【Country report】Mexico Agriculture: Thrive on the Shift from Efficiency to Resiliency / Serie #2

This article will be available in 7 parts. Here is the 2nd part. Read the other parts here.

Cristian García de Paz

The former Executive Director at PROCCYT

What are the main agricultural products Mexico exported to other countries?

Mexico is a major global producer and exporter of agricultural products, capturing a significant share of the total world exports of citrus and melons (31%), tomatoes (24%), cucumbers (19%), and tropical fruit (22%), including pineapples, mangoes, avocados, and guavas.

We must know that Mexico has 32.4 million hectares destined for harvest, according to the National Agricultural Survey (ENA, 2017), of which 21% have irrigation and the remaining 79% depend on the rains to keep the crop standing.

Another data provided by the National Agricultural Survey (ENA) is that 19.5% of the irrigated area is majority owned by large producers, while the rest is owned by small and medium producers.

Figure 1. U.S. Share of Mexico’s Exports and Imports

 Data Source: UN Comtrade Database (2018). U.S. and Mexico bilateral trade.

Figure 2. Value (million dollars) from Mexico’s main agricultural products exported to other countries 

 Data Source: SADER-SIAP. Panorama Agroalimentario 2020.

Here the volume of production for Mexico’s TOP 5 state and the agricultural products that each of them produces:

1. Jalisco: 35,539,638 tons from agricultural products

• Pastos (13,194,479 t.) and sugarcane (8,013,662 t.)

2. Veracruz: 30,071,966 tons from agricultural products

• Sugarcane (21,837,516 t.) and orange (2,486,956 t.)

3. Oaxaca: 19,337,368 tons from agricultural products

• Pastos (12,742,818 t.) and Sugarcane (3,929,301 t.)
  

4. Chihuahua: 16,516,499 tons from agricultural products

• Corn (1,417,390 t.) and alfalfa (8,116,222 t.)
  

5. Sinaloa: 12,559,483 tons from agricultural products

•  Corn (6,440,205 t) and tomatoe (764,435 t.)
  

These entities altogether produce 114,024,954 tons of agricultural products in a total of 6,512,626 hectares that are planted and harvested in the different crop cycles.

How many crop protection companies does Mexico have? How many crop protection products (formulated products) are available on the market?

There are 556 companies that formulate pesticides and/or plant nutrients. There are 2019 pesticide distributors. There are 8241 Pesticide Registrations, of which: 2,422 are insecticides, 1,282 Fungicides, 1,179 Herbicides, 1,251 Mixtures, 550 Urban, 394 Industrial, 358 Domestic and, 805 other kind of pesticides.

How does USMCA (or T-MEC) affect agricultural trade and agrochemical industry in Mexico?

USMCA includes an agriculture chapter which aims to promote trade in agricultural products in the region; preserve and establish disciplines that strengthen transparency and cooperation between the involved countries.

The objective for Mexico with the inclusion of this chapter was to modernize the disciplines on agricultural trade, eliminating provisions that were superseded during the term of the NAFTA Agreement, and incorporating new disciplines that are part of recently signed Free Trade Agreements by Mexico and the work carried out within the framework of international forums.

Some of the most important aspects of the agriculture section are set out below:

• Tariff-free treatment is maintained for agricultural products originating in the region.

• The commitment to eliminate agricultural export subsidies is reaffirmed.

• Areas of collaboration and consultation are determined on issues such as export competition, internal support, and other measures related to agricultural trade.
  

Likewise, a section is included with provisions that ensure greater transparency and cooperation in certain activities related to agricultural biotechnology.

An Agricultural Committee was established to monitor the implementation of the commitments assumed in the agriculture USMCA chapter.

On the other hand, and regarding the agrochemical sector, we would mention that we believe that the approach that the Federal Government is taking, both in the implementation of the glyphosate/corn decree, as well as in the possible changes to the Pesticides Regulations, will not only damage the Mexican countryside and all the industries that depend on these crops, but will also imply a violation of Mexico's international commitments, and in particular the USMCA.

The fact that the authorities are proceeding without the support of scientific evidence not only leads to violations of the individual rights of the developers, importers and users of agricultural and agrochemical inputs, but also may constitute commercial restrictions. Therefore, the Mexican authority´s refusal to issue pesticide´s import authorizations without a scientific basis could lead to legal action by our main trading partners.

Will glyphosate be finally phased out from the market after 2024?

It is important to note that the use of herbicides in agriculture is essential for the effective management of weeds, and thus maintain the productivity and quality of the crops, since, when they are not controlled in a timely manner, they compete with the crops for water, light, carbon dioxide, soil space and nutrients, which, under very high infestation conditions, production can be completely lost. 

Specifically, glyphosate has the most robust compendium of scientific studies that support its safety and efficacy. Glyphosate is the most effective active principle, and consequently the most used in pre-sowing. It has a history of safe use of more than 40 years and is supported by more than 1,000 scientific studies worldwide, which is why it is used in more than 160 countries. Currently, there is no substitute on the market with the same characteristics: versatile, effective, safe and low cost. 

In Mexico, it benefits around 30 crops, and is used mainly in corn (7,157 thousand ha); citrus (569 thousand ha); sorghum (1,365 thousand ha); and cotton (208 thousand ha).

