In August, I had the opportunity to travel to El Salvador and Mexico with the U.S. Soybean Export Council (USSEC) on a Qualified State Soybean Board (QSSB) learning mission. Both El Salvador and Mexico strongly believe in the quality and importance of U.S. soy, but they are opposites in the size and makeup of their agriculture industry. Travelling to each country was an eye-opening experience of the important role U.S. soy plays in multiple types of markets.
El Salvador: A Growing Country in Every Aspect
El Salvador is a small country with a population of approximately 7 million people, yet it imports more than $790 million worth of U.S. agricultural products annually, and that demand continues to grow. One of its top agricultural imports is U.S. soybean meal, accounting for nearly $100 million in purchases and representing growth of more than 100% over the past decade.
The quality of U.S. soy stands out at every level of production throughout El Salvador. Producers consistently recognize the value of U.S. soy and appreciate the dedication of American farmers in maintaining the high standards that make it a preferred choice in the marketplace.
A significant portion of imported soybean meal is used in poultry production, as well as other livestock feed applications. As El Salvador’s economy and infrastructure continue to advance, both the poultry and swine sectors have experienced steady growth. Industry leaders have set ambitious goals to further expand production and eventually become exporters of animal products. El Salvador faces one challenge that no other Central American country does: it has no access to the Gulf. Because of that, shipping costs and time are much higher compared to their neighboring countries, which gives them a unique challenge to work around. One way they are trying to improve their port is by creating a U.S.- only product line to fast-track the time it takes for U.S. goods to arrive.
Life in El Salvador has changed dramatically over the past decade. Improvements in public safety, infrastructure and overall quality of life have contributed to more efficient and healthier communities. These positive developments have also created opportunities for continued growth and investment throughout the agricultural industry.
Mexico: A Key Partner for U.S. Soy
While El Salvador showcased the opportunities within a growing agricultural market, Mexico highlighted the features of one of the United States’ most important trading partners. As the largest importer of U.S. agricultural products and a leading buyer of U.S. soybeans and soybean meal, Mexico plays a critical role in the success of American agriculture.
While in Mexico City, we heard from a variety of key players in the agricultural industry, including swine producers, poultry producers, soybean crush plants, agribusiness representatives, dairy producers and feed manufacturers. One topic consistently emerged in every conversation: the United States-Mexico-Canada Agreement (USMCA). USMCA is a free trade agreement among the three countries and serves as the foundation for much of North America’s agricultural trade. Recently, discussions surrounding its future and the possibility of annual reviews have created uncertainty for producers and agribusinesses across all three nations.
According to the USDA Foreign Agricultural Service (FAS) office in Mexico City, Mexico’s economy is facing several challenges, including a weakening peso and slower economic growth, both of which have impacted the agricultural industry. Mexico’s agricultural industry relies heavily on trade with the United States, which purchases approximately 89% of Mexico’s agricultural exports. Uncertainty surrounding the future of USMCA creates additional concerns for Mexican producers and businesses because trade with the United States is critical to the country’s agricultural economy. Unfortunately, because of the economic situation and uncertainty, Mexico has increased its Brazilian soybean imports because of the lower cost. On the bright side, processors and producers have noticed the lower quality compared to U.S. soy.
However, this uncertainty cuts both ways. Mexico is the largest export market for U.S. agricultural products, purchasing more than $30 billion in U.S. agricultural goods annually. If Mexico’s economy continues to struggle, the effects will be felt beyond its borders, potentially reducing demand for U.S. exports. U.S. Ambassador to Mexico, Ronald Johnson, said, “We’re working to expand U.S. exports, strengthen our integrated agricultural supply chains, and create greater prosperity on both sides of the border,” while meeting with QSSBs and industry partners in Mexico City. Ambassador Johnson believes in what U.S. farmers do and is working to ensure that value is shown throughout Mexico. The strong interdependence between the two countries highlights the importance of maintaining a stable trade relationship under USMCA.
