IMPACTS OF NAFTA ON

AGRI-FOOD TRADE FLOWS:

A MEXICAN PERSPECTIVE

ASERCA-SAGARPA

August, 2001

ASERCA

AGRICULTURAL PRODUCTION AND TRADE OUTLOOK

Mexican agrifood sector has successfully integrated to world markets.

During the period 1993-1999, agrifood exports showed an annual rate of growth of 11.6%, while agrifood imports of 6.1%.

MEXICAN AGRIFOOD TRADE BALANCE 1993 - 1999

-4000

-2000

0.0

2000

4000

6000

8000

10000

1993 1994 1995 1996 1997 1998 1999

Million

s

dollars

Exports Imports Trade Balance

AGR %93/99

SECTORS

AGRIFOODEXPORTS 11.6

AGRIFOODIMPORTS 6.1

AGRICULTURALEXPORTS 8.3

AGRICULTURALIMPORTS 7.5

PROCESSEDFOODEXPORTS 19.1

PROCESSEDFOODIMPORTS 6.1

ASERCA

FOOD CONSUMPTION COSTS OUTLOOK

Opening of Mexican economy to international competition has influenced the evolution of most consumer prices, including food.

No single food price in Mexico is under control by the government.

The consumer price index for food grew 6.1% in 2000, 2.9 percentage points below general inflation.

PRODUCTS WITH INCREASES IN PRICES PRODUCTS WTIH DECREASES IN PRICES

Tomatoes 61.5%

Peppers 88.6%

Avocados 17.5%

Guavas 19.2%

Rice 2.8%

Dry edible beans 7.8%

Oranges 15.4%

Apples 9.1%

Agricultural exports have gained importance in agricultural GDP:

21.1 per cent of agricultural GDP is generated by exports.

15.9 per cent of agri – food GDP is generated by exports.

AGRICULTURAL EXPORTS / AGRICULTURAL GDP RATIO

AGRICULTURAL EXPORTS/AGRICULTURAL GDP RATIO

21.1%21.1%20.6%20.6%20.4%20.4%

29.4%29.4%

13.0%13.0%

20.3%20.3%

0

5,000

10,000

15,000

20,000

25,000

1994 1995 1996 1997 1998 1999

Mil

lion

doll

ars

0

5

10

15

20

25

30

35

(%)

Agricultural Exports México-World

Agricultural GDP Agricultural Exports / Agricultural GDP (%)

MEXICAN AGRICULTURAL EXPORTS FIGURES

AGRIFOOD EXPORTS/TOTAL EXPORTS RATIO, MEXICO – WORLDMillion dollars

Concept 1994 1995 1996 1997 1998 1999AGR

99/94

Total exports of Mexico 60,817.2 79,540.6 96,003.7 110,236.8 117,459.6 136,391.1 17.53

Agri – food exports Mexico - World 4,031.7 5,786.2 5,724.7 6,337.5 6,746.0 6,985.9 11.62

Agri – food exports / Total Exports of Mexico (%)

6.6 7.3 6.0 5.7 5.7 5.1 (5.03)

The rate of agri-food exports to total exports has been diminishing, even though agri-food exports have increased at an average growth rate (AGR) of 11.6 per cent.

Data shows no trade diversion on the side of exports due to NAFTA. Trade remains concentrated with NAFTA Partners.

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

(Million

dollars

)

1994 1995 1996 1997 1998 1999 (Years)

PERFORMANCE OF MEXICAN AGRIFOOD EXPORTS WITH NAFTA AND REST OF THE WORLD

Rest of the World Mexico - NAFTA

AGR10.9%

AGR15.8%

Source: SAGARPA and Secretary of Economics.

MEXICAN AGRICULTURAL IMPORTS FIGURES

Food imports vs total exports measures vulnerability according to FAO. This index is decreasing for Mexico, due to the performance of the economy as a whole.

Data shows trade diversion on the import side due to the NAFTA.

