MEXICAN

AGRICULTURAL TRADE

UNDER NAFTA:

AN ASSESSMENT

AFTER FIVE YEARS OF

IMPLEMENTATION

Andrés Rosenzweig

San Diego, California

February 2000

WHY THE ANALYSIS OF TRADE FLOWS WITH NAFTA ARE IMPORTANT

Contribution to the overall trade balance.

Identification of technological changes.

Indicator of sector performance.

Assessment of the vulnerability of the trade balance to “shocks”

Responsiveness of exports to competitive advantages

HOW TO FOLLOW MEXICAN TRADE PERFORMANCE

Main sources of information:

BANXICO

SICM

INEGI

Main problems:

Degree of aggregation of data

Consistency of time series

Consistency with WTO definitions

Time consuming for processing data bases

Performance of primary sector and processed products.

A PROPOSAL TO MANAGE SICM DATABASE

Forages

Cereals

Oilseeds

Vegetables

Fruits

Dried vegetables

Tubers

Industrial products

Flowers

Other crops

Bovine

Swine

Poultry

Ovine

Goat

Dairy

Eggs

Honey

Other livestockproducts

Agriculture Livestock

PRIMARY PROCESSED PRODUCTS

AGRI - FOOD

Goat derivatives

Bovine derivatives

Ovine derivatives

Swine derivatives

Agriculture Livestock

Cereal derivatives

Oilseed derivatives

Vegetable derivatives

Fruit derivatives

Dried vegetables derivatives

Tuber preparations

Industrial crops derivatives

Wines, spiritous and alcoholic beverages

Other preparations based on agricultural raw materials

Other industrial preparations based on llivestock products

Poultry derivatives

Dairy preparations

BASIC DEFINITIONS

Agriculture and livestock Trade

Balance

Exports (A)AgricultureLivestock

Imports (B)AgricultureLivestock

Concept Concept

Processed food, beverages and tobacco

Trade Balance

Exports (C) Processed agricultural products Processed livestock products

Imports (D) Processed agricultural products Processed livestock products

Concept

Agrifood Trade Balance

Exports (A+C)AgricultureLivestock

Imports (B+D)AgricultureLivestock

AN EXAMPLE TO USERS

P 3 2 Meat offal of fowls, no cut in pieces

P 3 3 Meat offal of fowls, in pieces

P 3 4 Other fowl pieces

P Livestock

P 3 Poultry

P 3 1 Live fowls

19921990 1991 1992 1993 1994 1995 1996 1997 1998

(3,000)

(1,000)

1,000

3,000

5,000

7,000

9,000

11,000

13,000

1990 1991 1993 1994 1995 1996 1997 1998

ARG = 9.9% (90-98) and 11.6% (93-98)ARG = 12.0% (90-98) and 10.3% (93-98)

Exports Imports Agri-food trade balance

AGRI-FOOD TRADE BALANCE MEXICO- US AND CANADA

(Million dollars)

AGRI-FOOD TRADE BALANCE MEXICO- US AND CANADA

(Million dollars)

Agriculture and Livestock Trade Balance

107 90 (613) (250) (1,001) 951 (1,313) (732) (951)

Exports 2,103 2,240 2,103 2,483 2,559 3,620 3,174 3,400 3,704

Imports 1,996 2,150 2,716 2,733 3,560 2,669 4,488 4,132 4,655

Processed Foods, Beverages

and Tobacco Trade balance(395) (403) (797) (934) (1,135) (423) (317) (465) (672)

Exports 523 586 612 750 890 1,103 1,423 1,577 1,883

Imports 919 989 1,409 1,685 2,024 1,526 1,740 2,042 2,555

YEAR 1990 1991 1992 1993 1994 1995 1996 1997 1998

Source: SECOFI.

AGRIFOOD IMPORTS TO TOTAL EXPORTS

A ratio < 25% of agrifood imports to total exports is sound in terms of food security. (FAO)

For Mexico this ratio was 12.7% (1989-1993) and 7.8% (1994-1998).

