Mexico was a great country with a lot of potential. Probably the biggest limitation is the land ownership laws which prohibit an individual from owning more than 100ha in their own name (they can however lease country). Land is worth about US$2000-3000/acre with water having to be purchased on top of this. Water cost about US$20/meg, which seems ridiculously cheap but I think my translation was correct. Notwithstanding this, I will outline my thoughts on the country below.

Mexico was a lot more efficient agriculturally than I thought it would be. Whilst we weren’t in the country for a long time and we spent 2 days at CIMMYT (the international wheat and maize breeding institute) the countryside we saw driving around was quite productive. Having said this, it is the irrigation water we saw in the Yagui and Mayo valleys that is providing this efficiency. The Mexicans are averaging 6t/ha of irrigated wheat (growing up to 9t/ha) and are growing a lot of maize, vegetables and also moving into other horticultural crops like oranges and table grapes. The soils we saw were deep clays with excellent water storage capacity (we heard 420mm but this wouldn’t all be plant available) and very consistent. Rainfall was between 350-450mm per annum, which basically falls in summer (July and August). They have a ready market for a lot of these products in the USA and their labour costs make any form of agriculture that requires a significant amount of labour very efficient. We saw a team of 40-60 people picking, grading and stacking potatoes that were being paid US$10/day. When it comes to labour intensive agriculture, we in Australia can’t compete against that.

Water is very abundant. The valleys have 3 and 1 dam each that basically fill when a cyclone comes into the Sea of Cortez and then heads inland. They also have underground water (about 150 metres down) to supplement this dam infrastructure. Water use is dictated by crop choice. From my understanding, you were allowed 7 megs/ha for wheat and 10-11 megs/ha for cotton. I didn’t get any numbers for other crops but water isn’t a limiting factor. Most irrigation systems are flood or furrow with a few pivots. The government are trying to encourage more efficient irrigation techniques to the extent that they are paying for 50% of the cost of a centre pivot to try and get more efficient irrigation.

They have a very strong “Union” (called AOASS), or cooperative in our language, that helps the farmers with purchasing inputs, insurance, providing agricultural advice and they also have a JV with Cargill to market about 600,000t of wheat (mainly durum) per annum to overseas countries through a pool based selling mechanism. It seems that this union is quite keen to take Mexican agriculture up the value chain and they also have a fair amount of influence politically.

Industries we saw included wheat (both bread and durum), corn, chickpea, safflower, potatoes, oranges, onions, dairy, lamb and beef production. The big industries for Mexico in this area were grain, pork, chicken and horticulture.

Technically, they were also quite proficient. There is quite a bit of no-till and one of the farmers we saw was ally cropping his oranges to provide supplementary income off that block. The irrigation techniques could be improved but Australia is arguably one of the world leaders in this area and the Mexicans didn’t really have much incentive to improve irrigation efficiency as water is so plentiful and cheap. However, the limitations on land ownership are limiting the opportunities to develop any serious economies of scale.

In summary, I would regard Mexico as arguably a better value proposition than Brazil due to its plentiful irrigation supplies, cheap land, cheap labour and access to the biggest market in the world in the USA. However the limitations on land ownership are an issue and whilst one can lease land, the terms and security are unknown to me. There is also the chance of socialism which occurred in the 1970’s when all the land was nationalised. Whether this could happen again, I am not sure, but it is definitely a risk.