Agricultural Policy Monitoring and Evaluation 2024

19. Mexico

Main findings

Support to agriculture

Mexico’s agricultural support (Producer Support Estimate, PSE) was equal to 10.6% of gross farm receipts in 2021-23, down from 25.2% in 2000-02 and below the OECD average. Market Price Support (MPS), as a percentage of gross farm receipts, decreased over the past 20 years from 17.7% in 2000-02 to 6.2% in 2021-23, mostly due to trade liberalisation and domestic policy reforms. On average, domestic prices are 7% higher than border prices. MPS is also the main component of Single Commodity Transfers (SCT), which are highest for, sugar, rice, coffee, and poultry.

For 2021-23, payments based on input use (fertilisers and electricity) and land represented 90% of total budgetary transfers to producers and are mostly targeted to small-scale farmers, although the electricity subsidy to pump water reaches all types of farmers. Payments based on land comprise of land-based support for the production of staple crops by subsistence farmers and the “sowing life” payment scheme based on area for afforestation and agroforestry.

Expenditures for general services (General Service Support Estimate, GSSE) equalled 1.4% of agriculture’s value of production in 2021-23, less than half the OECD average. Most of those expenditures focus on agricultural innovation, extension, training, and on development and maintenance of infrastructure, particularly on large hydrological works. Total support to agriculture in Mexico was 0.6% of Gross Domestic Product (GDP) in 2021-2023.

Key recent policy changes

The Fertiliser for Wellbeing Programme was expanded to the entire country in 2023, reaching 3 million ha and benefiting 2 million small-scale farmers. The distinct Production for Wellbeing Programme reached more than 2 million farmers, of which 34% were women and 50% were farmers from indigenous communities.

In 2023, the Mexican food security institution SEGALMEX bought staple products from 112 369 small-scale producers, while the milk distribution programme LICONSA reached 6.4 million beneficiaries, distributing 800 million litres of milk. Around 60% of all beneficiaries were women, and the programme reached around 4 million children.

The mitigation programme No Fires in my Parcel (Mi parcela no se quema) was expanded in 2023. Several workshops were held throughout the country, serving 493 municipalities, and an estimated 36 879 ha of forest fires were prevented through this programme. Moreover, in 2023 the Agrifood Technical Workshops (MTA) took place, which consist of a space for discussion between producers, technicians, and academics on the expected changes in rainfall and temperature in their region and how these changes may affect their crops, 25 workshops were held across the country and where 30% of participants were women farmers.

The National Strategy on Soil for Sustainable Agriculture (ENASAS) was implemented in 2023. The strategy aims to promote, strengthen, and co-ordinate actions to promote sustainable management of agricultural soils in the country. Farmers in eight states of the country were certified during 2023. As part of ENASAS, the Water Footprint Working Group took place, this group implemented several pilot projects to estimate the water footprint of maize, wheat, beans, barley, avocado, walnut, alfalfa and agave.

Assessment and recommendations

• Limited co‑ordination among institutions, scarce funding, the mismatch between farmers’ needs and research institutions, and limited extension services all constrain the agricultural innovation system of Mexico and impede its sustainable productivity growth. As a result, there are low levels of technology adoption particularly among small-scale producers. Further public investments on the innovation system, extension services, and capacity building would help agriculture progress to become more sustainable.

• Sustainable agricultural practices should be encouraged and scaled up the existing ones, for example by continuing to promote climate-smart, zero till, crop diversification and soil recovery practices, building on traditional knowledge and taking an outcome-based approach. Programmes supporting the conservation of local plant genetic resources, particularly among smallholders in poor areas, could help strengthen the resilience of agricultural systems and the genetic diversity of crops. Linking payments to the implementation of sustainable farming practices, or where possible to environmental improvements, could also reduce the sector’s environmental impact.

