Agricultural Policy Monitoring and Evaluation 2021

19. Mexico

Support to agriculture

Mexico’s average producer support estimate for 2018-20 was 10% of gross farm receipts, about half the OECD average. Around 50% of total transfers to producers were in the form of market price support (MPS) through price regulations and border measures. Sugar and poultry meat had the highest MPS at 44% of total MPS. While trade liberalisation and domestic policy reforms in the 1990s led to considerable reduction in the most production- and trade-distorting support, MPS increased again after 2016.

Other important forms of support are based on electricity use, direct payments based on area and payments for afforestation and agroforestry.

General services expenditures (GSSE) represented 1% of agriculture’s value-added and 8% of the agriculture’s total support estimate (TSE), lower than the OECD average. Most of those expenditures are directed to agricultural technical institutes and vocational agricultural schools (50%), and inspection and control activities (20%).

Total support to agriculture in Mexico was 0.6% of GDP in 2018‑20, similar to the OECD average. Taxpayers provide 65% of these transfers, the remaining 35% coming from consumers.

Recent policy changes

In June 2020, the Mexican government published the Sectoral Programme for Agriculture and Rural Development 2019-2024, which guides implementation of the National Development Plan during those years. The Sectoral Programme focuses on three objectives: (1) improve agricultural productivity for food self-sufficiency, (2) reduce poverty rates in rural areas and (3) increase small-scale agricultural producers’ incomes.

The Mexican Ministry for Agriculture and Rural Development (SADER) targeted beneficiaries of area-based payments (Production for Wellbeing) to focus on producers with less than 20 hectares and those in marginalised indigenous communities in the country’s south-eastern states. The guaranteed minimum prices programme now includes medium-size maize producers with 5 to 50 hectares.

The Marketing Support Program of the Agency for Marketing Services and Market Development (ASERCA), which provided support for the purchase of financial instruments related to price volatility and contractual agricultural schemes, was dismantled. Support for financial instruments (price hedging, insurance and contractual agriculture) was suspended. Several programmes supporting livestock production and rural development were also dismantled.

SADER and the Ministry of the Environment and Natural Resources (SEMARNAT) are developing the National Strategy for the Conservation and Sustainable Use of Pollinators (ENCUSP) to promote conservation of pollinators and valuate the ecosystem services they provide.

Policy responses to COVID-19 included:

• Expanding by 200 000 the number of beneficiaries of the Sowing Life programme that distributes payments, plants and inputs for agroforestry projects to producers with incomes below the poverty line.

• SADER collaborated with the members of productive chains to make sure food supply, inventories and distribution are not disrupted. Particular attention was given to key chains such as grains, horticulture, poultry, beef, fisheries and aquaculture. Digitalisation services were expanded to speed up food imports. Up to 60% of administrative import is now done remotely by the Centre for Documentation and Judgement (CDD) of the National Service for Health, Safety and Agri-food Quality (SENASICA).

• Government recommendation to reinforce hygiene inspection systems in food production units and encourage consumers to follow hygiene practices when handling and preparing food.

Assessment and recommendations

• Throughout the 1990s and 2000s, Mexico made progress in reducing the most-distorting forms of support, including market price support, and payments based on outputs and on the unconstrained use of variable inputs. Nevertheless, these forms of support have increased since 2016, accounting for 62% of total support to producers and 6% of gross farm receipts by 2018-20. These measures keep farmers in uncompetitive activities, harm the environment, stifle innovation, slow structural and inter-generational change, and weaken resilience. Mexico should consider phasing out price regulations for sugar cane, border measures and payments based on electricity consumption, and continue efforts to re-orient payments to schemes targeting those in need.

• Mexico has advanced on reorienting its payment schemes to focus on those in need and on the provision of public goods. In particular, modifications made to area-based payments (Production for Wellbeing), focused on producers with less than 20 hectares and those in marginalised indigenous communities in the south-eastern states, are useful for improved targeting. The Sowing Life programme was implemented in 2019 to support agroforestry projects led by small farmers (with 2.5 hectares of available land) located in poor municipalities.

