Opinion: learning from the world's 'greatest' import market

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Opinion: learning from the world's 'greatest' import market

By Eric Viramontes, president of VISER

eric viramontesAs the story goes, one day a Mexican and an Israeli were chatting and the Mexican complained, saying, "Poor Mexico, so far from God and so close to the United States of America."

The Israeli responded, "No, you’re wrong! Poor Israel, so close to God and so far from America."

It’s interesting to analyze the situation of countries like Mexico that have the competitive advantage of being a neighbor to a country that many have catalogued as the greatest market in the world. The depth of what this truly means must be studied, however.

Twenty years after having formalized a free trade agreement between the three main countries in North America, Canada, the United States and Mexico, there is still controversy in my country over how beneficial this treaty has been for the sector.

There are hard facts that demonstrate exports from the primary sector destined for our neighboring country barely reached US$3.5 billion in 1994. It is estimated that by the close of 2013, they will already have surpassed US$20 billion for the United States alone. The total value of exports for the primary sector is US$23 billion.

However, there are industries that have been strongly affected by the entrance of agricultural products of North American origin. The meat and grain industries have resented competition from foreign products in their own territory.

On the other end we have the case of products like avocados, tomatoes, and berries, among other varieties of fruits and vegetables that have exponentially grown their foreign sales, thanks to the aforementioned market.

Simply put, total sales for avocados and tomatoes to the American union mean more than 11% of the total value of exports from the primary sector.

Without a doubt, growth of these exports means higher income, economic development and job creation.

Seen from a different angle, the gray part of this analysis is that the United States is certainly a market that is complicated, thankless and uncertain.

Don’t be mistaken. The game of globalized markets on the North American field is not a clean match. It can become a bit rough and you must be very competitive if you want to play.

On the one hand, they demand that their commercial partners enter their fresh products into our markets, bypassing phytosanitary risks and strongly pressuring opposing authorities. But when their industry losses competitiveness before the efficiency of other countries – as was the case in Mexican tomato dispute in the United States – they are creative enough to dress up protectionist practices with regrettable events, such as possible infectious outbreaks or supposedly poor market practices like alleged dumping.

All the main fresh products that Mexico exports from its primary sector to the United States have gone through some sort of international dispute. These are overseen by rigorous regulation procedures and supervision of customs and the departments of commerce and agriculture, with the purpose of enforcing compliance with agreements and detecting irregularities that could suspend current agreements. Only through this will they allow us to enter their markets.

All of these processes are so vulnerable that tomorrow, due to subjective circumstances, they could close their doors, impeding the passage of our products through their borders without concern for the number of businesses and employees that would be affected. This is all justified through their vision and under laws totally designed to favor their interests.

When I see my country’s situation and confirm that more than 95% of exports from Mexican farms depend on such criteria, this is when I can agree with the friend from the story: “Poor Mexico, so close to the United States.”

The analysis becomes even more interesting when we realize countries that are further from the market in question, like Peru and Chile who have US$5 billion and $14 billion in primary sector exports, respectively. Today, the United States is an important market for them but it is far from being a priority.

It’s ironic to me that Mexico, as the Latin American country with the most free trade agreements, sends almost all of its exports to the United States and Canada alone.

The world’s largest market is uncertain and thankless but we must supply it. Even with their producers in Florida and California and with their many commercial interests, the reality is that the United States depends on Mexico and Latin America to fill its pantries.

Additionally, to be fair, I think we have won them over as a country. This difficult commercial relationship has become of mutual benefit.

That is the small part of the good news. By understanding the dependency of this nation in achieving its food security, it is easy to feel confident that Latin America, including Mexico, has opportunities in markets further away.

The great advantage of supplying the United States, even with its rigorous norms, is that after so many years of complying with their demands, we have become very competitive and efficient producers. I have said it many times but truly, I believe that the good agricultural practices and safety system we use in our fields and packing house are international examples of excellence.

Without a doubt, we have surpassed a countless number of requirements made by demanding clients in supermarket chains, distribution, wholesale and retail. And we have surpassed quality and post-harvest expectations.

I believe it’s safe to say that if the products from Mexican farms have achieved the competitiveness to survive the North American market, they can be accepted anywhere in the world.

Let’s speak about the real, greatest market in the world. I think analysis should be based on the opportunity, efficiency and self-evaluation of suppliers to satisfy the expectations of all of these potential clients. The biggest market is that which today means greatest growth opportunity and profitable, sustainable businesses.

We have to figure China into the equation and without a doubt, see what happens with other Asian countries, as well as Europe and other highly specialized markets. I think that it is necessary to create new commercial relationships, without leaving your neighbor out. I think we can play with high expectations on the fields of other continents.

Not “poor Mexico” at all. It’s great that we have a neighbor like ours that taught us to be competitive, efficient and to give a satisfactory answer to any demand. Thanks to this we can be assured that we are ready for new destinations to sell our agricultural products.

In the end, I think it must have been the Israeli who had it correct.

Follow Eric Viramontes on Twitter at @ervs_viramontes.


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