CHICAGO – U.S. food producers and shippers are trying to speed up exports to Mexico and line up alternative markets as concerns rise that this lucrative business could be at risk if clashes over trade and immigration between the Trump administration and Mexico City escalate.
Diplomatic relations have soured fast this month, as the new U.S. administration floated a 20 percent tax on Mexican imports and a meeting between the presidents of the two countries was canceled. U.S. President Donald Trump has also pledged to renegotiate the North American Free Trade Agreement (NAFTA) trade deal with Mexico and Canada.
Mexico is one of the top three markets for U.S. farm production.
Some U.S. producers of corn, soybean meal and distillers dried grains (DDGs), an ethanol byproduct, are trying to accelerate sales to Mexico because they are uncertain about the risk for new tariffs to disrupt trade, said Rafe Garcia, general manager for U.S. operations at shipper Primos & Cousins USA.
“They don’t know what will happen in the next month or the next week,” Garcia said about producers. “They are trying to move everything as fast as they can.”
The company, which ships U.S. livestock feed to Mexico and imports Mexican products like molasses, has already talked with U.S. producers about selling into other countries, such as Nicaragua, to reduce their dependence on Mexico, Garcia said.
Exports are critical for U.S. farmers as a global slump in prices for agricultural products has pushed incomes to their lowest in years
Last week, more than 130 trade associations and food companies, including Cargill Inc and Tyson Foods Inc, touted the benefits of NAFTA in a letter to Trump on trade.
Food producers say the agreement has quadrupled U.S. agricultural exports in the region during the past two decades.
Mexico is expected to import about 4 percent of the U.S. corn crop in 2016-2017, according to the U.S. Department of Agriculture (USDA). It buys 7.8 percent of U.S. pork production, the U.S. Meat Export Federation said.