• Despite these efforts, improvements to current programmes are needed to ensure they deliver on their intended objectives. Eligibility for the Sowing Life programme needs to be reviewed so as to reduce farmers’ incentives to deforest their parcels in order to be considered for the programme.

• The majority of strategic programmes introduced by the current government in 2019 – in-kind loans to livestock producers, guaranteed minimum prices for small-scale producers and transfers to fertiliser consumption – target poor farmers. These can become costly and inefficient measures for helping small-scale and poor farmers, and have negative effects on the environment. For example, distributing fertiliser without consideration for soil needs can threaten water and air quality if applied beyond what is required.

• Transitioning to schemes that promote agrobiodiversity by using local plant genetic resources (one of the main ecosystem services that small-scale farmers in poor areas provide) could be more cost-effective for helping poor farmers and increase the resilience of agricultural systems and the genetic diversity of plants. More broadly, conditioning payments on the implementation of sustainable farming could reduce the sector’s environmental impact.

• Investments in general services, mainly related to infrastructure, remain low, at 1.4% of agriculture’s value-added. These are crucial for improving the sector’s performance and creating an enabling environment. In particular, the sector would benefit from investments in price and weather information systems, agricultural knowledge transfer and research and development. Support to promote producer associations, market promotion, and access for small-scale and poor farmers could also help overcome barriers related to scale.

• While the share of agriculture in Mexico’s greenhouse gas (GHG) emissions has decreased since 2000, it remains high relative to other OECD countries. Mexico’s agriculture GHG emissions target of 8% below business-as-usual in 2030 (compared to an overall reduction target of 22%) can improve the sector´s environmental performance and contribute to global mitigation efforts. However, support and financing have been reduced since 2018 for the main strategies to achieve the target, such as increased use of biodigesters in livestock farms as well as conserving and restoring grasslands.

Figure 19.1. Mexico: Development of support to agriculture

Note: * Share of potentially most distorting transfers in cumulated gross producer transfers.

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Figure 19.2. Mexico: Drivers of the change in PSE, 2019 to 2020

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Figure 19.3. Mexico: Transfer to specific commodities (SCT), 2018-20

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Table 19.1. Mexico: Estimates of support to agriculture

