Mexico is the third-largest producer of agricultural products in Latin America, behind Brazil and Argentina. And its production helps fill demand for fresh fruits and vegetables in many parts of the globe.

To better understand this thriving industry in Mexico, the Agricultural and Fisheries Information Service (SIAP by its Spanish acronym) releases an annual report about statistics and trends in Mexican crops, as well as production and trade information. SIAP is expected to release its 2022 report later this year. For now, let’s look into the 2021 data. The Mexican government agency published the data of the Agricultural Closing for 2021, which provides detailed information about the current situation of agricultural products in Mexico. This includes getting an understanding of products that generate more revenue out of the many crops grown in Mexico.

It is important to understand that a good yield does not necessarily equate to profitability because there are more factors that affect the return on investment. First, the total amount of production must be measured to compare it accurately with potential income. This can be done through a well-developed recordkeeping system that tracks both inputs (e.g., seed, fertilizer, and labor) and outputs (e.g., harvested crops). The quality of the harvest is also a factor. For instance, if a crop yields high quantities but is of low quality due to environmental factors or pests and disease, its market value may be drastically reduced. Long-term sustainability also comes to play when tackling crop income; while short-term gains may appear attractive in the near term, they could have negative repercussions further down the line.

For example, tomatoes are one of the most produced crops in Mexico. In 2021, tomato producers in Sinaloa, Mexico, produced a yield of 56 tons per hectare, a good yield considering that it mainly runs an open-field production. We might think the return on investment is high with this output. But the truth is, since they harvest most of their tomatoes between November and January, the oversupply causes the price to drop to the point that over several years farmers were forced to throw away their produce or use it to feed livestock. We will find out how this trend changes based on SIAP’s 2022 upcoming release of statistics.

The most profitable farm crops are those that can create an economic benefit. For example, even in the case of obtaining a low yield, you can have good profitability if the product is marketed at a high price. This premise is much better than having a huge production in a saturated market.

Having explained this, the following are the products of Mexico that left more income per unit area (hectare in this case) to Mexican farmers in 2021.

Agricultural Products of Mexico with the Highest Income

It should be clarified that the data presented refer to the gross profit obtained for each crop. To obtain the net profit, the expenses inherent to production costs would have to be deducted.

To analyze how much money these Mexican crops generated, we considered the country’s total harvested area and the production value for each crop during 2021.

In this sense, the crops with the highest value per unit area in Mexico are agave, leaving 1,225,778 pesos per hectare, followed by eggplant and strawberry with 972,411 pesos/ha and 923,234 pesos/ha, respectively.

We can see that this list includes three of the berries grown in Mexico, which together, constitute the 3rd most exported agri-food product by Mexico. So, we can say that berry cultivation is one of the most profitable in the industry.

Also, it is not surprising that tomatoes appear in this list since it is one of the most important crops in Mexico. This Latin American country is the 9th largest tomato producer and the largest exporter in the world.

In addition, among the agricultural products in Mexico, tomato was the 4th agri-food product with the highest production value in the country in 2021, followed by agave, pepper, and berries.

High-value crops in Mexico

It is highly interesting that avocados ranked 17th in the list despite being a fairly well-remunerated product in Mexico.

In 2021, grain corn, avocado, and sugarcane had the highest production value in Mexico, with 148,601, 50,538, and 46,929 million pesos, respectively.

This can be explained by the fact that the yield (production volume divided by harvested area) of avocado is much lower than that of other agricultural products in Mexico, such as tomatoes or berries, making it a crop that requires a larger extension than usual.

In Mexico, agave, eggplant, and strawberry are the crops that leave more income per hectare harvested, while the crops with the highest production value are grain corn, avocado, and sugar cane. We expect to see how this changed in 2022 when SIAP’s data comes out.

ProducePay’s Role in the Agricultural Sector

At ProducePay, we aim to provide a better produce trade for all stakeholders in the industry. From our boots-on-the-farm expertise, we provide tools to help alleviate these challenges that produce growers face. During 2022 alone, we were able to reach more than 700 customers in 10 countries and had nearly $4 billion in transactions through our online marketplace – driven by continued growth in North America and launches in new markets in Central and South America.

ProducePay Marketplace, an online trading platform that allows growers and buyers to find each other to fulfill their needs, can assist produce players. They can trade on the platform and ensure a secure and transparent transaction, as well as on-time deliveries and payments. Our Marketplace gives sellers and buyers access to a variety of solutions to assist with their operations:

• Market insights give produce players easy access to updated reports on price, movement, and more.
• Financing solutions can allow produce sellers to have easy and secure access to Pre-season and Quick-Pay+ solutions, which help provide cash flow to operations and ensure quick payouts.
• Sustainability programs can help produce players gain more customers and also meet their ESG goals.
• Supply chain services link sellers with pre-vetted third-party logistics partners to ensure a trusted delivery process. This can allow growers to focus on their core business – farming and packing – while we handle the logistics.

Contact us to learn more about how ProducePay can help you improve your fresh produce business.

Source: SADER-SIAP