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Corn+Soybean Digest

Mexico: A Consistent Trade Partner

Mexico, our good neighbor to the south, is not only a staunch ally (one of our largest trading partners), but it's also a growing market for U.S. exports.

As I wrote this series of articles on our major competitors and customers I was amazed at the data on Mexico. Mexico's democratic government has embraced free market economics and its hardworking population is now reaping the benefits.

Look at this economic data and you'll see why Mexico is likely to be an expanding market for U.S. farmers.

• Population: 104 million
• Population Growth Rate: 1.18%
• Birth Rate: 21.44/1,000
• GDP Growth Rate: 6.7%
• Real Growth Rate: 1.3%
• Per Capita Income: $9,000

The percentage of the population living above the poverty level is 60%.

After weak or negative economic growth from 1997-2001, the Mexican economy has turned the corner and is now growing, and inflation has been held to manageable levels.

The rapidly expanding middle class is improving its heavy starch diet to include more meat and vegetable oil.

Trade with the U.S. and Canada has tripled since NAFTA was adopted in 1994.

Mexico's livestock production has shown dramatic increases. Consumption is up 15% in the last five years and is up 232% from 20 years ago. Mexico is the fourth largest sumer of corn in the world behind the U.S., China and Brazil. Because China and Brazil are both export competitors with the U.S., as Mexico's demand for corn increases, odds are good that the U.S. will provide the lion's share of that larger market.

Mexico is also the third largest importer of corn in the world, right behind Japan and South Korea.

Demand for soybeans has increased 11% since 1999 and is up a whopping 222% in the last 20 years. With the improvement in the Mexican economy and more of its population moving solidly into the middle class, growth is likely to accelerate in future years.

The work the American Soybean Association has done in Mexico has really paid off. Mexico passed Japan last year and is now the third largest buyer of U.S. soybeans, importing an estimated $957 million dollars worth last year.

Mexico is second in the world for soybean meal exports at $150 million, and is the No. 1 soybean oil buyer in the world at $96 million.

The key to Mexico's economic growth is a stable government, an expanding middle class and high energy prices.

With Mexico exporting 3.59 million barrels of oil per day, it needs to diversify its economy and become less dependent on oil revenue.

The 40% of the population living in poverty needs to be brought up to higher income levels as soon as possible to insure political stability and expanded food exports.

The good news from Mexico is also good news for U.S. corn and soybean farmers.

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