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Agri-food Sector Attractive for Investment During COVID-19

By Jan Hogewoning | Fri, 07/24/2020 - 16:39

Figures collected by INEGI and Banco de Mexico indicate that the total value of Mexican agro-food exports so far this year amount to US$17.12 billion, reports El Economista.  This figure is more than the revenue generated individually by remittances, tourism or petroleum exports over the same period. The agricultural and food sectors have continued relatively undisrupted, with many Mexican products finding new fertile grounds in other world markets. During 1Q20 GCMA reports that GDP growth for the agri-food sector was 2 percent. Mexico´s overall GDP reduced by 1.4 percent over the same period, showing a more dramatic fall over the second and third quarter. The 2 percent growth of the agro-food sector is 0.5 points higher than last year's. This indicates that the sector struggled to gain momentum over the first year of the present  administration, but saw an increase through late 2019 and early 2020.

This May there was a 2.2 points slower growth if compared to May 2019. However, if we contrast this with the manufacturing industry, which has contracted 35.6 percent this year, the difference is staggering. Equally petrifying figures emerged about the overall export of Mexican goods, which recorded a drop of 21 percent during the period between January and May compared to the same period in 2019.  In contrast, agri-food exports grew by 2 percent, recording a trade surplus increase of 11.68 percent between January and May. While these figures for the agri-food sector are promising, there are still looming risks which should keep the sector wary. These include the spike in inflation of agri-food products, reported El Economista. Other risks include the outbreak of COVID-19 in production and processing sites, which could severely disrupt the spurt in exports to new markets. One of the ways in which sanitary authorities have assured that quality monitoring and sanitary measures are applied is through digital channels.

Despite the need to stay vigilant, the agri-food sector has become a more attractive sector to invest. This being said, the most attractive segment is without a doubt produce directed for export.

The data used in this article was sourced from:  
El Economista, GCMA, Mexico Business News
Photo by:   Pexels
Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst

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