Impactful factors set the stage for an even better, more stable future
According to USDA data, in the past 10 years Mexico has maintained its role as a significant produce supplier to the United States. “Mexico represents an important part of the fresh produce marketplace,” says Gil Munguia, division manager for Giumarra Nogales in Nogales, AZ. “Mexico’s obvious transportation and trade advantages benefit both of our markets.”
USDA import statistics show growth from 8.9 billion pounds of produce in 2006 to more than 15 billion pounds in 2016. Retailers, such as Redner’s Markets in Reading, PA, with 44 stores, count on Mexico’s growth to fill its produce departments year-round. “We rely on Mexico when there are gaps in U.S. domestic production,” says Richard Stiles, director of produce and floral for Redner’s Markets. “The quality of product coming out of Mexico gets better and better, and the volume keeps increasing, thus providing greater stability to our offering.”
Continued innovation in Mexico, including production methods, geographic expansion of production areas and logistical developments, paves the road for even larger exports. “Mexico has plenty of land and plenty of microclimates, so its production will certainly increase and move to additional geographic areas,” says Danny Pollak, vice president of sales for CarbAmericas in Fort Lauderdale, FL. “Advances in transportation, such as the Mexican superhighway from the Pacific growing region to the Texas border, have drastically simplified logistics. We expect more logistics advances, maybe even more rail, and definite increased growth in exports over the coming years.”
Innovation, consistency, responsibility and a willingness to be leading-edge and work toward responsive adaptation are all part of Mexico’s success, according to Jessie Gunn, marketing manager for Wholesum Harvest in Nogales, AZ. “We work hard to meet our customers where they need us to be, adapt to meet their supply consistency needs and surpass their quality requirements.”
These trends result in a more stable and longer supply. “The addition of a variety of growing methods means more quality produce grown for the United States year-round,” says Steve Yubeta, vice president of sales for Farmer’s Best in Nogales. “Our addition of growing areas in other regions of Mexico allows us to be a part of that source every month of the year.”
Alfonso Cano, produce director for Northgate Gonzalez Markets in Anaheim, CA, with 41 stores, believes one of the biggest contributing factors to Mexico’s success revolves around changed perceptions. “Mexico is now perceived as a safe, reliable source,” he says. “The food safety stigma previously associated with Mexico is gone due to producers’ diligence in going above and beyond. Over the years, they have also become more retail- and shipping-friendly. Their ability to sell into the U.S. market has advanced tremendously.”
With Mexico’s ongoing trends in produce, Stiles expects more options. “We are able to take advantage of promoting more items out of Mexico now because of the volume and quality. Costs have come down, so we can get aggressive ads out to customers — whether it’s berries, avocados or pineapple.”
Mexico’s produce industry faces challenges, yet offers opportunities. Here are top trends to watch for in 2017.
Trend 1: Greenhouse Expansion
One of the notable trends in production in the past two decades has been protected agriculture. According to Asociación Mexicana de Horticultura Protegida AC (AMHPAC) — the Mexican Association of Protected Horticulture — located in Culiacan, Sinaloa, México, protected agriculture has maintained an exceptionally high rate of growth. With a reported surface of just 790 hectares in 2000, Mexico now ranks seventh among countries with the most protected surface, boasting 23,251 hectares in 2015, as reported by Mexico´s Secretaria De Agricultura (SAGARPA).
Though protected agriculture continues at a steady pace, Matt Mandel, vice president of operations for SunFed in Rio Rico, AZ, says it’s not in the way many people think. “Much of the protected agriculture springing up is cannibalizing previously grown-on agricultural land. While it allows for gains in production and quality, it is not wholly new production.”
Mexico’s explosion of protected ag translates into expanded availability of products. “One of the most notable changes has been a large investment in greenhouses with automation and climate control technologies in the central region of the country — allowing for year-round production and supply in off-season months,” says Alfredo Diaz, chief executive of AMHPAC.
AMHPAC reports Mexican tomatoes, bell peppers and cucumbers are now harvested year-round because of the investment in protected agriculture. “Historically, the American market in these products was complemented by imports from Mexico in the winter period — and this remains,” says Diaz. “However, year-round supply allows for a more stable market whenever climate affects either Mexican or American open-field production. This means not only American consumers, but also the Mexican market, enjoys high-quality produce at competitive prices.”
