Agriculture and food in Mexico

Agriculture and farming in Mexico main information

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With its varied landscapes and climates offering producers the opportunity to produce more than 200 crops, the country is a major player in Latin American food production and the eighth-largest agricultural crop producer in the world. The agriculture sector in Mexico has been important to the country’s economy both politically and historically. As far as Mexico’s GDP, agriculture only accounts for a very small percentage however, Mexico is considered to be one of the cradles of human agriculture. With ancient civilizations developing plants such as tomatoes, maize, avocados, peppers, beans, and much more, the country became known for some of its crops, which have become important agricultural exports. In 2018, crop cultivation was responsible for 2% of total GDP, livestock husbandry amounted to 1%, and forestry and fisheries accounted for 0.2%. Notwithstanding this, primary activities comprise 13% of total national employment and continue to be the most important source of income in rural areas. More than half of the country’s total land area is used in agriculture, with crop production accounting for 13% of the total national territory.

Mexico has a large rural territory and population – the largest population living in predominantly rural areas in the OECD. Farm employment, however, has dropped dramatically in recent decades. Agriculture accounts for about 14 per cent of employment in Mexico, down from more than 25 per cent in the early 1990s. The most dynamic agricultural areas are located in the northern and western parts of the country. Central and southern Mexico are mainly characterised by small land plots producing basic subsistence crops. In general, low productivity is still the norm. This is best reflected in poverty rates: in 2016, 58.2% of rural households were poor (including 17.4% of extremely poor); in contrast, 39.2% of urban households were classified as poor, including only 4.7% of extremely poor.

Economically speaking, there are only two types of agriculture in Mexico: The one for living, and the one of large plantations. The first one has to do with small producers who use the field as a primary source of income and to supplement their own food. These farmers usually do not have the technology (tractors, modified seeds, irrigation systems or others) to do their job. This way being the farmer his own employer, he has no wage labor, but perhaps only during the strongest periods, such as the periods of planting and harvesting, since most of the time is his family who supports him.

In the agriculture carried out by large plantations, the main goal is trade. In this area they do use high technology and workmanship to do the job and much of this production is exported to international markets. The main products these companies handle are: Wheat, watermelon, pickles, lime, cucumber, avocado, onion, white corn, mango, chile, asparagus, broccoli, bananas, oranges, cauliflower, cotton and coffee. Rural poverty is high with 61 per cent of the people in rural areas living below the national rural poverty line, compared to 46 per cent in urban areas.This development coincides with a trade policy that has led to much more open markets, especially within the NAFTA region, and significantly increased trade in agricultural products.

In 2007, small farms represented approximately 73 per cent of total production units. Indeed, small and medium producers employ a majority of rural population but their potential to provide a decent livelihood for themselves and to constitute a viable base for expanding economic activity in rural areas is curtailed by a variety of constraints. These include rising costs of factor inputs, land possession issues, adverse climatic conditions, increasing competition from below-cost imports, structural rigidities and some public policies, which although designed to benefit small and medium holders have not had the intended impact. The relative importance of products for big and small farms varies as well. For smaller farms fruits and vegetables are relatively more important than for larger farms for which maize is more important.

Due to the heterogeneity of the agricultural sector in Mexico, the impact of trade policy changes varies for different groups of farmers and consumers. In some areas, predominantly in north-western parts of the country, larger commercialized farms operate. In central and southern states farms are often smaller and often produce for subsistence.

Mexico is the home of avocado and corn (or maize), with both having long histories which are deeply engrained in Mexican culture and lifestyle. Mexico is among the world’s leading agrifoods producer: ranked first in avocado, lemon and limes, third and fourth respectively for grapefruit and corn, fifth for beans, coconut oil, oranges and poultry and sixth for sugar.

Crop production was and continues to be the most important agricultural activity in Mexico, accounting for fully 50 percent of agricultural output. Domestically, the most important crops for consumption purposes are wheat, beans, corn, and sorghum. The most important crops for export purposes are sugar, coffee, fruits, and vegetables. Mexico continues to be one of the top producers of crops in the world. In comparison to its crop production, livestock accounts for around 30 percent of Mexico's agricultural output. Mexico is not self-sufficient in the production of meat and fish.

Corn, avocados, sugarcane, and tomatoes comprise 35% of crop value, whereas beef, poultry, milk, and pork consist of 85% of the value of production in the livestock sector. Agrifood exports have steadily grown since NAFTA implementation, reaching a record high of USD 34.2 billion in 2018.

Sugar cane production chart (tonnes)

While overall there are 2 million producers of corn in Mexico, they can be divided into two categories: commercial and traditional. It is estimated that the minimum surface for commercial corn production is around 30 hectares per farmer, which means that only large and medium sized farms are actually in a position to participate in commercial production. However, less than 6 per cent of all farmers in Mexico benefit from land possession of more than 20 hectares and most of the larger farms are located in the Northern regions. The large majority of small holders engaging in traditional farming are located in the Southern region where they either produce solely for self-consumption or sell corn to persons living near their farms. The productivity of traditional farmers is reported to be 15 to 20 per cent of the level of productivity of commercial farmers.

Maize production chart (tonnes)

Fruits and vegetables are the most economically significant agricultural products exported by Mexico. Its most significant include tomatoes, - a crop which is native to the country and was first grown there some 7000 years ago and occupies a third of the country’s cropland. Other important tropical crops include banana, pineapple, mango, cocoa, rice and vanilla - another of the country’s native plants. The majority of agricultural exports head to the United States, which receives about 81% of the country’s exported food products. However, trade deals mean new markets have opened up to Mexico’s producers in recent years, including Canada, Japan, Hong Kong and Europe.

Livestock accounts for a percentage of Mexico’s agricultural output. Livestock produces eggs, milk, poultry, and beef. The northern part of Mexico has been considered the most important ranching area in the country since the time of the Mexican War of Independence.

Eggs production chart (tonnes)

Mexico is the United States’ third-largest agricultural trading partner. In 2020, U.S. agricultural and related product exports to Mexico totaled USD 18.3 billion. Even after taking into account the effects of the COVID-19 pandemic in 2020, the United States maintained its number one position in Mexico´s agricultural imports with nearly 70 percent market share. The United States remains Mexico’s principal agricultural trading partner, receiving USD 33 billion of Mexico’s total agricultural exports. Overall, U.S. market share in Mexico has remained high, as geographic advantages continue to make the United States the best supplier for most major agricultural goods.

For 2021, continued production growth is expected in the poultry and egg sectors, building on recent expansion and vertical integration. Mexico closed 2019 with steady growth of poultry and egg production. Chicken meat is still the preferred animal protein for domestic consumption due to its lower price and versatility in Mexican cuisine. Mexico is the number one consumer of eggs in the world. Most poultry and egg imports continue to originate in the United States, while exports by Mexico are limited. Notably, a third-country tariff-rate quota for chicken meat has allowed Brazil and Chile to expand market share through breast and wing exports.

The Mexican farmland is currently facing several challenges to continue its optimum production. Some of these problems are: Climate and its consequences, the high contrast between the states of the North and South side of the country at an industrial level, deforestation and introduction of genetically modified species.