Mexico Offers Farmers Price Guarantees to Curb Imports

Newly elected Mexican President Andres Manuel Lopez Obrador is offering farmers new price guarantees to curb the country’s reliance on agricultural imports. The president, who took office Dec. 1, has lamented Mexico’s reliance on imported food, especially wheat and rice, and advocated a path to self-sufficiency going forward. Mexico currently buys 85 percent of the rice it consumes and 70 percent of the wheat.

The price guarantee program will benefit producers of corn, beans, wheat, rice, and milk, and hopefully spur greater domestic production. Beginning in 2019, the Mexican government will subsidize these commodities at the following rates:

Corn: 5,610 pesos (US $293) per tonne up to 20 tonnes maximum

Beans: 14,500 pesos (US $757) per tonne up to 15 tonnes maximum

Wheat: 5,790 pesos (US $302) per tonne up to 100 tonnes maximum

Rice: 6,120 pesos (US $320) per tonne up to 120 tonnes maximum

Milk: 8.2 pesos (US $0.43) per liter

Raising the guaranteed prices for these crops further over time was also mentioned, but a time frame for the price increases was not provided. It’s unclear whether the new price guarantees for certain crops will cause farmers to shift planting intentions.

Other price supports are currently available for Mexican producers. Between 1993 and 2013, many Mexican farmers were supported through PROCAMPO, a program of direct cash payments determined by a farm’s area under production, to a maximum of 100,000 pesos. PROCAMPO primarily benefited subsistence growers in developing rural areas who are more exposed to lower trade protections.

Beginning in 2013, PROCAMPO became PROAGRO Productivo, which retained most of the elements of PROCAMPO but with further incentives aimed at increasing agricultural productivity in line with Mexico’s domestic production goals. PROAGRO Productivo continues to support crops such assugar and sorghum, which President Lopez Obrador’s new price guarantee program does not cover.

Gro Intelligence subscribers can follow developments in Mexican agriculture by using our advanced data analytics platform, now including monthly updates from Mexico’s Agrifood Information Service, or SIAP. You can use this link to view some examples of Gro’s SIAP displays.

Mexico’s imports of wheat and rice have grown, as domestic production has fallen in recent years (left chart). The map on the right shows Mexico’s principal corn-growing districts, which SIAP calls municipalities, with darker shading indicating higher producing regions.