Tomatoes represent the biggest category Redner’s handles from protected ag, but Stiles notes how increasing volume drives promotion in other categories. “Mexico has really expanded volume in the colored pepper category,” he says. “This has brought the cost way down. Colored peppers used to retail at $5 per pound; now we promote them at $2 per pound. The English or slicer cucumber is another great example. We are selling more of these because we can promote them more frequently and cost-effectively.”
AMHPAC confirms tomatoes, cucumbers and bell peppers account for more than 95 percent of Mexico’s protected agriculture. “Other types of produce, including hot peppers and eggplants, are also grown under protection but on a smaller scale,” says Diaz.
For the future, AMHPAC continues investigating what markets demand so its partners can diversify offerings. “There is opportunity for growth,” says Diaz. “Among what we found attractive so far includes artichoke, organic products and some specialties.”
Trend 2: Quality Pineapple
Another pleasantly surprising trend from Mexico this year is the development of a viable pineapple export business. According to Asociacion Mexicana de Exportadores de Piña (AMEP) — Mexican Pineapple Exporters Association — Mexico’s exporting is on the rise and it’s predicted to become a significant factor in the near future.
Redner’s Stiles considers pineapple a key product with great potential for Mexico. “This year is really the first year Mexico is making a major push in the market,” he says. “Costa Rica has dominated the market for so long, but the Mexican production is good; and they’re aggressive in marketing.”
To garner a spot in the U.S. market, Mexico is increasing its production of the U.S.-friendly MD2 pineapple variety. Though the MD2 at this point is not the majority variety produced in Mexico, AMEP reports production is growing. “About 50 percent of Mexico’s production is in Sweet Cayenne (a lesser preferred variety) and 50 percent in MD2,” says Emilio Lopez Turrent, president of AMEP and founder of his own grower-shipper operation, Pinacola, in Veracruz, Mexico. “The peak of production of AMEP associates matches the high demand season, December through April, and our quality is excellent.”
Lopez Turrent says it’s easy for growers to switch from Sweet Cayenne to MD2. “The sweeter MD2 is making inroads within Mexico’s marketplace, and we foresee more growers producing the variety,” he says. “Of the pineapple area planted in Mexico, 75 percent has been established in the southern part of the state of Veracruz, with the state of Tabasco growing fast.”
Northgate’s Cano references the potential for Mexican pineapple due to proximity. “For us, pineapple sales are not about brand or region; it’s about quality, color and availability,” he says. “Mexico’s producers have a major geographical advantage — meaning they can let their fruit ripen more on the tree, resulting in better color and higher brix — a huge opportunity for them.”
Trend 3: Products You Don’t EXpect
When Ta-De Distributing in Nogales, AZ, began more than 60 years ago, the main items shipped were tomatoes, cucumbers and peppers. “Today, we have dozens more items,” says Robert Bennen Jr., president. “The offering increases each season as new production areas and new technologies increase yield.”
Increasing the variety of products from Mexico promises a wealth of possibility for buyers. This season, Ta-De will focus on items not likely sourced from Nogales distributors before. “These include lettuce, carrots and cauliflower,” says Bennen. “We are able to do this as we open new production areas such as Obregon and even around Mexico City. Additionally, with protected ag and better technology, we can grow these items in regions where we couldn’t before. The goal is to provide a wider assortment for our customers, a one-stop option for them for top-sellers.”
CarbAmerica’s asparagus and broccoli business from Mexico continues to expand. “We added another 100 hectares of asparagus this year and anticipate doing half-a-million cases in 2017,” says Pollak. “We will add more than 1,000 acres of broccoli as well. We certainly believe in Mexico’s potential for growth.”
CarbAmerica demonstrates its belief in Mexico by its recent unveiling of a new facility through a partnership with CarGoldMex in Irapuato, Mexico. CarGoldMex will pack broccoli at the new facility and process other vegetables and fruits, including asparagus, bell peppers and strawberries at different times throughout the year. CarGoldMex expects to create hundreds of jobs in Irapuato and the surrounding area.
On the fruit side, Cano points to opportunity in ethnic tropical and exotic fruits such as dragon fruit, mamey and guava. “For us, what’s helping sales and profits are not the high penetration items such as tomatoes, onions or squash,” he says. “It’s the secondary items. We buy 200 items every day. The top 20 items are going to sell no matter what. But we’re looking at the bottom of the list and trying to build on those. Mexico’s growers get better at packing and shipping these ethnic fruits every year, and we see great potential with them.”
