1. THE INTEGRATION OF NORTH AMERICA AGRIFOOD MARKETS: MEXICAN PERSPECTIVE
ANTONIO RUIZ
Undersecretary of Rural Development
SAGARPA
Cancún, México
May, 2004

2. ANNUAL GROWTH RATE IN TRADE OF GOODS
MEXICO: TRADE LIBERALIZATION PROCESS
SOURCE: 2002, World Development Indicators, World Bank.
THE ROLE OF BILATERAL TRADE
AGREEMENTS IN COUNTRY POLICY
In 1986, Mexico initiated the process of trade liberalization with its adhesion to WTO.
In 1994, NAFTA entry into force; since then Mexico has signed 11 Free Trade Agreements with more than 30 countries. 2
Country
Inhabitants
(millions)
Per-capita
Income
(US dollars)
North America
Canada
United States
Mexico
Central America
Guatemala
Honduras
El Salvador
Costa Rica
Nicaragua
South America
Colombia
Venezuela
Chile
Bolivia
European Union (15)
Israel 31
282 98 11 6 4 5 42 24 15 8
376
21,130
34,100
5,070
1,680
860
2,000
3,810
400
2,020
4,310
4,590
990
22,470
16,710
TOTAL
1,053
EFTA 12
36,827
Japan
127
33,700
2.6
4.0
4.5
5.1
5.6
6.3
7.0
10.8
12.3
15.0
EFTA (4)
Morocco
EU-15
(extra-UE)
World
Latin
America (3)
EE.UU.
NICs (2)
East
Europe (1)
China
ANNUAL GROWTH RATE IN TRADE OF GOODS
(Average 1990 – 2002)
SOURCE: SE con datos de OMC
1/ Albania, Bulgaria, Hungría, Polonia, Rep. Checa, Eslovaquia, Rumania. 2/ Hong Kong, Taiwán, Corea, Singapur. 3/ Sin México. 4/ Suiza, Noruega, Islandia, Liechtenstein

3. MEXICO: TOTAL EXPORTS AND IMPORTS OF GOODS
(Billion dollars)
Exports
Imports
SOURCE: Secretaría de Economía.
During 1993 – 2003 period, Mexican foreign trade of goods has tripled.
In 1993, Mexico export to the world 52 billion dollars; while in 2003 the value of Mexican exports reached 165 billion dollars
MEXICO: FOREIGN TRADE OF GOODS 3 52 65 61 79 80 72 96 89
110
117
125
136
142
166
174
158
168
161
169
165
171 20 40 60
100
120
140
160
180
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003

4. Before NAFTA entry into force, Mexico's trade balance with the USA registered a deficit; while in 2003 there is a surplus of 41.1 billion dollars.
MEXICO´S TRADE BALANCE WITH THE USA REGISTER A
SUPERAVIT OF 41.1 BILLION DOLLARS IN 2003
SOURCE: Secretaría de Economía.
MEXICO – USA
TRADE BALANCE 1991 – 2003
Billion dollars 4
-3.6
-8.3
-2.4
-3.1
12.4
13.0
12.2
9.7
15.1
20.2
26.5
36.4
41.1
-15 -5 5 15 25 35
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
NAFTA

5. AGRI-FOOD TRADE BALANCE, MEXICO-WORLD 1/
MEXICAN AGRIFOOD TRADE BALANCE
During the period, the agrifood trade balance defict of Mexico was on average 1,805.5 million dollars.
Mexican exports of agrifood products grew at an annual average growth rate of 8.1% during the post NAFTA period; while agrifood imports registered an annual growth rate of 6.3%.
Mexican exports of processed food products had increased sharply during the process of trade liberalization (10.4% AGR).
AGRI-FOOD TRADE BALANCE, MEXICO-WORLD 1/
(Million dollars)
7,349
5,132
Import
6,287
3,470
Export
-1,062
-1,662
Agri-Food
3,448
2,804
2,837
1,348
-610
-1,456
Processed food
3,902
2,328
3,450
2,122
-452
-206
Agriculture
10,753
8,204
-2,549
5,695
4,247
-1,449
5,057
3,957
-1,100
6.3
8.1
6.5
10.4
6.2
6.1
AGR 2/
1/ Fisheries not included. 2/ AGR = Average Growth Rate. Source: Banco de México 5