MEXICO (1994-1998)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

MEXICO (1989-1993) FAO

25%

7.8%

12.7%

PERFORMANCE OF GDP

The performarce of the primary sector (agriculture and livestock) in terms of trade and production has not been as good as the processed food and beverages sector.

Deficit sector as share in totalagri-food deficit

1990-1992 20.7

1996-1998 67.3

79.2

32.7

1993-1998

BEVERAGE AND

GDP average rate of growth */ 1.2% 3.2%

SECTORTOBACCO SECTOR

* / Source: INEGI

PRIMARY PROCESSED FOOD,

TRADE BALANCE MEXICO - US AND CANADA(Million dollars)

90

Agriculture

Livestock

Agriculture Processedproducts

Livestock Processedproducts

91 92 93 94 95 96 97 98Average

90-98

364 672 87 283 -130 1,051

-257

-227

-168

-582

-178

-225

-700

-474

-322

-534

-539

-396

-870

-680

-455

-100

-67

-356

-594

-719

-10

-308

-110

-354

276

-1,227

-260

-412

257

-670

-283

-333

305

-1037

EXPORTS OF FRUITS AND VEGETABLES AND IMPORTS OF MAIZE, BEANS, WHEAT AND SORGHUM TO NAFTA

PARTNERS(Millon dollars)

0

500

1,000

1,500

2,000

2,500

1993 1994 1995 1996 1997 1998

1,338

1,774

2,089

1,7641,622

1,252

Exports

992 985

1,986

687

1,447

859

Imports

BASIC CROPS PRODUCTIONMARKETING YEAR, TONS

In 1998, the production of the basic crops was 31.3 million tons, mean while in 1993 was 27 million tons (ARG of 2.8 per cent)

1993 1994 1995 1996 1997 1998

287,180 373,616 367,030 394,075 469,455 458,112

1,287,573 1,364,239 1,270,915 1,349,202 965,056 1,260,710

18,125,263 18,235,826 18,352,856 18,025,952 17,656,258 18,454,710

3,582,450 4,150,922 3,468,217 3,375,008 3,656,594 3,235,080

22,638 8,862 21,081 47,397 21,466 31,652

41,824 187,053 343,874 420,892 347,690 387,968

63,885 63,924 113,267 181,590 163,391 171,219

497,566 522,583 189,774 56,074 184,526 150,296

540,529 307,266 486,636 585,754 470,671 410,766

2,581,072 3,701,120 4,169,898 6,809,490 5,711,564 6,474,842

27,029,980 28,915,411 28,783,548 31,245,434 29,646,671 31,352,783

CROP

Rice

Beans

Maize*

Wheat

Sesame

Cotton**

Safflower

Soybeans

Barley

Sorghum

Total

SOURCE: De 1993 a 1997 Centro de Estadística Agropecuaria y 1998 Dirección General de Agricultura, SAGAR.

*Incluye maíz blanco y amarillo.

**Algodón semilla.

DOMESTIC LIVESTOCK PRODUCTIONThousand tons

1,364.7

872.9

1,144.4

1,379.8

960.7

1,619.5

PRODUCTION OF BOVINE, SWINE AND POULTRY CARCASS EQUIVALENT1994-1998

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

1,800.0

BOVINE MEAT SWINE MEAT POULTRY MEAT

TH

OU

SA

ND

TO

NS

1994

1998

3,451.0 3,704.9 3,589.5 3,805.7 4,028.7 3.91,364.7 1,412.3 1,329.9 1,340.1 1,379.8 0.3

872.9 921.6 910.3 939.2 960.7 2.41,144.4 1,303.4 1,284.0 1,460.9 1,619.5 9.17,461.5 7,537.6 7,709.3 7,968.6 8,442.0 3.11,246.2 1,242.0 1,328.9 1,328.9 1,461.2 4.1

1994 1995 1996 1997 1998ARG*/

Product 1998/94

Carcass meatBovineSwinePoultryDairy Eggs

CONCLUSIONS

Mexico and NAFTA partners are complementary in agriculture.

Access to foreign markets will not be the most important constraint for exports

Need to overcome structural problems.

Schemes for a better integration between primary sector and food processing industries.