Mexico’s booming produce growth

U.S. Consumers’ Demand for Year-Round Produce Boosts Mexican Imports.

Originally printed in the December 2022 issue of Produce Business.

Mexican fresh produce is here to stay. And it’s expanding very quickly. For many, many good reasons.

Mexico is a vast country. If laid across the United States, it would extend from San Francisco to Chicago. Its microclimates range from the tropics of Chiapas on Guatemala’s border to the chilly high elevations of the Sierra Madres. Airline passengers flying over the hot deserts along West Mexico’s long Pacific Coast see a staggering, endless alignment of fruit and vegetable fields.

On the Baja Peninsula, vegetable growers are rapidly building modern new greenhouse facilities within hours of Southern California’s vast consumer population. Table grape vineyards — and wineries — are also emerging in ocean-cooled conditions.

Mexico’s produce industry has evolved for more than a century. By now, third- and fourth-generation growers are educated in the most sophisticated disciplines of agricultural economics, finance, technology and production. This young generation is fluent in English and understands the needs of North American — and other international — customers.

VALUE TO U.S. RETAILERS

It’s hard to imagine how different U.S. produce departments would look if all produce items from Mexico suddenly disappeared from displays. Mexico’s increase in produce exports to the U.S. is growing so fast that historic data seems to fall short of today’s reality.

A November 2021 U.S. Department of Agriculture (USDA) report indicates that, in 2020, Mexico accounted for 77% of U.S. fresh vegetable import volume. (Ranked second, Canada represented 11%.)
The USDA explains the demand for imports: “U.S. consumers have pushed for greater consistency in supermarket produce and expanded demand for year-round availability of virtually all fresh vegetables. Between 1998 and 2020, the volume of fresh vegetable imports increased nearly 200%, and the value of fresh vegetable imports grew to exceed fresh exports by $7.6 billion, more than double the same figure a decade earlier.”

USDA’s analysis of domestic census and trade data shows Mexican and Canadian producers have dominated the U.S. import market by offering protected culture — or greenhouse — imports, as well as organic options, which increased choices for consumers. While conventional and field-grown fresh vegetables still account for most imports, organic and greenhouse vegetables are expanding market reach.

At the same time, Lance Jungmeyer, president of Nogales, AZ-based Fresh Produce Association of the Americas (FPAA), notes simple climatic advantages are great for Mexican growers. He observes that growers in the southeastern U.S. are vulnerable to severe weather, such as Hurricane Ian in late September. Mexico assures the compatibility of the supply chain with more stable weather, he adds.

MARKET WINDOW CREEP

The telling November 2021 USDA document notes Mexico’s market share expansion is boosted in part by a “market window creep in fresh vegetable imports.” This is not a shocking new development, particularly from the viewpoint of U.S. growers whose markets are being crept-upon.
But the USDA report details a trend that’s evolved in recent years.

Market window creep is an extension of seasonal demand and refers to the increasing volume of fresh vegetable imports entering during the start or end of the traditional domestic production seasons. Over time, USDA notes, the categorization of vegetables into summer and winter categories has dwindled, as near year-round imports of both categories of produce proliferated.

Many traditional domestic market windows have eroded, as importers have found their own market windows expanding, according to trade data. From 2008 to 2020, imports entered the market earlier than usual (entering the traditional domestic market window), and shipping seasons were extended into the following season.

Government experts affirmed imports previously complemented U.S. production during the winter, autumn and early spring months when domestic supplies were limited. However, imports grown under greenhouse production or in southern climates increasingly augment U.S. production at the beginning and end of domestic market windows for many fresh vegetables.

BY THE NUMBERS

Fresh vegetable import volumes from Mexico during the summer have shown substantial increases in the past 15 years. Comparing three-year average import volumes for bell peppers from Mexico provides an illustration of market window creep. According to the USDA, bell pepper import volume increased by 742% to 127 million pounds in the summers of 2018–20 from 15 million pounds in the summers of 2008–10.

Meanwhile, cucumber imports increased 156% to 223 million pounds from 87 million pounds over the same period; squash imports increased 105% to 69 million pounds from 34 million pounds; and snap bean import volume increased by 204% to 15 million pounds from 5 million pounds.

USDA figures for 2019 showed U.S. total imports of agricultural products from Mexico totaled $28 billion. Mexico was our largest such supplier. Leading categories include: other fresh fruit ($6.9 billion) and fresh vegetables ($6.3 billion).

NICHE MEXICAN ITEMS

Not every produce item grown in Mexico has vast sales. But specialty growers are adding variety to consumer diets.

Edgar Del Angel, a salesman at Cabefruit Produce LLC, McAllen, TX, notes that, as demand for Mexican produce is flourishing, jackfruit has been his firm’s specialty.

“Overall, we will continue to grow because people know more fruit like jackfruit. And we’re growing with our customers. Customers that used to buy a half-pallet of jackfruit are taking one to three pallets now.”

Cabefruit’s long production roots extend through southern Mexico’s states of Oaxaca, Chiapas, Nayarit, Tamaulipas and Colima.

