Agriculture and US-Mexico Border Region

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

XVI Border Legislative Conference, Santa Fe, N.M., October 19, 2007

• Market integration

• Mexican policies to promote agribusiness

• Migration and agriculture

• Further integration issues

• Final remarks

Agenda

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Market Geography

Geography:

• 10 border states

• 2,000 miles of border

• Population: 92 million

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Food Culture

US Consumers:

• Spend 18 billion USD a year on “Mexican Food”

• Spend 1 billion USD a year on tortillas

• Spend more on salsa than on ketchup

Mexican Consumers:

• Increased consumption in fast food in US franchises

Both:

• Fresh Fruits, Vegetables and Organics can be

considered superior goods (higher income of

consumers implies higher demand in those goods)

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Market Integration

Since NAFTA:

• Mexican agrifood exports to US have increased 129%

• US agrifood exports to Mexico have increased 189%

Fuente: DGAFR-SAGARPA with data from the Foreign Agricultural Service (FAS), USDA

US-Mexico trade in agrifood products after NAFTA

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

(mill

ion

US

D)

US exports to Mexico Mexican exports to US

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Mexican policies to promote Agribusiness

Federal Government:

As a result of government macroeconomic policies,

Mexico offers an attractive business environment:

• Low country risk level• Investment grade economy• Low inflation rates• Sound public finances• Historic levels of monetary reserves

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Mexican policies to promote Agribusiness

SAGARPA:• Animal Health

•Control•Control•Control•Control•Control•Free•Varroasis

•Control•Control•Control•Free•Free•Free•Tics

•Control•Free•Free•Free•Free•Free•Paralitic•Bovine Rabies

•Control•Control•Control•Control•Eradicated•Control•Brucelosis

•Eradicated•Eradicated•Eradicated•Eradicated•Eradicated•Control•Bovine Tuberculosis

•Free•Eradicated•Control•Free•Free•Free•Aujezky

•Free•Free•Free•Free•Free•Free•Pork Fever

•Free•Free•Free•Free•Free•Free•Avian Salmonella

•Free•Free•Free•Free•Free•Free•Newcastle

•Free•Free•Free•Free•Free•Eradicated•Avian Flu

•Tamaulipas•Nuevo Leon•Coahuila•Chihuahua•Sonora•Baja California

•Control•Control•Control•Control•Control•Free•Varroosis

•Control•Control•Control•Free•Free•Free•Ticks

•Control•Free•Free•Free•Free•Free•Bovine Paralytic Rabies

•Control•Control•Control•Control•Eradicated•Control•Brucellosis

•Eradicated•Eradicated•Eradicated•Eradicated•Eradicated•Control•Bovine Tuberculosis

•Free•Eradicated•Control•Free•Free•Free•Aujezky’s disease

•Free•Free•Free•Free•Free•FreeClassic Swine Fever

•Free•Free•Free•Free•Free•Free•Avian Salmonellosis

•Free•Free•Free•Free•Free•Free•Newcastle disease

•Free•Free•Free•Free•Free•Eradicated•Avian Influenza

•Tamaulipas•Nuevo Leon•Coahuila•Chihuahua•Sonora•Baja California

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Mexican policies to promote Agribusiness

SAGARPA:• Med fruit fly eradication campaign

Free

Low prevalence

Low control

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Mexican policies to promote Agribusiness

Undersecretariat of Agribusiness Development:

• Market Oriented Program

• Determine strategic products• Realign productivity programs• Shift production from traditional to strategic

commodities• Public-private joint ventures

• Consulting Services

• Investment Promotion

• Market Analysis Services

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Mexican policies to promote Agribusiness

•By:• Planning with a long-term perspective• Focusing on the high value crops• Restructuring and aligning the programs within

SAGARPA• Investing in the key infrastructure

•Mexico will:

• Increase competitiveness and exports• Attract foreign direct investment to the sector• Increase agricultural trade

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Agriculture and Rural Migration

Source: SAGARPA

12%

12%

5%7%

64%

12%

11%2%8%

67%

12%

9%2%

10%

68%

19%

6%4%

29%

43%

18%

6%2%

30%

45%

14%

4%3%

40%

39%

1986 1996 2006 1986 1996 2006

Planted Acres (% ot total) Value of Production (% of total)

Crops' value share in Mexican agriculture

industrial crops dried legummes other crops fruits & vegetables cereals & forages

Further integration issues

• Further harmonization of agricultural policies in North America.

• Developing compatible sanitary, phytosanitary and food security policies to strengthen a common trade region.

• A North America wide agreement is needed to address

biosecurity and agricultural supply chain issues.

• Fostering research, innovation and promotion of “North American” products.

Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Final Remarks

• The competitiveness of the North American agrifood

market depends on the free flow of agricultural products

within the region.

• The harmonization of sanitary policies is necessary to

facilitate the flow of agricultural products.

• Agricultural business and labor depend on each other.

• Mexico needs its rural labor force to increase the level of

development and well-being of its agricultural sector.

• SAGARPA will promote the high market value and labor

intensive agricultural production.