According to USDA's baseline projections, Mexico will import larger amounts of grains, oilseed products, and meats over the next decade. Scarce water, arable land, and low use of modern technology will restrict Mexico's productive capacity. Growing demand for meats will spur domestic meat production and increase feed ingredient imports. Trade liberalization will provide greater opportunities for the United States to export meats.

• Most agricultural commodity producers in Mexico will seek to limit imports because of continued low prices for domestic products.
• The new president will continue the current direction of agricultural policy.
• Mexico's Alianza para el Campo will continue to produce small productivity gains in grains, oilseeds, and livestock.
• Price liberalization will increase retail prices and lower domestic demand.
• Mexico's economy grew 6.6 percent in 2000 and will grow at a somewhat slower rate in 2001.

Mexico's economy will be primarily driven by investment to satisfy domestic and export demand as opposed to a consumption-driven growth pattern. Unemployment will be reduced as investment seeks to capitalize on Mexico's competitive edge in labor-intensive industries. Economic growth and consumer demand will be hindered somewhat by the need to retire both government and household debt burdens. ERS assumes that Mexico will maintain its floating exchange-rate policy, and that the government will pursue monetary and fiscal policies in order to align the depreciation of peso with the inflation differential with the United States. Another key macroeconomic variable, population growth, will continue, but at a declining rate.

• The water distribution system.
• Investments in irrigation for both crops and livestock.
• New genetic material and equipment for livestock producers.
• Technology transfer programs for oilseeds.
• Development of dual-purpose cattle to boost meat and milk production.
• Purchase and repair programs for tractors.
• Certified seed exchange and training for corn producers.

• A small boost in corn yields due to the Kilo por Kilo certified seed exchange and training program. A one-time only program, which shows farmers the benefits of certified hybrid seed, has limited effectiveness unless additional funds are allocated.
• A successful rebuilding of Mexico's cattle herd. Programs emphasize three areas: rebuilding the cattle herd; improved cattle breeds; and pasture improvement. The programs, if implemented effectively, could strengthen domestic output and reduce imports.

Rice. Fairly constant production combined with increasing consumption will result in steady growth in imports.

Corn. Area planted with corn will decline due to changing relative prices and government programs. Government resource and technology and seed programs may slightly increase corn yields. Demand for feed corn will continue to grow, and corn imports are expected to continue to increase.

Sorghum. Fairly steady production and increasing demand will result in increased sorghum imports.

Other coarse grains. Mexico's expanding beer industry will increase barley imports and shift more area into growing barley. The cereal and the racehorse industries will sustain oat imports.

Cotton. Cotton production is even with levels of the past few years. Imports are expected to increase steadily as mill demand (spinning yarn for domestic and export textile markets) grows.

Soybeans. Mexico will continue to import soybeans, soymeal, and soyoil, given the minor role of domestic production in the market. Soyoil will continue to hold about a 40-percent share of Mexico's oil demand.

Other oilseeds. Cottonseed, safflower, and sesame, the other principal oilseeds (besides soybeans) cultivated in Mexico, are expected to remain fairly stable throughout the next decade. The largest oil imports will consist of palm and coconut oil, with smaller amounts of imported canola, cottonseed, and sunflower oil. Per capita consumption of other oils will grow at roughly the same pace as soybean oil.

Beef and veal. Rebuilding Mexico's cattle herd is expected to take longer than expected. Consumer demand for beef recovers more quickly than Mexico's producers can increase supply. Beef imports will continue their upward trend throughout the next decade, with some cyclical adjustments.

Pork. The pork outlook changes little. Per capita demand climbs back to 1994 levels in 2002. Imports remain at or near the level of the tariff rate quota (TRQ), which will be eliminated in 2003. In the short term, Mexico's pork industry will continue to lose market share to imports of mechanically deboned chicken and turkey meat, most of which goes to make sausage or "hams." Mexico's pork industry may be restructured over the next 10 years. Four firms accounted for about 35 percent of the pork produced in Mexico in 1996.

Poultry. Mexico's decision not to enforce the poultry meat TRQ will lead to continued growth in imports, although at a relatively modest, conservative rate.

Eggs. Eggs are the cheapest source of animal protein in Mexico. Consumption per person in the next decade is unlikely to reach the extraordinarily high level seen in 1994, because higher incomes will allow consumers to buy other protein sources. Imports exceed the tariff-rate quotas set by NAFTA.

References
Understanding the longer-term outlook for Mexico's agricultural production, trade, and policy is critical to the development of USDA's Baseline Projections for U.S. agriculture. For more information on the USDA Baseline Projections, see the USDA agricultural baseline projections briefing room.

World Agricultural Supply and Demand Estimates reports provide monthly updates of Mexico's import market for coarse grains and cotton.

Foreign Agricultural Service Oilseed circulars (monthly) provide analysis and data on production, use, and trade in Mexico's oilseed sector.

Foreign Agricultural Service Current World Production, Market and Trade Reports provide analysis and data on grains, livestock and poultry, oilseeds, sugar, tropical products, cotton, and other commodities important in Mexico.

The Foreign Agricultural Service office in Mexico City prepares annual reports on the following commodities. The latest reports and archives of earlier reports are available through the Foreign Agricultural Service.

• Asparagus
• Avocados
• Citrus
• Coffee
• Cotton
• Dairy and products
• Dried fruits
• Forest products
• Fresh deciduous fruits
• Grain and feed
• Livestock and products
• Oilseeds and products
• Planting seeds
• Poultry and products
• Strawberries
• Sugar
• Tobacco
• Tomatoes
• Tree nuts

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page updated: December 12, 2002