• Mexico has undertaken significant efforts to reorient its budgetary support towards tailored and targeted producer payments for vulnerable populations, in line with previous OECD recommendations. This includes the area-based Production for Wellbeing programme, the Fertiliser for Wellbeing Programme, and the Sowing Life Programme.

• However, further efforts should made to ensure that these programmes deliver on their sustainability objectives. For example, the Fertiliser for Wellbeing Programme should be complemented with more training, scaled up at a national level, on good agricultural practices and include systematic analysis of soil characteristics and nutrient requirements prior to distributing fertilisers. The government should ensure that the Sowing Life Programme does not incentivise farmers to deforest their land to become beneficiaries and integrate complementary payments for environmental services to preserve their existing forests. The efficiency of these programmes could be further improved by the parallel development of a zoning system that identifies land use based on agri-climates and soil fertility characteristics. Finally, support to producer organisations (e.g. co-operatives), as well as improved access for small-scale and poor farmers to output and input markets, could help overcome barriers related to scale.

• Mexico’s agriculture would benefit from larger public investments on general services including climate-smart infrastructure, price and weather information systems, and rural and agricultural infrastructure, particularly for water management. Mexico should also consider reforming its electricity subsidies, which continue to encourage the overuse of water, and improve water management more broadly to better prepare for the future of agriculture under a changing climate.

• The national adaptation guidelines for agriculture are aligned with good adaptation practices. However, more detailed and concrete actions embedded in the country’s agricultural policy instruments can be developed to strengthen the resilience of the sector and its adaptation to climate change. Moreover, better climate-change adaptation information, such as adaptation actions could help with assessing the impact of policies.

• Additional actions are needed to achieve the GHG emission reduction target for agriculture (8% by 2030, compared to a Business as Usual (BAU) scenario), as existing support and financing for increased use of bio-digesters in livestock farms and for conserving and restoring grasslands are insufficient to deliver the needed results.

Development of support to agriculture

Figure 19.1. Mexico: Development of support to agriculture

Table 19.1. Mexico: Estimates of support to agriculture

Million USD

	1991-93	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	28 112	31 345	76 769	63 731	73 377	93 199
of which: share of MPS commodities (%)	68.31	66.28	63.68	64.01	62.84	64.18
Total value of consumption (at farm gate)	28 196	34 362	82 913	54 822	75 869	118 049
Producer Support Estimate (PSE)	9 144	8 540	8 690	7 137	5 433	13 500
Support based on commodity output	7 698	6 282	5 042	4 255	2 261	8 609
Market price support¹	7 646	5 968	4 966	4 187	2 192	8 519
Positive market price support	7 693	5 999	5 112	4 187	2 192	8 959
Negative market price support	-47	-32	-147	0	0	-440
Payments based on output	52	315	76	68	69	91
Payments based on input use	1 443	953	1 342	887	1 096	2 041
Based on variable input use	746	349	949	574	749	1 526
with input constraints	0	0	0	0	0	0
Based on fixed capital formation	545	362	238	173	202	339
with input constraints	0	4	33	28	38	34
Based on on-farm services	152	241	154	141	146	176
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	3	137	0	0	0	0
Based on Receipts / Income	0	59	0	0	0	0
Based on Area planted / Animal numbers	3	78	0	0	0	0
With input constraints	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	641	564	607	751
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	1 666	1 431	1 468	2 099
Based on long-term resource retirement	0	0	1 666	1 431	1 468	2 099
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 (%)	30.91	25.22	10.65	10.70	7.09	13.75
Producer NPC (coeff.)	1.41	1.26	1.07	1.05	1.03	1.11
Producer NAC (coeff.)	1.45	1.34	1.12	1.12	1.08	1.16
General Services Support Estimate (GSSE)	1 048	621	1 035	579	679	1 847
Agricultural knowledge and innovation system	288	304	393	358	374	446
Inspection and control	0	102	53	50	51	58
Development and maintenance of infrastructure	284	112	589	171	254	1 342
Marketing and promotion	83	103	0	0	0	0
Cost of public stockholding	392	0	0	0	0	0
Miscellaneous	0	0	0	0	0	0
Percentage GSSE (% of TSE)	9.49	6.52	10.32	7.35	10.67	11.87
Consumer Support Estimate (CSE)	-7 013	-5 521	-3 908	-2 223	-1 409	-8 093
Transfers to producers from consumers	-7 668	-5 893	-4 386	-2 387	-1 655	-9 117
Other transfers from consumers	-396	-124	-10	-4	-4	-22
Transfers to consumers from taxpayers	852	348	209	168	250	210
Excess feed cost	199	148	279	0	0	836
Percentage CSE (%)	-25.65	-16.27	-4.60	-4.07	-1.86	-6.87
Consumer NPC (coeff.)	1.40	1.21	1.05	1.05	1.02	1.08
Consumer NAC (coeff.)	1.34	1.19	1.05	1.04	1.02	1.07
Total Support Estimate (TSE)	11 044	9 509	9 934	7 883	6 361	15 557
Transfers from consumers	8 064	6 017	4 396	2 391	1 659	9 139
Transfers from taxpayers	3 376	3 616	5 547	5 496	4 707	6 439
Budget revenues	-396	-124	-10	-4	-4	-22
Percentage TSE (% of GDP)	2.47	1.22	0.64	0.60	0.43	0.87
Total Budgetary Support Estimate (TBSE)	3 398	3 541	4 968	3 697	4 169	7 038
Percentage TBSE (% of GDP)	0.76	0.45	0.32	0.28	0.28	0.39
GDP deflator (1991-93 = 100)	100	391	1 127	1 065	1 136	1 179
Exchange rate (national currency per USD)	3.08	9.49	19.33	20.22	20.07	17.69