6. MEXICAN AGRIFOOD EXPORTS BY COUNTRY / PARTNER
2.4%
0.3%
5.4%
1.9%
90.1%
1990: 3,206 MILLION DOLLARS
2003: 9,085 MIILLION DOLLARS
SOURCE: SAGARPA with data from “Secretaría de Economía”.
10.5%
0.5%
4.6%
1.1%
83.4%
MEXICAN AGRIFOOD EXPORTS HAVE DIVERSIFIED AS
A RESULT OF THE TRADE LIBERALIZATION PROCESS 6
In 1990, 90.1% of the Mexican agrifood exports had as main destination the NAFTA region; while in 2003 this participation decreased to 83.4%.
This is the result of a net of free trade agreements signed by Mexico with more than 30 countries.
NAFTA EU
MERCOSUR
JAPAN
OTHERS

7. ORIGIN OF MEXICAN AGRIFOOD IMPORTS
1990: 4,741 MILLION DOLLARS
2003: 12,740 MILLION DOLLARS
SOURCE: SAGARPA with data from “Secretaría de Economía”.
MOST OF MEXICAN AGRIFOOD IMPORTS
COME FROM THE NAFTA REGION 7
NAFTA EU
MERCOSUR
JAPAN
OTHERS
65.0%
0.2%
17.1%
5.3%
12.4%
81.8%
0.1%
5.0%
2.4%
10.7%
Between 1990 and 2002, the share of agrifood imports from the U.S. and Canada in total Mexican agrifood imports increased from 65% to 81.8%.
The above is a result of a better preferential market access granted by NAFTA in agrifood products compared to other FTA’s signed by Mexico.

8. RELATION OF MEXICAN AGRIFOOD EXPORTS TO NATIONAL AGRIFOOD GDP
THE MEXICAN AGRIFOOD SECTOR IS INCREASINGLY
ORIENTED TO FOREIGN MARKETS 8
RELATION OF MEXICAN AGRIFOOD EXPORTS TO NATIONAL AGRIFOOD GDP
SOURCE: Sistema de Cuentas Nacionales de México, INEGI.
Exchange rate for period : y exchange rate for period :
AGR = Annual Growth Rate.
During the period, the share of Mexican Agrifood exports in National Agrifood GDP was 9.6%, while in the period its participation increased to 15.9%.
This trend is the result of the increasing demand in other countries for Mexican products, as well as of the investment and restructures that domestic industry has made to satisfy such demand.
Without foreign markets the domestic demand would not be capable to absorb the products that are exported nowadays.
9.6%
15.9%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
GDP: ,257 million dollars
Exports: 3,594 million dollars
GDP: ,641 million dollars
Exports: 8,357 million dollars
Percent

