Overview
This research comprehensively analyzed the Mexican maize economy, examining national maize production and the trade relationship between the USA and Mexico. Despite Mexico's significant maize land acreage, a critical issue highlighted is the marginalization of maize growers due to prevailing rainfed farming practices and outdated methodologies, which limits their contribution to national and global food security. The study concludes that maize farmers are ensnared in a flawed business model where the market is largely confined to local households, while imports fulfill the growing industrial demand, thus limiting price flexibility and sacrificing economic feasibility. Previous government initiatives to support staple crop farmers have largely failed due to resource mismanagement, cultural resistance to modernization, and market detachment. The paper aims to offer insights for understanding this dilemma and establishing a basis for NAFTA's renegotiations in 2026.
Methodology
The study employed a quantitative analysis over two decades (2005-2022), drawing on agroindustrial statistics, development indicators, and trade details. The methodology involved two main parts:
1. National Maize Production System Analysis: This characterized the national agroindustry at the state level based on agricultural parameters and socio-economic development indicators (Human Development Index, income, health, and education levels). Factors such as Average Farm Revenue (AFR), Maize Agroindustry Development (MAD), maize land share, rainfed and irrigated maize land yields, irrigation share, and maize price were evaluated using linear regression.
2. USA–Mexico Maize Trade Profile Analysis: This part evaluated the dynamics of maize imports and Mexican consumers' preferences based on price desirability. It analyzed traded volumes of yellow and white maize varieties and the importance of price in influencing purchasing decisions for competitively priced imported grains versus domestic options. Transportation costs via sea and rail routes from the USA were also examined. The Imports Penetration Index (IPI) was utilized to estimate Mexico's dependency on imported maize grains.
Key Findings
• Production Disparities: Mexico's national production heavily relies on white maize, primarily cultivated in central and southern states under rainfed conditions, leading to low productivity (e.g., Chiapas, Veracruz, Oaxaca with 1.4-2.2 ton/ha, far below commercial standards of 6-9 ton/ha). In contrast, northern, more agriculturally developed states demonstrate diversified and efficient farming practices, often utilizing irrigation, and achieve higher yields.
• Import Dependency: Mexico is a major importer of yellow maize for industrial and feedstock purposes, with USA supplying over 80% of national yellow maize demand between 2005 and 2022. The Import Penetration Index (IPI) for all maize increased from 23.2% to 36.8% during the study period. There's also a growing reliance on imported food-grade white maize, with its Import Penetration Index surging from below 1% in the mid-2000s to over 5% by 2018.
• Economic Uncompetitiveness: Domestic maize grain prices in Mexico are generally higher than global and USA averages (e.g., 307-340 USD/ton nationally compared to 273 USD/ton globally and 268 USD/ton in USA). This price disadvantage, coupled with well-developed logistics infrastructure for imports, compels industrial consumers to prefer more affordable imported grains.
• Socio-economic Links: The research identified a negative correlation between a state's development indicators and the likelihood of farmers choosing maize as their primary crop. More developed states tend to diversify their agricultural portfolios, while less developed states predominantly cultivate maize.
• Challenges in Modernization Efforts: Programs like MasAgro, aimed at modernizing traditional rainfed maize farming, showed technical success but faced hurdles such as cultural resistance to new practices, limited access to hybrid seeds, and complex farmer-market dynamics.
• Rising Transportation Costs: Mexico's annual transportation costs for imported maize from the USA surged from over 300 million USD in 2005 to nearly 1.44 billion USD in 2022, primarily driven by increases in rail freight fees.
Implications and Recommendations: Mexico's significant reliance on imported maize, particularly for industrial uses, renders its food industries vulnerable to global trade tensions, potential tariffs, and supply chain disruptions. Such disruptions could lead to inevitable price increases for maize and, consequently, for downstream products like poultry, beef, pork, and snacks, impacting household welfare.
The paper strongly recommends:
• Direct engagement of public and private stakeholders in the technological upgrading of traditional rainfed farmers, including risk coverage mechanisms for proposed innovations.
• Encouraging crop diversification and industrialization of maize farming, especially in southern regions, to capitalize on niche market opportunities for higher-value crops.
• For Mexican decision-makers, it is crucial to thoughtfully consider the future implications of food sector overdependence on imported maize grains during the upcoming NAFTA renegotiations in 2026.
• Reframing agricultural analysis to consider land acreage in low-productivity regions, which have often been overlooked in academic and policy research.