The Changes Needed for Agro Exporters to International MarketsBy Lia Bijnsdorp | Thu, 12/09/2021 - 09:23
Another year has passed with the pandemic still continuing and we are all wondering what 2022 will bring for Mexico’s agricultural sector. Fortunately, 2021 has been a better year for agro exporters than 2020.
Within the agricultural sphere of Mexican exporters, the international markets are becoming increasingly important to be able to diversify their export portfolio. Of course, the US is a natural market for most Mexican fruit exporters. On the other hand, the competition is also fierce and large exporters have created many advantages by implementing their own cool storage and logistics facilities in the main US markets, which has made it more difficult for growers and smaller exporters to compete.
The second- and third-largest markets for fruit sales are Canada and Europe, while Japan and other Asian destinations are increasingly becoming attractive markets as demand is growing and volumes are increasing steadily.
How to Increase International Fruit Export Volumes
Let us review what improvements are necessary for Mexican exporters to become even more successful among international buyers. Interviewing agro exporters from Mexico to different international markets, reveals there are several changes that are necessary to increase both volume and economic returns.
- Pre-harvest improvements and traceability practices are to be standardized, so all exporters will apply the same formats for their export processes. This is already in place for export to the US market, as USDA has implemented many quality checks in Mexico to ensure quality control of the fruit. However, for other international markets, standards still remain to be executed by the individual exporters. Though it is true that the national growers and exporters organizations have implemented several new practices for their members, there is still a need for a standardization of export processes.
- Food safety, social and sustainable certifications for growers and packers are often costly requirements, as different international markets require different certifications. European supermarkets are requiring that both growers and packers obtain as many certifications as possible, from agricultural practices, to social and sustainable certifications. Of course, it is undeniable that all certifications have a necessary objective; however, the costs of these certifications are usually not absorbed by the market. This means that there often is no economic benefit for those exporters that do have all certifications and this puts particularly organizations of small growers that want to export at a disadvantage. Therefore, the challenge remains to have access to large buyers by having the required certifications, and to be able to absorb the costs of them in very competitive markets.
- Sustainability and social impacts are becoming more important for consumers, and in particular in the European market, which makes it necessary for exporters to anticipate the market requirements by taking into account issues such as water, soil and forest management. Certifications, such as Rain Forest Alliance or Global Gap Spring, will allow Mexican exporters a wider range of clients in international markets.
- All agro-exporters face the challenge of finding reliable international clients that they can build a long-standing relationship with. This often is a road of trial and error that can have poor or intermediate results for fruit exporters in the process.
A trade that is fair to both sellers and buyers, is not always easy to find. The best option is to participate in trade missions to visit trade fairs, to physically get to know the clients and visit their warehouses. A good practice is to receive references from other suppliers that the buyer is already working with.
- Digitalization of processes and standards through digital platforms are slowly becoming more available to agro-exporters. Through these platforms, documentation is standardized and easily accessible for participants in the chain and makes traceability much more transparent.
- Quality inspections before shipping should become standard practice for all exports, so both seller and buyer receive a quality control report before any fruit is being shipped. Control Union Mexico has implemented a fruit inspection program, where a quality surveyor examines the product before it is loaded for export.
- Collective branding with a quality program, which unites exporters under a standardized export quality seal, where all participants adhere to the same quality control processes, from orchard, to packing, to shipping. A clear example of collective branding is the very successful campaign of Avocados from Mexico for the US market.
- Non-GMO declarations, emitted by the federal government. An increasing number of consumers are demanding food products that are not genetically modified.
- Improve sea transit times. Mexico is still facing long sea transit times as compared to competing countries, creating a significant barrier for growers to conquer foreign markets, such as Europe. Currently, a new Express Sea Route from Mexico to Europe is being programmed for 2022, which will reduce shipping days by approximately 40-50 percent and will allow growers to export higher volumes with better returns.
- Direct sales to supermarket chains. Several Mexican exporters have started to supply their fruit directly to supermarkets. Each year, the supermarket chains are looking to supply their different fruit products as directly as possible from the growers. This means that growers have a fair possibility to become direct suppliers of supermarkets but only if they are prepared to do so, have the required certifications, have professional pre- and post-harvest practices in place, a commercial structure, and previous export experience.
What should fruit exporters to international markets expect in 2022 and beyond? Of course, the COVID-19 story is still unfolding and it is continuing to be a major challenge. The food service sector, in particular, is being affected by the renewed closures or semi-lockdowns in several markets. What we have seen in these last two years is that consumers are looking to eat healthier and, as such, are willing to purchase more organic fruits. According to the Agricultural Outlook 2021-2030 report from the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO), avocados will become the most commercialized tropical fruit by 2030. Mexico is fortunate to have the largest production not only of avocados but it is also the largest exporter of mangoes, berries and several other agricultural products. Thus, we can expect the coming years to be successful for agro-exporters from Mexico. The better prepared they are, the more opportunities lie ahead in international markets.