Mexico opportunities and challenges in organic agri-input market

Mexico is one of the countries with most free trade agreements in Latin America and T-MEC, former NAFTA agreement was the most favored by companies and growers. With T-MEC this might change to some extent. Recently, the government announced that the US might establish import limits in certain Ag products to protect growers in the US. Although this is yet to be seen, this could change the Mexican export scenario. 

In Mexico, the logistics and infrastructure allow food to be harvested, processed, and placed in retail stores in the US in less than 72 hrs. Therefore, regardless of the number of free trade agreements, Mexico favors U.S and Canada markets.

Changes in the crops that Mexico grows since 1994 to current year

Unlike Canada and the US, the Mexican climate allows growers to produce vegetables year-round with low production costs. So, the crops that can take advantage of this are usually ones, such as tomatoes, bell peppers, peppers, onions, zucchini, melons, amongst others. Being vegetables most of them.

Avocado growers and associations for example, fought to demonstrate that the “stem borer worm of the Mexican avocado”, wasn’t a real threat to the U.S. agriculture since the problem isn’t endemic to the avocado crop. After this long and arduous process, the US Department of Agriculture allowed the imports of Avocado into the US. 

After this, the market for Avocado in the U.S. and worldwide grew significantly. In 2019 Avocado exports reached 2.7 billion USD.

Berries (Strawberries, cranberries & raspberries) also found an important place in Mexico, in the past 10 years, Berries plantations and commercialization has increased significantly. With the presence of companies like BerryMex and Driscolls, berries are now grown in numerous states in Mexico, becoming the 4th most important product of exports in México reaching 507 million USD in 2019.

Tomato has been an important crop for the US market specifically because it can be produced during the whole year. With increasing pressure from consumers, now growers must integrate organic and biological products into their control program. Tomato exports to the US reached 1.2 billion USD in 2019.

Finally, Agave, the plant from which tequila & mezcal is made, has grown significantly in the past 15 years, especially after the appellation of origin was issued for tequila & mezcal with NAFTA agreement and with the EU afterwards to some extent. Agave plantations have increased significantly and have an important orientation of producing tequila & mescal in an organic fashion for the selling value. Tequila exports reached 1.8 billion USD in 2019.

The Growth potential of organic products market in Mexico 

Organic products have existed in Mexico for well over 20 years, being garlic & pepper extracts and pheromones probably the tip of the spear of market development. 

Unfortunately, since organic products in Mexico are still a developing market, it has proven to be rather difficult to track. Over the past 10 years Rios Figueroa Consultores has tried different approaches to value the market correctly, but since new product categories, brands and companies appear fairly fast, the endeavor has been unfruitful so far.

Analyzing different estimations, interviews with some leading companies’ directors, and estimations by companies such as Dunham Trimmer. We estimate that the market value on the first level of distribution in Mexico might be around $110 -120 million USD in 2019. Going back to 2010, our previous market value was estimated at around $50 million USD.

Organic product types that have significant growth in the market

Organic and biological products face an important challenge, at least here in Mexico, there are certain crops and states in which growers need to be re-educated about these products. Growers are used to agrochemicals effectiveness and expect the same sort of results in speed and visual effect.

Taking that into consideration, soil improvers, micro & macro nutrients, benefic microorganisms, biostimulants and fertilizers have all made their way into the grower’s production plan. We believe that perhaps bio stimulants are the most prolific products overall being fertilizers a close second.

The truth is that the usage of most of the organic and biological products happens in export produce. The trend in the food of American, European, and Asian markets is moving towards using fewer agrochemicals, this pressure is then transferred to the growers.

We did a research in 2018 about the perception of organic products with 414 face to face interviews and we found that growers perceive organic products as expensive yet beneficial in the long term because their land is less filled with agrochemicals. They also see and accept the trend of organic products and sustainability to some extent.

OMRI Certified products matter to Mexican growers

OMRI is the only certification issued by the Mexican government rendering it as the most important organic certification in the Mexican market.

The reality of OMRI is that it has slowly lost its value to the growers. Organic products are still laxly regulated in Mexico, this has negatively impacted the industry, since numerous registration extensions, “backyard”, counterfeit and unregistered products have appeared in the market and are sold as “organics”. This issue has made growers doubting OMRI registrations to some extent.

