Mexico: Concern in the Mexican countryside over rising agricultural costs

The region’s agricultural sector faces a planting season marked by strong financial pressure, driven by increases of up to 50% in fertilizer prices and a rise of 20% to 30% in agrochemicals. 

Roberto Garza Villarreal, director of the company Agropecuaria El Arranque, explained that, although there has been no shortage of supplies, the price increase linked to oil costs has directly driven up operating expenses. 

While the exchange rate has helped to partially mitigate the effects of this situation, Garza Villarreal warned that the consequences will inevitably fall on the end consumer, especially in the case of vegetables.  

The gap between production costs and selling prices continues to widen.

While input costs are rising, the market value of many products remains stable or even at historic lows, making it difficult for producers to absorb these higher expenses. 

This problem is especially critical for staple grain farmers. According to Garza Villarreal, "corn and wheat prices have been practically stagnant for three or four years since the beginning of the conflict in Ukraine." 

In contrast, potato cultivation, which is one of the main products of Agropecuaria El Arranque, is seen as an alternative that can still generate profits if current prices are maintained.

However, the overall outlook for the Mexican agricultural sector is alarming and points toward a trend of decapitalization. The elimination of guaranteed prices—a government mechanism designed to ensure a minimum income per ton harvested—has discouraged many farmers from planting, resulting in a reduction of the national food supply.

A worrying sign of this crisis is the record-high level of food imports. The lack of profitability in agriculture has led the country to depend more than ever on foreign markets. According to Garza Villarreal, this dependence not only contradicts the goals of food self-sufficiency but also undermines the economic security of Mexican households in the face of international volatility. 

The businessman pointed out that low local production, especially in sectors such as vegetables and other crops with high demand for chemical inputs, will be the main factor driving inflation – the sustained and generalized increase in prices – in the coming months.