Mexico eyes Brazil farm products as hedge on Trump threat

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Brasilia | Reuters — Amid trade tensions with the U.S., Mexico plans to send a delegation next month to visit Brazilian corn, beef, chicken and soy producers as an alternative to U.S. suppliers, its representative in Brazil said on Friday.

Mexican charge d’affaires Eleazar Velasco said Brazil is uniquely positioned to expand agricultural commodity sales to Mexico if trade with the U.S. is disrupted because it is closer than other potential suppliers like Australia.

“The United States unilaterally wants to change the established rules of the game,” Velasco told Reuters. “This will evidently lead us to rebalance our trade relations.”

Mexican Agriculture Secretary Jose Calzada was due to visit Brazil last week but had to postpone his trip until March due to scheduling issues, Velasco said.

Calzada will bring Mexican food industry executives to do deals with Brazilian exporters, the diplomat said. The trip is part of a drive to lessen dependence on U.S. exports as President Donald Trump threatens to upend long-standing free trade between the two countries.

Calzada told Reuters in an interview last week that Mexico could cut tariffs on South America products, if needed.

Mexico has relied on U.S. yellow corn imports under the North American Free Trade Agreement. With US$2.3 billion of imports in 2016, Mexico is by far the biggest foreign buyer, and U.S. farmers have lobbied Trump not to alter their trade.

“Corn is the main staple for the Mexican population. If the rules are changed we will have to buy from others, and Brazil is in the best position,” Velasco said.

Brazil is expanding its corn production and the 2016-17 harvest is expected to jump to 93 million tonnes from 71 million tonnes in the previous harvest. Consultancy Agroconsult estimates Brazil’s corn exports will double to 28 million tonnes, with neighboring Argentina as its main competitor.

Mexico will also be looking to buy soy from Brazil, the world’s largest exporter of the bean, even though Mexican imports are small, Velasco said.

Tensions with the Trump administration injected new energy into negotiations between Mexico and Brazil to free up their trade, 51 per cent of which is made up of cars and auto parts, but could now see an expansion of agricultural goods.

Reporting for Reuters by Anthony Boadle.

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