Mexico's Agri-Food Trade Balance Registers US$4.8 Billion Surplus

Mexico’s agri-food trade balance increased by 11.68 percent during 1Q20, compared to the same period in 2019, reported the Ministry of Agriculture and Rural Development (SADER), according to a note from El Economista.

Despite the excellent news, this agro-industrial abundance is not uncommon. Agribusiness is one of the sectors that most contributes to the Mexican economy. Mexico is the ninth food producer and eighth food exporter, as well as the largest world importer of yellow corn and one of the main importers of soy, rice and pork. In addition, it is considered one of the richest countries in natural resources and one of the 10 countries with the highest biodiversity in the world, according to FAO.

Growth in the agribusiness sector is due to the trade agreements that Mexico has with other countries, which allow it to export its merchandise to the international market. According to a report by the Agricultural Market Consulting Group (GCMA) agricultural national production grew 78 percent in volume and 132 percent in value thanks to NAFTA. Also, Mexico has stood out for being the first exporter of avocado, asparagus, mango, lemon, chili peppers, cucumber and tomato, as well as beer and tequila, in addition of having a major stake in the international sugar markets, as well as in pork and beef, according to the same report.

With the arrival of USMCA, everything seems to favor the Mexican agri-food sector, since the renegotiation of NAFTA did not substantially change the agricultural chapter. According to GCMA, "the new text of the agreement does not have major changes in the agricultural section, although favorable conditions such as the recognition of tequila and mezcal as a distinctive product are observed."

According to GCMA, USMCA brought no changes because of the agribusiness relationship between the US and Mexico. “The US is the main supplier of grains in the world and Mexico is the largest yellow corn importer with 16 million tons per year and an estimated value of imports of grains and oilseeds close to US$5 billion yearly,” reports GCMA.

These same conditions are the basis for GMCA's projections about the future of the sector in Mexico, which looks promising but moderate. The average area harvested from 2010 to 2019 was 20.4 million ha and GCMA estimates that by 2020, there will be no variation from the previous year, remaining at 20.4 million ha. 

The sector will be affected by trade tensions between the US and China, as well as the economic impact of COVID-19. Experts explain that COVID-19 can fuel a food crisis. “Border closures, quarantines and trade disruptions are restricting people’s access to sufficient/diverse and nutritious sources of food, especially in countries hit hard by the virus or already affected by high levels of food insecurity,” according to FAO. 

However, it is not a situation set in stone. “Disruptions have been minimal as food supply has been adequate and markets have been stable so far,” explains FAO. “Globally, there is enough food for everyone. Policy makers around the world need to be careful not to repeat the mistakes made during the 2007-2008 food crisis and turn this health crisis into an entirely avoidable food crisis.”