Trend 4: Competitive Organics
Expanding organic production in Mexico represents another significant trend for export opportunity. “Mexican organic production is changing the organic dynamic as it evens out the cost differential between conventional and organic,” says Redner’s Stiles. “Organic grape tomatoes are well below what they used to cost. We can retail those close to conventional retail. Organic strawberries are also pretty much the same.”
Producers such as Giumarra report increasing organic production out of Mexico. “Our acreage for USDA organic winter squash is up 40 percent this season,” says Munguia. “We offer organic tomatoes (grape and cherry) and organic winter squash (acorn, butternut, spaghetti) out of Mexico. We see increased growth in the sector as consumers continue to demand more organic products. We intend to broaden our organic product line substantially over the next few years.”
“Mexican organic production is changing the organic dynamic as it evens out the cost differential between conventional and organic.”
— Richard Stiles, Redner’s Markets
Nearly every product SunFed produces conventionally is also being produced organically. “The breadth of available climates and growing regions and conditions allows for a multitude of options,” says Mandel. “If there is a demand for a product to be grown organically, there is likely someone who is growing it or working to meet that need.”
Mexico’s adoption of indoor production methods provides a solid platform for organic. “Indoor production offers a safer environment to grow vegetables otherwise exposed to pest and disease pressure in systems with less control options,” says AMHPAC’s Diaz. “It also provides more stable environmental and growing conditions, such as temperature, light and nutrition.”
Organic systems are natural for many Mexican growers since the traditional way of growing produce in Mexico was historically organic, points out Mayra Velazquez de León, president and chief executive of Organics Unlimited in San Diego. “When the country became a leader in mass production for commercial export, farms converted to using chemicals and other, newer methods. However, growers in Mexico are sensitive to the increased demand for organic produce, so many farms have responded by focusing on organic growing again.”
Wholesum has been growing organic for 30 years. “It’s the single largest-growing segment of produce,” says Gunn. “We are 100 percent organic, offering tomatoes on-the-vine, beefsteak, sienna, cherry on-the-vine and grape, as well as eggplant, cucumbers, European cucumbers, all colors of bell peppers, zucchini and squash. We see the market growing and produce departments being 50/50 within the next 10 years, if not sooner.”
Though organic bananas continue to be its best-selling product, Organics Unlimited has seen an increase in demand for organic plantains and organic coconuts. “These products are becoming more mainstream within U.S. households as consumers become more adventurous with their food purchases and learn of the many benefits of organic fruits,” says Velazquez de León.
Mandel believes the future is bright for organic production in Mexico. “As long as the demand for organic products in the marketplace continues, Mexico will continue to evolve to meet that demand,” he says.
Trend 5: Being Responsible
U.S. consumer awareness and demand for increased social responsibility emphasizes the need to meet those demands. Mexico’s protected agriculture industry reports investing heavily in these areas. “This is not a new trend in Mexico,” says Diaz. “It has been a subject of interest for Mexican growers for quite some time. Protected ag has seen great advancement in the social responsibility issue. Some 20 percent of AMHPAC´s grower members already have third-party certification validating they comply with the highest standards in this area.”
Such programs yield benefits all along the supply chain. “This trend is important for buyers because the modern consumer wants responsibly sourced food just as much as Mexican growers want to help their workers have a better life,” says Diaz. “We must continue efforts to transform Mexican agriculture into an industry where social responsibility is no longer an issue, but an example.”
Seven years ago, Wholesum started working with Fair Trade USA to develop standards to work in agriculture. “We were one of the first larger (more than 100 workers) farms to become certified,” says Gunn. Farmers Best holds two certifications for its social responsibility programs: Empresa Agrícola Libre de Trabajo Infantil and Empresa Socialmente Responsable. “We are committed to the protection and care of minors, and we look for ways to boost the development of our workers’ families,” says Yubeta. “Farmer’s Best is strongly against the use of child labor. Instead, we have schools on our properties to provide youth a path to education and opportunity.”
For Farmer’s Best, social responsibility is directly related to its ability to endure. “This is why we have been certified as a socially responsible company for 10 years,” says Yubeta. “This certification focuses on multiple topics, and we concentrate our efforts on quality of life for our workers, proper business ethics, community engagement and support, and environmental protection and sustainability of our resources.”
