Mexico’s a hot and dry country by most standards, but a particularly severe and prolonged drought has hit its agricultural industry hard.

“Corn producers had a very poor MY 2011-12, but we expect a rebound both in size of harvested area as well as production next year assuming normal weather conditions (relatively higher moisture) at next summer’s corn planting period,” a USDA attaché said. “It should be noted that Mexico is being battered by its worst drought in seven decades, which has devastated agricultural production in most of the country.

“According to the National Water Commission (CONAGUA), the drought is expected to continue until the rainy season begins in the summer of 2012,” the report said. “The prolonged drought has affected 70% of the country and devastated agriculture in the Coahuila, Aguascalientes, San Luis Potosi, Sonora, Tamaulipas and Zacatecas (among others). The impact of severe drought conditions during the main crop phases of the corn crop provoked an irreversible yield loss in the 2011 spring/summer crop cycle that was worse than previously estimated, particularly in important producing areas in Puebla, state of Mexico, Guanajuato and some regions of Jalisco,” it said. “Consequently, SAGARPA contacts estimated a corn output of 13.5 million tonnes in the 2011 spring/summer crop cycle, which is nearly 20 percent lower than in 2010.”

According to the International Grains Council (IGC), Mexico’s total grain production is going to be 33.5 million tonnes in 2012-13, up from 29.9 million the year before. By far the most important crop is corn at 22 million tonnes in 2012-13, up from 19 million in 2011-12. The sorghum crop is estimated at 6.8 million tonnes, up from 6.1 million.

Mexico’s wheat production is just 3.5 million tonnes of that 2012-13 figure (3.7 million the year before).

Mexico is slated to import 15.2 million tonnes of grain in 2012-13, down from 17.4 million tonnes in 2011-12. Corn imports are forecast at 9.5 million tonnes, down from 11 million.

The import figure includes 3.4 million tonnes of wheat, down from 4.6 million tonnes. The country is predicted to export 800,000 tonnes of wheat in 2012-13, down from 1 million.

Mexico is by far the world’s biggest importer of sorghum with projected 2012-13 imports at 2.1 million tonnes, up from 1.6 million a year earlier.

Also included in Mexico’s import forecast for 2012-13 are 3.3 million tonnes of soybeans, down from 3.6 million the year before.

The USDA attaché noted that corn is produced in all regions of Mexico in a wide range of agro-climatically diverse conditions by growers who differ in resource endowments, managerial structures, and technical skills.

“Approximately 70% of total production comes from eight Mexican states: Sinaloa, Jalisco, Mexico, Chiapas, Michoacan, Veracruz, Guerrero, and Chihuahua,” it said.

The report explained that corn production in Mexico is divided into two categories: commercial and traditional.

“Commercial production is practiced by large- and medium-sized growers that produce white and/or yellow corn, while traditional production refers to small-scale and subsistence farmers who specialize mostly in white corn production,” it said. “Commercial producers generally obtain higher yields and use more inputs and technology than traditional farmers. Yields continue to vary significantly throughout the country, depending, in large part, on the level of technology used.”

It explained that while the forecast for the 2012-13 maize yield averages three tonnes a hectare, Sonora and Sinaloa traditionally have yields reaching10 tonnes per hectare, similar to those obtained in the United States.

“Due to the drought problems previously mentioned, these states are expected to register significantly lower yields in MY 2011-12,” it said.


Transportation, storage, and marketing continue to be sources of unnecessarily high costs and bottlenecks in the Mexican corn sector, the report said.

“Long distances from fields to consumption centers, reliance on expensive trucking, inadequate road infrastructure, and the lack of direct railroad links at key transport hubs (especially at ports and markets) have thwarted efforts to create an integrated market from farmers to consumers.

“Furthermore, Mexico has a substandard storage network that lacks effective instruments for financing inventories in warehouses,” it said. “Similarly, the rising cost of fuel and other inputs are other factors that have affected corn prices. The competitiveness of Mexican growers is hampered relative to U.S. imports, with nearly all imports coming via rail and/or ship, since most internal movement of Mexican production is by higher-cost trucking.”


Biofuels have been slow to take off. An attaché report published in July 2011 entitled, “Little Policy or Production Change since Last Year, but Interest Growing,” noted that ethanol and biodiesel are more expensive than the products they intend to substitute.

The report described the industry as being in its infancy.

“Although the government of Mexico essentially has defined the legal framework that will regulate Mexico’s biofuel production and marketing, actual production is limited to either self-consuming enterprises or research projects,” it said.


Mexico is a big importer of wheat flour at 110,000 tonnes in 2011-12, compared to 105,000 tonnes the year before.

“The wheat milling industry continues to be one of the most important destinations for U.S. wheat,” the attaché said. The report cited data from the millers’ association CANIMOLT showing that Mexico has 93 different millers that process approximately 5.7 million tonnes of wheat and produce 4.3 million tonnes of flour each year.

