Mexican agribusinesses express concern about NAFTA
MERIDA, Mexico—Mexican agribusinesses are concerned about the renegotiation of the North American Free Trade Agreement. Many Mexican companies already have been buying South American grains and oilseeds over the last year to be proactive, in case the talks are not successful.
Proteinas Yoleicos, located in Merida, is one of the largest soybean processing plants in Mexico. The plant normally gets 70 percent of its soybean supply from the U.S. However, they have started to switch over to Brazilian sources because they are concerned about the future of NAFTA. Ricardo Acevedo Vales, sales manager for Proteinas Yoleicos Soymeal, says they need to be prepared in the event either country withdraws from NAFTA and the tariffs on U.S. imports like soybeans return.
"Right now with this equation we don't know if maybe taxes will be raised or something," he says. "We are moving and starting to explore the South American market."
Magaly Tapia Santos is the plant manager for GCM, or Granjas Carroll de Mexico, in Vera Cruz. The company produces 1.4 million hogs per year and manufacturers their own feed. She says they rely on the U.S. for their feed ingredients because local farmers cannot grow enough corn or soybeans to supply the plant. She says they are closely watching the NAFTA talks.
"We are very concerned about that because we are very dependent of the American corn and soybeans," Santos says. "Eighty percent of our formula came from there so we are very concerned about that."
However, officials with Mexican ag companies agree South America isn't their first choice for imports because the U.S. is duty-free and they can get product in around 48 hours versus 12 to 14 days from areas of Brazil.
"It's not the best way," says Edmundo Miranda, the lead at Gramosa Commercial. "The transits for the vessels are much, much longer. The freight rates are much higher, so for sure we will prefer to work with the U.S."
However, he says they were forced to look at the South American market.
"We develop a pipeline between South America and Mexico for beans and for corn ourselves just to see if it will be profitable and doable," Miranda says.
Company officials believe that 24 years after the implementation of NAFTA, the trade deal has been beneficial for both countries.
"We are neighbors. We have some products you need, you have some products we need," says Jorge Enrique Banos, spokesman for Port of Vera Cruz.
Valdemar De La Garza is a marketing consultant with Agromercados De La Garza. He says Mexico imports 90 percent of their soybean and meal needs, and the majority comes from the U.S.
"We import a lot of what we need from the states, so that's why it's very important," he says.
Vales says the countries need to work together to modernize and make the trade deal better for everyone.
"It's important that the companies from the U.S. and Mexico get together, work together in order to improve what we are doing," he says.
Despite rhetoric that Mexico or the U.S. were on the verge of walking away from the deal, Vales doesn't believe Mexico will withdraw from NAFTA.
"Mexico wants to stay ... and wants a good agreement. We're sure that will happen," he says.
Vales says they've also talked to American agricultural companies, and they share that sentiment. Ricardo Moreno, his colleague at Proteinas Yoleicos, is a purchasing manager for the processor and agrees they don't want either country to withdraw.
"It's just going to make things complicated, prices are going to go up. So, I think it's a treaty that must continue," Moreno says.
U.S. farmers also support NAFTA and want to make sure any renegotiation does no harm to agriculture. In fact, South Dakota soybean farmers on the recent See for Yourself trade mission in Mexico reassured their customers they value NAFTA and the Mexican market. Todd Hanten farms near Goodwin, S.D., and serves on the South Dakota Soybean Research and Promotion Council.
"We made it clear that we would like to see it continue and no matter what, we certainly want to keep their business," Goodwin says.