Although the U.S. values the Latin American market and wants to regain its market share, it is necessary to take into account the elections in that country and the corollary of the pandemic in the Latin American economy.
USDA’s Foreign Agricultural Service has just published a report on corn exports to Latin America. Nothing less than 25% of these commercial transactions are mainly done with Mexico, Colombia and Peru, as well as other countries.
The world’s largest importer of U.S. corn is Mexico, while Colombia and Peru are key markets in South America. It is just matter of reading the U.S. Grains Council (USGC) weekly reports to see the importance.
The increase in these imports has been the result of the growing demand for animal protein from a population that seemed to economically improve. There is also the inability of these countries to produce what they need because of inadequate policies, a lack of water and farmland, the prevalence of mountains and deserts, a lack of infrastructure, and perhaps many other reasons.
Around this and other grains is the term self-sufficiency, word overheard by politicians and dreamers, which seems increasingly distant and alien. Peru produces only one-third of its corn needs, Colombia 20%, and Mexico, although self-sufficient and even an exporter of white corn for human consumption, produces only 20% of its animal consumption needs. Mexico is the second largest producer of chicken and eggs in the region, while Colombia is third in both and Peru is fourth and fifth, respectively.
While Colombia and Peru are at different stages about duties and import quotas from the U.S., they are located relatively close to Brazil and Argentina. At a given time, these suppliers can be attractive. However, the ground transportation infrastructure still has shortcomings.
In the case of Mexico, the tariff situation with the U.S. is at a different stage and corn freely enters the country. In addition, Mexico has developed an important railway and road infrastructure, which allows 60 percent of imported corn to be distributed along these routes. Proximity has, of course, been an advantage, but it also represents a disadvantage if diversifying suppliers are desired.
On the other hand, this report informs that imports have been trailing off. But the market seems promising, and the U.S. hopes to regain its market share soon.
The impact of the current COVID-19 crisis on the economy and of the relationship between the U.S. government and Latin American governments, remains to be seen. Let us not forget the outcome of the elections in the United States. In these days, no one can say, “that is not going to happen,” because it can happen. For the good of all, I hope that trade relations will continue to enjoy a good, healthy status.
What do you think?