Mexican Companies Craft Plan to Sidestep U.S. Grain Imports

February 22, 2017 05:28 PM

One of Mexico’s largest business groups is working on a bargaining chip ahead of talks to renegotiate the North American Free Trade Agreement: finding alternatives to the U.S. for grain imports.

The Consejo Coordinador Empresarial, one of the nation’s top business chambers, is examining countries such as Brazil and Argentina to add new sources for soy, corn and wheat, according to Juan Pablo Castanon, the group’s president. Exports from those countries could help Mexico adjust to the difficulties that a Nafta renegotiation might present, he said.

“The renegotiation might bring increased costs to imports, and our own exports might be hurt, so we need to find new markets,” he said in a phone interview, adding that the group’s efforts are still in the initial stages. The chamber, established in 1976, represents the country’s main agricultural, industrial and financial industry organizations, among others.

A move by Mexican businesses to import raw materials from other countries could hit U.S. farmers hard. Mexico is the largest buyer of U.S.-produced corn, spending $2.5 billion in the 2015-2016 season, ahead of Japan’s $1.8 billion, according to the U.S. Grains Council. Mexico has spent $800 million on U.S. corn so far in the current season. The country is the second-biggest client for U.S. beef, having bought $1 billion in the 2015-2016 season, trailing only Japan.

Mexico is preparing to hold talks with Canada and U.S. President Donald Trump, who has threatened to withdraw from Nafta if his partners aren’t willing to renegotiate a deal that he blames for destroying American jobs.

“We’d like to keep the trade deal as it is, but right now we have to look for alternative producers and Brazil and Argentina could work,” Castanon said.

Big Client

The CCE, as Castanon’s group is known, consults regularly with Mexican government officials and is part of the “room next door,” a group of experts that assists the nation’s trade representatives in Washington, he said. The group is also in constant contact with its counterparts in the U.S. and Canada. Mexican President Enrique Pena Nieto attended the CCE’s 40th anniversary celebration last week.

Mexico’s Economy Ministry declined to comment.

The push is not limited to grains, Castanon said. Other imports such as meat are also being considered. “An economy as important as Mexico’s needs to have secure supply sources on many fronts,” he said.

Sigma Alimentos SA, the meat-packaging unit of Mexican conglomerate Alfa SAB, is looking into countries such as Brazil and Chile as new sources of raw materials, Chief Financial Officer Eugenio Caballero said on a call with investors last week.

Switching suppliers isn’t as easy as flipping a switch. Mexico depends heavily on rail for imports from the U.S. and Canada, which wouldn’t work for goods from South America. But Mexico’s ports could handle imports from the south, and the benefits would outweigh the costs, Castanon said.

“We need to open new doors,” he said. “As the trade talks progress, we’ll see how we need to make use of them.”

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Spell Check

Lansing, MI
2/28/2017 12:26 AM

  Dave, you post makes no sense. Did you not read the content of the article and the risk to the U.S. should Mexico (and others) find alternative sources for supply? If this happens, watch commodity crop prices crumble thus farm income drops even further. Farmers across the country will be filing bankruptcy because they won't have the income to farm. Your hatred towards Mexico (and immigrants in general?) has clearly clouded your thinking. Please try to see the bigger picture here.

auburn, IN
2/23/2017 08:05 AM

  Fine , Mexico, US needs to close the border permantly, nothing comes in to the US, no fords, chevs, no fruits and vegie, no tourists, no drugs, and round up 11,000,000,000 illeagals and ship them back,

HL Cowan
Lafayette, IN
2/23/2017 09:25 AM

  Dave, So our goal is to tank corn prices and send auto prices soaring? In the meantime fruit and veggie prices soar making it more expensive to live in the US. What a great way to make America great again


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