Giumarra observes growth within its own Fair Trade programs with two of its Mexican growers. “The resulting success has contributed to meaningful worker bonuses and the introduction of several community improvements for our workers in Mexico,” says Munguia. Giumarra currently markets Fair Trade asparagus, grapes and watermelon.
Every year the amount of Fair Trade produce shipped by SunFed out of Mexico increases. The company offers Fair Trade zucchini, yellow and grey squash (calabacita), slicing cucumbers, eggplant, green bell pepper, cantaloupe and mini watermelons. “Several of these items are available in our Perfect Organics line as well,” says Mandel.
Organics Unlimited works via its GROW program to offer customers responsible organic bananas. “A portion of the funds from each box of GROW organic bananas sold is earmarked for programs benefitting the communities surrounding our organic banana farms,” says Velazquez de León. “By offering GROW organic bananas in stores, retailers can help.”
Consumer education — signage, videos and social media — plays a fundamental role in communicating benefits. “A very strong interest already exists amongst all segments of retail market demographics, especially Millennials,” says Giumarra Nogales’ Munguia. “It’s simply a matter of getting the message out to improve retailer and product perception, ultimately increasing consumption and building brand loyalty through consumer confidence.”
Q&A With Mexico’s Trade Promotion Official
By Jodean Robbins. Photo by Dean Barnes
PRODUCE BUSINESS sat down with Alejandro Vazquez Salido, chief executive of ASERCA (Mexico’s Agency for Trading and Agricultural Markets Development) at SAGARPA (Mexico’s Ministry of Agriculture) and Manuel Pozo Cabrera, general coordinator for trade promotion and exports at ASERCA.
PB: How important is increasing produce trade for both Mexico and the United States?
Vazquez Salido: The theme of increasing Mexico’s ag exports to the United States continues to be crucial for both economies. Our trade is mutually beneficial, and we must continue to work together. In the current political climate, it’s important for people to understand how symbiotic our two countries are. We are allies and we rely on each other.
Pozo Cabrera: Mexico has tremendous potential in the area of food and agriculture. We are focusing on strengthening producers and we’ve been able to open new sources and markets. We’ve made great strides to help change production in Mexico to products more favored by the market. For example, in areas where they used to grow corn, now they are producing asparagus. These successful stories can be repeated and copied.
PB: How does produce trade continue to benefit both countries?
Pozo Cabrera: We can identify various examples of cooperation and mutual benefit. For example, the industry in Nogales, AZ, or the avocado industry — these are examples where together, the United States and Mexico have worked to create something to benefit everyone. The alliances built between the U.S. and Mexican businesses have benefited both countries, both economies and U.S. consumers.
PB: Mexico is a powerhouse, but what more can it do to increase produce trade?
Vazquez Salido: Mexico needs to involve itself more in the area of packaging and value added. There is a lot of opportunity, and Mexico has the potential to capitalize on this market opportunity and provide needed products. We are also looking into how we can help buyers better understand the wide range of products Mexico has to offer. We’re working on two applications. First, is at a geographic level to allow for identification of products optimally produced in certain regions. Second, is a more general database where buyers can pull up an entire list of all the certified producers of a certain product.
PB: Are there any new product areas Mexico is looking to introduce?
Vazquez Salido: We are looking at how we can access markets with new products we may not have thought of before. For example, agave nectar. Halal is another great example of market opportunities. We were originally looking into this with the idea of exporting to some of the Middle Eastern nations, but we realize there is a huge potential Halal market in the United States. We are looking to expand sources of already successful products as well. We’re working on greater phytosanitary admissibility, for example, for avocados in Jalisco, Mexico. We’re waiting on the USDA now to open this potential production area.
PB: What advances has Mexico made in the area of sustainability and social responsibility?
Vazquez Salido: Social responsibility is crucial and we’re working diligently on these programs. We are committed to working toward all farms complying with the conditions of social responsibility and sustainability. The Table Grape promotional video we had at the PMA Fresh Summit is a good example of showcasing what Mexican producers are doing in this respect. We want to support these types of programs so we can ensure we take care of our farms and people, and sustain our exports and business into the future.
PB: What logistical developments are you looking toward for the future?
Vazquez Salido: We’re looking at not just building more crossings on the border, but also developing more maritime options. We’re exploring Tampa, FL, as well as some other ports as potential entry points for Mexican products. Our goal is to achieve the highest efficiency in transportation and logistics of high-value products into the United States (especially the North and East) and allow these products to arrive with great quality and shelf-life.