“So far, the government has not provided an alternative to replace glyphosate or provide farmers with a better tool…”
Luis Eduardo González Cepeda is the CEO of the Mexican Union of Agrochemical Manufacturers and Formulators – UMFFAAC, commercial director of Grupo Dragón (Agricultura Nacional S.A. de C.V.), graduated in agronomy from the Autonomous University of the State of Mexico.
AgriBrasilis – What is the role of the Mexican Union of Agrochemical Manufacturers and Formulators and what is the profile of its members?
Luis González – UMFFAAC was created as a Civil Association in 1976, made up of Mexican executives, joined by important foreign companies that supply phytosanitary products.
One of our goals is to raise awareness about how food is produced in the countryside and how it reaches people’s tables, about the importance of the inputs that farmers use to provide food and generate economic development.
In Mexico, the agrochemicals industry complies with national and international standards and regulations, but there are areas of opportunity to strengthen the commercial relations of the members of the Free Trade Agreement between Canada, United States and Mexico (USMCA). One of them is the harmonization of respective regulatory frameworks, an issue in which important advances have been recorded, but there are also threats of regression. This topic can fall into commercial disputes if the scientific basis is abandoned and if public policy decisions are based on ideological foundations.
AgriBrasilis – What is the Mexican pesticide market and what is the trend for 2023?
Luis González – The formal pesticide market in 2022 was estimated at approximately US$ 1.65 billion, in the case of the formal or regulated industry in Mexico. The average annual growth trend in recent years is 3% to 5%, with some fluctuations because of adverse conditions, as occurred during the period of the COVID-19 pandemic and the Ukraine-Russia conflict.
Gradually, the Mexican market is changing to more specific products for pest and disease control, seeking differentiated solutions, with less environmental impact, toxicity and greater ease of use, etc.
Regarding the market for 2023, the situation is not very optimistic, because of the dry climate, considering that in Mexico two thirds of the agricultural area are non-irrigated, mainly for grain farming. In addition, there is uncertainty in the international market because of the drop in input prices. We estimate a contraction of approximately 3% to 5%.
AgriBrasilis – How is the drop in product prices affecting the market compared to last year?
Luis González – Prices have dropped dramatically in the first quarter of 2023. Stock in the production chain has been bought at higher prices, which is causing losses or reduced profit for importers or formulators.
There are also uncertainties for the distribution channels in relation to the purchase of products when it is observed that prices are still falling. This is a complicated question for the sector in Mexico in 2023.
From the farmer’s point of view, this situation is favorable, as they have suffered significant increases in the prices of fertilizers and pesticides derived from the effects of the pandemic and the Ukraine-Russia conflict.
AgriBrasilis – What are the product commercialization steps from manufacturing/formulation to the end user?
Luis González – Unlike other countries, commercialization in Mexico is more complex because of the way agricultural production units are structured. We have farmers with large areas, mainly in the North and West regions, that allow them to work with economies of scale; on the other hand, we also have fragmented production units, largely used for subsistence agriculture, mainly in the south-southeast and center regions of the country.
In agricultural production units that have a commercial scale, commercialization takes place from the manufacturer or formulator to the large distributor, that serves large agricultural groups.
In the case of fragmented or very small productive units, the commercialization chain is longer: the large regional wholesalers supply a channel that we call “dealers” or local resellers, that in turn supply another channel, that are the retailers, who reach the small farmer. This is a complex channel that requires many points of sale to reach the farmer and that makes the products more expensive.
AgriBrasilis – How is credit provided along the pesticide chain, from manufacture to consumption?
Luis González – Large companies develop technical analyses to determine credit lines for the distribution channel. These credit lines are usually secured by national and international credit companies.
The large distributor provides credit to sub-distributors, who also escalate these lines of credit. It is important to mention that there are distributors in the country that may have excess credit, which may exceed three or four times its value, because each company, each supplier, offers financing for them.
There are some companies that grant credit lines to large farmers. It is worth mentioning that providing credit to the farmer is risky: if the conditions are favorable, they can pay punctually, but if not, the farmer can remain with this debt until the next agricultural cycle or year.
In the case of “dealers” or local resellers, transactions are normally carried out in cash, involving a very low volume of products.
AgriBrasilis – How does the industry see the glyphosate ban and other government restrictions? Is there still a possibility of going back on these bans?
Luis González – The ban on glyphosate in Mexico is a unilateral decision. It has no scientific or technical basis or analysis of the risks and consequences for agriculture, the market, and the countryside. It is possible that the decree will be enforced on the last day of March 2024.
If the US or other countries discuss this matter within the framework of international free trade agreements, there is the possibility of extending the decree’s term until the end of the current federal administration.
So far, the government has not found an alternative to replace glyphosate or provide farmers with a better tool.
AgriBrasilis – What is the size of the illegal pesticides market?
Luis González – The last report, from 2020, estimates a value of more than US$ 200 million. Some calculations already estimate approximately US$ 300 million per year in terms of illegal pesticides.
If we also take into account the illegal market for foliar fertilizers and other low-volume fertilizers, the figure could reach over US$ 500 million.
The illegal market grows because the government has not carried out inspections, seizure of products, investigations, etc.
AgriBrasilis – You said that there is a lack of scientific basis for public policies on pesticides in Mexico. In your opinion, what would be the best practice?
Luis González – We need public policies to be based on science. Misinformation surrounding scientific evidence about hazardous substances has become a powerful tool for manipulating public opinion and the debate over the food supply, causing confusion, doubt, and distrust.