Farmers Forecast Bumper Export Crop To Mexico

In five years US has turned a trade deficit into a lucrative market. OPENING TRADE DOORS

IN a dramatic turnaround for their agricultural products, United States farmers are expecting a bumper crop of exports to Mexico this year - up threefold from 1987's sales of $1.2 billion.

This would push Mexico from its current third place to No. 2 for US agricultural exports.

In 1987, the US had an agriculture trade deficit, importing $700 million more from Mexico than it exported, the US Department of Agriculture (USDA) reports. Bulk commodities, like coarse grains and soybeans, made up much of the exports.

But today the trade relationship has changed.

"Now you see a trend towards high-value products," says Richard Barnes, USDA trade minister in Mexico City.

These "high-value products" - consumer-oriented items like canned fruits, snack foods, wine, beer, and red meat - are finding a place in Mexican markets.

Currently, about 70 percent of US farm exports to Mexico are high-value products, according to USDA, and they could amount to $2.4 billion in shipments in 1992.

As world agricultural trade changes, some US states are finding Mexico a profitable partner.

Meanwhile, some traditional customers, like Russia, are not buying as they did before, making Mexico an attractive alternative, says Roberto Restepo, the Illinois Agricultural Department representative in Mexico City.

A US Midwest agriculture research and trade office agrees that the collapse of the former Soviet Union and the breakup of Eastern Europe have ruptured certain trade ties.

"Most people in Midwestern states feel they have to expand beyond traditional markets," says Cindi Griglione, Mexico project manager for the Midwest Agribusiness Trade Research and Information Center (MATRIC) in Des Moines, Iowa.

Ms. Griglione points to Mexico's 1986 entry into the General Agreement on Tariffs and Trade, the international trade regime, as a key factor in growing US exports to Mexico. As Mexico dismantled its trade barriers, US agricultural products flowed south at an unprecedented rate, she says.

This month, the US Agricultural Department will open a specialized trade center dedicated to promoting sales of US grains, meats, timber, and other products in Mexico.

"The idea is ... to take advantage of liberalized market conditions," says the USDA's Barnes.

A group of Illinois farmers toured the states of Mexico and Queretaro in August to survey land to grow corn. In turn these state governments and private banks hope to update agricultural techniques.

New constitutional changes in Mexico have opened the gates to foreign investment in agriculture, transforming land policies that have been sacred since the 1917 revolution.

"By nature, the constitutional changes will encourage outside firms to invest," Barnes says.

Mexican producers will likely welcome US agribusiness with open arms. Ninety-two percent of agricultural producers here want a foreign partner, according to an August survey by the Monterrey-based daily El Norte. Respondents said foreign capital, technology, and international experience would benefit Mexican agricultural sales.

US farmers in general are interested in investing in agricultural products that are consistent with Mexico's soil conditions and lack of water, says Sergio Martin, vice president of MacroAsesoria, a Mexico City research organization. "I see this as a trend," Mr. Martin says.

In addition, investors are focusing on labor-intensive products, such as coffee, to take advantage of Mexico's inexpensive workers, Martin says. "It won't take employment from the US because these products typically are not produced in the United States," he notes.

MATRIC's Griglione says other Midwest corporations have established farms in Mexico to grow fruit and vegetables for export to the US.

"Many farmers believe the ideal trade relationship works both ways," she says.