Brazil sees significant boost in farming exports to Mexico

The Mexican government’s temporary exemption of import taxes on certain staple products has boosted Brazilian agribusiness exports to Mexico.

According to data from Apex Brasil, exports to Mexico increased from $2.2 billion in 2022 to $2.9 billion in 2023, a 32% rise. This year, exports are expected to reach between $3.5 billion and $4 billion. Before the program, the export value stood at around $1 billion in nominal terms.

The “Paquete Contra la Inflación y la Carestía” (Pacic) was introduced in May 2022 by Andrés Manuel López Obrador to reduce inflation and ensure a stable food supply, as Mexico heavily depends on the United States. The program eliminated import taxes on several staple products, including meat, corn, rice, and eggs.

The program remains valid until December 31 this year. The major concern of Brazilian businesses is whether Pacic will be renewed by the new Mexican president, Claudia Sheinbaum. Apex and industry representatives are advocating for renewal while negotiating a trade agreement to secure permanent quotas or tariff reductions for Brazilian agribusiness.

“Pacic is a significant symbol for Brazil, but we don’t want it to be just a temporary measure. We want to expand our trade agreements with Mexico and, in line with our strategy to ensure food security, make this successful partnership permanent and not reliant on renewals,” said Laudemir Muller, agribusiness manager at Apex Brasil.

Some producers, according to sources, are holding off on investments while awaiting a decision from the Mexican government. Muller stated that if the program becomes permanent or is included in a trade agreement, there is potential for even greater growth in agribusiness exports to Mexico.

The chart below builds on DataLiner data to reveal Brazil’s top exports to Mexico in the first eight months of 2024.

Top Exports to Mexico | Jan 2024 – Aug 2024 | WTMT

Source: DataLiner (click here to request a demo)

Food Inflation

An argument presented by Brazilian businesses to persuade the Mexican government to renew the measure is its impact on prices. Food inflation in Mexico fell from 13.2% in 2022 to 8.2% in 2023, and to 6.2% in 2024, following the introduction of Pacic. Brazil is Mexico’s main partner in this program and ranks second overall in agribusiness, behind the United States.

“Brazil has tripled the supply [of agricultural products] and helped reduce food inflation in Mexico. Brazil is a more competitive supplier, even more competitive than the United States,” Muller said.

Another argument is that Mexico imports the raw materials and sells the processed products with higher added value, which benefits the Mexican industry and does not result in job losses in the country.

During the Brazil-Mexico Business Forum, an event held on Monday (30) by Apex in Mexico City, Antonio Camardelli, president of the Brazilian Beef Exporters Association (Abiec), said that Brazil has the capacity to provide a consistent supply of beef to Mexico. “Another important point is that we are not retail predators. We want to provide complementary exports,” he emphasized.

Carolina Machado, manager at the brokerage Expoente Agronegócios, which specializes in rice, stated that Brazil is capable of meeting Mexico’s needs without compromising domestic demand.

Source: Globo Rural

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