9.7%, as chicken demand is expected to grow by 12.5%.
To help the sector adapt to the extreme weather, in March 2012 the Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA) started a project to conserve and restore grazing lands in areas badly affected by drought. US$42 million will be spent to restore rangelands and improve land management in areas used for cattle rearing in 19 states across the country.
However, Mexico requires more research and innovation as it struggles to compete with other countries that are investing a lot of money in these areas.
There are opportunities for foreign companies from Europe, North America and Asia to increase their presence in Mexico and develop investment projects.
Getting into the market
Contact with SAGARPA (Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Foods) is of high importance for doing business in this specific sector. Research is critical when considering any new markets, especially Mexico. UKTI provides market research services which can help UK companies doing Agribusiness in Mexico including:
Contact with SAGARPA and other governmental organisations.
Research on import duties and other trade barriers.
Validated lists of agents/distributors.
Key market players or potential customers in the Mexican market.
Establishment of interest of such contacts in working with you.
Organising seminars or other events for you to meet contacts and promote your company in the Mexican market.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
Irma Gloria Saldaña, UKTI Office Guadalajara. Tel: +52 (33)3630.4357 or email: [email protected]
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.
Expo Agroalimentaria Guanajuato
7-10 November, 2012
Expo ANTAD. Guadalajara.
Expo Obregón. Obregón, Sonora