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Mexicans say free trade agreement won't hurt U.S. coffee exports.

Mexico, currently the second-largest exporter of coffee to the United States after Brazil, will continue selling coffee to the Americans unaffected by a free trade agreement that could link the two countries economies as early as 1993.

Jenaro Hernandez de la Mora, executive director of the Mexican Coffee Exporters Association, said the FTA won't have much impact on the coffee trade, though it could affect fruits, vegetables and other agricultural produce.

"Through a free trade agreement, the United States and Mexico will enjoy free trade of products that otherwise would have to pay import duties," De la Mora told The Tea & Coffee Trade Journal. "In the case of coffee, our biggest market is the United States. Nothing will happen for a very simple reason: Mexico produces coffee, and the United States doesn't. There's no difficulty now, and there won't be in the future."

Eventually, President Bush and his counterparts in Canada and Mexico hope to form a North American Free Trade Agreement that would unite the three countries into a $6 trillion market of some 360 million people. Yet talks between U.S. and Mexican negotiators have been slow, and most observers don't expect the FTA to take shape until after next year's U.S. elections.

Currently, the United States buys 22 million sacks of coffee a year from around the world. From January to June 1991, Mexico's share of U.S. green coffee imports was 23.1%, second only to Brazil's 26.7% and way ahead of Colombia's 13.7%.

In an interview at his 8th-floor office across from the Hotel de Mexico, the city's largest unfinished construction project, De la Mora said low prices have meant hard times for the Mexican coffee industry.

"In 1989, when the International Coffee Agreement fell through, prices dropped from $1.20 to 80 cents," he said. "Mexico had warehoused 2.3 million 60-kg sacks and nowhere to sell it. In 1989 and 1990, we began to export all this coffee."

Current production, he estimated, stands at close to 5 million sacks, though between October 1990 and August 1991, he said, Mexico exported 3.34 million sacks. More than 90% of that went to the United States, with the remainder going to Japan and Western Europe. Generally speaking, he said, Mexico's share of U.S. coffee imports is around 10%.

Yet the dollar importance of coffee to the overall Mexican economy has declined in real terms over the last few years. In 1989, according to de la Mora's organization, Mexico sold $513 million worth of coffee, making it the biggest generator of foreign exchange in agriculture, ahead of frozen shrimp ($338 million), cattle ($211 million) and tomatoes ($109 million).

But by 1990, coffee dropped to $333 million, lagging behind tomatoes ($428 million) and cattle ($349 million). The same year, for point of comparison, Mexican petroleum exports were worth $8.9 billion.

According to the quasi-governmental Instituto Mexicano del Cafe, coffee is grown in 12 of Mexico's 31 states--primarily Chiapas, Veracruz, Oaxaca, Puebla, Guerro, Hidalgo and San Luis Potosi--and occupies an area of 560,343 hectares. Some 200,000 families live off of coffee, of which Mexico is the fourth largest producer after Brazil, Colombia and Indonesia.

A spokeswoman for the Institute, founded in 1959, said "we try to extend technical assistance to producers as well as technical people and administrators, and to create an information network on export markets and international prices. We also focus on fighting diseases and the use of fertilizers. We maintain relations with the ICO, and give technical assistance to other countries."

De la Mora, who has his own coffee plantation in Jalapa, Veracruz, said the Mexican Coffee Exporters Association's 137 members represent 30% of Mexicos coffee exports. He said the 34-year-old organization is one of several dedicated to the trade, the other major groups being the Condereracion Mexicana de Productores de Cafe, and Union Nacional de Productores de Cafe.

"We produce coffee of very high quality, but we're not doing it now because producing quality coffee has a cost, and it's not worth it," he said. De la Mora added that, "Mexico hasn't made much publicity of its coffee, because everything it could export, it does."

PHOTO : Jenaro Hernandez de la Mora, executive director of the Mexican Coffee Association, on the balcony of his office.

Larry Luxner is a freelance journalist based in San Juan, Puerto Rico.
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
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Author:Luxner, Larry
Publication:Tea & Coffee Trade Journal
Date:Jan 1, 1992
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