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 (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

The Sectoral Programme for Agriculture and Rural Development 2019-2024 defines agricultural policies in Mexico and is implemented mainly by the Secretariat (Ministry) of Agriculture and Rural Development (SADER, 2024[1]). Key objectives of the Sectoral Programme include: 1) improve agricultural productivity for food self-sufficiency; 2) reduce poverty rates in rural areas; 3) increase the income of small-scale agricultural producers; 4) develop an inclusive, sustainable, healthy, and nutritional agri-food system; 5) promote a sustainable use of soil and water.

Agricultural policies in Mexico are delivered mostly via the following programmes:

• Fertiliser for Well-being programme

• Production for Wellbeing programme

• Guaranteed Prices programme for basic food products for small and medium scale farmers implemented by the Mexican Food Security Agency (SEGALMEX)

• Sowing for Life programme under the responsibility of the Secretariat (Ministry) of Wellbeing

• Domestic milk acquisition and the social milk supply programme under the responsibility of the social milk supply programme (LICONSA)

• Rural supply programme (PAR) under the responsibility of DICONSA a network of convenience stores owned by the state

• Subsidy for water pumping via reduced electricity tariffs

• Agro-food health and safety measures

• Programme for the Promotion of Agriculture, Livestock, Fishing and Aquaculture.

The Fertiliser for Well-Being programme, launched in the state of Guerrero in 2019, physically provides nitrogenous and phosphate fertilisers (up to 600 kg per farmer per year) to small-scale producers. Beneficiaries include producers of maize, beans, rice, or any other crop with holding no more than 3 ha and located in highly marginalised and poor communities of the country (SADER, 2024[1]).

The Production for Wellbeing programme provides area-based payments that target small-scale producers. Payment rates decrease with farm size and differ by product. The products covered are maize, rice, beans, wheat, amaranth, chia, sugarcane, coffee, cocoa, nopal-cactus, honey, and milk.

