October 23, 2021
  • October 23, 2021

Agriculture is an economic bright spot in Mexico

By on September 16, 2021 0

ROMÁN JUÁREZ has expanded its tomato farm several times since its inception 15 years ago. It now spans two separate sites in a rural area of ​​the state of Puebla, southeast of Mexico City. In a good season, each of the 38,000 plants he cultivates in his large greenhouse-shaped tents can produce up to 160 tomatoes. Although farming can be risky, Mr. Juárez is thriving, mainly because since 2016 he has been exporting his products to the United States. “We do business where there is business,” he says.

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This year, Mexico is expected to export 1.8 million tonnes of tomatoes to its northern neighbor, a record. Last year, tomato exports alone were worth around $ 2.3 billion. Tomatoes are the most prominent and important example of a larger trend. Mexico exported agricultural products worth $ 39.5 billion last year, or about 10% of the country’s total exports. Agriculture, which represents 4% of Mexican production GDP, grew 2% last year, even as the economy as a whole contracted 8.5%.

Mexico has exported food for centuries. But the most recent boom has its roots in the North American Free Trade Agreement (NAFTA, now replaced by the United States-Mexico-Canada Agreement, the USMCA), which came into effect in 1995. At the time, Mexican tomato exports were valued at just $ 406 million. Agriculture was once “the ugly duckling” of the Mexican economy, says Juan Cortina of the National Council of Agriculture, which represents producers.

Two things changed that. For starters, culinary tastes have evolved. “Today Americans want [produce] year round, not just seasonally, ”says Philip Martin of the University of California, Davis. Mexico’s warmer climate means that it can grow some crops that the United States cannot, and in greater quantities than California or Florida. Mexican farmers have also invested in ways to protect their crops, often in partnership with large American companies. Most use tunnels or plastic hoops rather than open fields, which can reduce pests and increase yields.

But it’s not just a matter of simply sowing. The export prowess of Mexican producers angered American farmers and generated accusations of unfair government support. Within the framework of USMCA negotiations, US officials under Donald Trump’s administration tried to facilitate the application of defensive tariffs on seasonal fruits and vegetables. They failed, but then asked the United States International Trade Commission to investigate imports of strawberries, peppers and squash.

The tomato trade is also in difficulty. In 1996, prior to the complete elimination of U.S. tariffs on tomatoes under NAFTA, the US Department of Commerce has launched an investigation to determine whether Mexican tomato growers are selling their products too low. This led to a series of “suspension agreements” in which Mexican exporters agreed to minimum prices, the most recent of which was removed in 2019.

Beyond maintaining calm trade relations, more could be done to stimulate agriculture. Farmers would benefit from better technology, such as improved irrigation systems. Aurelio Bastida of the Autonomous University of Chapingo believes that the government must have policies that integrate both agriculture and the environment. Mexican agriculture is vulnerable to climate change. She already suffers from severe water shortages. And while the farmers whose crops are exported are doing well, many of those going to the domestic market are struggling.

If the industry is to grow, Mexico will have to export its food to other countries besides the United States. It should be easy: In some ways, Mexico is a signatory to more free trade agreements than any other country.

But the policy of President Andrés Manuel López Obrador’s, who seems to want to go back to the 1970s, could stifle that potential. Last year, some of the funding for the agency that certifies food safety – a prerequisite for most exports – was cut. Such counterproductive parsimony could mean that agricultural exports wither rather than flourish.

This article appeared in the Americas section of the print edition under the title “Harvesting the Fruits of Trade”


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