Del Angel notes Cabefruit is adding to its specialty tropical produce to enjoy greater sales volumes with more mainstream products like Maradol papayas, avocados and limes.

MEXICAN AVOCADOS ROCK

In November, Stephanie Bazan, the vice president of shopper and trade marketing for Avocados From Mexico (AFM), told PRODUCE BUSINESS, “The demand for Mexican avocados has grown dramatically over the years, with annual consumption reaching more than 2 billion pounds.”

In the past seven years alone, U.S. per capita consumption of avocados from Mexico has doubled — it’s now at 9 pounds per capita per year. “Americans love avocados, and Mexico has an abundant supply of the fresh and flavorful fruit, arriving to the U.S. in just three to five days.”

Regarding AFM’s long-term view of avocado exports to the U.S., Bazan said there is a growing consumer demand of avocados in the U.S., “and since avocados grow year-round in Michoacán, we have a steady supply of avocados to meet consumer demands. And with the addition of the state of Jalisco to the import program, we have even more avocados available for U.S. consumers, with the same commitment to quality and traceability. In fact, this year alone, the U.S. is projected to import a record volume of avocados — so we’re confident that we will be able to continue meeting these ever-increasing demands through our exports.”

Jalisco avocado growers began exporting to the United States in the summer of 2022.

Alvaro Luque, AFM president and CEO, said in October that Jalisco production enhances Mexico’s ability to meet U.S. demand. He indicates that Mexican avocado exports to the U.S. doubled, from 1.2 billion pounds in 2014 to 2.4 billion pounds in 2021.

To maximize avocado sales, Bazan recommends retailers merchandise avocados in influential locations in-store to drive conversion.

“Assortment and selection is key to driving units per trip, including a dual size offering and having avocados that are ready to eat now and ready to eat later. Seeing avocados merchandised at the produce entrance or beside fresh, complementary items — like tomatoes, onions, or even chips — makes it easy for shoppers to purchase.”

Bazan adds that show-stopping displays are also a tried-and-true way to help excite shoppers in-store.

WHY MEXICO?

The bottom line, says Jungmeyer, is that “Mexico is well positioned to continue to play a large part in the American diet.” And he offered many reasons for this position.

There is a continued lack of water in the western U.S., which has caused interest in western growers switching some or all the vegetable production — and some fruits — to Mexico. That will continue to increase.

Also, he notes, “growers in California, Florida and Georgia all have a hard time getting farm labor in a timely manner to fill the market with continuity and reliability.”

That said, Jungmeyer acknowledges, “Mexico has its own challenges in growing. West Mexico has a lot of the same water pressures as are in California and Arizona. Mexico growers recognize this and use less intensive water through shade houses and greenhouses to be more efficient. That makes Mexican produce competitive.”

Labor availability is also somewhat of a challenge in Mexico, and Jungmeyer says wages will increase again in Mexico.

So, while Mexico has many of the same problems as the western U.S., “the advantages are hard to outweigh,” Jungmeyer says. “There is very good weather and long growing seasons.”

“In Mexico, we’ve also seen innovation in varieties that the buyers are looking for,” he adds.

Mexico also offers many microclimates for diverse crops and production seasons. In the table grape business, production is now pushing south beyond the “new” southern Mexico production in Jalisco. Harvest time for Mexico table grapes should be April 1 before too many years, Jungmeyer says.

Mexico’s highlands elevation allows berry and vegetable production 12 months a year. And berry production investments in these highlands “have only just begun in the last five years.”

These investments have included valuable proprietary varieties.

THE TEXAS POINT OF VIEW

Dante Galeazzi, president and chief executive of the Texas International Fresh Produce Association (TIPA), plays a similar role as Jungmeyer, but from Texas’ Rio Grande River crossing region from his office in Mission, TX.

TIPA’s role is unique, however, because the group represents the interests of Texas fresh produce growers. But it also represents the role of Texas produce importers distributors, who may handle large volumes of Mexican product.

Galeazzi shares Jungmeyer’s view on the strengths of, and bright future for, Mexican produce exports to the United States. But he notes another factor expediting Mexican export growth is Mexico’s superhighway, Autopista Durango-Mazatlán, which was completed in October 2013.

As the name implies, this road runs between Durango and Mazatlan, straight through Mexico’s rugged Sierra Madre mountains. The new 115 bridges and 61 tunnels replace a route that faced landslides, potholes, blocked tunnels and ragged asphalt.

Now, vegetable products grown in Sinaloa and other West Mexico locations enjoy a smooth, fast, timely ride to south Texas. This has improved quality, and diverted a large volume of fresh vegetables that once went to the northwest to enter through Nogales, to Texas. This route is much shorter to reach U.S. markets in the northeast and southeast.

Jungmeyer is pleased with U.S. Customs’ efforts to develop more non-intrusive means to inspect Mexican produce crossings. “We support the investment for quick and efficient non-intrusive scans.” FPAA also is talking to political leaders about the need for more Customs officers to work in inspections, to replace those who have been diverted to border immigration issues.