Mexico’s Import Dependency Deepens with U.S. Agricultural Dumping
By Timothy A. Wise and Stewart A.L. James, January 22, 2025
As a supplement to TITLE LINK, we provide here more detailed updates on the trends in Mexican import dependency and staple-food production. These trends were presented in the 2023 policy brief, Swimming Against the Tide: Mexico’s quest for food sovereignty in the face of U.S. agricultural dumping. That report, which documented a pattern of agricultural dumping from 2014–2020, was itself an update on a more thorough study of the effects of the North American Free Trade Agreement on Mexico’s farmers, Agricultural Dumping Under NAFTA: Estimating the Costs of U.S. Agricultural Policies to Mexican Producers.
This table from the 2023 report summarizes the trends through 2020.
The table shows:
· The growth in U.S. exports over two periods, from 1990–2 to 2006–8 and 2006–8 to 2018–20. The first period saw an explosion in exports following NAFTA. The second saw continued export growth for most products but at a slower pace.
· The impacts on real producer prices in Mexico over two periods: from before NAFTA to 2005, the end of the first period of dumping; and from 2003–5 to 2018–20, which includes the second dumping period 2014–20, to assess whether producer prices continued their decline or recovered. After producer prices plummeted between 48% and 68% in real terms immediately following NAFTA, farm prices in Mexico subsequently recovered a small share of that lost value for most food products.
· The impacts of each of the two export periods on Mexican production. For wheat and rice, production dropped due to low prices and import competition in the period immediately following NAFTA. Corn was the notable exception with production expanding 52%. Meat production continued to grow despite lower prices. In the second dumping period, crop production grew but relatively slowly, with the exception of beans and wheat, which saw continued production declines.
Our new research shows that, since August 2023, the United States has resumed its dumping of corn, with export prices on average 14% below production costs through December 2024. U.S. corn dumping had been at pause as U.S. export prices skyrocketed above production costs amid the COVID-19 pandemic, a trend protracted further by the Russia-Ukraine war’s impact on world grain markets. But dumping is now back, with a vengeance.
This resumption is not unique to corn, though we focus on it here as a particularly relevant case study. Our earlier report documented U.S. agricultural dumping in a number of other commodity markets including soy, wheat, cotton, and rice. It seems clear that the resumption of corn dumping is symptomatic of a broader trend across several crops. And USDA projections show that low prices will likely persist in coming years.
Whether these anticipated prices fall above or below dumping levels depends on future input prices, but there is reason to believe the unfair trade practice will persist. One study predicts that production expenses will increase due to inflationary trends in U.S. agriculture, meaning that export prices are likely to remain at dumping levels, below production costs.
Over the years since NAFTA, Mexico’s dependence on U.S. agricultural goods soared. The graph, from the 2023 study, shows the percentage of each key staple that comes from the U.S. in three different moments.
The new research updates the trends in import dependency. The graph below tracks imports as a percentage of apparent domestic consumption across four key food crops. Corn, shown in yellow, was outsourced at a steadily increasing rate between 2014 and 2020. Since the resumption of dumping in mid-2023, imports appear to be swelling once again, with the rate of dependency projected to reach an estimated 46% in 2024.
As our 2023 report explains in greater detail, under President Andrés Manuel López Obrador (2018–2024), Mexico began offering a number of government initiatives to increase production. For instance, the government guarantees support prices to some producers to counteract the market pressure from low import prices. It has also expanded the provision of free fertilizer and other forms of agricultural subsidies to some producers. As the graphs below show, these measures appear not to have been sufficient to stimulate production — with the exception of dairy — particularly in the face of prevailing drought conditions and the return of dumping. Production has failed to respond to government incentives for corn, beans, wheat, or rice.
It should be noted that estimates for 2024 differ between Mexico’s SADER — which claims a recent increase in production — and the less optimistic GCMA — which projects a major decrease, as visualized above. The latter estimate has been corroborated by one report on state-level rates of land area planted with corn. It is also worth bearing in mind that the volume of Mexico’s corn imports estimated by GCMA differs from that suggested by other sources. According to USDA-FAS, which tracks U.S.-Mexico agricultural trade alone, annual corn imports grew by over 50% between 2022 and 2024. GCMA, which considers all of Mexico’s trade partners, forecasts a lower number which implies a 21% increase over the same period. The picture should become clearer over the coming months as SADER releases official data on this past year. Still, even the most optimistic estimates imply a rate of import dependency greater than that in 2023 or any prior year.
None of this is to say that government initiatives have been fruitless; on the contrary, according to FIRA’s Panorama Agroalimentario Maíz, corn yield rates have risen to record highs in recent years. The stagnation we have been witnessing is far more likely due to observed reductions in area planted, due at least in part to discouraging price signals.
Meat and eggs
As with dairy, consumption of other animal products has been rising as Mexican diets become more diverse with rising incomes for some. Mexico has succeeded in increasing domestic production accordingly. Dairy and eggs have become two of the most important sources of animal protein in the Mexican diet, followed by poultry, pork and beef. NAFTA’s integration has led to a great deal of cross-border investment and production, making it difficult to fully account for U.S. or Mexican levels of production, exports and imports. That said, the trends are toward rising levels of Mexican production to meet rising consumer demand, with imports rising even faster. Because much of the growth in production is from factory farms, meat production is the largest driver of demand for yellow corn — which in turn feeds import dependency for that key product.
This graph reflects the following trends:
· U.S. pork exports increased more than 700% in the 12 years after NAFTA, and they jumped another 180% since then. Producer prices in Mexico fell more than 60% over that time frame. Still, Mexico-based production nearly doubled, some of that production coming from U.S. firms taking over slaughterhouses. U.S.-based Smithfield became Mexico’s largest pork producer. It has since been bought by a Chinese firm. Overall, Mexico’s import dependency has soared from less than 5% before NAFTA to more than 25% today.
· The story is similar in poultry. Since NAFTA, U.S. exports have increased more than 500% and producer prices have continued to fall to less than half their pre-NAFTA levels. Despite the price pressure, Mexican poultry production has grown by nearly 300%. Still, import dependency has grown from 6% to 23% since NAFTA.
· In beef, Mexican production has more recently kept pace with consumption, which has risen more slowly than it has for more inexpensive poultry and pork. In the 12 years after NAFTA took effect, U.S. beef exports jumped nearly 300%, pushing import dependency to over 20%. Producer prices in Mexico fell almost 50%. In the last 12 years, imports of finished beef from the U.S. have been relatively stable. Over the entire post-NAFTA period, Mexican domestic production has grown by about 70%, and import dependence has stabilized at about 9%. Because there is so much cross-border trade in the production process, including in live animals, it is difficult to interpret the data.
· Mexicans have the highest per capita egg consumption in the world, with table eggs serving as the population’s most important source of protein. A very small share of eggs is imported. Egg production has roughly tripled since NAFTA took effect, leaving Mexico with one key protein source that is produced overwhelmingly by Mexican producers.
President Claudia Sheinbaum maintains her predecessor’s commitment to improving food self-sufficiency in key products and promises to build on López Obrador’s initiatives. One welcome addition to government priorities will be investments in more efficient irrigation infrastructure. Drought has highlighted the urgent need to upgrade leaky irrigation systems, which support many of the larger scale farms growing corn and other crops in northern Mexico.
