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NAFTA Contributes to Growth in U.S. Soybean Exports to Mexico
by Floudia Bradley
Since 1994, U.S. soybean exports to Mexico have grown at a tremendous rate as a result of the implementation of NAFTA. In the last four years, U.S. soybean sales to Mexico have increased by more than 50 percent, and as a result, the United States has become the largest supplier of soybeans to the Mexican market.
The expansion of the livestock sector, combined with Mexico’s stable trade and the new investment environment encouraged by NAFTA, has generated growth in the Mexican oilseed crushing industry. The industry is being modernized as investors construct newer and larger facilities that are significantly adding to Mexico’s crushing capacity. This bodes well for the long-term outlook for U.S. soybean exports to Mexico.
When NAFTA was first implemented, the Mexican oilseed industry was striving to meet the protein requirements of a growing livestock sector, even as domestic oilseed production continued to decline. By 1994, Mexico’s soybean production had fallen by nearly 50 percent to an estimated 0.5 million tons, down from a high of about 1 million tons in 1989.
NAFTA provided Mexico with improved access to U.S. soybean supplies to help farmers meet the demands of their growing livestock industry. This access, combined with Mexico’s close proximity to the United States and the support of credit guarantees provided under the U.S. Department of Agriculture’s GSM-102 Export Credit Guarantee Program has helped to solidify the U.S. position as the dominant supplier of soybeans to Mexico.
As a result, the United States has experienced double-digit percentage increases in soybean exports to Mexico in every year but one since the inception of NAFTA. That brief interruption occurred in 1995 in the aftermath of the Mexican peso crisis.
In marketing year 1997, U.S. soybean exports to Mexico totaled 3 million tons and were valued at $794 million. U.S. soybeans now account for about 97 percent of Mexico’s soybean imports--the remainder are from South America.
U.S. Soybean Exports On the Rise in 1998
An improved Mexican economy with strong consumer purchasing power and a low inflation rate continued to support the expansion of feed use in the Mexican livestock and poultry industries in fiscal year 1998. This is expected to increase poultry meat production by 6 percent in Mexico.
In the swine industry, new investments in specialized swine plants and further integration of swine producer associations in the Mexican slaughtering and marketing industries have helped to boost output. For 1998, Mexican protein meal consumption is estimated at 3.8 million tons, up from 3.2 million tons in 1997.
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The author is an agricultural economist in the USDA-FAS
Cotton, Oilseeds, and Tobacco Division. Tel.: (202) 720-2257 Fax:
(202) 720-7670 E-mail: BradleyF@fas.usda.gov
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