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Mexico Holds Opportunities and Challenges for Fruit Industry

By Greg Brown Associate Editor

The United States’ neighbor to the south offers challenges and opportunities to producers willing to cultivate trade relations, according to a recent Farm Bureau tour of Mexico. The Michigan Farm Bureau (MFB) Agricultural Trade Issues and Policy Study Tour recently returned from Mexico with insights into that country’s agriculture system. “One of the things that we learned is that in Mexico there are just two economic classes of people: there are the dirt poor and the filthy rich,” said Jim May. May, an apple, corn, wheat, dairy and alfalfa producer from Sparta, Mich. was one of 26 tour members who traveled to Mexico March 5-14. As the majority of Mexican consumers see an improvement in their discretionary income, an opportunity for non-subsistence food products will emerge, said MFB President Wayne Wood. That’d be beneficial since value-added, upscale food products in Mexican supermarkets tend to originate in the U.S. At first glance, it is the differences between the production and consumption of the two countries that stand out. “Nearly 40% of the Mexican wages or income go for food, while in the states it is only 12%,” May said. The financial situation in Mexico is very different than that in the States. “Interest is very high in Mexico, we are talking anywhere from 30 to 138% interest. Money in Mexico is hard to get, so many of the growers were coming to the U.S. to get money,” he said. Many production costs are lower. For instance, labor costs $10 for a nine-hour day, with laborers working six and seven days a week. Mexico is a major importer of beef, dairy, corn, soybeans, and apples. Their big problem is a low supply of water. Not surprisingly, water is a scarce commodity in Mexico. “Agriculture is highly regarded for water but their situation is getting worse, because their cities are growing,” said May. “For this reason, Mexico will never be a major exporter of ag commodities. They will always be an importer. Mexico is growing so fast that they can’t get enough.” In some instances the scales of production match those found in the states. The tour members visited a fruit operation in Chihuahua, which is the largest fruit operation in the world. The farm encompasses 2,500 acres with plans to double its size. With over one million apple trees in the ground, the facility raises 2.6 million bushels of apples, of which 90-95% were Golden Delicious, said May. The Chihuahua operation had 48 CA rooms on one farm. Contrary to assumptions, the country is not a backward nation. While parts may be behind the times, other portions are state-of-the- art, even high tech. “I never expected to see Mexico as high tech as they are,” said May. “This one fruit operation is very high tech. They have frost fans in all their orchards. They have frost heaters in all their orchards. They use trickle irrigation in all their orchards, and they cover their trees with a hail net from the month of May through the month of August, because they are highly susceptible to hail.” Tour members found apples from the state of Washington in a Chihuahua grocery store. The upscale grocery store sold three pounds of apples for $1.59 U.S. dollars. “There are 23 million people living in Mexico City,” said May. “It is the world’s largest city. The sector in the higher economic range is looking for good food. They want good stuff and they are willing to pay the price for the product.” On the other hand, Mexico is out seizing the opportunities. Part of the tour included a stop at a farm raising red and blue corn for tortilla chips. At the time of the visit a company representative was in Japan, marketing their products. Other strong sectors include the pepper producers for dehydration and shipment to the U.S. for use for salsa and chili powder. The tour also included stops at many industrial operations. The average farming operation in Mexico is farms around five to six acres. “They raise enough to feed their family, to keep themselves going,” said May. “We are talking about plowing with the horses and milking the cows by hand.” Mexican farmers are leaving the country for better opportunities abroad. Other pressures on Mexico’s agriculture system include efforts by Bolivia to lure Mexican farmers away by giving them land. But even with Mexico’s economic and social challenges, there are plenty of opportunities for Michigan farmers. “I think there’s a real opportunity for Michigan apples,” said Wood. “Washington State seems to have a hold on that market now because it has been able to meet Mexico’s requirements on phytosanitary procedures. But we have to explore that market.” Wood said he was impressed with the technological advances Mexico has made since he visited five years ago. Still, Mexico is an extremely poor country where research and technological advancements seem to have reached a level limited by lack of capital and educational resources, he said.