Skyrocketing North American fruit and vegetable imports are coming from many sources. Mexican imports are the poster child for the category. Land ports make Mexico an unsurprising source for being the primary source of those imports.
Well beyond this obvious fact, the United States’ southern border is the gateway to a land that is ideal in many ways for providing fresh fruits and vegetables. Providing a solid perspective on such things is Dante Galeazzi.
TIPA’s role is to serve the interests of Texas fruit and vegetable growers. TIPA also represents Texas businesses that handle imported fresh Mexican produce. As to potential threads of conflicting interests therein, Texans live the pro-business savvy favoring the proverbial “rising tide.”
Galeazzi says Mexican imports have increased because of access to a long list of Mexican resources that are unavailable for producers in the U.S.
Mexican Vegetables Imports Set the Table
A November 2021 USDA report indicates that in 2020, Mexico accounted for a healthy 77% of U.S. fresh vegetable import volume. (Canada, a distant number two, represented 11% market share.)
The USDA explains import demand: “U.S. consumers have pushed for greater consistency in supermarket produce and expanded demand for year-round availability of virtually all fresh vegetables. Between 1998 and 2020, the volume of fresh vegetable imports increased nearly 200 percent, and the value of fresh vegetable imports grew to exceed fresh exports by $7.6 billion, more than double the same figure a decade earlier.”
USDA figures for 2019 showed U.S. total imports of agricultural products from Mexico totaled $28 billion, making Mexico the largest such supplier. Leading categories include “other fresh fruit” ($6.9 billion) and fresh vegetables ($6.3 billion).
Wine and beer ($4.0 billion) and snack foods ($2.3 billion) came in third and fourth. Processed fruit and vegetables came in with a hefty value of $1.8 billion.
Tridge.com indicates that Mexican tomato exports to the U.S. were valued at $2.48 billion in 2021.
USDA’s analysis of domestic census and trade data shows Mexican and Canadian producers have dominated the U.S. import market by offering protected culture—or greenhouse—imports as well as organic options, which increased choices for consumers. While conventional and field-grown fresh vegetables still account for most imports, organic and greenhouse vegetables are expanding market reach.
According to Avocados from Mexico (AFM), Mexican avocado exports to the U.S. doubled, from 1.2 billion pounds in 2014 to 2.4 billion pounds in 2021.
Stephanie Bazan, AFM’s vice president of shopper and trade marketing, said, “In the past seven years alone, U.S. per capita consumption of avocados from Mexico has doubled – it’s now at nine pounds per capita per year. Americans love avocados, and Mexico has an abundant supply of the fresh and flavorful fruit, arriving to the U.S. in just three- to five days.”
Practical Ag Production Advantages
In the U.S. there is a well-documented history of an agricultural labor shortage going back 100 years. That situation is only getting worse.
Labor is starting to be a challenge under certain conditions in Mexico, but unlike in the U.S., there is still a good labor pool, Galeazzi notes.
The ongoing water shortage in the Western U.S. has impaired agriculture production and U.S. growers also face competition for land, and high levels of regulatory compliance, and oversight. And higher feeder stock cost has fueled skyrocketing agrochemical prices over the last year.
He adds, “Highway transportation costs have gone up and down dramatically over the last three years, but we saw a 100 percent increase in year-on-year transportation costs in 2021. In 2022 people have access to more equipment but truckers are facing more regulations on that equipment which is resulting in costly modifications for compliance.
Mexico has supplemented U.S. production for a long time. But NAFTA removed a lot of tariffs and quotas. This created immediate opportunities and attracted U.S. investments in Mexico. We saw production numbers increase very quickly in the following years.
Durango-Mazatlan Highway
Mexico’s second growth wave came after 2013 when road infrastructure improved dramatically. Then it really took off.
The Durango-Mazatlan highway, which opened in 2013, is one of the biggest drivers. This ultra-modern highway from production-rich West Mexico to South Texas’ entry points, replaced an antiquated, dangerous-in-every-way road through the Sierra Madres. Suddenly growers in Sinaloa, Jalisco, and rich Pacific coast states enjoyed a smooth ride on a direct route toward Eastern and Southeastern U.S. markets. This very substantially replaced the historic trade route up the level west coast, but headed to the northwest, in Nogales, AZ. For Sinaloa vegetable growers, Nogales is on the way to San Francisco and Seattle. But certainly not New York and Atlanta.
The transportation time from the west coast of Mexico was cut almost in half. Time and freight savings made for consistent timing in deliveries and superior arrivals because the refrigerated tractor-trailers had a much smoother ride.
USDA indicates in 2021, Mexican exports of fresh produce to the United States were 625,995 truckloads. This is a leap from 260,992 truckloads in 2007.
A Century of Maturation
Over a century ago, West Mexico growers started shipping wintertime tomatoes and other vegetables by rail to Nogales.
Some Nogales businesses have histories to the historical beginning.
A number of these companies started as and remained, distributors. Others were growers who added their own distribution with Nogales warehouses. While others Nogales distributors became vertically integrated by investing in Mexican farms. Such shifting takes place to this day.
With production cost increases - and consumer demand for a greater variation on American tabletops - pressure and opportunity built for U.S. companies to grow or at least partner in Mexico.
“In my opinion, the increasing costs to produce in the U.S., growth of knowledge and experience in Mexico, and the speed and ease of communication have translated into a wider variety of commodities being grown outside the U.S.” Galeazzi said.
“Mexico has grown strawberries for 30 years, but that production has exploded in the last 10 years. There is no major U.S. berry producer that does not have Mexican berry production now.”
More broadly, “Nowadays, there are more high-value items produced in Mexico with very good results.
“Growth in Mexican production has also been driven by demand in the marketplace. For example, proprietary grape varieties and other high-value specialty programs have been tailored as part of a planned production system to meet consumer demand – especially American consumers who go to grocery stores and feel these items should be there year-round,” Galeazzi said.
Traditionally, the produce industry serving U.S. consumers “once had production gaps, but by extending production to many regions, consumer demand and expectations are being met as the gaps are being or have been eliminated.”
Not Unique to Mexico
Galeazzi notes, “This is not unique to Mexico. Consider the mandarins and clementines produced offshore in South America, South Africa, and other places. Now they’re available 12 months a year because of international and domestic conditions.”
He believes this basis for U.S. demand from Mexico – and other countries – will bring nothing but expansion.
“We’ll see increases for a number of reasons. These include food security. You’ve got to expand production because people have to eat, and the global population will continue to grow.” Food will be needed, regardless of the source.
Conversely, given U.S. growers’ resistance to imports of Mexican products, Galeazzi observes, “If Mexico does not export to the U.S., that food will find another export market home.”
He observes “there will also be a growing demand for U.S. production. The question is how do U.S. growers deal with water and labor shortages, or political and societal changes?
“There is room for all growers. We have to feed the people.”
Privileged Consumers
Fortunately for most American consumers, their shopping list goes far beyond subsistence.
“Consumers are gaining knowledge in food and health, especially after the pandemic. With inflation,” Galeazzi observes, “supplemental nutrition such as vitamins will be replaced with fresh fruits and vegetables due to cost.”
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