The import ban for glyphosate has not taken into account the scientific criteria of regulatory agencies in other countries, nor the opinions of producers, so this unilateral decision will affect the production of corn to a greater extent. sorghum, sugar cane and fruit trees, which will increase production costs and reduce the profitability of these crops.

In summary, what is at stake in the current discussion is the future of farmers, food production, and therefore, the feeding of more than 126 million Mexicans, since as a consequence, it would represent an increase in basic consumer products prices.

It is important to point out that agricultural restrictions, can lead to an increase in illegal trade, smuggling and piracy, affecting farmers and creating multiple risks to health, crops, the environment and the economy; especially in countries like ours with a great agricultural vocation, where large volumes are demanded for the control of weeds, pests and diseases.

In addition to the above, with the challenges posed by the health emergency caused by COVID 19, it´s vital not only to guarantee food production, but also to ensure its quality and safety. Crop protection products offer this possibility, as long as they are not products derived from illegal markets, a situation that is growing in our country due to the inaction of responsible authorities to stop this criminal activity.

Until now, the decree remains in force. However, there are ongoing judicial processes, and the application of the decree will depend on the resolutions reached by the competent judicial authorities. On the other hand, the authorities in the Executive continue to insist on the need to replace glyphosate and are working on the investigation of possible substitutes. However, we believe in the industry that it is practically impossible to achieve that goal by 2024, also considering that the resource allocated to such research is extremely limited.

Do you think the promotion and application of biological products can meet the needs of Mexican farmers for crop protection?

There is a prolific number of pests, due to the fact that tropical climates favor their abundance, that in a certain stage or population of the pest, the use of chemical pesticides is essential. Biological control is part of Integrated Pest Management, but by itself it is unable to maintain acceptable crop productivity.

What new agricultural innovations and trends have emerged in the Mexican market in recent years? In your opinion, what will be the most critical factor for driving the development of Mexican agriculture in the next 5-10 years?

The agricultural sector in Mexico has grown over the past decade, but the country still faces challenges and unrealized opportunities. While larger, technology-intensive operations in Mexico are competitive and generally supply the export market, Mexico’s agricultural operations are predominantly small, with limited access to capital, infrastructure, and profitable markets.

The competitiveness of the sector could benefit from higher investment in rural infrastructure and business logistics to facilitate trade and commerce. The capacity to meet food safety, food labeling, and sanitary and phytosanitary standards seems to remain a barrier for some exporting companies in Mexico, particularly as new regulations such as the Food Safety and Modernization Act tighten verification restrictions for produce imported into the United States. While Mexico has made improvements in these areas, more investment in the country’s capacity to assist producers through extension education and for verification control is still needed. More investment in research may be needed to support productivity growth in the sector.

Mexico’s proximity to the United States, coupled with a strong trade agreement, has opened doors for Mexico’s products into the United States, which has resulted in an increase in agricultural exports. However, the country’s dependency on the U.S. market also makes it vulnerable to foreign and trade policy changes in the United States. Currently, immigration issues have slowed trade discussions and the current U.S. administration’s positions on trade could affect Mexico’s agricultural sector. This uncertainty also impacts investment in the sector, which is key to sustaining growth.

In addition, uncertainty regarding the potentially protectionist policies of the new Mexican administration could reduce investors’ confidence in the country and stifle investment in the sector. Since the inauguration of Mexican President Obrador in 2018, the administration has announced efforts to reduce Mexico’s dependence on U.S. imports, but questions remain regarding Mexico’s comparative advantage when producing grains, cereals, dairy, and meat. It is unclear how a sufficient level of mechanization and productivity can be achieved to increase domestic competitiveness against imports from the United States. 

This will require further investment in building the productive capacity of these sectors. In 2019, the Mexican government launched a program targeting less developed rural communities to ensure access to fertilizers, credit, price guarantees, and other producer incentives. Some groups have criticized the program because it does not play to the comparative advantage of the country and is not designed to benefit larger-scale farmers, who are responsible for the majority of commercial production. A major concern is that these new policies have added more restrictions and created uncertainty in the agricultural sector, which could prevent large-scale producers from planning in the long term.

Please introduce PROCCYT. What are the main responsibilities and functions of PROCCYT?

PROCCYT (Association of Crop Protection, Science and Technology) represents 70% of the Crop Protection Industry in Mexico. We are made up of pesticide research, development, formulation and distribution companies, as well as some agricultural ones. We are part of the network of 25 associations, in 18 countries of CropLife Latin America.

We promote the adoption of a process of continuous improvement in the handling, control, use, distribution, trade, labeling, packaging and storage of pesticides, under the guidelines of the FAO International Code of Conduct for the Management of Pesticides.

The pesticides Industry is so important in the food production chain that, according to estimates by the Food and Agriculture Organization of the United Nations (FAO), without the correct pest and disease control, agricultural production would decrease by up to 40%.

To ensure the correct use of these agricultural inputs, through our programs, we accompany producers by offering training and technical advice to develop agricultural activity in a responsible and environmentally sustainable way, which directly affects their productivity by doing a more efficient use of resources.

This article was initially published in AgroPages' '2022 Latin America Focus' magazine.