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Trans-Pacific Food Security: Mexican-Chinese Agricultural Trade.


This week a Mexican delegation, including the Mexican Minister for Agriculture, met with the China Chamber of Commerce of Foodstuffs and Native Produce to discuss the furthering of China-Mexico agricultural trade and cooperation. The meeting follows on from the November 2011 China-Mexico Agricultural Match Making session and the April 2012 China-Mexico Agricultural Working Group, where a number of pledges of cooperation and memorandums of understanding were signed. This week's meeting hopes to make further steps to transforming these pledges and memorandums into, in the words of Jose Antonio Meade Kuribrena, Mexico's Secretary of Foreign Affairs, “a bilateral relationship sustained on a...strategic and long term vision.” There is potential to open up an enormous agriculture and food trade relationship.



As of 2010, China was the world's top producer of 50 of the UN's Food and Agricultural Organisation's global food categories. At the same time, however, it is fast become a net importer of these and other food and agricultural produce. With the world's largest and still growing population, feeding China is a major challenge. The country contains 20% of the world's population, but only 7% of global arable land. The government have recognised that these sums do not add up and, overturning Maoist policy, that China cannot face the challenge to feed itself alone. Most recently China signed agricultural trade agreements with Australia and New Zealand in April. It also has its eyes on the potential for agricultural trade as part of its numerous free trade agreements with African and Latin American countries.


The profile of China's demand is also changing fast. Demand for meat has soared in direct relation to the rising purchasing power of large sectors of China's 1.3billion strong population. Per capita meat consumption now sits a comfortable 8% above the global average and as of 2008 China leads the world in pork consumption, devouring over half of the world's total. A new layer has recently been added to this demand profile. In the wake of numerous food safety scandals, the members of these more privileged strata of Chinese society are also demanding better guarantees of food quality and safety standards.


Mexico is a country which finds itself in a good position to answer these demands. It is a globally renowned producer of food stuffs, and in particular has a well developed infrastructure for meat production and a large export stock of animal feed grains. Mexican food production also has a decent reputation for food safety regulations, managed by the state-run Tipo Inspeccion Federal system of safety certification. This reputation for safety came about in large part because of the comparatively high safety and quality standards of the US import market, by far Mexico's largest trading partner.


Mexico is already one of the largest exporters of pork to Japan. Since 2005 it has shipped around 50,000 metric tonnes of pig carcasses to Japan annually. The good news for China here is that, not only does Mexico have the capacity to produce large quantities of pork, the most in-demand meat for Chinese, it also has tested and currently operational trans-Pacific transportation infrastructure.


This infrastructure may soon be utilised in shipping pork to China if the currently headlining potential takeover of the world's largest pork producer, Smithfield Foods, by Chinese company Shuanghui gets the go-ahead from Congress. Although it is a deal being struck between an American and a Chinese company, Smithfield's large numbers of farms in Mexico, which produce nearly 52,000 tonnes of pork every year, mean that this deal would have a significant impact on China-Mexico agricultural trade. A Chinese owned and run Smithfield Foods would be a good example of trade functioning within the US-Mexico-China 'triangular relationship' outlined in a recent report by the University of Miami, the University of California, Berkely, and the Centro de Estudios China-Mexico. Shuanghui will be stepping into an infrastructure of production and transportation constructed as a result of US-Mexican trade and the North American Free Trade Agreement. Mexico can benefit from the boosted export market this will create, most importantly in gaining access to new markets and in addressing its massive dependency on US markets.

Another area with potential for cooperation between China and Mexico is that of research in agricultural sciences. It is a field which China is interested in exploring as an answer to feeding its 1.3billion strong population, and it is a field for which Mexico has expertise and renown. At the Agricultural Working Group meeting in 2012, a Memorandum of Understanding on Agricultural Science and Technology Cooperation was signed with the intention of exploring biotechnology, climate change adaptation and animal and plant diseases. This week's meeting may produce further such agreements. The opportunity for Mexico to promote itself as a global leader in global agricultural science, with China as its main customer, is strong.


To date the most successful Mexican company in China has been Bimbo Breads. It deals in already manufactured foodstuffs, rather than raw agricultural produce, where Mexico's largest market is likely to be. But it has seized upon the same opportunities that the agricultural sector is presented with; China's need for food and concern for its safety. Bimbo has utilised its Western brand name to appeal to this desire for greater safety guarantees, and has also adopted a pragmatic approach to what products it sells, frequently producing new 'bread with Chinese characteristics' specifically for its Chinese consumers. Bimbo have set the bar and other Mexican companies would do well to learn from their approach of tailoring their products to the Chinese market.


For much of the last decade China has been seen simply as a threat to Mexican manufacturing through its ability to out price Mexico on many of the goods sought by the American import market. Over the period 2000-2011, for example, the export of Mexican manufactured leather goods to the US shrank by 10.6% whilst China's grew by 35.3%. China's rapid emergence as both a massive producer and a massive consumer, however, has opened up opportunities for Mexico and other producer economies. Mexico, in fact, is placed in the unique and privileged position of having been a major supplier to the quality controlled US market. As a result of decades of this trade, Mexican goods strike an appealing balance between price and quality, something which China has so far not reached. If Mexico seizes this opportunity to promote itself as a well-priced producer of safe goods, a large and growing consumer market in China awaits. Agricultural trade is just one of the sectors through which Mexico can seek a Chinese market.




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