By TBY | Mexico | Sep 22, 2017
The northwestern states of Sonora and Baja California, hubs for wheat production, are great examples of both the successes and challenges facing the agricultural sector.
Mexico’s agricultural sector, often the main source of tensions with the country’s largest trade partner, is inextricably linked with Mexico’s economic health as a whole, accounting for USD23 billion in 2016 in exports to the US. Despite its prominence, Mexico’s agricultural industry has faced challenges in recent years stemming from a combination of domestic and international issues.
Though mostly arid and sparse with extremely high summer temperatures, Sonora and Baja California are a couple of the most important agricultural regions in the country, producing massive amounts of wheat, potatoes, grapes, watermelons, and more. Wide-scale irrigation projects are to thank for the agricultural sector in the northwest. In the early 20th century, the government began to construct massive irrigation systems that utilized dams and reservoirs to bring water to the valleys in these states. These sweeping public works projects allowed for the introduction of large-scale farming of non-native crops.
Further contributing to the agricultural development of the region was the invention of new agricultural techniques that increased crop yields, a process termed the Green Revolution. Mexico was then at the epicenter of the research, and the first strains of high-yield wheat were grown by crop researchers in Sonora. Once improved agricultural techniques and complex comprehensive irrigation systems were fully integrated into the northwest’s agricultural sector, the area became one of the world’s largest agricultural hotspots. Today, approximately one-quarter of Mexico’s 20 million ha of cultivated land is irrigated. Sonora and Baja California are the country’s largest wheat-producing states, accounting for half of the nation’s 4 million tons.
Yet, the scale of agricultural production in these states belies the economic issues the industry has faced over the past two decades. A series of domestic and external factors has combined to put northwestern Mexican agriculture in a difficult position. Over the past three decades, the Mexican government has been moving away from protectionist policies, opening the sector up to competition and exposing farmers to new risks. During the 1990s, the government dramatically reduced subsidies and market intervention programs that guaranteed incomes for small farmers. The government also privatized state-run farming agencies, and this, combined with the decreasing margins for small farmers led to a consolidation of the sector that saw industrial farming operations replace traditional small-scale farming.
NAFTA, the most well known piece of agricultural policy, strengthened effects of the Mexican government’s domestic reforms. When NAFTA was passed in 1996, Mexico saw an influx of heavily subsidized US crops, most notably corn. Unable to compete with US subsidies, more than 2 million farmers have left the industry, and Mexico has become ever more dependent on imports to meet its population’s food requirements. The agreement’s bans on protective tariffs and increased ease of business have led to net increased trade flows and FDI—but the agricultural industry has taken the brunt of the costs of the reshuffling.
More recently, however, the Mexican government has shown a newfound desire to support the agricultural sector in the northwest. The election of a conservative president who campaigned on protectionist trade policies in the US has led political and industry leaders to reevaluate the country’s vulnerabilities to trade agreements and self-sufficiency. The National Water Commission has been taking steps to modernize irrigation systems to reduce waste and improve yields, a long process that should have tremendous benefits for the area. The government has also invested in new surveys to measure the aquifers located in Sonora to better understand the water supply and analyze what is needed to best meet agricultural needs. Finally, some subsidies have returned to the sector, providing some needed financial stability for still active farmers. None of these actions can singlehandedly solve the issues facing the agricultural sector, but their implementation reflects a commitment to keeping Sonora and Baja California a hub for the industry, which bodes well for the economic future of the northwest.