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MEXICAN AGRICULTURAL TRADE UNDER NAFTA: AN ASSESSMENT AFTER FIVE YEARS OF IMPLEMENTATION

MEXICAN AGRICULTURAL TRADE UNDER NAFTA: AN ASSESSMENT AFTER FIVE YEARS OF IMPLEMENTATION Andrés Rosenzweig San Diego, California February 2000. WHY THE ANALYSIS OF TRADE FLOWS WITH NAFTA ARE IMPORTANT. Contribution to the overall trade balance. Identification of technological changes.

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MEXICAN AGRICULTURAL TRADE UNDER NAFTA: AN ASSESSMENT AFTER FIVE YEARS OF IMPLEMENTATION

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  1. MEXICAN AGRICULTURAL TRADE UNDER NAFTA: AN ASSESSMENT AFTER FIVE YEARS OF IMPLEMENTATION Andrés Rosenzweig San Diego, California February 2000

  2. WHY THE ANALYSIS OF TRADE FLOWS WITH NAFTA ARE IMPORTANT • Contribution to the overall trade balance. • Identification of technological changes. • Indicator of sector performance. • Assessment of the vulnerability of the trade balance to “shocks” • Responsiveness of exports to competitive advantages

  3. HOW TO FOLLOW MEXICAN TRADE PERFORMANCE • Main sources of information: • BANXICO • SICM • INEGI • Main problems: • Degree of aggregation of data • Consistency of time series • Consistency with WTO definitions • Time consuming for processing data bases • Performance of primary sector and processed products.

  4. AGRI - FOOD PRIMARY Agriculture Livestock Agriculture Livestock Cereal derivatives Bovine Cereals Bovine derivatives Swine derivatives Oilseed derivatives Swine Oilseeds Poultry derivatives Vegetable derivatives Poultry Vegetables Fruit derivatives Ovine Fruits Ovine derivatives Dried vegetables derivatives Goat Dried vegetables Goat derivatives Tuber preparations Dairy Dairy preparations Tubers Industrial crops derivatives Eggs Forages Industrial products Other industrial preparations based on llivestock products Wines, spiritous and alcoholic beverages Honey Flowers Other livestock products Other preparations based on agricultural raw materials Other crops A PROPOSAL TO MANAGE SICM DATABASE PROCESSED PRODUCTS

  5. Concept Concept Concept Agriculture and livestock Trade Balance Exports (A) Agriculture Livestock Imports (B) Agriculture Livestock Processed food, beverages and tobacco Trade Balance Exports (C) Processed agricultural products Processed livestock products Imports (D) Processed agricultural products Processed livestock products Agrifood Trade Balance Exports (A+C) Agriculture Livestock Imports (B+D) Agriculture Livestock BASIC DEFINITIONS

  6. P Livestock P 3 Poultry P 3 1 Live fowls 3 2 P Meat offal of fowls, no cut in pieces P 3 3 Meat offal of fowls, in pieces 3 4 P Other fowl pieces AN EXAMPLE TO USERS

  7. 13,000 ARG = 12.0% (90-98) and 10.3% (93-98) 11,000 9,000 ARG = 9.9% (90-98) and 11.6% (93-98) 7,000 5,000 3,000 1,000 (1,000) (3,000) 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 Exports Imports Agri-food trade balance AGRI-FOOD TRADE BALANCE MEXICO- US AND CANADA(Million dollars)

  8. YEAR 1990 1991 1992 1993 1994 1995 1996 1997 1998 Agriculture and Livestock Trade Balance 107 90 (613) (250) (1,001) 951 (1,313) (732) (951) 2,103 2,240 2,103 2,483 2,559 3,620 3,174 3,400 3,704 Exports 1,996 2,150 2,716 2,733 3,560 2,669 4,488 4,132 4,655 Imports Processed Foods, Beverages (395) (403) (797) (934) (1,135) (423) (317) (465) (672) and Tobacco Trade balance 523 586 612 750 890 1,103 1,423 1,577 1,883 Exports 919 989 1,409 1,685 2,024 1,526 1,740 2,042 2,555 Imports Source: SECOFI. AGRI-FOOD TRADE BALANCE MEXICO- US AND CANADA(Million dollars)

  9. 25% 30.0 25.0 20.0 12.7% 15.0 7.8% 10.0 5.0 0.0 MEXICO (1989-1993) MEXICO (1994-1998) FAO AGRIFOOD IMPORTS TO TOTAL EXPORTS • A ratio < 25% of agrifood imports to total exports is sound in terms of food security. (FAO) • For Mexico this ratio was 12.7% (1989-1993) and 7.8% (1994-1998).