In the Guaranteed Prices programme, prices are granted to small and medium-sized producers of maize, beans, wheat, milk, and rice. Guaranteed minimum prices set by SEGALMEX (the agency in charge of food security) try to address various challenges faced by farmers. These include the lack or insufficiency of infrastructure such as rural roads, storage facilities, market information, or the lack of co-operatives. These challenges often push farmers to sell their produce to middlemen at prices lower than market prices. Guaranteed prices set a minimum price that must be paid to farmers. SEGALMEX buys staple products directly from small-scale farmers or pays the difference between the price received by farmers from buyers and the minimum price set by SEGALMEX. For medium-scale maize producers (those with more than 5 ha of rain fed area), support is provided through a price hedging mechanism, where the difference between the guaranteed price and a reference price is covered by an insurance for which the SEGALMEX pays part of the premium (SADER, 2024[1]).

The Sowing for Life programme supports agroforestry projects implemented by small-scale farmers located in poor municipalities. The programme provides direct payments, in-kind support (e.g. plants, seeds, sowing tools and nurseries) and technical support. The programme is under the responsibility of the Ministry of Wellbeing.

LICONSA, a state enterprise, buys milk from small-scale producers and then collects it in its network of 58 collection centres and 10 industrial plants. Once the milk is bought, LICONSA processes and distributes it in established stores and the milk is sold at subsidised prices to low-income population that are part of the national social programmes.

The state enterprise DICONSA operates the Rural Supply Program (PAR), with SEGALMEX as provider of food. The PAR programme aims to facilitate physical access to basic food products to improve the food security of the population living in the rural areas in poverty conditions. DICONSA seeks to facilitate (by selling at reduced prices) physical access to staple food products to populations living in localities with high levels of marginalisation and poverty. It has more than 24 000 convenience stores (fixed or mobile) across the country buying and selling 30 products defined as staple food basket. DICONSA distributes and sells the products purchased by SEGALMEX, such as beans, rice, and maize, in its stores located in vulnerable and poor rural and urban regions. DICONSA can also purchase some of its products directly from smallholders. Both DICONSA and LICONSA support food actions for vulnerable poor populations.

Subsidies supporting electricity for water pumping continue to be provided. This programme benefits all types of farmers. Investments in general services for the sector predominantly include agricultural knowledge and innovation system, hydrological infrastructure and animal and plant health inspection and control. Investments in hydrological infrastructure support the rehabilitation and maintenance of off-farm irrigation systems. SENASICA, the agency in charge of implementing sanitary measures in the agro-food chain, implements sanitary and phytosanitary campaigns and 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, inspection of goods that are transported in the country, implementation of systems for reducing contamination risks in production units and promotion of good sanitary practices.

Mexico continues to use its 12 free trade agreements that involve more than 50 countries, as well as treaties, and a large share (98%) of Mexico’s agricultural trade occurs under these agreements and treaties for both agricultural products and inputs.

In terms of climate change mitigation, agriculture contributes around 13% of GHG emissions in Mexico. The country’s pledge to the Paris Climate Conference in December 2015 includes unconditional and conditional targets. Under the 2020 update of its Nationally Determined Contribution (NDC), Mexico committed to unconditionally lower GHG emissions by 22% and black carbon emissions by 51% relative to BAU by 2030. Agriculture GHG emissions reduction targets are -8%. Depending on international support, this could increase to 36% of total emissions and to 70% of black carbon emissions. To achieve these targets, the agricultural sector strategy promotes agricultural practices adapted to climatic and environmental conditions such as soil conservation and reduced burning of residues considering community and scientific knowledge; and adopting agroforestry, agroecology and biodigesters on livestock farms (SADER, 2024[1]).

Innovation for sustainable productivity growth

Strategic planning

As stipulated in the Sectoral Programme for Agriculture and Rural Development 2019-2024, sustainable productivity growth is mainly approached by improving agricultural productivity for food self-sufficiency and promoting a sustainable use of soil and water (SADER, 2024[2]).