AGRIFOOD IMPORTS/TOTAL EXPORTS RATIO, MEXICO – WORLDMillion dollars

Concept 1994 1995 1996 1997 1998 1999AGR

99/94

Total exports of Mexico 60,817.2 79,540.6 96,003.7 110,236.8 117,459.6 136,391.1 17.53

Agri – food imports Mexico - World 7,343.2 5,252.9 7,678.3 8,610.1 8,546.7 6,985.9 11.62

Agri - food imports / Total Exports of Mexico (%) 12.1 6.6 8.0 6.9 7.3 6.3 (12.2)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

(Million

dollars

)

1994 1995 1996 1997 1998 1999 (Years)

PERFORMANCE OF MEXICAN AGRIFOOD IMPORTS WITH NAFTA AND REST OF THE WORLD

Rest of the World Mexico-NAFTA

ARG4.4%

ARG(2.2%)

Source: SAGARPA and Secretary of Economics.

MEXICAN AGRICULTURAL AND AGRI-FOOD TRADE BALANCES

AGRICULTURAL TRADE BALANCE / AGRICULTURAL GDP RATIOMillion dollars

Concept 1994 1995 1996 1997 1998 1999

Agricultural Trade Balance Mexico - World

(1,332.3) 1,176.6 (1,433.0) (730.7) (1,134.4) (977.6)

Agricultural GDP 22,216.4 14,348.3 18,393.4 20,109.5 20,080.2 20,488.5

Agricultural Balance / Agricultural GDP (%)

(6.0) 8.2 (7.8) (3.6) (5.6) (4.8)

Source: SAGARPA with Secretary of Economics data.

AGRICULTURAL TRADE BALANCE / AGRI-FOOD GDP RATIOMillion dollars

Concept 1994 1995 1996 1997 1998 1999

Agri-food Trade Balance Mexico - World

(3,311.5) 533.3 (1,953.6) (1,311.6) (1,864.0) (1,560.9)

Agri-food GDP 41,968.1 28,546.4 35,023.5 39,168.4 39,785.8 43,845.6

Agri-food Balance / Agri-food GDP (%)

(7.9) 1.9 (5.6) (3.3) (4.7) (3.6)

Source: SAGARPA with Secretary of Economics data.

The deficit in agri – food products is equal to 3.6 per cent of agri – food GDP.

Country/Block Before Agreement After Agreement % Growth

Fuente: SAGAR with SECOFI data1/ Before agreement = 1990-1993 average; after agreement = 1994-1998 average2/ Before agreement= 1990-1994 average; after agreement = 1995-1998 average3/ Before agreement = 1990-1991 average; after agreement = 1992-1998 average4/ Before agreement = 1990-1997 average; after agreement = 1998

NAFTA 1/ 6,499,468.31 10,544,640.36 62.24

Costa Rica 2/ 15,262.94 50,327.45 229.74

Bolivia 2/ 91.62 615.62 571.92

G3 2/ 16,916.45 58,393.59 245.19

Chile 3/ 12,027.09 75,845.81 530.62

Nicaragua 4/ 16,787.36 25,411.71 51.37

MEXICAN AGRIFOOD TRADE FLOWS WITH COUNTRIES THAT HAVE SIGNED A FTA BEFORE 1999

(U.S. Dlls.) ASERCA

74.6 %12.6 %

3.4 % 9.4 %

82.5 %

6 %

1.3 %

10.2 %

Mexican Agrifood trade is highly concentrated in NAFTA.

In 1990, Mexico’s agrifood trade with NAFTA countries was 74.6% of total agrifood trade, and in 1999 it grew to 82.5%.

Agrifood trade with Europe fell from 12.6% to 6% during the same period .

Source: SAGAR with SECOFI data.1/ Include: agriculture livestock and agrifood

TLCAN EUROPE MERCOSUR Rest of the World

1990 1999

MEXICAN AGRIFOOD TRADE WITH DIFFERENT BLOCKS

ASERCA

From 1988 to 1993, agrifood trade between Mexico and NAFTA countries grew 43.2%, while from 1993 to 1999 it grew 66.8%.

Agrifood trade deficit was 2.2 billion dollars, while in 1999 was 1.3 billion dollars, a decrease of 40.3%.

Exports ImportsSource:Secretary of Economics

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Agrifood trade Mexico-NAFTA (Millio dollars)

TMAC: 8.8% AGR 1993/1999

AgrifoodEXP. 10.1 %

AgrifoodImp. 7.8 %

Agrifood.Trade. 8.8 %

NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

ASERCA

In the last 6 years, an average 66% of our agrifood imports are agriculture and livestock products, and 34% are processed products.