Million USD

	1991-93	2000-02	2018-20	2018	2019	2020p
Total value of production (at farm gate)	28 112	31 345	58 059	56 971	60 121	57 086
of which: share of MPS commodities (%)	68.3	66.3	61.1	61.7	60.8	60.8
Total value of consumption (at farm gate)	28 196	34 362	68 469	67 620	71 930	65 858
Producer Support Estimate (PSE)	9 144	8 539	6 161	6 377	6 374	5 731
Support based on commodity output	7 698	6 282	3 330	3 294	3 563	3 134
Market Price Support1	7 646	5 967	3 178	3 208	3 321	3 006
Positive Market Price Support	7 693	5 999	3 178	3 208	3 321	3 006
Negative Market Price Support	-47	-32	0	0	0	0
Payments based on output	52	315	152	86	242	129
Payments based on input use	1 443	953	1 481	2 287	1 391	766
Based on variable input use	746	349	507	565	544	413
with input constraints	0	0	1	0	3	0
Based on fixed capital formation	545	362	753	1 411	636	213
with input constraints	0	4	252	611	122	23
Based on on-farm services	152	241	221	311	211	139
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	3	137	116	266	81	0
Based on Receipts / Income	0	59	0	0	0	0
Based on Area planted / Animal numbers	3	78	116	266	81	0
with input constraints	0	0	29	84	3	0
Payments based on non-current A/An/R/I, production required	0	0	535	531	577	499
Payments based on non-current A/An/R/I, production not required	0	1 167	0	0	0	0
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	0	1 167	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	0	0	698	0	762	1 332
Based on long-term resource retirement	0	0	698	0	762	1 332
Based on a specific non-commodity output	0	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0	0
Percentage PSE (%)	30.9	25.2	10.1	10.6	10.1	9.6
Producer NPC (coeff.)	1.41	1.26	1.06	1.06	1.06	1.06
Producer NAC (coeff.)	1.45	1.34	1.11	1.12	1.11	1.11
General Services Support Estimate (GSSE)	1 048	621	523	535	485	549
Agricultural knowledge and innovation system	288	304	348	359	355	331
Inspection and control	0	102	83	108	80	60
Development and maintenance of infrastructure	284	112	82	44	46	157
Marketing and promotion	83	103	10	25	5	0
Cost of public stockholding	392	0	0	0	0	0
Miscellaneous	0	0	0	0	0	0
Percentage GSSE (% of TSE)	9.5	6.5	7.5	7.2	6.8	8.5
Consumer Support Estimate (CSE)	-7 013	-5 520	-2 129	-1 824	-2 099	-2 463
Transfers to producers from consumers	-7 668	-5 893	-2 434	-2 305	-2 374	-2 622
Other transfers from consumers	-396	-124	0	0	0	0
Transfers to consumers from taxpayers	852	348	305	481	275	158
Excess feed cost	199	149	0	0	0	0
Percentage CSE (%)	-25.6	-16.3	-3.1	-2.7	-2.9	-3.7
Consumer NPC (coeff.)	1.40	1.21	1.04	1.04	1.03	1.04
Consumer NAC (coeff.)	1.35	1.19	1.03	1.03	1.03	1.04
Total Support Estimate (TSE)	11 044	9 508	6 989	7 394	7 134	6 438
Transfers from consumers	8 064	6 017	2 434	2 305	2 374	2 622
Transfers from taxpayers	3 376	3 616	4 555	5 089	4 760	3 817
Budget revenues	-396	-124	0	0	0	0
Percentage TSE (% of GDP)	2.6	1.3	0.6	0.6	0.6	0.6
Total Budgetary Support Estimate (TBSE)	3 398	3 541	3 811	4 186	3 813	3 432
Percentage TBSE (% of GDP)	0.8	0.5	0.3	0.3	0.3	0.3
GDP deflator (1991-93=100)	100	396	946	918	948	973
Exchange rate (national currency per USD)	3.08	9.49	19.93	19.18	19.22	21.40

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Mexico are: wheat, maize, barley, sorghum, coffee, dried beans, tomatoes, rice, soybean, sugar, milk, beef and veal, pig meat, poultry and eggs.

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database). http://dx.doi.org/10.1787/agr-pcse-data-en

Description of policy developments

Overview of policy trends

Significant reforms to price support began in the late 1980s and continue to the present. In 1988–89, guaranteed prices for wheat, sorghum, barley, rice and oilseeds were eliminated, but maintained for maize and beans.

After the enactment of NAFTA in 1994, guaranteed prices for maize and beans were phased out and replaced by a new system of direct income support payments (PROCAMPO) based on historic cultivated crop area. The government withdrew from procurement and marketing except for beans and maize (although the government sharply reduced its involvement in these crops). Input subsidies for seeds, fertiliser, pesticides, machinery and diesel fuel were reduced, but the input subsidy for electricity to pump groundwater still remains. During trade liberalisation, subsidies for financial instruments to reduce financial risks (price hedge instruments) were also put in place.

Another shift took place in 2018 to re-direct most payments to small- and medium-scale farmers located in poor rural areas. Some programmes that operated before the 1990s were reinstated, such as minimum guaranteed prices for staple crops and fertiliser subsidies. The PROCAMPO programme was renamed Production for Wellbeing and reformed to provide support only to small- and medium-scale farmers with particular focus on those located in poor communities. Furthermore, price hedge subsidies were dismantled.

