Image courtesy of AMVAC

Agriculture continues to be a key pillar of the Mexican economy, and agricultural exports from Mexico have continued to increase despite the challenges faced by agricultural producers across the country. Between January and June of 2024, Mexico exported over US$19.381 billion worth of produce, an increase of 8.84% compared to the same period in 2023, according to the Ministry of Agriculture and Rural Development (SADER). A change in government, droughts and water accessibility issues, in addition to the ongoing debate and temporary postponement of the federal government's ban on glyphosates, were key issues on the minds of crop protection industry executives interviewed for our report this year. Mexico reported record import volumes of fertilizers in the first trimester of 2024. 

The government's re-engagement with private industry, a key theme of this year's interviews across the chemical industry, was evidenced at the annual Crop Protection Convention in October 2024, a joint event hosted by UMFFAAC & PROCCYT, the principal industry associations. For the first time in over six years, a high-level government delegation, led by newly appointed Minister of Agriculture Dr. Julio Berdegué Sacristán, attended the event. The Minister stated that the government's approach to agriculture was centered around four key priorities: food sovereignty, environmental and worker well-being, and water. 

Ministerial attendance at industry events is a clear sign of the federal government's willingness to re-engage with private industry, and its legislative agenda also shows some promising signs. Among them is a temporary pause on the prohibition of glyphosate products. In the first half of 2024, despite previous promises to do so, the government postponed its glyphosate ban, citing a lack of alternatives as the reason. José Escalante de la Hidalga, president of the Mexican Union of Agrochemicals Manufacturers and Formulators (UMFFAAC), commented on this postponement, saying: "Things have changed from one government to the next. During the previous government, our priority was to combat misinformation about glyphosate and communicate its benefits. Fortunately, our government has decided the product will continue to be used in Mexico."

The leading industry associations have been centrally focused on re-engagement with the authorities. In addition to renewed contact with the Ministry of Agriculture, Luis Osorio, executive director of the Association of Crop Protection, Science and Technology (PROCCYT), said: "We want to encourage science-based decision-making and have made significant advances with COFEPRIS, the primary regulator. We are re-establishing dialogue at a ministerial level with COFEPRIS, SENASICA and SADER."

A critical element of PROCCYT & UMFFAAC's work in Mexico includes running not-for-profit training and safety programs across the country's central agricultural regions. Some of these programs include Amocali, a joint plastic recycling initiative, and Proccyt's CuidAgro, an educational program around safe agrochemical product use. Osorio expressed a desire to expand this program by bringing in the government: "We train up to 100,000 farmers annually and seek the government's collaboration to enhance it. We are also expanding our collaborations with regional agricultural associations in important regions like Sinaloa, Jalisco and Veracruz." 

This feeling of re-engagement is not just expressed by the leading associations but has trickled down to the commercial level too. Companies expect that under the current administration some headway will be made to unlock innovation in the sector. Marco Salcedo, managing director of AMVAC, said: "There are signs of improvement at COFEPRIS, and hopefully the product registration process can be made more efficient because it stifles innovation."

Years of bureaucratic indecision, slow product approval times, and the looming threat of the glyphosate ban all contributed to creating a sizeable illicit market for crop protection products, the prevalence of which has led to detrimental health and environmental outcomes. If the government is serious about re-engaging with the private sector, it will also have to get tough on illegal goods, which have distorted the market for years. Francisco Ortiz, CEO of Altiara, said: "Unregistered products remain a significant issue in Mexico, making up roughly 25-30% of the market's value."

Collaboration with the government is crucial in the face of serious difficulties. The principal climate-related challenge facing the country's farmers is drought conditions, making access to water harder and pushing the country's water infrastructure to the brink. According to data from Conagua, the Mexican National Association for Water, Mexico's agricultural sector consumes over 75% of the country's water. The agency's drought monitoring center indicates that the north of the country continues to suffer from extreme to exceptional drought conditions across parts of the country that are key to Mexico's agricultural export success. 

Historically, low water levels have disproportionately affected some of Mexico’s most critical agricultural regions, forcing farmers to change their cultivated crops. This shift echoes sentiments proposed by industry executives for years, especially concerning cultivating water-intensive corn. Altiara’s CEO Ortiz said, “Water shortages have posed a severe challenge, particularly in regions like Sonora, Sinaloa, and Baja California, which are key markets for us. The lack of water has reduced cultivated acreage considerably—affecting around 50% of vegetable production.”

Looking at Mexico's northern neighbor, a more sophisticated agricultural infrastructure support network has allowed US growers to weather irregular weather more resiliently. Cristian García, Ag business relationship director LATAM for Gowan Company, which offers crop protection products, has seed and fertilizer businesses, and a port facility in Guaymas, Sonora, said: "Mexico's agricultural sector could learn from our northern neighbor. The availability and use of water are key differentiators… The US agricultural sector benefits from significant subsidies, open credit lines, low interest rates, and accessible financial instruments."