Research and innovation

Mexico has several institutions that are part of the national agricultural innovation and knowledge system, including agricultural public research institutes across the country, such as the National Institute of Agricultural and Livestock Forestry Research (INIFAP) or the agriculture research institutes (COLPOS), a network of agricultural schools at technical level (DGETAs), universities at national and state level, etc. However, the country does not have a network of extension services per se, these are provided through ad hoc programmes of different public institutions (e.g. INCA Rural), by different public-private initiatives (e.g. MasAgro), or by private companies. Significant challenges for the agricultural innovation system relate to the lack of co‑ordination among institutions, limited funding, disconnect between farmer needs and research institutions, limited technical assistance resulting in low levels of technology adoption (SADER, 2024[2]).

Besides the Sectoral Programme for Agriculture and Rural Development 2019-2024, which aims to improve sustainable productivity to achieve food security for the poorest segments of population across the country; more specific innovation initiatives for sustainable productivity growth have been implemented. For example, the government has also developed specific strategies that promote environmental sustainability such as the sustainable technology transfer package for maize, implemented by the Ministry of Agriculture, which aims to increase yields and reduce the production costs.

Programme implementation

The country also has developed an agricultural bioeconomy training programme for small-scale farmers that has three objectives: waste and pollution reduction, circular use of products and materials, and regeneration and conservation of natural resources. This programme aims to offer consumers food products produced in an environmentally sustainable way, but also products that have social and economic benefits to poor farmers. In 2023, the programme reached 1 230 producers in the states of Campeche, Chiapas and Jalisco. In addition, indigenous groups are provided with comprehensive training for innovation and capacity building to increase sustainable productivity in agriculture, aquaculture, and fishing. To sustainably add value to primary crops, small-scale producers are provided with workshops and webinars, on adding value to different crops to increase income and to prolong the shelf life of their produce (SADER, 2024[2]).

Mexico also promotes organic agriculture through training on production methods and on the certification process. The more than 1.2 million ha of certified organic land represent around 1% of total agricultural area.

The Ministry of Agriculture, in co-ordination with other federal government agencies, carries out the Special Concurrent Programme for Sustainable Rural Development. This programme has, among many other projects, three areas related with increasing sustainable productivity:

• Subsidies for strategic projects to increase sustainable productivity in rural priority areas such as beans, native maize, and cactus.

• Technical and social training to beneficiaries of the programme Sowing for life (agroforestry programme).

• Support and training to projects for timber harvesting and management of non-timber forest resources and forest management certification.

A strategy for access to financing is carried out by the National Guarantee Fund for the Agricultural, Forestry, Fisheries and Rural Sectors FONAGA and Trust for Agriculture FIRA. This strategy aims to provide loans to beneficiaries of the Production for Wellbeing Programme. The strategy allows producers to complement the subsidy received with short- or long-term credit for financing the production, acquisition of capital goods, harvesting, post-harvest, value added or marketing in order to increase sustainable productivity. Credit recipients are required to follow certain good agricultural practices.

Mexico is part of several international groups and forums, where technical discussions on strategies for the conservation of livestock soils in the country are organised. Moreover, a regular forum between indigenous peoples of Mexico and First Nations of Canada allows to exchange experiences on the sustainable development, including agricultural activities, within their territories.

Recent policy developments

Domestic policy developments in 2023-24

During 2023, the Fertiliser for Well-being programme has been expanded to the whole country. For 2024 it will cover an estimated 3 million ha and benefit 2 million small-scale producers. The budget of the programme for 2024 is of MXN 17.5 billion (USD 985 million) (SADER, 2024[1]).

In 2023, the Production for Wellbeing programme established the minimum and maximum support given to small-scale farmers. The minimum was MXN 6 200 (USD 349), and the maximum MXN 24 000 (USD 1 351) per beneficiary. The programme is implemented through the national development bank (Banco del Bienestar). The budget for the programme for 2024 is MXN 16.3 billion (USD 915 million) reaching more than 2 million farmers. The programme stipulates that at least 34% of beneficiaries need to be women, and 50% of beneficiaries need to be living in the 1 033 municipalities with indigenous populations. The guaranteed minimum price programme run by SEGALMEX bought from 112 369 small-scale producers in 2023.