Table 19.2. Mexico: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
Prior to 1990s	Import substitution model	Agricultural tariffs and import quotas Minimum prices for staple food (maize, rice, beans, wheat, etc.) State food marketing enterprise (CONASUPO) Subsidies for inputs (fertilisers, seeds, electricity for water pumps) Preferential credit
1990-2018	Trade liberalisation	Dismantling of tariffs on agricultural products (except sugar) Dismantling of state marketing enterprise Elimination of input subsidies (except electricity for water pumps) Elimination of minimum prices Reforms to land tenure NAFTA and other FTAs signed Creation of direct payment to farmers (PROCAMPO) Insurance and price hedge subsidies
2018- present	Reforms	Guaranteed minimum prices on staples (maize, beans, wheat) Direct payment to small- and medium-size producers Preferential credit Electricity subsidies Fertiliser subsidies

Until the early 2000s, producer support comprised mostly market price support. The share of market price support then declined while that of budgetary support grew, until 2016 when market price support and input-based support again became the largest components of producer support.

Figure 19.4. Mexico: Level and PSE composition by support categories, 1986 to 2020

Notes: A/An/R/I:Area planted/Animal numbers/Receipts/Income.

Payments not requiring production include Payments based on non-current A/An/R/I (production not required) and Payment based on non-commodity criteria. Other payments include Payments based on non-current A/An/R/I (production required) and Miscellaneous payments.

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Main policy instruments

Five-year sectoral programmes guide agricultural support policies in Mexico. The strategic guidelines of the Sectoral Programme for Agriculture and Rural Development 2019-2024 focus on three objectives: (1) improve agricultural productivity for food self-sufficiency, (2) bring down poverty rates in rural areas and (3) increase small-scale agricultural producers’ incomes.

Mexican agricultural policy focuses on three main programmes: (1) guaranteed prices for small-scale farmers, (2) payments based on area and (3) fertiliser programmes. Except for payments based on area, the programmes are new and covered in the “Domestic policy developments 2020-21” section.

Guaranteed minimum prices are granted to maize, beans, wheat, milk and rice producers. Guaranteed prices are set at levels above market prices. Eligibility criteria vary by commodity but mainly support small- and medium-size producers of maize (up to 5 or up to 30 hectares, respectively), beans (up to 30 rain-fed hectares or 5 irrigable hectares) and milk (up to 100 dairy cows). LICONSA, a state enterprise, purchases beans, maize and milk from small producers and also processes and distributes milk at subsidised prices. Under this programme, small-scale maize producers are eligible for a transportation subsidy. For wheat and rice producers, SEGALMEX (Mexican Food Security) pays the difference between the reference and guaranteed prices, while for medium-scale maize producers, support is provided for the purchase of risk management instruments. The reference price is calculated as the sum of the average future price of maize published in the Chicago Board of Trade, converted to Mexican pesos using Banco de Mexico’s published average exchange rate, and a commercialisation fee determined by SEGALMEX. In all cases, there are limits to the support a single farmer can receive.

The Production for Wellbeing programme focuses on area-based payments that target small and medium producers, including from indigenous communities. Payment rates decrease with farm size and differ by product (Table 19.3).

Table 19.3. “Production for Wellbeing” payment rates

Producer type	Area	Payment per ha
Small producers	Up to 5 rain-fed ha	MXN 2 000 (USD 100)
Medium producers	Between 5 and 20 rain-fed ha or Up to 5 irrigated ha	MXN 1 200 (USD 61)
Coffee producers	No limit	MXN 6 200 (USD 314)
Sugar cane producers	No limit	MXN 7 300 (USD 367)

Source: Reglas de Operación del Programa Producción para el Bienestar de la Secretaría de Agricultura y Desarrollo Rural para el ejercicio fiscal 2021, Diario Oficial de la República Mexicana, Mexico, 28/12/2020.

The Fertiliser Programme grants support to producers of maize, beans or rice holding no more than three hectares located in highly marginalised localities in the state of Guerrero. Up to 450 kg of fertiliser per hectare can be granted per producer each year.

SADER implements sanitary and phytosanitary measures for early detection of pests and diseases. This programme supports inspection and monitoring projects of sanitary risks, control and prevention of pests and diseases, establishment of systems to reduce sanitary risks, and promotion of good sanitary practices.

