President Donald Trump's administration has criticized free trade agreements and what it calls “unfair practices” allegedly coming from Mexico that are harming the United States' industrial complex. However, undesirable consequences have already been noticed in the North American economy and the most affected sector is agribusiness.
Mexico, one of the largest buyers of food in the United States, has announced the search for new sources of supply precisely from major competitors. The idea is to reduce purchases from northern neighbors even before any type of change in the North American Free Trade Agreement (NAFTA).
Argentina has negotiated the entry of fresh eggs. Mexican diplomats have already announced the authorization of future imports of Brazilian rice. Argentina is trying to release its lemons and other juices for Mexican tables. Bringing in beef from both South American countries is also being considered, but one question remains: Will Argentina and Brazil be able to supply corn and soybeans to Mexico replacing the United States?
Mexicans already say that South American corn will be free from surcharges, according to a report by Portal agriculture.com signed by the site's correspondent in South America, Luis Vieira.
Tom Sleight, president and CEO of the United States Grains Council, believes the United States still has a significant logistical advantage. Shipments to Mexico are made by truck, ship and trains – much cheaper compared to South American counterparts. He admits, however, that some damage has already occurred to American agricultural exports.
“We still have to wait to find out what will happen. We have been talking to the Trump administration every day about these risks and I am sure they have understood these risks. It is possible that in the coming years Mexico will purchase corn from other sources,” Sleight told Agriculture.com.
A Cargill operator in Argentina does not see much possibility for the country to sell corn to Mexico: “One third of Mexican purchases come from the United States by rail, making it very difficult to compete by sea.” On the other hand, some say that Argentina has the potential to export more grains to Mexico by reducing internal transport costs by reactivating old modes of transport.
“Argentina has always sold a lot of three basic products: corn, sorghum and soybeans. The volumes sent to North America were very high until the signing of NAFTA. I would not be so sure that, with the return of tariffs, we would not be competitive”, analyzed Gustavo López, director of the consultancy AgriTrend in Buenos Aires.
Brazil expects to harvest a volume of 100 million tons of corn this year, if the weather cooperates. Although the safrinha harvest is still a long way off, experts see great potential in Mexico.
“Mexico should give preference to expanding purchasing volumes from Brazil, including grains and meats,” said professor Marcos Fava Neves from the Business School of the University of São Paulo, an expert in agribusiness.q
Source: Agrolink
