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Mexico Trip Report, March 2000
Foreign Agricultural Service analysts from the United States Department of Agriculture traveled to Mexico during March 2000 to meet with Government of Mexico representatives, to review the 1999/00 crop season, and to gain a better understanding of what crops are planted where in the agriculturally diverse states Veracruz, Puebla, and Mexico. (Map 1.) While traveling by car, the analysts collected data concerning agricultural commodities, and took note of the viewpoints expressed by members of the industry. The opinions recounted here do not necessarily reflect the viewpoint of USDA.
Corn fields were commonplace on the drive eastward along Federal Highway (F.H.)150 away from Mexico City. The states Mexico, Puebla and Veracruz harvest 15-30 percent of the nation’s annual total, the vast majority of it from rain-fed summer fields. Any space larger than what a bus would occupy is a candidate to be planted to subsistence corn. Corn is grown year-round in Mexico, however, the rain-fed spring/summer crop provides at least 85 percent of the annual total, and the major producing states include Chiapas, Jalisco, Mexico, Michoacan, and Puebla. The winter crop is mostly irrigated in Sinaloa, but rain-fed in most southern states.
Most of the winter corn was still in the fields completing drydown before harvest along the route the PECAD analyst traveled, but there were some very early planted fields introducing the spring/summer crop. Across the Puebla state line, fields of beans, cabbage, carrot, cauliflower, onions, chili peppers, sweet potatoes, and fresh flowers were prevalent along the side roads off F. H.150. The corn fields around Puebla city had mostly been harvested, and some had already been plowed in preparation for the summer crop. Beyond the intersection with F.H. 140, very large fields that had been prepared for summer corn stretched across a series of plateaus that step down the east face of the Sierra Madre Oriental Mountains to the Gulf of Mexico. F.H. 150 is the major artery to the port city Veracruz, so thousands of trucks traverse the 260 odd miles of forested mountains and cultivated valleys between Veracruz and Mexico City every day. Over that distance, elevation drops from around 8,000 feet above sea level in Mexico City to 7,000 feet at Puebla, to 3,000 feet at Cordoba, to just above sea level at the port of Veracruz. North of Cordoba, the plateaus climb above 15,000 feet in less than 100 miles.
Entering Veracruz state, sugarcane and fruit groves (grapefruit, lemons, limes, mangoes, papayas) began to dominant the mountainous landscape about 25 miles outside of the city Cordoba. The GOM nationalized the sugar industry in the 1970s, then re-sold it to private investors starting in the late 1980s. Companies have not fared well in the upheaval. Today most of Mexico’s 61 sugarcane mills are approaching an advanced stage of obsolescence, trapped between a poor credit environment and low domestic and world prices. Twenty-six of those mills are in Veracruz state, which accounts for 33 percent or more of annual production, 70 percent of it on rain-fed land.
Nearing the city Cordoba in western Veracruz state, rice fields became more numerous. According to an international rice producer/miller in Veracruz state, Mexico imports about 60 percent of its rice needs, the majority of it from the U.S.. On the day of our conversation, the miller said the price for U.S. rice was 6 percent lower than the Mexican price. Quality and transportation costs make U.S. rice far more attractive to millers. It is more efficient to transport rice by boat from Miami, Florida across the Gulf of Mexico to metropolitan Veracruz than to transport rice by truck or rail from Pacific coast states such as Colima, Nayarit, or Michoacan (700 to over 1,000 miles).
In June of this year, millers will have to decide whether to finance the 2000 summer crop, and the Veracruz producer/miller believes an improved cost-to-price situation is necessary for financing to make sense. Should a favorable price swing prompt millers to offer financing, summer production will be 75 percent of normal. Beyond the anticipated lower output from traditional production leader Sinaloa state (insufficient water in the reservoirs portends reduced planted area), the Veracruz producer/miller expects Campeche state, also on the Gulf of Mexico east of Veracruz, to continue its steady growth in production. The Veracruz producer/miller believes prices are artificially high in the U.S. because Congress finds creative ways to support rice, such as designating areas as environmentally endangered. U.S. producers thus have no incentive to reduce production. Mexico producers and millers stay in business by learning how to save pennies in transportation and labor costs.
Mexico was a wheat exporter as recently as the 1950s, and may re-enter that marketplace in the near future. Wheat industry representatives in Mexico City estimate that 3.1 million metric tons (roughly 65 percent of the annual crop) is forthcoming from the 1999/2000 fall/winter wheat season. Wheat production from Mexico’s central region of the Bajio, predominately soft wheat, is expected to be down from last year because of water shortages. While part of the wheat crop had been channeled to the Mexican swine industry in previous years, durum production totals of 1.3 to 1.4 million metric tons from the current crop could equate to approximately 0.7 million metric tons being diverted to the export market. The trend toward durum production may result in a corresponding shift for Mexico to the importation of soft bread varieties from the U.S.
The GOM of Mexico offered a more optimistic outlook, as officials from the Department of Basic Grains, General Direction of Agriculture expected the harvest of fall/winter wheat to yield 3.6 million metric tons. (Note that different GOM officials may announce dissimilar numbers during the year, and adjustments in the GOM official numbers frequently lag events by a month or more.) Those same GOM officials labeled prospects for overall grain production in the spring/summer season as good, assuming close to normal weather conditions.
In a departure from anticipated election year activity, the water situation has not been the subject of extensive campaign discussion. (Map 2.) In the 1990s, the politically active farm sector has regularly lobbied the Federal government for increased allocations of water for agricultural purposes as the primary response to below-normal precipitation. The National Water Commission (CNA) is the GOM agency that owns all the reservoirs, administering programs for 82 water districts. CNA also holds jurisdiction over wells, private and otherwise, and all wells are legally required to have meters which allow CNA to monitor flow.
CNA defines a drought as any year wherein rainfall does not reach "normal" for a given model, however CNA has instituted the practice of releasing a (unknown) volume of water to the agriculturally important states of Sonora, Sinaloa, and Chihuahua each October regardless of the amount of water present in the reservoirs of that region. If water levels permit, those three states can receive additional allocations in February and the months thereafter.
Other Mexican states must adhere to the strict CNA guidelines in deciding for themselves when they receive water. If reservoir levels are high, states can ask for and receive water to plant a fall/winter crop in October, and be eligible to receive additional allocations in the winter and spring. If reservoir levels are low, no water allocation are requested by the state CNA offices; reservoir resources are instead held for distribution for the spring/summer season. Abundant precipitation at any time can prompt CNA to discontinue plans to restrict the volume and frequency of water releases. Most of Mexico’s reservoirs were constructed in the 1950s, and there are no plans to expand the reservoir system beyond the projects currently underway in Sinaloa (Pacific northwest coast) and Tamaulipas (Atlantic northeast coast). Water re-cycling and improved efficiency in irrigation are among the preferred CNA methods for offsetting short water supplies in long term.
In 1999, GOM designated 10 jurisdictions in the northern half of the country as Drought Emergency States, making them eligible for assistance from the national government. This financial assistance was drawn from the National Relief Fund, a program administered annually according to Mexico’s fiscal calender (January to December), and is a part of the Congressionally approved budget. The availability of funds is, like many GOM programs, directly tied to revenue from petroleum production. For example, in years where the international price of oil is $30 (U.S.), there is a National Relief Fund; in years where the international price of petroleum is $10, there is no fund.
For more information, contact Ron White, Production Estimates and Crop Assessment Division, FAS, USDA at (202) 690-0137, or e-mail whiter@fas.usda.gov
