Mexican bean growers are bracing for an influx of product from Canada and the United States starting in 2008, the first year protective tariffs have been abolished.
Mexican farm activists rang in the new year by blocking a border bridge leading to El Paso, Texas, to protest the demise of a clause in the 1993 North American Free Trade Agreement that provided growers with 15 years of protection on corn, beans and sugar.
Activists have announced plans to march through Mexico City later in the month and to hold a national conference to plan future protests.
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Farmers fear their country will be inundated with cheap product from Canada and the U.S., where modern farming practices can deliver much higher bean yields than many of Mexico’s subsistence farmers can produce.
For the past 15 years, Canadian exporters have been limited to shipping about 2,000 tonnes of beans to the Mexican market. Anything above that amount faced stiff over-quota duties of up to 133 percent.
Sean MacKenzie, president of Fieldcrest International Commodities Ltd., a major Ontario bean exporting firm, said it’s a big deal to have unimpeded access to a market that consumes one million tonnes of dry beans a year.
“You’ve got one heck of a market. It can be enormous, there’s no question about it.”
But despite being in a zero quota, zero tariff environment, there is still apprehension from Canadian bean growers about what to expect from that important customer. It all depends on the size of Mexico’s summer harvest.
“If they have a big dry bean crop, then you will see non-tariff trade barriers like we’ve never seen before. If the crop is not burdensome and they need beans, they need imports, then great,” said MacKenzie.
Jackie Blondeau, director of market development with Pulse Canada, isn’t expecting the erection of non-tariff barriers. The government of Mexico has been clear in its commitment to eliminate tariffs and support an open market. And it has designed programs to assist producers adjust to their new reality.
“That really does set our industry at ease,” she said.
Mexico has been Canada’s 14th largest bean customer over the last few years and the second most important destination for black beans.
Sales in 2006 topped $5 million and, as of the end of September, had reached $2.2 million in 2007.
Blondeau doesn’t expect a huge program to Mexico in the 2007-08 marketing year simply because there is not a lot of product to move. Production was down in Canada and the U.S.
But the elimination of the quota and tariffs will eventually bubble Mexico up the list of Canada’s important bean customers.
“In the long run it is going to end up having a really big impact,” she said.
MacKenzie said tariff removal will have more impact in Canada than the U.S., which was assigned a quota of about 60,000 tonnes under the NAFTA agreement, 30 times the size of Canada’s quota.
He expects the Mexican situation will probably lead to the planting of more black and pinto beans in Western Canada, the two classes Mexico tends to import.
Researchers at Saskatoon’s Crop Development Centre have made good progress developing new lines of drought resistant pinto varieties that will be better suited to Western Canada’s dry climate.
But in the short term Blondeau expects bean acreage will continue to be under pressure next year because of attractive prices for bigger crops like wheat and canola.
It is the same situation across the border, according to the U.S. Department of Agriculture vegetables and melons outlook.
“Given current price relationships, input prices and the outlook for low ending stocks, especially for many of the smaller dry bean classes, it appears that 2008 U.S. dry bean plantings will again decline modestly from the 1.5 million acres of 2007,” stated the report issued Dec. 18.
