Mexico and the United States have a long and profitable trading relationship

You can pick out a lot of horns on the dilemma that is Mexico. The big one, most likely, is the issue with immigration and that one branches off into several smaller points that include border violence, drug trafficking and the desperate need in the United States for Mexican labor.

Water issues frequently stick up as one side of the border claims the other is taking advantage. And then there is trade, which comes with its own tines of alleged barriers, quotas, rules and food security questions.

But the bottom line is this: Mexico and the United States have a long and profitable trading relationship.

“Mexico is one of our largest trading partners,” said Pete Olsen, agriculture attaché with the USDA Foreign Agriculture Service in Mexico City.

Olsen led off a panel discussion on trade issues at the Texas Produce Association annual conference in San Antonio.

“We have a big time trade relationship with Mexico,” Olsen said. U.S. exports to Mexico top $19 billion annually. Imports are $16.5 billion. Mexico wants increased U. S. market access, “especially for potatoes, avocadoes and poultry. Food safety will be an issue and Mexican imports have to meet USDA standards.”

USDA has 19 offices in Mexico, including FAS, the Animal-Plant Health Inspection Service or APHIS and the Agricultural Research Service.

“Mexico also wants to eliminate some trade barriers and build on NAFTA,” he said.

Mexican agriculture production includes corn, cattle, poultry, sugar cane, swine, forages, sorghum, tomatoes, avocadoes, peppers and dry beans.

But Mexican agriculture has its share of production problems. “Recently, agriculture’s share of the Mexican labor force has been declining as labor shifts to manufacturing. And we have the immigration issue, as everyone knows.”

He said drought has affected corn production and Mexico’s food security. Dry weather the last two years resulted in a 25-percent reduction in the Mexican corn crop. “Corn exports from the United States eased some of those concerns in 2011 and 2012, but a lot of their corn is white corn for food.”

Dry bean production was also down. “Drought reduced bean production by 50 percent and the United States filled some of that gap, but not enough to cover the losses.”

But demand also affects bean production, and per capita bean consumption in Mexico has been dropping. “Mexican families are having less family meal time,” he said. “More mothers are working, and families tend to eat more ready-to-eat foods.”

Price has also been a factor in bean consumption. The price of beans versus the cost of chicken leg quarters favors chicken. “Beans are more expensive.”

That could change, however. “Avian influenza outbreaks are pushing up poultry prices.”

Olsen said a trade dispute over tomatoes also concerns Mexican producers. A tomato trade agreement set a floor price for tomatoes, but recently Florida producers and producers in other states, including Texas, “say that agreement is not working. The dispute is in the hands of the Department of Commerce.

“From a Mexican perspective, they see this as a change in the rules after they find a commodity they can compete with the United States on. Tomato export is huge for Mexico.”

John McClung, president of the Texas Produce Association, said not all Texas produces go along with the Florida complaint. “Most of the Texas tomato producers are opposed to suspending the tomato agreement with Mexico.”

Olsen said Mexican orange production is down but lime production is up.

Improvements in Mexico’s infrastructure—the Interoceanic Highway—may change Mexican ag export destinations. Typically, Mexico’s ag products end up on the West Coast. With the new transportation corridor, “they have an expanded market approach,” Olsen said. “They can transport to the East Coast and shift some products from west to east.”