It puts total milling capacity at approximately 8.4 million tonnes of production.

“CANIMOLT estimates that 51% of the installed milling capacity is located in or around Mexico City, Toluca and Puebla metropolitan areas, where slightly more than 50% of the Mexican population is located.”

CANIMOLT’s figures show that per-capita wheat flour (including semolina) consumption has increased 14% over the past five years.

“This increase is due, in large part, to the growing popularity of bread consumption throughout Mexico,” the attaché said. “The pasta and noodle sectors have also seen large growth in consumption.”

The attaché also quoted Mexico’s National Bakery Industry Association (CANAINPA) as saying that there are 30,194 bakeries in Mexico, 26,900 artisan bakeries and 3,504 industrial and in-store bakeries. “Approximately 70% of bread is still manufactured by artisan bakers, down slightly from 74% in 2001,” it said. “The artisanal baker is losing market share to self-service bakeries found in large grocery stores.”


The USDA has forecast Mexico’s oilseed production at 298,000 tonnes for 2012-13, including 205,000 tonnes of soybeans. The forecast, in an annual report on the oilseed sector, was “based on assumed normal weather conditions and an increase in harvested area stimulated by a governmental domestic support program.”

“This program established various oilseed production targets and assists oilseed growers with support for planting, purchasing improved seeds and fertilizers, and technical assistance,” the report said. “The program offers technical assistance for increasing seed planting density, promotes the use of fertilizers and improvements in plant nutrition, and encourages efficient technological application of phytosanitary controls. The program provides support for up to 15% of the average cost of technical assistance, with a limit of 1,100 pesos/hectare (roughly 85 U.S. dollars/hectare) for the production of soybeans, rapeseed (canola), and sunflower seed.

“Domestic production represents only 5% of total domestic consumption, as imports have displaced much domestic oilseed production with almost all oilseed imports originating from the United States. Due to proximity and lower freight costs, U.S. suppliers should remain price competitive and increase its market share. For MY 2011-12, the U.S. share is expected to remain at about the same level, 73%, as it was in the previous year.”

Key Facts

Capital: Mexico City
Population: 114,975,406 (July 2011 est.)
Religions: Roman Catholic 76.5%, Protestant 5.2% (Pentecostal 1.4%, other 3.8%), Jehovah’s Witnesses 1.1%, other 0.3%, unspecified 13.8%, none 3.1% (2000 census).
Location: North America, bordering the Caribbean Sea and the Gulf of Mexico, between Belize and the United States and bordering the North Pacific Ocean, between Guatemala and the United States.
Government: Federal republic. Chief of state and head of government: President Felipe de Jesus Calderon Hinojosa (since Dec. 1, 2006).
Economy: Mexico has a free market economy in the trillion dollar class. It contains a mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector. Recent administrations have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. Per capita income is roughly one-third that of the U.S.; income distribution remains highly unequal. Since the implementation of the North American Free Trade Agreement (NAFTA) in 1994, Mexico’s share of U.S. imports has increased from 7% to 12%, and its share of Canadian imports has doubled to 5%. Mexico has free trade agreements with over 50 countries including Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan – putting more than 90% of trade under free trade agreements. In 2007, during its first year in office, the Felipe Calderon administration was able to garner support from the opposition to successfully pass pension and fiscal reforms. The administration passed an energy reform measure in 2008 and another fiscal reform in 2009. Mexico’s GDP plunged 6.2% in 2009 as world demand for exports dropped, asset prices tumbled, and remittances and investment declined. GDP posted positive growth of 5.4% in 2010 and 3.8% in 2011, with exports – particularly to the United States – leading the way. The administration continues to face many economic challenges, including improving the public education system, upgrading infrastructure, modernizing labor laws, and fostering private investment in the energy sector. Calderon has stated that his top economic priorities remain reducing poverty and creating jobs.
GDP per capita: $15,100 (2011 est.); inflation: 3.5% (2011 est.); unemployment 5.2% (2011 est.).
Currency: 13.68 Mexican pesos equal 1 U.S. dollar (June 20, 2012).
Exports: $336.3 billion (2011 est.): manufactured goods, oil and oil products, silver, fruits, vegetables, coffee, cotton.
Imports: $341.9 billion (2011 est.): metalworking machines, steel mill products, agricultural machinery, electrical equipment, car parts for assembly, repair parts for motor vehicles, aircraft, and aircraft parts.
Major crops/agricultural products: Corn, wheat, soybeans, rice, beans, cotton, coffee, fruit, tomatoes; beef, poultry, dairy products.
Agriculture: 3.8% of GDP and 13.7% of the labor force.
Internet: Code: .mx; 15.165 million (2010) hosts and 31.02 million (2009) users.
Source: CIA World Factbook