  10. PRIMARY PROCESSED FOOD, SECTOR BEVERAGE AND TOBACCO SECTOR GDP average rate of growth */ 1.2% 3.2% 1993-1998 Deficit sector as share in total agri-food deficit 1990-1992 20.7 79.2 1996-1998 67.3 32.7 * / Source: INEGI PERFORMANCE OF GDP • The performarce of the primary sector (agriculture and livestock) in terms of trade and production has not been as good as the processed food and beverages sector.

  11. Average 90-98 90 91 92 93 94 95 96 97 98 672 Agriculture 364 87 283 -130 1,051 -594 305 276 257 -257 -582 -700 -534 -870 -100 -719 -1037 -1,227 -670 Livestock Agriculture Processed products -227 -178 -474 -539 -680 -67 -10 -110 -260 -283 -354 Livestock Processed products -168 -225 -322 -396 -455 -356 -308 -412 -333 TRADE BALANCE MEXICO - US AND CANADA(Million dollars)

  12. 2,500 2,089 1,986 2,000 1,774 1,764 1,622 1,447 1,338 1,500 1,252 992 985 859 1,000 687 500 0 1993 1994 1995 1996 1997 1998 Exports Imports EXPORTS OF FRUITS AND VEGETABLES AND IMPORTS OF MAIZE, BEANS, WHEAT AND SORGHUM TO NAFTA PARTNERS(Millon dollars)

  13. CROP 1993 1994 1995 1996 1997 1998 Rice 287,180 373,616 367,030 394,075 469,455 458,112 Beans 1,287,573 1,364,239 1,270,915 1,349,202 965,056 1,260,710 Maize* 18,125,263 18,235,826 18,352,856 18,025,952 17,656,258 18,454,710 Wheat 3,582,450 4,150,922 3,468,217 3,375,008 3,656,594 3,235,080 Sesame 22,638 8,862 21,081 47,397 21,466 31,652 Cotton** 41,824 187,053 343,874 420,892 347,690 387,968 Safflower 63,885 63,924 113,267 181,590 163,391 171,219 Soybeans 497,566 522,583 189,774 56,074 184,526 150,296 Barley 540,529 307,266 486,636 585,754 470,671 410,766 Sorghum 2,581,072 3,701,120 4,169,898 6,809,490 5,711,564 6,474,842 Total 27,029,980 28,915,411 28,783,548 31,245,434 29,646,671 31,352,783 SOURCE: De 1993 a 1997 Centro de Estadística Agropecuaria y 1998 Dirección General de Agricultura, SAGAR. *Incluye maíz blanco y amarillo. **Algodón semilla. BASIC CROPS PRODUCTION MARKETING YEAR, TONS • In 1998, the production of the basic crops was 31.3 million tons, mean while in 1993 was 27 million tons (ARG of 2.8 per cent)

  14. 1994 1995 1996 1997 1998 ARG*/ Product 1998/94 Carcass meat 3,451.0 3,704.9 3,589.5 3,805.7 4,028.7 3.9 Bovine 1,364.7 1,412.3 1,329.9 1,340.1 1,379.8 0.3 Swine 872.9 921.6 910.3 939.2 960.7 2.4 Poultry 1,144.4 1,303.4 1,284.0 1,460.9 1,619.5 9.1 Dairy 7,461.5 7,537.6 7,709.3 7,968.6 8,442.0 3.1 Eggs 1,246.2 1,242.0 1,328.9 1,328.9 1,461.2 4.1 PRODUCTION OF BOVINE, SWINE AND POULTRY CARCASS EQUIVALENT 1994-1998 1,619.5 1,800.0 1,600.0 1,379.8 1,364.7 1,400.0 1,144.4 1,200.0 960.7 872.9 1,000.0 THOUSAND TONS 800.0 600.0 400.0 200.0 1994 0.0 BOVINE MEAT SWINE MEAT POULTRY MEAT 1998 DOMESTIC LIVESTOCK PRODUCTION Thousand tons

  15. CONCLUSIONS • Mexico and NAFTA partners are complementary in agriculture. • Access to foreign markets will not be the most important constraint for exports • Need to overcome structural problems. • Schemes for a better integration between primary sector and food processing industries.

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