LATIN AMERICA
With the 10th largest population worldwide, Mexico is an attractive market for edible oils, with soyabean remaining the main oil produced domestically Sunder Singh With a population of more than 131M – the 10th largest globally – Mexico is one of the most attractive markets in Latin America for edible oils. Spanning a geographical area of 1.973M km2, Mexico is a vast country. As the second most populous nation in Latin America and the most populous Spanish-speaking country in the world, it is a vital market for global edible oil producers and suppliers.
Vegetable oil industry
Mexico’s economy has been performing positively, with a 2.1% growth rate in 2018 and a decline in inflation. However, for the edible oil industry, one of the greatest challenges relates to the country’s high 43% poverty rate, which has deprived it of a huge section of the market. According to the World Bank Annual Report of 2018, “The mid-term outlook for the country is rather optimistic, with projected upward economic growth, driven by private consumption; as well as further drops in inflation and public debt, which ultimately may positively influence public spending.” Soyabean oil remains the major oil produced in Mexico, accounting for 62% of total domestic vegetable oil production. According to a United States Department of Agriculture (USDA) GAIN report, about 96% of domesticallyproduced soyabean oil is extracted from imported US soyabeans. In 2018-19, Mexico produced a total of 0.98M tonnes 34 OFI – MARCH/APRIL 2020
Mexico.indd 2
Steady growth of soyabean oil and imported 176,000 tonnes of soyabean oil in 2018. The USA continues to be the main supplier of soyabean oil to the Mexican market and, due to lower freight costs, it is expected to maintain and potentially increase this share in coming years. Canola oil is the second largest vegetable oil consumed in Mexico, which imports a significant supply of seed and oil from Canada. Between 1 August 201830 July 2019, Mexico imported 78,100 tonnes of canola oil and 1.27M tonnes of canola seed for crushing from Canada. Investments in oil palm plantations in the past 15 years have made palm oil the third largest oil produced in Mexico by volume. This growth has largely been driven by government programmes encouraging oil palm planting in Campeche, Chiapas, Tabasco and Veracruz states. Palm oil consumption in Mexico totalled approximately 676,000 tonnes in 2018. An additional 69,000 MT of palm kernel oil (PKO) and 38,000 tonnes of refined palm oil were also consumed. Palm oil has become increasingly important for the food processing industry in recent years since companies began removing trans fats from their recipes. Several snack food companies have also switched to palm oil for products such as potato chips due to its attractive pricing. Mexico produced about 237,000 tonnes of crude palm oil (CPO) in 2018, representing a nearly 25% increase from the previous year. Approximately 13,000 tonnes of PKO was also produced. Despite growing palm oil production, Mexico is heavily dependent on imports of palm oil to meet domestic demand. Approximately 65% of CPO consumption is supplied through imports. In 2018, CPO
imports were estimated at approximately 439,000 tonnes. Costa Rica and Guatemala accounted for more than 50% of total palm oil imports into Mexico, while Honduras, Columbia and Nicaragua accounted for about 31%. Indonesia and Malaysia, the world’s two largest palm oil producers, accounted for just 14% of total palm oil imports into Mexico. The high level of of palm oil imports from South American countries is due to the trade advantage gained by Mexico as a result of the Central American Free Trade Agreement (CAFTA). Mexico’s appetite for vegetable oil imports is likely to grow steadily in the coming years as rising disposable incomes drive consumption growth at a faster rate than in recent years.
Domestic edible oil producers
Large companies such as Agydsa, Ragasa, Proteinas y Oleicos, and Cargill represent nearly 80% of oilseed crushing capacity in Mexico. There is stiff competition between these companies in the domestic market. Almost all of them have made significant investments to expanding the scale and scope of their operations in recent years. Currently, Agydsa is building a new plant in Jalisco with a crushing capacity of 4,000 tonnes/day, which is expected to become operational in August. Similarly, Cargill recently invested US$16M to install a production and bottling line for vegetable oils at its plant in Hidalgo. As a result, Cargill began participating in the vegetable oils and fats retail sector in Mexico. With the new production line, Cargill’s Hidalgo plant became one of the company’s largest and most modern www.ofimagazine.com
19/03/2020 11:23:31
