MEXICO CITY, MEXICO — Having free trade agreements with more than 40 countries, Mexico is a major participant in international agricultural trade and could see that role grow more under the leadership of President-elect Claudia Sheinbaum.
Sheinbaum, who will take office on Oct. 1, has said she will focus on growing the nation’s agri-food surplus with the idea of increasing agricultural exports. US trade associations and analysts are hopeful she could bring an end to an ongoing trade dispute with the United States over genetically modified corn that started under current president Andrés Manuel López Obrador.
Crop production is the most important part of Mexico’s agriculture industry, accounting for 50% of output. Key crops include corn, sugar cane, sorghum, wheat, vegetables, fruits, beans, barley and coffee. Mexico has a large land mass with a diverse range of climates.
It is the third largest agricultural producer in Latin America with 60.8 million acres of arable land. Corn is by far the largest crop grown, with an estimated production of 25 million tonnes in 2024-25, an increase of 7% year-over-year. Production also is expected to increase for wheat and sorghum.
However, Mexico is facing increasing challenges and degraded natural resources, according to the International Trade Administration (ITA). Rural people face inadequate investment, poor infrastructure, limited access to technical assistance and markets.
Mexico struggles with high rural poverty and wide social and economic disparities, the ITA said. One in four Mexicans live in rural areas but they represent about two-thirds of the extremely poor.
Trade is a significant part of the agriculture industry, with exports of $46.6 billion and imports of $41.4 billion in 2022, according to the Economic Research Service (ERS) of the US Department of Agriculture (USDA). Mexico is the world’s seventh largest agricultural exporter, selling its products to 192 countries.
“Mexico will continue to be a significant importer of basic grains, with forecast growth in total grain imports in 2024-25 to meet growing demand for livestock feed with limited domestic production,” according to a report from the Foreign Agricultural Service (FAS) of the USDA.
The United States is its largest agricultural trading partner, buying 80% of Mexican exports and supplying 70% of its imports. Trade between the two is mostly complementary in that the United States tends to export different commodities to Mexico than Mexico exports to the United States.
Crop production
Corn production is expected to increase to 25 million tonnes on an increase in planted area based on average precipitation levels compared to last year’s drought conditions, the FAS said. In addition to incentivizing farmers to plant more, a return to average rainfall will reduce damaged acres.
Despite yield increases from 2013-19, totals have been volatile the last four years, ranging from 3.1 to 4.1 tonnes per hectare.
“Persistent elevated input costs and lower international prices, combined with minimal producers’ investments in enhanced seeds, infrastructure and limited financing mechanisms for medium and large corn producers will remain an obstacle to reaching high-production levels in 2024-25,” the FAS said.
Total consumption is expected to increase 1% to 46.6 million tonnes, driven by the growing animal feed sector. Mexico is the world’s fifth largest animal feed producer, making more than 43 million tonnes of feed for poultry, swine, cattle, dairy, pet food and aquaculture production. More than 50% of the feed includes corn, with an estimated 28 million tonnes of corn needed in 2024-25 to support the feed industry.
Human consumption will remain stable due to inflationary pressures and record level tortilla prices. Average prices across all states in local tortilla shops increased by 3% in February and by 4% at supermarkets.
Wheat production is expected to increase 10% to 3.4 million tonnes due to a higher planted area. Government support programs will favor increased 2024-25 winter wheat planting intentions, the FAS said. Higher precipitation and water availability also will contribute to growing wheat production and yields.
Consumption is expected to increase 1% to 7.7 million tonnes due to a slight increase in bread wheat consumption in line with population growth. Per capita consumption of pasta (durum wheat) in 2024 is estimated downward to 5 kilograms, back to pre-pandemic consumption levels.
Mexico’s wheat milling capacity was 10.7 million tonnes in 2023 and included 94 wheat mills after one new mill went into production during the year, the FAS said.
The wheat flour sector uses about 70% of the available capacity with 7.3 million tonnes of wheat milled into 5.5 million tonnes of flour and semolina in 2023.
Sorghum production is expected to increase 8% to 4.6 million tonnes in 2024-25 due to a slightly higher planted area and slightly higher yields. Consumption also is expected to increase 4% to 4.8 million tonnes due to increased feed demand, the FAS said. Still, corn remains the preferred animal feed source based on availability, higher feed conversion rates and preferred coloration impact of corn on final animal products such as eggs.
Mexico’s oilseed production is minimal at 636,000 tonnes, with most oilseeds for crush and meal production imported. Domestic oilseed production is forecast to represent about 7% of Mexico’s total use, according to the FAS.
Oilseed crush in 2024-25 is estimated at 8.3 million tonnes, an increase of 7%, driven by significant domestic vegetable oil and feed demand. Meal production is estimated at 6.2 million tonnes, an increase of 6% from the previous year, the FAS said, while oil production is estimated at 2.2 million tonnes, an increase of 7%.
“Higher vegetable oil demand, driven by population and economic growth and the hotel, restaurant and institutional sector, will also drive up oil imports to 1.2 million tonnes, 2% higher than the previous year,” the FAS said.
Trade dispute
Even with production increases, Mexico increasingly has relied on corn imports, primarily yellow, to cover growing demand for the livestock and starch industries, the FAS said. Since 2013, imports have grown 268% from 5.7 million tonnes to an estimated 21 million tonnes in 2024. Mexico is mostly self-sufficient in white corn production, which is predominantly used for tortilla production.
Corn imports for 2024-25 are estimated at 22 million tonnes, a nearly 5% increase from 2023-24. Lower corn prices compared to previous years and growing demand from livestock producers and processors will drive imports. Exports are expected to remain unchanged at 50,000 tonnes.
Wheat imports for 2024-25 are expected to remain unchanged at 5.4 million tonnes while exports are forecast to decrease 11% to 800,000 tonnes due to lower exportable supplies of durum wheat. The United States is Mexico’s largest wheat supplier, the FAS said, followed by Canada and Russia.
“Mexico’s wheat milling industry relies on US wheat through developed rail and maritime supply chains, although they seek to diversify their supply sources depending on prices,” the FAS said.
Despite the ongoing trade dispute with the United States, the nation’s export market share in Mexico remains robust due to geographical advantages, interlinked supply chains and trade benefits under the United States-Mexico-Canada Agreement (USMCA). In 2023, the United States supplied more than 85% of Mexico’s corn imports, the FAS said.
Outgoing President López Obrador issued a decree banning the use of GM corn for dough and tortillas and to gradually substitute GM corn used for animal feed and for other forms of human consumption with non-GM corn. Following that 2023 decree, which clarified the initial decree from 2020, the United States initiated dispute settlement proceedings under the USMCA.
The United States claims that the 2023 decree violates the USMCA requirement that parties use science-based principles when implementing measures because the United States claims that scientific studies have shown GM corn is safe for human consumption.
A dispute settlement consultation did not resolve the issue, so a formal dispute panel was convened. Oral arguments will be presented by each side this June. A final report is expected this November.
If the panel finds Mexico’s ban is inconsistent with the USMCA, Mexico will have 45 days to correct the issue. If it does not, the United States can suspend benefits to Mexico under the USMCA that are equivalent to the effect of Mexico’s ban on importing GM corn.
With the election of Sheinbaum as president, analysts have speculated that the dispute might come to an end. Sheinbaum will start her six-year term on Oct. 1. Sheinbaum has said she wants to continue the USMCA agreement and that her No. 1 priority is strong relations with the United States.