During 1993–1999, Mexican agrifood imports increased in average 7.8%, 2.3 points less than agrifood exports.

FOOD EXPORTS

AGRIC.EXPORTS

AGRIFOOD EXPORTS

CONCEPT

17.9

7.1

10.1

% AGR93/99

4.9

9.4

7.8

% AGR93/99

2,347 1,759FOOD IMPORTS.

4,698 2,734AGRIC. IMPORTS

7,045 4,492AGRIFOOD IMPORTS

19991993CONCEPT

AGRIFOOD IMPORTS OF MEXICO FROM NAFTA COUNTRIES(millons of US dlls.)

Source: SAGAR with SICM data

MEXICAN AGRIFOOD IMPORTS FROM U.S.A. AND CANADA

ASERCA

3,2113,437

4,790 4,5554,933

5,3825,696

0

1,000

2,000

3,000

4,000

5,000

6,000

1993 1994 1995 1996 1997 1998 1999

NAFTA

Mexican agrifood exports to U.S.A.Growth 1993 – 1999: 77.4%

Million

dollars

34.1228.98

42.88 43.80

61.09

68.96

77.07

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

1993 1994 1995 1996 1997 1998 1999

NAFTA

Million

dollars

Mexican agrifood exports to CanadaGrowth 1993 – 1999: 126%

From 1993 to 1999, the Mexican agrifood exports to U.S.A.. grew 77.4%, while to Canada 125.8%

Mexico has consolidated its position as the second supplier of U.S.A. markets.

The share of Mexican agrifood products in total U.S. Imports grew from 9.1% in 1993, to 11.5% in 1999, only second to Canada.

MEXICAN AGRIFOOD EXPORTS TO U.S.A. AND CANADA

ASERCA

ASERCA

Total agrifood exports show an annual rate of growth of 10.1% during 1999-2000, while total agrifood imports of 13.7%.

Agrifood deficit increased from 1,569.4 million dollars in 1999 to 2,035.6 million dollars in 2000.

EXPORT PRODUCTSWITH SIGNIFICANT INCREASE

1999 - 2000

• Peppers 40.9%

• Onions 17.5%

• Chickpeas 22.2%

• Avocados 25.7%

• Bananas 36.3%

• Bovine live cattle 41.4%

• Pork meat 28.8%

• Honey 37.3%

AGRICULTURAL PRODUCTION AND TRADE OUTLOOK

IMPORT PRODUCTSWITH SIGNIFICANT INCREASE

1999 - 2000

• Bovine meat 30.2%

• Poultry meat 29.4%

• Raw cotton 41.5%

• Milk powder 26.8%

• Fresh apples 36.2%

The Mexican produce exports to the United States, have increased 72.9%, from 1.4 billion dollars in 1993 to 2.4 billion dollars in 1999.

Exports to Canada increased 70.9% in the same period, from 15.2 to 25.9 million dollars.

Mexico has increased its participation in U.S. Imports, in some cases in more than 50.0%

7172 70

96

86

0

10

20

30

40

50

60

70

80

90

100

%

Tomatoe Onion AsparragusEggplant and cabbage

Cucunber

MEXICAN VEGETABLES SHARE IN U.S. IMPORTS (1999)

91

6975

52

76

0

10

20

30

40

50

60

70

80

90

100

%

Watermelon Mango and guava

Papaya Melón Strawberry,blueberry and

raspberry

MEXICAN FRUITS SHARE IN U.S. IMPORTS (1999)

PRODUCE EXPORTS FROM MEXICO TO NAFTA COUNTRIES

ASERCA

In many products, Mexico has consolidated its position as the most important supplier of United States markets.

In 1999, Mexico was the supplier of 221 products of the 2,070 that conformed the agriculture and livestock United States tariff. This represents 53.5% more products than in 1993.

1171VEGETABLES

12106OILSEEDS

34313CANDIES

22193COCKIES

22233BEER

20-------AVOCADO

12169GRAPE

1171LEMON

1136TOMATOE

1169CUCUMBER

1166PEPPER

12127GARLIC

11709ASPARAGUS

Exports growth1993 – 1999 (%)

PRODUCTImportance as a U.S.A.

supplier 1993 1999

Source: SAGAR with USDOC data

THE MAIN MEXICAN AGRIFOOD EXPORTS TO U.S.A. AND CANADA

ASERCA