For 2024, several support prices for small-scale farmers were defined. The price for maize from farmers with maximum of 5 ha of rainfed land and with a maximum output of 35 tonnes was defined at MXN 6 915 per tonne (USD 389). The guaranteed price for beans from farmers with up to 30 ha of rainfed or up to 5 ha of irrigated land and producing no more than 15 tonnes destined to SEGALMEX was set at MXN 21 000 per tonne (USD 1 182). The guaranteed price for wheat that applies to medium-size farmers producing up to 200 tonnes was set at MXN 7 050 per tonne (USD 397), small-scale producers producing no more than 50 tonnes was set at MXN 7 600 (USD 428) per tonne. For small-scale and medium-scale rice producers, guaranteed prices were set at MXN 7 905 (USD 445) and at MXN 8 500 (USD 479), respectively. The total budget allocated to the programme for 2024 is MXN 12.5 billion (USD 706 million) (SADER, 2024[1]).

In 2023, LICONSA reached 6.4 million beneficiaries, distributing 800 million litres of milk. Around 60% of all beneficiaries were women, and the programme reached around 4 million children between 0-15-years old. For 2024, the budget allocated to the programme amounts to MXN 1.4 billion (USD 80 million).

Policies to mitigate emissions from agriculture

A key programme on mitigation that continues to take relevance in 2023 is No Fires in my Parcel (Mi parcela no se quema), created in 2021. The programme is a campaign that provides alternatives to the use of fire in productive systems and the regulations associated with this activity. It uses an application on smartphones to warn of agricultural fires as well as forest fires. In 2023, workshops were held throughout the country, serving 493 municipalities, it is calculated that 36 879 ha of forest fires were prevented.

Policies to facilitate climate change adaptation in agriculture

In 2023, the Agrifood Technical Workshops (MTA) continued to take place, which consist of a space for discussion between producers, technicians and academics on the expected changes in rainfall and temperature in their region and how these changes may affect their crops. At these workshops climate forecasts are discussed, and based on scientific and traditional knowledge, producers determine the management that seems most appropriate (species, varieties, planting times, types of fertilisation, pest incidence forecasts, etc.) and as a result, an agro-climatic bulletin is prepared that summarises the climate forecasts analysed and generates recommendations and adaptive measures for each type of crop. In 2023, 25 workshops were held across the country gathering 2 800 participants, of which 30% were women farmers, producing 25 bulletins (SADER, 2024[3]) .

The National Strategy on Soil for Sustainable Agriculture (ENASAS) developed in 2022, continues to operate in 2023 and 2024. It is an instrument that aims to promote, strengthen, and co-ordinate actions to promote sustainable management of agricultural soils in the country. The aim is to contribute to food security and the well-being of the rural population, through the conservation of soils and the restoration of degraded agricultural soils. Besides the ENASAS the country also has the Soil Doctor Programme, which its objective is to train and certify farmers on sustainable soil management. In 2023, it has certified farmers in 8 states of country (SADER, 2024[3]).

In 2023, the Water Footprint Working Group implemented several pilot projects to estimate the water footprint of agricultural crops (e.g. maize, wheat, beans, barley, avocado, walnut, alfalfa and agave, among others) in eight irrigation districts in the states of Guanajuato, Hidalgo, Jalisco, Sonora, Chihuahua, Sinaloa, Tamaulipas, Lagunera region, and Jalisco. The main objective is to determine a viable system for estimating the water footprint of such crops, which can be applied more broadly in different productive regions of the country. The pilot projects are expected to contribute to providing information for reducing the water footprint in production processes and improving sustainable water management. The Water Footprint Working Group had been set up in 2022 with the participation of several water related public institutions to explore the development and implementation of estimation and reduction systems for the water footprint of the agricultural sector (SADER, 2024[2]).