The water crisis distorts agricultural patterns in Mexico, causing regions traditionally competitive in certain crops to lose out. Many executives we spoke to insisted that agricultural growing patterns in the country must change, but cultural and regulatory resistance to such change persist. Sergio Aburto, vice president of North Latam for Acadian Plant Health, said: "The government prioritized water for urban areas over agriculture, which resulted in insufficient irrigation for crops like corn, wheat and beans."

Acadian Plant Health recently announced a global partnership with BASF. Aburto said: "This collaboration enables us to leverage BASF's extensive global presence while combining our expertise in marine algae-based technology to create innovative products that meet the growing demand for sustainable agriculture."

Droughts are not the only climate-related risk in Mexico, however. With the rainy season becoming more irregular and, in places, more intense, the prevalence and behavior of pests in some regions have also changed. Luis Eduardo González Cepeda, commercial director at Dragon, one of Mexico's leading domestic crop protection companies, said: "Dragon is investing in new molecules and further insecticide developments to combat the evolving pest dynamics caused by climate change."

Grupo Versa's strategy to deal with climate challenges has been getting closer to its farming customers better to understand their needs, vulnerabilities and requirements. Fernando Vera, Grupo Versa's CEO, said: "A relevant strategy to combat this has been to promote our brand and increase the proximity to customers with our technical teams. In the last three years, we practically doubled the number of people in the field."

Crop protection companies are developing alternative methods to retain client loyalty, promote brand awareness, and help their customer base survive the current difficulties. Companies across the crop protection spectrum, from Altiara to UPL, have turned to rural financing initiatives, extending credit lines to customers. UPL's 'Shakti' rural financing model, which it practices worldwide, incentivizes farmers to purchase more sustainably produced and environmentally beneficial crop protection products. At the local level, Altiara has identified farming customers particularly affected by severe droughts in the past year and extended credit lines to them so that they can secure crucial crop protection products for their harvests. 

Like other sectors, Mexico's agricultural producers could be exposed to punitive tariffs imposed by the US, the leading destination for the bulk of Mexican export crops. Like many companies in the sector, Grupo Lucava has taken steps to diversify its export markets. Counting on export markets in the Caribbean and Central America, it recently launched a new line of patented, sustainable crop protection products that the company thinks could help them reach European markets too.

Considering the size of the agricultural sector and its export competitiveness, it is no surprise that multinationals are committing resources to research and develop new products and methods for their Mexican customer base. The Indian agrochemical giant UPL has been present in Mexico for decades, and Himanshu Panwar, business head of Mexico & Cuba at the company, was keen to share UPL's commitment to R&D in-country, commenting: "One notable achievement is establishing a global center for biological product innovation in Coahuila. This facility, a US$15 million investment, focusing on R&D, delivering organic and natural agricultural solutions."

Similarly, for Bayer, Mexico has been key to developing new agricultural tools and products. Nery Echeverría, business lead North LATAM, seeds & crop protection at Bayer Crop Science, said: "Short corn was a development that started globally in Mexico. We have Mexico's most important seed research center, which has world-class infrastructure… On the digital technology side, in Q4 2024 we launched FieldView' in Sinaloa, a digital tool we have been developing for over four years."

Another multinational that is investing in its R&D capacity in Mexico is FMC Corporation, which has fostered relationships with research institutions to jointly develop innovative products with university faculties, a common practice in Mexico. According to Juan Francisco Ortiz Diaz, business director Latam North, FMC annually invests over US$350 million in R&D globally. In Mexico, FMC has gone back to class; "A particular product that stands out is one we developed in collaboration with the National Autonomous University of Mexico (UNAM), which uses an exclusive strain of beneficial organisms."

For Albaugh, the world's largest privately owned off-patent supplier of crop protection products, Mexico has been a key driver of growth since 2003, and R&D investments locally have followed. The company's offices in Guadalajara manage the Mexican market, which is its largest in the north Latam region. Albaugh is investing in the development of a biorational product portfolio for Mexico, and Carlos Saavedra, Mexico & LATAM North president, said: "In Mexico alone, we will invest over US$2.5 million in innovation, which involves the development of products."

Regulatory and social pressures on glyphosates and chemically based crop protection products have, in recent years, spurred development and investment in organically derived substitutes, which are becoming increasingly prominent in the Mexican market. Valent de México, a subsidiary of Sumitomo Chemical, has been moving in this direction for years. César Parada, managing director of Valent de México, said: "Additionally, we are investing in the biocontrol market. This sector represents a US$104 million market in Mexico, with biological fungicides, insecticides and growth regulators (PGRs) taking precedence."

Despite these challenges, the agricultural market remains attractive enough for new entrants to make a mark. Fertisquisa, part of the Isquisa group, has been expanding its fertilizer business, and Roberto Escalante, the company's managing director, said: "Our ambition is to expand the solutions offered to the farmers incorporating crop protection and biological solutions."