NAFTA woes whet food producers’ appetites

As the months wear on in the negotiations between Canada, Mexico and the United States over the future of the North American Free Trade Agreement (NAFTA), the increasingly hard line from the USA has Mexican government and industry groups casting about for backup plans, you know, just in case.  For months Mexican officials have been making noises about taking their business elsewhere, specifically sourcing yellow corn from South America, although clearly returning to NAFTA status quo would be their first choice.  Mexican pork producers, for their part, have long fumed over the high volume of pork imports from the United States, and are now sensing an opportunity to strike back with NAFTA seemingly on the ropes.  The following are examples of recent maneuvering against a backdrop of the sullen tone of current NAFTA negotiations.

Mexico imported 141,759 tons of yellow corn from Brazil and Argentina in September, a record volume for the month, according to Mexico’s Agrifood Information Service (SIAP).  Combined yellow corn imports from the two South American countries in September were six times higher than for the same month the previous year.  Local media also reported that the first ever private sector importation of bread flour from Argentina has been ordered and a 30,000 ton shipment is expected by the end of the year.  Mexican Minister of Agriculture José Calzada led a trade mission to Brazil and Argentina earlier this year, specifically citing the need to develop new sources for grain imports in the face of uncertainty over the future of the North American Free Trade Agreement (NAFTA).

Local media are reporting that although Brazil and Argentina are being touted as alternative grain suppliers for Mexico, the cost of transporting yellow corn from these countries to Mexico is approximately 43% higher than from the United States.  Citing analysis by grain industry organization Sistema Producto Maíz de Chihuahua, A.C., Mexican newspaper Reforma (October 30, 2017) reported that the cost to ship a ton of yellow corn from Brazil would be approximately US$35 and from Argentina, US$40.  At the same time, some local producers’ groups in Mexico are seeking to replace U.S. yellow corn imports with domestic production.  The group Alianza Protransgéncios is calling for increased production of GMO yellow corn in Mexico, and earlier this year U.S.-based breakfast cereal producer Kellogg’s reported its Mexico subsidiary entered into an agreement with a Mexican seed producer to source sustainably produced yellow corn in the northwestern state of Sinaloa. (El Financiero, June 1, 2017)

Mexican media also are paying close attention to concerns raised by U.S. pork producers over potential loss of market share in Mexico.  Recent reports point out that Mexican imports of U.S. pork are at historic highs and Mexican pork producers are lobbying hard to reduce the competition from the country’s NAFTA neighbors.  The Mexican national Pork Producers Association (OPORPA) publicly demanded that the government begin a long-pending investigation into dumping practices by the United States and Canada in pork imports into Mexico.  It would appear that Mexican pork producers would not be terribly disappointed if duty free status on foreign meat were to be rescinded under a renegotiated NAFTA; U.S. pork exporters, meanwhile, are cringing at the thought.

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