BMI View: While we expect solid growth for the Mexican agricultural sector out to the end of our forecast period in 2019, growth will be weaker than in previous years. Consumer demand growth will slow, particularly in key areas such as sugar and corn, where per capita consumption is already high. Competitiveness is also an issue, particularly in the grains, livestock and sugar sector.
|Agribusiness Market Value|
|BMI Market Value By Commodity (2011-2019)|
|e/f = BMI estimate/forecast. Source: FAO, BMI|
Corn production growth 201 3 /1 4 to 2018/19: 9.3 % to 25.0mn tonnes. There is potential for Mexico to significantly increase its grains production over the coming years, though growth will be restricted as we believe the area dedicated to corn is unlikely to grow considerably, and use of genetically modified seeds remains limited.
Sugar consumption growth to 2019: 11.3 % to 4.8mn tonnes. Sugar consumption growth will slow over the long term due to high base effects and increasing health consciousness in the country in the wake of high obesity rates. The one peso tax added to soft drinks prices in January 2014 is one of the first steps towards this.
Coffee production growth to 2013/14 to 2018/19: 14.5 % to 4.4mn bags. Agricultural techniques have improved in recent years and local and national government programmes are helping to improve infrastructure and education, which are likely to help boost production. However, growth will be largely due to base effects.
2015 real GDP growth: 2 . 8 % (up from 2.1% in 2014).
Consumer price index (average): 3. 6 % in 2015 (down from 4.0% in 2014).
Industry Trends And Developments
Mexican corn output will moderately decline in the upcoming 2015/16 season, as low corn prices will lead to stagnation in the area devoted to the grain, while yields will decline y-o-y as fewer agricultural inputs (such as fertiliser) will be used owing to low farmer incomes. We believe that corn output will decline by 2.1% y-o-y to 23.5mn tonnes, though this will still be the second-highest level of production in six years. Despite the decline in corn prices, corn production will hold up due to the lack of attractive alternative crops. Furthermore, strong demand (both actual and forecast) for corn from the livestock sectors and for human consumption will keep supply buoyant.
The Mexican livestock industry is in a financially strong place and will record good output growth over our forecast period to 2018/19. Out to 2018/19, growth in Mexico's poultry sector will outperform the general livestock complex. Output will increase by 8.1% on the 2013/14 level, to 3.2mn tonnes. Over the same time period, production will rise by 7.8% and 5.6% in the pork and beef sectors, respectively. Poultry output growth will outperform, as demand for the meat will be strong over the coming years and the sector will realise efficiency gains.