The Image of Mexican Agro ExportersBy Lia Bijnsdorp | Fri, 03/18/2022 - 09:00
The incredible potential of the agro-export sector from Mexico offers many growth opportunities for both existing and new growers. Whether or not the need to professionalize the sector is addressed will determine if this great potential can be channeled appropriately and translated into more business with increased export volume and more income for the growers. At this moment in the history of agribusiness, Mexico is considered an important player in the export markets. However, to continue to grow, Mexico is at a crossroads where professional practices are key and the decisions that are made to professionalize the export sector will determine if the growth can be sustained.
As an important exporter of agricultural products, Mexico still has growing pains that need to be attended to, as the image in the mind of importing countries is still very mixed. In particular the image that European importers have of the Mexican exporter is on one hand a non-formal exporter with low-protocol export practices and on the other hand, very professional growers and exporters with all the required certifications and good economic results.
Different Realities for Sellers and Buyers
It is not always easy for the exporter to understand from his side of the ocean that there is a large difference in realities between the grower and his clients in Europe, especially since the import market can have very different commercial practices. Let us review these different realities: the reality from the grower and exporter and the reality of the buyer in a market where fruits from many different origins converge.
On one side we have the grower, who deals with many variables, from weather conditions, labor costs, pre-harvest costs and at the end of the season, the result of all the hard work: the harvest itself. If the grower is also an exporter, the costs of packing is another considerable factor to be taken into account. After all resources invested in the production and packing processes, a grower needs to ensure he selects the right clients to build reliable and lasting relationships with.
On the other side we have the buyer, usually in an office behind a desk who may or may not visit his suppliers in their habitat to bring both realities closer. The buyer has to make sure that he offers the best available products to keep his customers happy with a steady quality supply. If his customers are supermarket chains, the buyer needs to have all required certifications duly checked to make sure they comply with the standards of the supermarkets. In addition, there is a relatively fierce competition with other importers. So, also here, the pressure is always present in the perishables business.
To reconcile the realities of both sides of the agricultural supply chain, it is necessary that all parties are aware of the reality on the other side, and for growers and exporters to understand how the market works and the utmost importance of working closely together with their clients. The buyer needs to be aware of all costs that a grower needs to invest before he ships his fruits to a faraway market. Good communication between the grower and his clients will bring both sides closer together as partners.
A Necessary Facelift
What is the current image in general of Mexican suppliers among European buyers? After having visited many times with buyers in the European market, the image that European clients have of Mexican exporters is mixed: there are exporters that have an excellent track record of annually supplying buyers, while on the other hand, there are the opportunistic exporters who take advantage of good prices in Europe. These exporters look for windows in the market when there are few or no other countries supplying the buyers, which does not contribute to the development of a durable relationship with clients, who count on supply in lower and higher markets.
It would be nice to only mention the good parts of the chain but that would not do justice to the reality, as there are complaints on both sides. Mexican exporters have complaints about the lack of transparency and the arbitrary and infamous sales account adjustments by their clients, while European importers have complaints about Mexican exporters not always being formal with the documentation, such as the required certifications, and not always thorough enough on the quality selection for export, resulting in low economic returns.
The recommendations to settle issues on both sides are several, based on experiences that have proven to be successful: all transactions should be formalized by a standard quote or sales contract, signed by either side, always by email and never only through a phone call or a whatsapp message. The contract should be made according to international commercial standards, specifying all conditions of the transaction: fruit sizes and conditions, incoterms, payment conditions, certification requirements as well as stipulated details about the responsibility of either party in case of a commercial dispute.
Since fresh fruit and long transit times generate many variables that may affect the quality of the fruit, it is necessary to have an independent quality inspection at the packing station at origin as well as an independent quality inspection upon arrival at the destination. By doing so, both sides — seller and buyer — have an independent quality control report, indicating the fruit quality before and after shipping.
The structure of standardized protocols and inspections for agro exports to the US, which was created by the US Department of Agriculture in Mexico together with the state and national growers organizations, has generated a steady growth of fruit exports.
The implementation of a similar structure of inspections for all fruit exports to any international market will generate an improved image of Mexican agro exporters in the minds of overseas buyers, which can then catapult agribusiness to a greater volume and improved economic results.