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Mexican Agriculture: A Paradise of Opportunities

Mexican Agriculture: A Paradise of Opportunities

Posted by Alejandra Romo on August 30, 2013

Since the North American Free Trade Agreement (NAFTA) came into force, Mexico's agricultural industry has undergone an extremely interesting transformation that has taken it from an economy with domestically consumed agricultural products, to one with a free market where agricultural goods are exported globally on a regular basis.

By Hugo Javier Chagoyán/ ProMéxico

Mexico is currently one of the most open economies in the world, boasting a large number of free trade and bilateral agreements. That openness has resulted in an increase in agri-food exports, which have gone from 8.2 billion usd in 2002 to 22.5 billion usd in 2012, with a compound annual growth rate (CAGR) of 10.6% between 2002 and 2012. That figure is proof of the huge penetration and acceptance that Mexico's agricultural products have had in international markets, particularly exports to its NAFTA trade partners, the US and Canada, and to countries in Europe and the Asia-Pacific region.

Furthermore, in terms of costs, Mexico is the fourth most attractive country for investment in the agri-food sector, according to the "Competitive Alternatives 2012" study by consulting firm KPMG. That fruitful cost advantage has strengthened Mexico's position as an agro-industry investment destination with several investment incentives and accessible, high-quality inputs for the manufacture of products.

Said commercial success has also brought about more challenges for Mexican producers, who must continue to improve their cultivation processes and increase the quality of their products to compete internationally. With that goal in mind, Mexico has created what are known as product systems, which are simply "the set of concurring elements and agents of the production processes of agricultural products, including the supply of technical equipment, inputs and services for primary production, storing, transformation, distribution and marketing." In that sense, the success or failure of Mexican agricultural products depends largely on the appropriate coordination of all the players involved in the supply chain. Thus, the creation of product systems is aimed precisely at enhancing agricultural production processes not only from a producer's perspective but also providing an integrated approach that improves the processes of everyone involved in the supply chain.

There are several agricultural product systems in Mexico, such as agave, Hass avocado, lime, rice, cocoa, guava, lemon, corn, mango, cantaloupe, potato, banana and papaya, among others. These systems have been created to comprehensively address the issues of the members of each crop's supply chain and jointly strengthen the efforts of those involved in production chains to improve processes, technification and the supply of improved products to demanding international markets.

Michoacán is one of Mexico's top agricultural producers. It ranks first in perennial production and in 2011 the state's output reached a value of 1.089 billion usd, which accounted for 7.1% of the national total, according to the Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA). A large part of Michoacán's produce is sent to the global market to supply customers in the Americas, Europe and Asia-Pacific. The state is internationally renowned for its production of blackberry, guava, lentil, cucumber, pear, lime, grapefruit, strawberry, peach, plum, coconut and its leading product, avocado, with an export value of 53 million usd.

 

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