Specifically, in export crops international organic registrations and lab content verification help the grower to “trust” the products origins. It is also important, that the product is accepted by international organic and health organizations such as Global Gap and EPA.

There are also, in cases such as berries, lists of permitted products issued by a trader. According to our research, mentioned before, most growers agree that organics and low residual agrochemicals will be used more in the near future.

Foreign investments in Mexico

To our knowledge some attempts have been made to acquire Mexican companies that have organic & biological products without being successful usually ending in the first few stages of the due diligence. As far as Rios Figueroa Consultores can share, we participated in 2006 with Arysta to evaluate and present prospects. Arysta eventually acquired GBM which at the time had a very interesting portfolio and company profile in the Mexican market as well as the interest of selling.

As for establishing subsidiaries, it has increased significantly in the last 5 years. The sheer number of companies accessing the Mexican market is almost overwhelming, the fact that the organic/biological products in Mexico is a developing market allows numerous companies to establish and try to gain some market share. Around 50 different companies have established to some extent in Mexico, with different organization schemes and products.

—— By Victor M. Rios, Associated CEO of Ríos Figueroa Consultores

Voices from industry

AgroPages invited Francisco Ortiz (Managing Director of Altiara), Paulo Iria Antunes (Corporate International & Development Officer of Fagro) and Carlos Campuzano (Marketing Manager of AliBio) who are from companies active in Mexican market, to share their views on the market opportunities for organic-certified products. They also talk about their products and challenges when expanding the market share, as well as how they overcome obstacles.

Could you please give us some introduction about your company?

Altiara

Altiara offers quality crop protection solutions for organic and traditional farming methods. We are a market leader in Mexico with more than 15 OMRI-registered brands, mainly with proprietary formulations. Additionally, we specialize I organic, natural, and inorganic adjuvants and nutrition products for different crops. 

Re-positioned as an organic supplier of agricultural inputs in 2010, our focus is on providing value for farmers in local and export markets. We have a young and professional team of agronomists and life sciences specialists that work closely with growers and field experts to address their daily challenges. This includes worldclass sustainable practices to protect the environment and ensure the wellbeing of farming communities.

Currently, Altiara has more than 30 collaborators in the field, which includes engineers and a sales force that serves strategic food production zones in Mexico. We have representatives across Mexico, mainly in vegetable and fruit production regions and a dedicated team for export sales. Our commitment is to provide training and the best tools for our people to achieve the highest customer satisfaction.

Fagro

Group Fagro is a 25-year Mexican Company, specialized in the Investigation, Manufacture and Commercialization of low-chem or zeroresidue inputs for high value crop production. We work in several areas like, specialized plant nutrition, biostimulation, bioprotection, and post harvest. Our Group participates in almost all the stages of agrifood chain: BIORGANIX MEXICANA (I+D Lab), FAGRO (Manufacture), FAGRO PHS (Post Harvest Solutions), AGROSAG (specialized Distribution Centers in major production areas in Mexico), ORGANIK (technical support and development of FAGRO and Third Companies), FAGRO LLC (sourcing and procurement of Mexican Productions to the USA and other countries), DCA (Credit Support to farmers) and others. This business model is called AVANTIA, and includes all our participation in the segment, from FARM to FORK (like we usually say). We have a strong presence in Mexico where we had our genesis, but nowadays we work with more than 25 countries, some of them with a branch – FAGRO ECUADOR, FAGRO LATINOAMERICA (Peru), FAGRO HONDURAS, FAGRO EUROPE (Spain) – and others with Exclusive Distributors. Last year we created BIORGANIX EUROPE in Spain to make I+D and formulation of some of our products. Nowadays our goal is to search to consolidate or open Asian and African Markets.

AliBio

AliBio has been developing sustainable solutions for more than 17 years, our research is focused on microbial ecology applied to agriculture. We think that in the years to come we face significant global challenges related to food, population growth, health and soil degradation. The solution can be found with agricultural practices more in tune with what nature intended.

What do you think about the opportunity from the growing trend in sustainable agriculture for organic-certified / OMRI-listed ag inputs?

