Mexico is such a reliable importer of U.S. corn that it is easy for the U.S. corn industry to lose sight of the size of the Mexican market and its continuing development. Mexico is the world’s second largest corn importer most years, the second largest importer of U.S. corn and a growing market. The Mexican market continues to change as the government and corn producers and users seek to increase domestic production efficiencies.

 

The Foreign Agricultural Service (FAS) of USDA estimates corn imports by Mexico for the marketing year beginning October 1 at 9.1 million metric tons (MMT), virtually all from the U.S., and tied with South Korea for the world’s second largest corn import market. South Korean imports are usually less than Mexico due to feed wheat imports. Drought in the Black Sea region this year has pushed up wheat prices and limited feed use. Japan is the largest corn market at 16.1 MMT.

Mexico’s consumption of corn is estimated at 32.1 MMT for 2010/11, the world’s fifth largest after the U.S. at 288.0 MMT, China at 160.0 MMT, the EU at 59.5 MMT and Brazil at 48.3 MMT. On a per capita basis, the U.S. is number one among the top five users at 0.94 metric tons (MT), but Mexico is number two at 0.29 MT, Brazil three at 0.24 MT and the EU and China both at 0.12 MT. The U.S. and Brazil are major meat exports which skew the numbers somewhat, while the EU uses wheat and barley for livestock production. Mexico is also the fifth largest producer of corn with FAS projections at 24.5 MMT, up from 21.3 MMT last year, and smaller than the U.S., China, the EU and Brazil, but larger than Argentina and India.

Mexico’s annual corn imports have grown from a range of 0.5 MMT to 5.0 MMT in the 1980s to 0.4 MMT to 6.4 MMT in 1990s and 4.1 MMT to 9.6 MMT in this decade. Imports have average 8.7 MMT over the last five years including the new marketing year. Corn was one of a few commodities subject to a 15 year phase-in of free trade under NAFTA, but the Mexican government allowed tariff-free imports above tariff rate quota amounts in the last few years of the transition ending in 2007.

The corn market in Mexico is really two markets that are coming together. One market is mostly locally produced white corn, 75 percent of production, primarily for the food market, but some also for livestock feed. The other market is yellow corn, including imports from the U.S., for livestock and poultry feed and processing such as corn starch and high fructose corn syrup. According to the U.S. Agricultural Attaché in Mexico, the two markets are similar in size with food, seed and industrial at 16.3 MMT and feed and residual at 15.6 MMT. The market shows recovery from a pull back last year, with feed growing twice as fast as the food market.

The Attaché reported earlier this month that Mexican agricultural officials expect a larger harvest than the FAS estimate if rains continue and carryover stocks at the end of the new year may be larger than the current FAS projection of 3.2 MMT, up from 1.8 MMT for the year just ending. More domestic white corn and sorghum could be used for livestock feed with less imported corn. The government already has a program to encourage more feeding of white corn. About 75 percent of the corn crop is grown in spring/summer and the rest in a fall/winter crop. About 35 percent of the corn is irrigated, including most of the fall/winter one.

Corn yields average 3.1 MT per hectare, about one-third of the U.S. Yields on modern larger farms are close to U.S. yields, but 85 percent of Mexico’s 2 million corn farmers have 12.5 acres of land or less. A new government program called PROMAF is designed to provide corn growers with support for planting land, improved seeds and fertilizers, and technical support. In 2010, yellow corn could account for 20 percent of the land growing corn. Even with higher yellow corn production, Mexico lacks the internal railroads and truck roads to efficiently move corn to livestock and poultry feeding areas. Market intermediaries to efficiently link producers to users have not developed.

Mexico allows imports of biotech corn, but has not approved production within the country despite having a biotechnology regulatory system, strong research institutions and prominent researchers. The government has authorized 77 biotech events for use. Growing biotech corn commercially would increase corn yields by protecting the yield potential of existing and new varieties. Biotech seeds in Mexico go through three phases – experimental stage, pilot and commercial. A change in regulations last year allows seed corn developers to run corn trials in approved regions. In 2009, 26 field trials of biotech corn were authorized in northern Mexico and at least 14 requests were submitted for 2010. Four types of events were approved for field trials – tolerance to herbicides, resistance to insects, a combination of the two and drought resistance. All of these events were developed in the U.S. and have been through the U.S. regulatory process. The cost of compliance with regulations is a stumbling block in developing biotech crops.

The recent rise in grain prices will likely have an impact on corn consumption in Mexico for this year and the planting of corn in 2011-12. The government believes that supplies of all grains are adequate with good harvests and normal import levels.

Efficient transportation of corn from the U.S. by rail and ship and consistent quality of feed have aided development of an efficient Mexican meat production industry, particularly poultry. Young chicken meat production has tripled in the last 20 years from 945,000 MT in 1990 to 2.8 MMT in 2010. Fluid milk production is up 75 percent to 11.0 MMT and pork production is up 50 percent to 1.2 MMT. Beef production is unchanged at about at 1.8 MMT per year.

As the Mexican economy continues to recover with the rest of the world, food demand, including meat, will grow. Increased imports of corn from the U.S. will remain part of the economic response to consumer demands. That will likely be tempered some by ongoing efforts to make available to more Mexican corn farmers the technology successfully used in the U.S. and other corn growing countries.