Bright future awaits NAFTA’s three amigos

03/15/2013 10:06:00 AM
Fred Wilkinson

Fred Wilkinson, Managing EditorFred Wilkinson, Managing EditorMcALLEN, Texas — While emerging markets in Asia and elsewhere may be the current focus the financial media and many big investment firms, the three NAFTA amigos — U.S., Mexico and Canada — are well positioned to prosper.

Panel discussions at the third annual America Trades Produce conference March 6-8 made a strong case for that prediction.

Presenter Carlos Vazquez, an economist from Mexico’s Institute of Technology, said trade between the U.S. and Mexico is worth well over $400 billion a year, with $18 billion in U.S. agricultural products heading to Mexico, which sends us $17 billion dollars in ag trade.

More than 90% of Mexican vegetable exports by volume go to the U.S., said ATP presenter Kenneth Shwedel, a former Mexico City-based economist for Rabobank who specializes in ag markets and works as a consultant.

Although a trade imbalance saw more than $60 billion dollars more head south than north, according to U.S. government figures, Vazquez pointed out that on average Mexican goods contain 40 cents worth of U.S. content, compared with pennies on the dollar for other major U.S. trade partners.

Trade with the U.S. is vital to Mexico, but Mexicans recognize opportunity lies elsewhere too, Vazquez said. The nation has signed more than 50 free trade deals around the world, he said, and is one of about a dozen nations (including the U.S. and Canada) taking part in the Transpacific Partnership trade zone talks, which aim to remove roadblocks to Asia-Pacific trade.

As an example of Mexican marketers looking to embrace these global opportunities, consider Eric Viramontes, who recently stepped down as director of Mexico’s protected horticulture trade group AMHPAC.

He talked about visiting countries such as Brazil, Costa Rica and Panama while at AMHPAC, trying to build demand in those markets for Mexican tomatoes, peppers and other vegetables.

“I’d be talking to them about tomatoes and peppers, and they’d be asking me about ajo (garlic) and citrus,” he said.

Meetings like this made him realize how much more Mexico’s fruit and vegetable producers have to offer and that he wanted to work to build foreign markets for more than just vegetables, he said.

Road to riches?

For several years now, shippers and importers have waited for the completion of Autopista Durango-Mazatlan, a highway from the growing regions of west Mexico to Texas ports of entry.

The road is scheduled to open later this year, promising more fruits and vegetables headed to Texas ports of entry like Pharr-Reynosa rather than reigning port of entry Nogales, Ariz.

Loads bound for East Coast markets up into Canada should save more than $1,000 per truck and about a day’s transit time.

Another development to keep an eye on, Shwedel said, is ports on Mexico’s Pacific coast, which could serve as entryways for fruit from Chile, Peru or Asia.

Compared to shipping through Los Angeles/Long Beach, Shwedel said, transit costs per truck would be up $1,500 less and 15 hours could be cut from transit time.

Fueling growth

While the U.S. is settling into four more years of an Obama administration, Mexico recently elected a new president, Enrique Pena Nieto.

ATP conference panelists seemed optimistic about his promises toward trade and economic development.

Along those lines, Pena Nieto has said he will energize state-owned energy company Pemex, aiming to join the booming oil and gas party that has been going in the U.S. and Canada thanks to hydraulic fracturing technology.

If Pena Nieto follows through on this, Mexico will likely to join the U.S. and Canada to form a North American powerhouse that could emerge as the center of world energy markets. (Note to President Obama: Don’t be a punk; green-light the U.S.-Canada Keystone pipeline.)

Secure and affordable of oil and gas supplies will help a produce industry that relies on these inputs for transit fuel — as well as synthesizing fertilizers, pesticides and herbicides. A growing oil and gas sector across North America should fuel a growing economy with well-paying jobs.

That would mean further growth throughout the economy, thanks to more disposable income in the pockets of Americans, Mexicans and Canadians.

And to paraphrase that old food industry truism, all those people gotta eat.

fwilkinson@thepacker.com

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