The Secretariat of Wellbeing (Social Development Ministry) operates the Sowing Life programme, which supports agroforestry projects implemented by small-scale farmers (having 2.5 hectares of available land) located in poor municipalities. The programme provides direct payments, in-kind support (e.g. plants, seeds, sowing tools and nurseries) and technical support for afforestation and agroforestry projects. Additional support is provided for on-farm consumption of electricity for water pumping.

Consumer food subsidies are an important poverty alleviation instrument in Mexico. Poor families obtain basic staples through DICONSA (state-owned rural shops selling basic staples in poor localities), while the LICONSA programme sells milk at prices below market levels.

Mexico’s pledge to the Paris Climate Conference in December 2015 includes both unconditional and conditional targets. Under the 2020 update of Mexico’s Nationally Determined Contributions (NDC), Mexico committed to unconditionally lower GHG emissions by 22% and black carbon1 emissions by 51% of business-as-usual levels by 2030. Reductions excluding black carbon come from transport (‑18%), electricity generation (‑31%), residential and commercial electricity consumption (‑18%), oil and gas (‑14%), industry (‑5%), agriculture (‑8%) and waste (‑28%). Depending on international support, the GHG target could increase to as much as 36% and to 70% of black carbon emissions. In order to achieve such targets, the general strategy for the agricultural sector promotes agricultural practices adapted to climatic and environmental conditions, considering community and scientific knowledge; and adopting agroforestry, agroecology and the use of biodigesters in livestock farms. The strategy also considers adaptation measures in the agricultural sector. It promotes sustainable production and consumption practices, incorporating climate risk into value chains and investment plans, preventing and controlling pests and animal diseases, strengthening environmental policy instruments to protect native crops from climate change, and financing mechanisms in the primary sector to cope with adverse climate change impacts. In addition, the government aims to strengthen the adaptive capacity of at least 50% of municipalities most vulnerable to climate change, establish early warning and risk management systems at every level of government, and reach a 0% net deforestation rate by 2030.

SADER organised venues for technical agro-climatic discussions with the International Maize and Wheat Improvement Center (CIMMYT) and agricultural producers regarding climatic conditions and appropriate adaptation practices to minimise the impact of climate change.

Domestic policy developments in 2020-21

As part of the policy changes, in June 2020, the Mexican Government published the Sectoral Programme for Agriculture and Rural Development 2019-2024 (the Sectoral Programme), which guides the implementation of the National Development Plan for the period 2019-24.

SADER continued with the targeting of beneficiaries of the payments based on area (Production for Wellbeing) payments to focus on small and medium size producers with less than 20 hectares and those in highly marginalised indigenous communities in the states of the southeast of the country. The guaranteed minimum prices programme now includes medium size maize producers (those with 5 to 50 hectares).

For 2021, SADER has the objective to increase the support to women farmers. The share of support provided to women farmers through the fertiliser programme is expected to reach 40% and that provided by payments based on area is expected to reach 30%.

Congress is in the process of approving the new Law of the National Financing of Agricultural Development (Financiera Nacional de Desarrollo Agropecuario, FND, formerly Financiera Rural), which contemplates the merger of the latter with three other financial and insurance promotion entities of the sector: AGROASEMEX, FIRCO and FOCIR. This would integrate, in a single entity, the services of credit granting, price insurance, crop and animal insurance, risk sharing and financing of projects to add value to primary products.

One of the priority objectives of the Sectoral Programme is the “Transition to Sustainable Agriculture for Present and Future Well-being”. It aims to promote sustainable production, the restoration of ecosystems and adaptation to climate change, as well as the use of clean energy in the agricultural and aquaculture-fishing sector.

The SADER and the Ministry of the Environment and Natural Resources (SEMARNAT) are developing the National Strategy for the Conservation and Sustainable Use of Pollinators (ENCUSP) for promoting the conservation of pollinators and valuate the ecosystem services they provide.