Altiara

We believe that the future of sustainable food production is based on residue-free agriculture. So, there is a trend in that direction. For a company like Altiara, this means ensuring that our Organic, Natural and Mineral inputs are formulated to the highest global standards. We are currently developing new insecticides, soil products and repellents to improve soil health and crop production.

In this vein, to be listed with OMRI is important for us, as are other certifications such as the Certification of Environmental Standards (CERES). It is well known that there are aggressive global campaigns to improve sustainability in food production as well as proper nutrition and health of the plant, animal, and human life.

Or course, these goals apply to Mexico as one of the world’s leading producers of fruits and vegetables, honey, and other delicacies. Locally, we have obtained the ESR listing for 10 years running, an award granted to Socially Responsible Companies. Also, we work with Campo Limpio Amocali, a non-profit organization focused on reducing agricultural waste.

There is a growing trend and many opportunities for sustainable agriculture in Mexico. Therefore, an international regulatory system is especially important to standardize quality and safety of phytosanitary products. We are continuously searching for better production and quality control systems, as 100% traceability of products in key in the markets we serve.

Fagro

We think that our goal with society is to search and develop low chem or Zero Residue with an effectiveness against the principal problems in crop production. This biorational products obtained from Plant Extracts, microbiologic seeds (or metabolites), and others, are almost as effective as the chemical common molecules, and the application prices are going down as well. It’s very important to us as a company to obtain this product certification like OMRI, because it gives us and the products a credibility in the market, and a guarantee to the consumers that its manufacture diagram, ingredients and other elements are correct, and there is no mistaken info. Our goal as a company is to reduce every day the chemical residues of our products, and introduce alternative low chem organic ingredients. The last example of it is the new plant we built to produce microalgae, to obtain natural growth regulators to our products.

AliBio

Through all the years we have been around, we are very happy to see that organic certified inputs is a generalized concern right now. Technology and collaboration let us to deliver more efficient organic solutions that can compete and surpass results expected by using agrochemicals.

What are the advantages of your organic-certified products?

Altiara 

Our organic-certified products cover most crops in Mexico and Central America. We have a firm commitment to continue developing new products that include insecticides, adjuvants, repellents, and organic bio-stimulants for Mexican, Middle East, European, North America and Latin American markets.

For example, in the next few weeks we will launch a revolutionary enhancer for organic-certified products. “Brio Max” is an additive that provides enhanced insecticide performance and action against difficult pests that are common in Mexico and other countries in the region. 

The main advantages of Altiara products are: Zero residues, High Performance, and Long-Lasting Action when applied. Also, these inputs complement each other to provide excellent results for farmers.

Fagro

Our CEO Ing. Jesus Saro Boardman, always says that we know how to understand, mix and make effective products in the crops. The main differences of our organic certified products from others is that we know very well the richness of Mexico in the endemic plant (due to our lab BIORGANIX), and after a lot of years of investigating we now know what component of the plant extract has the action of fungicide, bactericide or eventually that stimulates the crop biologically. Knowing well what component does the required we can provide to the plant what it needs, and not a mix of needed and non-needed components. The other big advantage is that we maintain a constant quality of our products, in order that our clients always obtain the same results. To certify this we have a strong group of specialists in the field from our company ORGANIK.

AliBio

Thanks to organic certifiers, growers can rely on the organic inputs they are using that have been evaluated with high standards to fulfill a truly organic production. 

Where do you sell your products? How do growers respond in terms of their cost effectiveness?

Altiara currently, we are focused on delivering quality crop protection products to the most important agricultural regions of Mexico. We have a trained salesforce and competent distributors that expand our reach. Additionally, we are selling “white-label” products to markets in Panama and Colombia. In these countries, we work with partners that register products and sell our offerings under their own brands and trademarks.

Additionally, our products are registered and authorized with the major Avocado, Berry, and Vegetable marketers worldwide. 

In terms of cost-effectiveness, this is one area where we strive to please our customers. We are one of the best options for several pests control, as is the case of Thrips control for organic Avocado production.

