Organizations preoccupied with developing Mexican agriculture are working to improve opportunities for farmers across multiple segments.

Rafael Gamboa González
Jesús Esteban Macías

How would you describe your business model?

RAFAEL GAMBOA FIRA's main focus has always been on promoting the development of the rural sector. Since the outset the institution was mandated to integrate smaller producers into the credit system. Our agronomists organized producers into larger and more effective agricultural units, and we have more recently been looking at the value chain. This makes us more certain that the producers are not just of good quality, but moreover that they produce what the market needs. We also provide development of the suppliers of large firms (in industry or trade) through technical assistance to producers. FIRA started operations in 1954 with one of the four trusts that today comprise the institution and only lends to financial institutions, and also provides guaranties for intermediaries to boost their lending to the sector. One of our trusts provides financial guaranties, where we co-share the risk with the financial intermediary who knows that its exposure to the agribusiness or rural sectors is limited. Banks can count on the FIRA guarantee for credits of up to around $150 million pesos as long as it is an eligible credit without consulting FIRA. We assume up to 50% of the risk. FIRA can take larger amounts and credit shares, after assessing an operation.

JESÚS ESTEBAN MACÍAS SOFAGRO is a financial intermediary for credit purposes. We don't collect money from the public, solely from the development banking system, other banks, and shareholders, and we lend it to further economic activity. We mainly concentrate on the sugar industry; however, we are introducing new development projects for palm oil, rubber, cattle, and corn. In another line, we are also working to introduce a greater volume of microcredits as they work well in Mexico. Before providing the loan, we try to reduce expenses. This means we have a certain advantage over banks and other intermediaries, because we operate with lower expenses. Second, after we have extended a loan, we are closer to the activity. People trust us. Third, we are experts in working with communities and organizations, and we know how to work with thousands of people quickly and simultaneously. For example, when you give credit to 2,000 or 3,000 people, you need to issue loans quickly, and sometimes in cash. Therefore, you have to go to the communities and make a strategy for disbursing credit quickly, which is difficult for banks to do.

How would you define the agricultural sector in Mexico, and how do you expect it to evolve over the coming years?

RG In livestock, we have seen much growth in bovine production. Mexico was formerly a net importer of meat by a wide margin, but in 2013 we were able to reverse this trend. As income rises in middle-income countries, there is more of an appetite for meat, which spells potential for both beef and pork. With pork we have a long tradition of production and much potential. Nowadays the regions that have achieved the standards required to export worldwide are in the northeast of the Mexico in Sonora, and also in the Yucatán Peninsula. Those two regions have already been exporting successfully to Asia. We also have considerable potential in central Mexico and are working hard to receive export certification. Those are the two chains of notable potential, and require investment, particularly regarding pork, in terms of the genetic production of livestock, and the commercialization of the meat itself.

JEM Mexico is a dual economy; there is a modern sector of agro-industry that is modernized and fast, and then there is a huge number of people working in the traditional manner. With this duality comes the need for programs with which to approach and create value-added chains for agro-industry and substitute imports with national production. We have to work with the government to create those value chains. The World Bank has also approached to help us create more value chains. In the coming years, there will be some opportunities in ethanol and biofuel, as well as in the production of solar or wind energy.