9. VALUE OF PRODUCTION OF MEXICAN AGRIFOOD SECTOR
3.9
12,000,469
7,778,959
Other Food Preparations
2.9
107,810,441
78,949,628
TOTAL
AGRIFOOD SECTOR
0.5
34,156,650
31,397,119
1.1
1,306,548
1,093,110
1.9
1,413,504
1,154,082
0.7
11,959,130
10,891,697
0.3
19,477,468
18,258,230
PRIMARY SECTOR
Agriculture
Livestock
Forestry
Fisheries
Subtotal
PROCESSED FOOD SECTOR
4.2
73,653,790
47,552,510
-3.4
845,283
823,353
Tobacco
7.0
7,710,715
3,617,685
Non Alcoholic Beverages
5,236,206
3,372,256
Alcoholic Beverages
0.8
1,991,003
1,648,676
Vegetable Oils and Fats
0.9
2,414,635
1,870,161
Sugar
1.7
1,576,134
1,192,975
Processed Coffee
6.7
20,119,688
11,519,484
Wheat and Maize Milling Industry
4.6 2,
1,810,069
Processed Fruit and Vegetables
2.4
18,761,518
13,918,893
Meat and Dairy Products
AGR
1993/2002
AVERAGE
THE VALUE OF PRODUCTION OF THE MEXICAN AGRIFOOD SECTOR HAS INCREASED STEADILY, MAINLY FOSTERED BY THE DYNAMISM REGISTERED IN THE PROCESSED FOOD SECTOR
VALUE OF PRODUCTION OF MEXICAN AGRIFOOD SECTOR
Between 1990 and 2002, the value of production of Mexican agrifood sector increased at an annual growth rate of 2.9%.
Trade liberalization process promoted the integration of the primary and processed food sectors of Mexico, US and Canada.
Nowadays, NAFTA consumers have access to a wider variety of food products, with higher quality and food safety standards.
SOURCE: INEGI.

10. MEXICO: PRODUCTION OF BASIC CROPS AND IMPORTS LEVELS
THE PRODUCTION OF BASIC CROPS HAS SHOWN A SLIGHT GROWTH IN THE CONTEXT OF TRADE LIBERALIZATION, BUT NOT ENOUGH TO SATISFY THE GROWING DOMESTIC DEMAND
The Mexican basic crops production increased at an annual average growth rate of 1.5% during the 1994– 2003 period, but not enough to satisfy the domestic demand.
In order to meet the domestic demand requirements, imports of basic crops have been needed (mainly for animal feed and industrial purposes). These imports reached an average level of 18.6 million tons during the 1994 – 2003 period.
MEXICO: PRODUCTION OF BASIC CROPS AND IMPORTS LEVELS
Tons
SOURCE: SIAP.
*/ Annual Average Growth Rate. 10
CROP
AGR */
Maize
Sorghum
Wheat
Dry Beans
Barley
Cotton Seed
Paddy Rice
Safflower
Soybeans
Sesame
Total
15,985,386
4,555,062
3,798,656
1,168,008
540,658
314,914
355,709
88,119
597,860
35,570
27,439,941
**/
19,311,834
6,102,976
3,236,289
1,228,426
826,644
209,912
265,973
121,131
109,131
33,581
31,445,897
2003/1994
1.2
7.0
-3.8
0.4
15.2
-4.9
-4.0
14.9
-14.6
14.7
1.5
5,667,693
4,536,094
3,191,614
97,708
83,338
263,781
708,779 8
4,127,665
204
18,676,885
AVERAGE PRODUCTION
8.7
-0.5
10.4
3.8
-8.5
3.5
6.6
9.6
5.9
-63.2
5.7
AVERAGE IMPORTS
1,735,387
2,707,872
903,727
90,839
88,700
124,329
299,008 25
1,078,893
8,546
7,037,326

11. MEXICO: LIVESTOCK PRODUCTION
LIVESTOCK PRODUCTION IN MEXICO HAD SHOWN A DYNAMIC GROWTH
Meat production increased at an annual average growth rate of 3.7% during the 1994 – 2003 period. Pork and poultry (includes meat and eggs production) sectors showed the most dynamic growth.
Poultry meat production grew at an annual average rate of 7.4% and pork meat production at 2.0% during the analysis period.
The average animal protein consumption in Mexico has increased sharply in the latest years, therefore imports of those products have been needed to satisfy domestic demand.
MEXICO: LIVESTOCK PRODUCTION
1,000 tons
SOURCE: SIAP and Ministry of Economy. 11
*/ Annual Average Growth Rate.
AGR*/
2003/1994
Meat (Carcass weight)
Bovine
Pork
Sheep
Goat
Poultry 1/
2,978.8
1,201.6
802.7
26.9
40.0
907.8
4,603.5
1,454.2
1,050.3
36.9
40.5
2,021.6
3.7
1.0
2.0
3.1
0.9
7.4
789.1
293.1
221.7
3.3
0.0
270.9
Milk (Million liters)
6,945.8
9,712.4
873.9
6,807.2
138.5
9,571.1
141.3
0.5
n.d.
Other Livestock Products
Egg
Wool
Honey
1,136.5
4.8
65.5
1,865.6
4.3
57.4
4.7
1.2
-0.2
14.5
0.2
AVERAGE PRODUCTION
11.3
10.8
14.4
-3.9
9.8
9.9
-9.1
-45.1
AVERAGE IMPORTS
214.9
62.5
43.8
5.7
0.1
102.9
608.6
8.3