Trade policy developments in 2023-24

In May 2022, Mexico and the United Kingdom began negotiations for a free trade agreement. The countries are seeking an agreement that strengthens trade in goods and services, increases investment flows, and promotes digital and cross-border trade. It should be noted that the bilateral negotiation process between Mexico and the United Kingdom is currently on pause, awaiting future approaches to continue the negotiation process.

Policy context

Key economic and agricultural statistics

Mexico had a population of 129 million in 2022 and ranks as the 12^th largest world economy. Agriculture’s contribution to GDP has increased from 3.2% in 2000 to 4% in 2022. Despite the decline over the past two decades, agriculture’s share of total employment remains relatively high at 11.8% in 2022. Trade is an important driver of Mexico’s economy; in 2022 it represented 40.3% of GDP, up 17 percentage points since 2000. Agro-food trade is an important fraction of total trade, both in terms of exports and imports, representing 7.1% and 4.8% respectively.

Table 19.2. Mexico: Contextual indicators

	Mexico		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	1 150	2 838	2.9%	2.1%
Population (million)	101	129	2.4%	2.4%
Land area (thousand km2)	1 944	1 944	2.4%	2.4%
Agricultural area (AA) (thousand ha)	106 330	97 126	3.6%	3.3%
			All countries1
Population density (inhabitants/km2)	52	65	52	64
GDP per capita (USD in PPPs)	11 394	22 073	9 363	25 965
Trade as % of GDP	23.3	40.3	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	3.2	4.0	2.9	3.8
Agriculture share in employment (%)	17.3	11.8	-	-
Agro-food exports (% of total exports)	4.6	7.1	6.4	8.0
Agro-food imports (% of total imports)	5.5	4.8	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	57	60	-	-
Livestock in total agricultural production (%)	43	40	-	-
Share of arable land in AA (%)	22	21	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Mexico has seen fairly stable GDP growth between 2010 and 2019, averaging 2.6% per year. After an 8.6% contraction due to the COVID-19 pandemic, the economy grew more quickly with a rebound by 5.8% in 2021 and continued growth above the pre-pandemic levels reaching 3.4% in 2023. Inflation has declined to 5.5% in 2023 after registering a peak of 7.9% in 2022, while the unemployment rate fell to 2.8% in 2023, the lowest level in more than two decades.

Since 2015, Mexico has registered a positive and growing net agro-food trade balance reaching a USD 11.8 billion surplus in 2022. While most agro-food exports are for final consumption (either primary or processed), more than half of agro-food imports are intermediate products for further processing.

Mexico’s agricultural output growth of 2.7%, over the past decade was due predominantly to the increased use of primary factors, notably capital and land. In addition, total factor productivity (TFP) grew by 1.2% per year between 2012 and 2021, slightly faster than the world average but less than during the 1990s. Increased use of intermediate inputs, notably fertilisers and feed, contributed less to the output growth.

Nutrient balances in Mexico have increased in the last decade and reached nearly 35.4 kg/ha for nitrogen and 4 kg/ha of phosphorus in 2022, both above the OECD average. Agricultural GHG emissions represent 19% of the country’s total, which is also higher than the OECD average and above its relative contribution to the country’s economy. Water stress is well above the OECD average, and agriculture is partly responsible for this pressure due to its high share of total water abstractions.

Table 19.3. Mexico: Productivity and environmental indicators

	Mexico		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	2.5%	1.2%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	26.4	35.4	32.1	28.2
Phosphorus balance, kg/ha	1.8	4.0	3.3	2.3
Agriculture share of total energy use (%)	3.0	3.1	1.7	2.0
Agriculture share of GHG emissions (%)	19.1	19.1	8.7	10.1
Share of irrigated land in AA (%)	4.5	6.2	-	-
Share of agriculture in water abstractions (%)	82.0	74.0	47.0	49.5
Water stress indicator	15.6	19.9	8.7	..

