The Mexican vegetable industry is too dependent on three crops and it is left vulnerable by its reliance on exports to the U.S. market.
This is the message of Alfredo Diaz, CEO of the Mexican Association of Protected Horticulture (AMHPAC), just over a week after a 20% import tax was proposed on Mexican goods in the U.S.
“We are occupied with accelerating some activities due to the new international scenario, but I think this will end up strengthening us – when times comes with possible storms, if we get to work there are great opportunities,” he tells PBUK.
Those activities are overseas market development.
For three years AMHPAC has been working hand-in-hand with Mexican government agencies like ProMexico to study different markets like Europe, Asia and Russia, but U.S. protectionism under President Donald Trump has given that initiative a well-needed kick into action.
You need only look at the numbers to understand why the organisation is treating the matter with such urgency.
Of the 1.2 million metric tonnes (MT) of fresh produce AMHPAC’s members produce each year, Diaz says 81% is exported, and of that percentage 96% goes to the United States and 4% goes to Canada.
“When I speak of accelerating this, we know we have a threat in front of us and have to accelerate how to actually reach those [non-U.S.] markets.
“Now what comes is working precisely on feasibility studies on logistics and transport. We’ve already started this.
“This month we’ll have intensive working group meetings to accelerate these studies,” he says, adding the biggest challenge will be the vegetables’ perishability when shipped via seafreight versus the higher cost of airfreight.
The spread of crops across the organisation is also narrow, according to the executive, with around 60% of volume coming in the form of tomatoes, 19% in peppers and 17% in cucumbers.
“But markets are also demanding other products like squash, spring onions, broccoli and others. There are a series of crops we have identified and the proposal would be to speak with AMHPAC members to say ‘markets are looking for these crops – let’s grow them to be less vulnerable’,” he says.
The move to produce other crops and reach new markets will take a while though, and in the meantime growers will need to make do with U.S. opportunities regardless of the tariff environment. Diaz says there are roughly three ways the situation could play out.
“The economic implications have a lot of edges. For example, if the 20% is applied, it would be immediately reflected in our costs,” Diaz says.
“What would the grower do? Increase the sales price by that same proportion. Finally, it would be the American consumer who pays.”
He says the second scenario would involve the application of the same tariff but an unwillingness from the U.S. market to absorb the 20% cost.
“What would happen? There in the United States it would provoke a supply gap because Mexican vegetables make up half of the vegetables consumed in the American market.
“In the short term there would be a shortage and as the supply declines the price will go up. And in the end the American consumer also loses.
“And Mexican vegetable exports don’t just affect Mexican producers. In America it generates a lot of employment and economic activity – there are distributors, truckers, a lot labour involved and a lot of wealth generation.”
He says the third, most pessimistic and very remote scenario, would be a total ban on Mexican imports.
“In that case everyone loses. They lose in the United States and we lose in Mexico.”
Diaz finishes the conversation highlighting how the situation would be much worse if Mexico had sub-par standards, but the fact is the quality of the produce is very good and meets the highest food safety standards.
On that note, he believes wherever the industry is able to ship fresh vegetables, they will be welcome.
