Mexico's feed grains imports

by Teresa Acklin
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Growing population, declining production gives feed grains imports into Mexico a boost into the next century.

   Mexico's rising imports of feed grains will continue into the next century, boosted by increased demand from a rapidly growing population and declining agricultural production, according to Ricardo Celma, director of the U.S. Grains Council office in Mexico City.

   Dr. Celma, in an interview in August, said Mexico was expected to import from 4.5 million to 5 million tonnes of maize in 1998 — nearly double the 2.4 million tonnes imported in 1997. Grain sorghum imports, at about 2 million tonnes in 1997, are expected to reach 3 million tonnes this year, he said. By the year 2007, imports of those two grains combined is expected to reach nearly 10 million tonnes.

   Mexico's population, currently at about 96 million, has been growing at a rate of about 2.1% per year. By the year 2025, Mexico's population is expected to reach 152 million, with nearly half of the population under age 19.

   As the human population grows, so does the need for more buildings and more roads, Dr. Celma said, which in turn diminishes the land planted to agriculture.

   “Mexico will keep on growing its population and we also expect the buying power of the people will keep on increasing,” Dr. Celma said.

   The Mexican import market for food and agricultural imports has improved significantly three years after the peso devaluation, according to the U.S. Department of Agriculture. The U.S.D.A. projects that U.S. agricultural exports to Mexico will increase by $700 million in 1998, reaching a total of $5.8 billion.

   One factor affecting imports is the North American Free Trade Agreement and the increasing openness of the market in Mexico, Dr. Celma said. Many tariffs were either phased out immediately under NAFTA or will be phased out in the next five to 10 years. In addition, Mexico also is establishing international agreements with Europe, Central America and South America, Dr. Celma said. “With that, the people will be able to consume value-added products like meat, milk, eggs, poultry meat,” he said.

   The future of importing food and feed grains into Mexico looks “more positive,” he added.

      DECLINING PRODUCTION.

   An open, liberalized market also is impacting agricultural production in Mexico, Dr. Celma said.

   “The tendency to keep on importing feed grains is a fact,” he said. “Our cereal producers already are selling their products with what we call ‘price of indifference.' That is, it will be the same for the Mexican buyer to buy either imported grain or locally produced grain, because both products will compete at the same price.” But Mexico faces other dilemmas in terms of its agricultural production, according to Dr. Celma. Because of erosion and mismanagement, much of Mexico's land is no longer capable of growing agricultural products, he said.

   Weather patterns also are affecting production. “Mexico is a dry-land country,” he said. “We depend upon the amount of rain we receive every year. Whether we have an El Nino or La Nina, that may change and impact the agricultural production in our country.”

   After several years of drought attributed to El Nino, Mexico now faces low levels of water in its dams, Dr. Celma said. During the past two years, Mexico's water reservoirs have dropped from an average of 76% nationwide to a current low of 18%.

   Of the 31.3 million hectares available for agricultural production in Mexico, about 15 million hectares are planted to cereal grains such as corn, grain sorghum, wheat and barley and about 2 million hectares are used for fruits and vegetables.

   This year, about 9.3 million hectares were planted to maize, Dr. Celma said. That number is expected to drop to 2 million hectares by the year 2005.

   Mexico's total maize production for crop year 1998-99 is expected to total about 19 million tonnes, according to the U.S. Department of Agriculture.

   Although imports of maize have increased, Mexico will always produce some maize for self consumption, Dr. Celma said. Between 4.5 million tonnes and 5 million tonnes of maize is grown annually in the hills and valleys outside of the cities by people who use this grain to feed their hogs or make their own tortillas, he said, “but this has no market impact.” Mexico produces two crops annually. The spring and summer crops account for about 80% of annual production of a given crop, depending upon the amount of rainfall, Dr. Celma said. Autumn/ winter crops are usually 80% irrigated.

   Between the two crops, Mexico annually produces from 16.5 million to 19 million tonnes of maize, from 4.5 million to 6.5 million tonnes of grain sorghum and from 450,000 tonnes to 650,000 tonnes of barley.

   While yellow maize dominates imports, most of the maize produced in Mexico is the white variety, Dr. Celma said, and is dedicated for human consumption. About 10.5 million tonnes of maize is consumed in tortillas, he said; the rest is used as animal feed.

   All of the grain sorghum and about 40% of the barley produced in Mexico is consumed by the feed industry, Dr. Celma said. The remainder of the barley production in Mexico is dedicated for the brewing industries, he said.

      HIGHER CORN QUOTA.

   Because of years of drought, Mexico started 1998 with very low initial stocks, according to Dr. Celma. Mexico's production of maize dropped from an expected 16.5 million tonnes to a low of 14 million for the spring/summer crop, he said. For the autumn/winter crop, production that was initially expected to be about 4 million tonnes will be less than 3.5 million tonnes.

   “Those factors plus growth in the poultry sector, particularly the broiler industry, the past five years, and resumed growth in the swine and dairy industries has put a lot of pressure for higher feed grains demands,” Dr. Celma said. “This year the Mexican government will have to allow a higher corn quota so the Mexican industry can satisfy its needs.” Through NAFTA, Mexico negotiated an initial quota of 2.5 million tonnes of maize, he said, which is to increase 3% annually over the next 15 years. In 1998, Mexico's quota on maize imports is approximately 2.8 million tonnes.

   There are no quotas on grain sorghum, Dr. Celma said, but importers must acquire a phytosanitary certificate stating that the product has no diseases, insects or other problem that may damage Mexican sorghum production.

   Trade between Mexico and the United States has grown tremendously since NAFTA, Dr. Celma said. In recent years, Mexico also has begun to improve its relations with Europe, Central and South America, he added.

   The Asian financial crisis will not likely have much effect on Mexico, Dr. Celma said, “mostly because our trade with the Asian countries represent a small percentage of our total international trade.” Since Mexico devalued the peso in 1994, the country's economy has been better managed, Dr. Celma said.

   “We have been able to pay back the (U.S.)$20 billion the United States government lent us to get over that crisis,” he said. “And we paid that amount of money even before the negotiated period.

   “The country is certainly facing problems mostly because of the very low oil prices. We have had already three budget cuts in 1998. But with the ability of Mexico to remain an open liberalized market and receive international investment, I'm convinced that we will see a strengthening of the Mexican economy in the near future.

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