SADER dismantled or suspended a number of agencies and programmes. The Marketing Support Program of the Agency for Marketing Services and Market Development (ASERCA), which provided support for the purchase of financial instruments for price volatility and contractual agricultural schemes, was dismantled. Contractual agriculture schemes will be in charge of the above-mentioned Financiera Nacional de Desarrollo Agropecuario (FND), with the ambition to link the price risk management systems with the granting of credit to the sector. Support for financial instruments (price hedging, insurance and contractual agriculture) was suspended. Livestock Credit, Rural Development, Productive Linkage and Livestock Promotion and Quality Standardisation of Livestock Products were dismantled.

The Agriculture Development Programme, the Livestock Development Programme and the Fisheries and Aquaculture Development Programme were merged and subject to substantial budgetary cuts, which led to the cancelation of support to agriculture and livestock under those programmes.

The administrative and institutional restructuring of the Ministry continued in 2020 and 2021. The approval of the new structure of the SADER was published in the Mexican Official Journal on 3 May 2021. Under the new structure, the Under-Secretariat for Rural Development was modified and the Under-Secretariats of Agriculture and Food, and Competitiveness were replaced by an Under-Secretariat for Food Self-Sufficiency and a General Unit for Rural Development. A new General Coordination of Agricultural Market Intelligence was also created.

Domestic policy responses to the COVID-19 pandemic

The Sowing Life programme that distributes payments, plants and inputs for agroforestry projects to producers with incomes below the poverty line, was expanded to include 200 000 more recipients.

SADER worked in collaboration with the members of productive chains to make sure food supply, inventories and distribution are not disrupted. Particular attention is given to key productive chains such as grains, horticulture, poultry, beef, fisheries and aquaculture. Digitalisation services have been expanded for speeding up food imports. Up to 60% of the administrative import processes are now done remotely by the Centre for Documentation and Judgement (CDD) of the National Service for Health, Safety and Agri-food Quality (SENASICA).

The government has recommended reinforcing hygiene inspection systems in food production units and is encouraging consumers to follow hygiene practices when handling and preparing food.

Trade policy developments in 2020-21

On 28 April 2020, the European Union and Mexico finished negotiations on a new EU-Mexico trade agreement, which will supersede the EU-Mexico Global Agreement that has been in force since 2000. The new agreement further liberalises more than 85% of the agricultural tariff lines that were left out of the original accord. For the remainder, market access was negotiated in the form of tariff rate quotas (TRQs). The European Union established TRQs for imports of various Mexican products, including beef, chicken breast, egg yolks, and frozen ham. In turn, Mexico established TRQs for imports of certain European products, including mature cheeses, fresh cheeses, skimmed milk powder, pork and poultry. In addition to improved market access on agricultural products, the agreement promotes co-operation on issues related to animal welfare and antimicrobial resistance (EC, 2018[1]). The agreement is awaiting signature and conclusion from the European Council and the European Parliament.

On 1 July 2020, the Mexico-United States-Canada Agreement (called Tratado entre Mexico, Estados Unidos y Canada ‑ T-MEC ‑ in Mexico) entered into force to replace the former NAFTA from 1994. In contrast to NAFTA, T-MEC establishes that grading standards for agricultural products will be non-discriminatory (they cannot be used to discriminate among products from member countries). There are new provisions that enhance the transparency of the basis used to set sanitary and phytosanitary measures for agricultural products. T-MEC also intends to boost agricultural biotechnology and gene editing trading, by promoting co-operation, information sharing and other trade rules in those areas.

Contextual information

Mexico has a population of 126 million, ranks as the 15^th largest world economy and has a per capita GDP just below the average of all countries covered in this report. Agriculture’s GDP share has remained stable at 3% since 2000. Despite the decline over the past two decades, however, agriculture’s share in total employment remains comparatively high at more than 12% in 2019, indicating that labour productivity in the sector is well below that of other sectors. Trade is an important driver of Mexico’s economy: it represents 36% of GDP and has grown 12 percentage points since 2000. Agro-food trade is an important fraction of total trade, both in terms of exports and imports, representing 7.2% and 5.4% of each, respectively. Since 2015, Mexico has registered a positive and growing net agro-food balance. Whereas most agro-food exports are primary and processed for final consumption, more than half of agro-food imports are intermediate products for further processing.