12. 12
Product
1990/2003
Beef Meat
13.7
16.7
2.6
Pork Meat
11.5
14.0
1.9
Poultry Meat 1/
10.9
21.7
7.3
Milk 2/
99.0
109.3
0.4
Egg
13.0
18.4
3.5
Average
AGR */ (%)
MEXICAN PER CAPITA CONSUMPTION OF LIVESTOCK PRODUCTS
Between 1990 and 2003, per capita consumption of meat, egg and dairy products have shown an important increase. The highest annual average growth rates were registered in poultry meat (7.3%) and eggs (3.5%).
A higher population purchase power has resulted in an increasing demand for animal protein products.
MEXICO: PER CAPITA CONSUMPTION
Kilograms
*/ Annual Average Growth Rate
1/ Turkey meat not included.
2/ thousand liters.
SOURCE: SIAP, INEGI.
MEXICO, PER CAPITA GDP
( )
5,496
3,491
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
US Dollars
AGR **/ 5.2
*/ Preliminary figures
**/ Annual Growth Rate
Source: Sistema de Cuentas Nacionales de México, INEGI, CONAPO and Banco de México

13. OTHER INDUSTRIAL CROPS13
FRUITS, VEGETABLES AND INDUSTRIAL CROPS PRODUCTION
AVERAGE 1990 – 1993 VS – 2003 PERIODS
(TONS)
From 1990 to 2003, period, the production of the main fruits, vegetables and industrial crops registered a positive growth rate.
The products with the highest growth rates are related with export activities like mango, orange, lime, watermelon, papaw, strawberry, avocado, tomato, and green hot pepper, among others.
The industrial crops showed a lower growth rate, mainly sugar cane and cherry coffee.
SOURCE: SIAP.
*/ Annual Average Growth Rate.
OTHER INDUSTRIAL CROPS
MAIN FRUITS
0.22
1,717,891
1,789,057
CHERRY COFFEE
4.08
3,900,674
2,511,251
ORANGE
2.08
1,515,960
1,104,862
MANGO
-0.62
541,041
514,599
MELON
7.26
1,656,026
726,127
LIME
6.82
957,178
420,842
WATERMELON
7.46
764,467
334,748
PAPAYA
2.49
140,330
91,580
STRAWBERRY
2.80
614,742
307,436
PINEAPPLE
2.13
912,769
725,131
AVOCADO
MAIN VEGETABLES
0.54
2,062,,128
1,715,930
TOMATO
10.52
2,136,005
1,066,843
HOT PEPPER
3.79
1,064,670
729,284
ONION
2.19
1,201,939
1,210,858
POTATOE
4.24
361,008
291,042
GREEN TOMATO
8.27
629,315
229,019
CARROT
0.95
44,658,941
40,706,775
SUGAR CANE
-3.09
32,557
37,176
TOBACCO
1990/2003
Average
AGR */ (%)
CROP

