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What About Mexico?

12/05/2014


This article was co-authored by Glenn Fraser and Maria Gonzalez, and originally appeared in Food in Canada.

Canada has long recognized export opportunities outside of North America and is working to expand market access in the EU and other emerging markets such as China, Russia, Indonesia and India through the Comprehensive Economic and Trade Agreement and Trans-Pacific Partnership and other bilateral trade negotiations.

While that is important, as consultants to the food and beverage processing industry we have to ask: what about taking full advantage of markets in which Canada has already entered into free trade agreements? What about Mexico, a country whose largest bread maker, “Grupo Bimbo”, is looking to acquire Maple Leaf Foods’ Canada Bread for $1.83 billion? Is this move indicative of a strong Mexican economy and an attractive marketplace for Canadian food processors? Should we be more proactive in capitalizing on markets like Mexico where we already have established open access?

This year, it is North American Free Trade Agreement’s (NAFTA’s) 20th anniversary, and Canada-Mexico bilateral agriculture and agri-food trade has been growing consistently since NAFTA came into effect.

Mexico is Canada’s fourth largest food trade partner. In 2011, Canada exported $1.72 billion of agri-food products to Mexico, with the top five exports being canola seed, non-durum wheat, fresh boneless beef, canola oil and canary seed. But there are ample unexploited opportunities for Canada’s food and beverage processors in the world’s 13th largest importer of agri-food products — and they are ripe for the picking.

With a population of 112 million and a GDP of $1.1 trillion in 2011, of which the agriculture sector accounted for 3.8 per cent, Mexico is the 14th largest economy in the world and the second largest in Latin America. Mexico’s income per capita is almost 30 per cent higher than Brazil’s, roughly twice as high as China’s and four times higher than India’s. The average population age in Mexico is just 26 years. By 2030, the working population will reach 62 million, almost the entire population of the U.K. This gives Canadian food processors a large population of consumers with incomes to spend, and provides a stable workforce at competitive wages.

Mexico also has an excellent business environment. According to the “Doing Business 2013” publication of the World Bank, Mexico ranks in 48th place out of the 185 economies compared on its business environment, performing better than Brazil, China and India. It offers a strong agricultural sector and a good business climate for Canadian companies. In addition, manufacturing costs are low and have been consistent, offering a major incentive for doing business there.

In recent years, Mexico has also increased investment in education. With greater levels of education come higher-paying jobs, leading to a growing consumer market for Canada. Getting into the market now could therefore result in even higher returns in the future.

Overall, Mexico provides Canadian processors with opportunities in a market that is close, mature and showing signs of economic growth. So, what about Mexico?