Fagro

Our biggest market is Mexico, due to all the exports to USA and to the world. Nevertheless we have a strong position in Ecuador, Peru, Honduras, Spain, Turkey and other countries. Normally our clients are exporters that really want to have an effective solution and not a possible solution. Ours is not a cheap solution because of the complexity of our formulas, but the clients know that a FAGRO product WORKS. To export markets it is very important that the solution Works, without residues restrictions. Plus we provide organic solutions to our clients for Post Harvest in their packing houses.

AliBio

We sell directly to the grower in order to deliver a quality service. There is a lot to learn about microbes and we want our customers to understand the science behind our solutions and how they can improve their crops. Cost-effectiveness is a must for any new technology or product, at AliBio we also look for our client's economic sustainability in order to have a deeper impact.

What are the challenges when you expand your market share of your products? How do you cope with them?

Altiara

Currently, we are among the Top 3 Mexican companies in our industry. In key areas, we compete favorably with global companies. In fact, we work with some of these international firms as a supplier or client. It is important to mention that today there are more than 15 direct competitors in our markets.

Perhaps the biggest challenge is to break through the clutter to position our organic based products as an excellent solution for all types of farming methods. In Mexico, growers have a strong attachment to traditional brands and solutions. This presents an area of opportunity for companies like Altiara. In other words, we must work diligently to explain the benefits of sustainable agriculture and how we can collaborate to match the productivity levels of traditional farming. 

Altiara has an important and diversified product portfolio, comprised of more than 60 brands. But, to cope with new challenges, we are doing three things:

• Strengthening our portfolio with specific products that complete our strategic product portfolio.

• Hiring a new generation of agronomists, engineers, and marketing specialists that are attuned to new technologies and market trends.

• Exploring international markets to register our products and/or discover possible strategic partners with solid local positioning. 

Fagro

We always try to have a freshness in our manufacture and product recently produced in the warehouses of our own distribution channel AGROSAG and their clients. I think that each day the principal challenge is that, to have products with recent manufacture to sell to all our clients. Normally we have a just in time process to guarantee the quality of our products in the market, due to a challenging relation between commercial and manufacturing groups. This constant communication allows us to continue to expand FAGRO brands in the market, and overall, to sustain the quality and effectiveness of our products.

AliBio

Breaking paradigms, agriculture usually is a generational labor and is very difficult to change practices that have been around for decades. We have to make clear that in order to preserve land for the generations to come we can't continue damaging soil. Nature can work with technology to find the answer.

Would you like to enter new markets? If so, where will be the target markets, and why?

Altiara

Yes. Our business plan includes strategies to grow internationally. Mexico is a great place to develop organic and sustainable agriculture solutions because of the great crop diversity that exists. The Altiara focus is in Fruits, Vegetables, and other High-Value crops. Therefore, we have the knowledge and experience to reach beyond our borders. 

The short-and-medium term target markets of our global plan include establishing alliances and partnerships in countries of the Caribbean, Central and South America regions. We have an advantage because of the shared language, except for Brazil, of course. However, we are looking at Brazil as a possible market because of its size and importance in the region. 

In the United States and Canada, we are beginning talks with key prospects. This is a greater challenge because of the number of well-established competitors that exist in those markets. Additionally, we are looking to expand into European and Middle East countries, for example Turkey, Egypt and Arab Emirates.

In conclusion, I would like to say that Altiara is a solid and modern company that thrives on quality products, customer satisfaction and innovation. To expand globally is a great challenge for us, but we believe that we have the technology, human resources, and financial commitment to export our business model and products overseas. 

We welcome all visitors to our Website (https://altiara.mx/eng/), to get more information about our products or contact us for any inquiry they may have.

Fagro

We always have an unquiet position in the market, seeking for new goals and new markets. In our Plan 2025 the vision of our CCO, Ing. Jesus Antonio Saro, is to enter USA, Asia and South Africa markets. We believe that for example the most exigent market in Organic Certified products is USA, and we must be there because we can be a solution for the well informed producers. And we think that Asia is growing a lot of high value products, with the exigence of their consumers for quality and low residue fruits and vegetables. In all this areas we are seeking for Distribution alliances, or eventually partnerships to produce or sell.

AliBio

We want to expand to more Latin American countries where agriculture has also a deep social impact.