Table 19.4. Mexico: Contextual indicators

	Mexico		International comparison
	2000*	2019*	2000*	2019*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	1 097	2 604	2.7%	2.3%
Population (million)	101	126	2.3%	2.4%
Land area (thousand km2)	1 944	1 944	2.3%	2.3%
Agricultural area (AA) (thousand ha)	106 330	106 891	3.5%	3.5%
			All countries1
Population density (inhabitants/km2)	52	64	53	63
GDP per capita (USD in PPPs)	10 870	20 703	9 265	21 975
Trade as % of GDP	24	36	12.3	14.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	3.3	3.4	2.9	3.5
Agriculture share in employment (%)	17.3	12.5	-	-
Agro-food exports (% of total exports)	4.6	7.2	6.2	7.3
Agro-food imports (% of total imports)	5.5	5.4	5.5	6.7
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	57	58	-	-
Livestock in total agricultural production (%)	43	42	-	-
Share of arable land in AA (%)	22	22	32	34

Notes: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

Economic growth has been slowing since 2010 and stalled in 2019. As a result of the COVID-19 pandemic and related restrictions, economic output has fallen by 9% in 2020, one of the strongest contractions in the country’s history. The inflation rate has declined since its most recent peak in 2017. The unemployment rate has remained stable at around 3% a year, but increased to more than 5% in 2020.

Figure 19.5. Mexico: Main economic indicators, 2000 to 2020

Sources: OECD statistical databases; World Bank, WDI; and ILO estimates and projections.

Figure 19.6. Mexico: Agro-food trade

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Agricultural output in Mexico has been increasing predominantly due to Total Factor Productivity (TFP) growth, and to a limited extent to growth in primary factors and more use of intermediate inputs (fertiliser and feed). TFP growth between 2007 and 2016 is estimated slightly below the global average, and thus has been much less dynamic than during the 1990s. In contrast to the trend observed in the OECD area, nutrient balances in Mexico have increased in the last decade, potentially impacting water and air quality. Agricultural GHG emissions represent 15% of the country’s total, higher than the OECD average likely due to the sector’s greater importance in the economy compared to many other OECD countries. Water stress is well above the OECD average, and agriculture is partly responsible for this pressure due to its high share on total water abstractions.

Figure 19.7. Mexico: Composition of agricultural output growth, 2007-16

Note: Primary factors comprise labour, land, livestock and machinery.

Source: USDA Economic Research Service Agricultural Productivity database.

Table 19.5. Mexico: Productivity and environmental indicators

	Mexico		International comparison
	1991-2000	2007-2016	1991-2000	2007-2016
			World
TFP annual growth rate (%)	3.0%	1.3%	1.6%	1.6%
			OECD average
Environmental indicators	2000*	2019*	2000*	2019*
Nitrogen balance, kg/ha	24.7	25.6	33.2	28.9
Phosphorus balance, kg/ha	1.6	2.4	3.4	2.6
Agriculture share of total energy use (%)	3.0	3.6	1.7	2.0
Agriculture share of GHG emissions (%)	17.3	14.6	8.4	9.5
Share of irrigated land in AA (%)	4.5	5.7	-	-
Share of agriculture in water abstractions (%)	82.0	76.0	46.0	43.4
Water stress indicator	15.6	19.5	9.3	8.5

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Reference

[1] EC (2018), New EU-Mexico Agreement: The Agreement in Principle, European Commission, https://trade.ec.europa.eu/doclib/docs/2018/april/tradoc_156791.pdf.

Note

← 1.  Black carbon is particular matter formed by the incomplete combustion of fossil, biofuels and biomass; it is a short-lived but powerful climate warming pollutant.