14. MEXICO IS ONE OF THE MAIN SUPPLIERS OF VEGETABLES THE US AND CANADA14
Share (%)
72.6
64.9
80.5
71.1
44.5
84.4
45.6 10 20 30 40 50 60 70 80 90
100
Tomato
Peppers
Cucumbers
Onions
Asparagus
Eggplant
Frozen
vegetables
Product
1994
2003
AGR
03/94
Broccoli and
Cauliflower
12,911
27,127
8.6%
24,350
35,867
4.4%
38,956
77,332
7.9%
Onions and
shallots
137,468
176,841
2.8%
and jerkins
137,067
242,498
6.5%
160,700
429,351
11.5%
394,049
901,759
9.6%
134,793
177,693
3.1%
Others
209,815
499,984
11.6%
TOTAL
VEGETABLES
1,250,109
2,568,452
8.3%
Mexican exports of vegetables to NAFTA countries had increased sharply, registering and average annual growth rate of 8.3% during the 1994 – 2003 period.
MEXICAN SHARE (%) IN TOTAL VALUE OF
USA VEGETABLE IMPORTS (2003)
SOURCE: SAGARPA with data from USDA.
MEXICAN EXPORTS OF VEGETABLES
TO USA AND CANADA
(thousand of dollars)
SOURCE: SAGARPA with data from the Secretaria de Economia.

15. MEXICAN SHARE (%) IN TOTAL VALUE OF MEXICAN EXPORTS OF FRUIT
MEXICO’S SHARE IN USA FRUIT IMPORTS IS IMPORTANT, BUT THERE STILL ARE SOME PRODUCTS
WHERE MEXICAN EXPORTS COULD BE GREATER
SOURCE: SAGARPA with data from USDA. 15
MEXICAN SHARE (%) IN TOTAL VALUE OF
USA FRUIT IMPORTS (2003)
SOURCE: SAGARPA with data from the Secretaria de Economia.
Product
1994
2003
AGR
03/94
Avocado
7,619
118,465
35.6%
Melon
41,225
45,999
1.2%
Watermelon
47,929
97,304
8.2%
Strawberry
40,096
116,470
12.6%
Pecan Nuts
36,066
76,881
8.8%
Lemons
and Limes
33,119
132,846
16.7%
Mango and
Guavas
99,808
125,976
2.6%
Grapes
35,955
147,607
17.0%
Others
104,572
150,365
4.1%
TOTAL
FRUITS
446,389
1,011,913
9.5%
MEXICAN EXPORTS OF FRUIT
TO USA AND CANADA
(Thousand of dollars)
Share (%)
33.4
16.6
85.9
52.8
48.6
96.4
71.9
91.3
33.1 10 20 30 40 50 60 70 80 90
100
Lemons and
Limes
guavas
Papaw
Mexican exports of fruits to NAFTA countries had increased sharply, registering and average annual growth rate of 9.5% during the 1994 – 2003 period.

16. NORTH AMERICA MARKET INTEGRATION IS A POLICY GOAL FOR MEXICO
INTEGRATION OF TRADE IN GOODS AMONG NAFTA COUNTRIES
NAFTA framework established the elimination of trade barriers among US, Canada and Mexico.
Trade flows among NAFTA countries had increased sharply.
Producers and agrifood industries of Mexico, Canada and US have access to inputs at competitive terms as a result of the NAFTA .
Complementarities among NAFTA countries: labor force, production patterns, investment flows, transfer of technology and financial sources, among others.
HARMONIZATION OF AGRICULTURAL SUPPORT POLICIES AND REGULATORY FRAMEWORK
NAFTA countries share the objective of the implementation of support policies that have less distorting effects in production and trade of agricultural goods. Nevertheless, the US moved from the FAIR Act (1996) to Farm Bill 2002.
Need to harmonize between NAFTA countries standards and regulations in some agriculture issues: sanitary conditions, food safety, marketing standards, quality, among others. 16

17. NORTH AMERICA MARKET INTEGRATION IS A POLICY GOAL FOR MEXICO
ESTABLISHMENT OF A COMMON MARKET
Harmonization of custom duties and procedures to third countries. Mexico’s bound and applied tariffs to third countries are higher than those of USA and Canada.
Free trade in goods, services and labor force among NAFTA Countries.
Total harmonization in some public policies with common funds, e.g. the Common Agricultural Policy of the European Union.
Some structural and adjustment funds should be necessary as a result of differences in development between countries. 17