Note: * or closest available year.

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

Historical trends in agricultural policies

Starting in the 1980s, reforms to price support reduced its prominence in the policy mix. In 1988‑89, guaranteed prices for wheat, sorghum, barley, rice and oilseeds were eliminated. After the enactment of the North American Free Trade Agreement (NAFTA) in 1994, guaranteed prices for maize and beans were phased out and the government withdrew from procurement and marketing except for beans and maize, for which government involvement was reduced but not eliminated (Anderson, K. and Valdes, A., 2007[4]; OECD, 2006[5]).

The old system of market supports was replaced by a new one of direct income support payments (Procampo) based on historic cultivated crop area, which was given to all farm sizes. During this period of trade liberalisation, subsidies for financial instruments to reduce financial risks (price hedge instruments) were also put in place. Input subsidies for seeds, fertiliser, pesticides, machinery and diesel fuel were reduced in the 1990s, but the input subsidy for electricity to pump groundwater was maintained (Anderson, K. and Valdes, A., 2007[4]; OECD, 2006[5]).

In 2018 direct payments were redirected to target small and medium-scale farmers located in poor regions of the country. Minimum guaranteed prices for staple crops were reinstated in the form of government purchases of crops from a limited number of farmers, targeted to smallholders, at a minimum price. Crops purchased under this intervention were then distributed to poor households at subsidised prices in both rural and urban areas. The Procampo programme was renamed “Production for Wellbeing” and reformed to provide support only to small-scale farmers, with particular focus on those located in poor communities. Furthermore, subsidies for large farms and food processors to encourage price hedging were dismantled. A fertiliser programme targeted to smallholders was created as well as the programme Sowing life that subsidises agroforestry activities carried out by smallholders.

Table 19.4. 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 agricultural 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 Preferential agricultural credit Creation of direct payment to farmers (PROCAMPO) Insurance and price hedge subsidies
2018- present	Reforms to target and tailor direct payments to smallholders	Guaranteed minimum prices on staples (maize, beans, wheat, rice and milk) are targeted to smallholders and limited to a certain amount of production volume. PROCAMPO was renamed “Production for Wellbeing” and reformed to provide payments to only small-scale producers, emphasising the poorest states located in the south of the country. Fertiliser for wellbeing programme was created to target only small-scale farmers and limited to only 600kg per year per farmer. Sowing Life programme was created to support agroforestry projects implemented by small-scale farmers. Electricity subsidies for water pumps continues. Preferential agricultural credit continues at a lower reach, while financial institutions have been reformed or dismantled.

Mexico provides relatively low levels of support to its agricultural sector, and this has decreased over the year. The Mexican Producer Support Estimate (PSE) was mostly comprised of market price support until the end of the 1990s. After this period, the share of market price support 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 19.7)

References

[4] Anderson, K. and Valdes, A. (2007), Distortions to Agricultural Incentives in Latin America, World Bank Group, Washington, DC,, http://documents.worldbank.org/curated/en/518211468170062688/Distortions-to-agricultural-incentives-in-Latin-America.

[5] OECD (2006), Agricultural and Fisheries Policies in Mexico: Recent Achievements, Continuing the Reform Agenda, OECD Publishing, Paris, https://doi.org/10.1787/9789264030251-en.

[1] SADER (2024), Secretaria de Agricultura y Desarrollo Rural. Mexico: Main Changes in Public Policies for the Agricultural Sector of the Agricultural Sector, 2023-2024.

[3] SADER (2024), Secretaria de Agricultura y Desarrollo Rural. Mexico: Public Policies to Address Climate Change in the Agricultural Sector, 2023-2024.

[2] SADER (2024), Secretaria de Agricultura y Desarrollo Rural. Mexico: Public Policies to Promote Agricultural Innovation for Sustainable Agricultural Productivity Growth, 2023-2024.