Doing Business in the Mesoamerican Region Countries

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by Javier Chavarro
Contributing Writer


The Mesoamerican region constitutes an integration and development platform made up of the following countries that are part of this geography, which includes Belize, Costa Rica, El Salvador, Honduras, Guatemala, Mexico, Nicaragua, Panama, and the Dominican Republic, in addition to the Caribbean islands. These countries share common ground in vegetation, crops, and production systems, as shown in the image that provide consistent spatial and temporal comparisons of vegetation canopy greenness, a property composed of leaf area, chlorophyll, and canopy structure in this area.

When we talk about agriculture in the Mesoamerican region, we must mention the extremely diversified local agriculture, since according to Food and Agriculture Organization (FAO) reports there are more than 130 different crops in the region that include different types of producers, from those for global export and interregional as well as local and smallholding producers. Latin America has a large collection of highly professional growers, who produce with very high-quality standards, with a highly diversified agriculture depending on the destination of the products and with intensive and extensive agriculture that allows for large exports as well as local consumption.

According to the data reported by FAO on the harvested areas in this area, the region has gone through a 4.4% reduction in its harvested area in the last eight years, from 2015 to 2022, going from 26 .8 million hectares to 25.7 million hectares in total. These decreases of more than 4.5% have especially affected Mexico, El Salvador, and Costa Rica, but there are also countries with growth greater than 8% in this area such as Honduras, Nicaragua, and Panama.

Crop Harvested Area Development by Country

In the same way, with regard to the crops harvested in the region, where crops that achieve a little more than 70% of the total harvested have been selected, corn occupies first place in planted area with a reduction of 4.5% in the harvest area, the reference countries being Mexico, Guatemala, Honduras, El Salvador, and Nicaragua, the same as beans with a decrease of 5.5%, while other industrialized crops such as sugar cane, where they are important countries such as Mexico, Cuba, Guatemala, the Dominican Republic, El Salvador, Nicaragua, and Honduras, which had a reduction of 6.2% and coffee a recovery over time of around 4% in the harvested area. A very interesting fact is the development of the African palm area where countries such as Honduras, Guatemala, Mexico, and Costa Rica have very important growth, of the order of 51% in the increase in area. While rice with countries such as the Dominican Republic, Panama and Nicaragua have a decrease of around 2.7% and oranges with a reduction of less than 1% in countries such as Mexico, Panama, and Nicaragua.

Crop Harvested Area Development

Something to highlight is the growth of the banana area by 6% in countries such as Guatemala, Mexico, Costa Rica, and the Dominican Republic despite the situation experienced in recent years due to restrictions on producers, low prices, and war in the east that affects fruit shipments from this region. But the most important thing is the growth of the avocado harvested area in Mexico, the Dominican Republic, Haiti, and Guatemala, which has had a very important increase of around 41% in its area.

As you can see in the following graph, Costa Rica, Guatemala, and Dominican Republic are in the top six export banana countries in the world with a very important participation among these countries.

Figure 3. World Banana Exports by Leading Origins, 2019-2023, million tons

In this context of production, the issue of export, Mesoamerican countries play a very important role in the issue of exporting tropical fruits to the world, according to the preliminary results of the 2023 market review. According to this report from the FAO, favorable weather conditions led to higher productions in several important tropical fruit production areas, particularly a sharp increase in supplies of avocado from Mexico and pineapple from Costa Rica. Exports of the group of basic products mango, mangosteen, and guava also benefited from greater production in suppliers such as Mexico as the first exporting producer, in addition to Papaya from Mexico and Guatemala, as shown in the following graphs:

Figure 8. Avocado: Export Quantities From the Leading Exporters, 2019 to 2023, thousand tons

Figure 6. Pineapple: Export Quantities From the Leading Exporters, 2019 to 2023, thousand tons

Figure 4. Mango, Mangosteen, and Guava: Export Quantities From the Leading Exporters, 2019 to 2023, thousand tons

Figure 10. Papaya: Export Quantities From the Leading Exporters, 2019 to 2023, thousand tons

Regarding the market value of agrochemicals for the Mesoamerican region, it is estimated to be around less than ~U.S.$3.0 billion dollars, which apparently had a reduction of around 7% to 12% compared to the value of the market of the previous year due to external factors mainly drought and high stocks in the distribution channel in addition to the reduction in prices in agrochemicals. From this market, Mexico has a value of approximately U.S.$1.5 billion dollars according to reports from the president of the Mexican Union of Agrochemical Manufacturers and Formulators (UMFFAAC), Luis Eduardo González Cepeda, “in some areas, we could say, almost 80% of the country’s surface has suffered drought,” he highlighted when speaking during a meeting with journalists at a site in Polanco in Mexico City on December 15, 2023.

The other Central American countries have lower market values considering their crops and the physical area they occupy in addition to the products they produce, whether for local consumption or agro-export, where the emphasis and intensity of production is focusing on export crops moving from small plots to larger areas to consolidate the volumes to be exported. For this reason, the markets for crop protection products have been growing in recent years due to the intensity required in the control of different problems in exporting countries such as Guatemala, Costa Rica, Nicaragua, Honduras, the Dominican Republic, and Panama, as shown. You can see in the following image how the rest of the market is divided according to the following figures:

The Mesoamerican Region Estimated Agrochemical Market in 2023 (Percentage (℮))

When we go into details about the markets by country, we see the great importance for each of them of the crops they produce especially for export as opposed to those that are for local consumption. Here there is a great diversity of crops that use crop protection products to obtain a product suitable for export and consumption in the large number of destination countries.

When analyzing Mexico, the first thought focuses on agro-export, but the main crop in the country is corn. It is the same for the other countries in the region, especially focused on local consumption, which is approximately for the Mexican case, 120 Kg/person/year since in this country. The population consumes more dishes derived from corn than in any other part of the world, being able to compare in this aspect only with Guatemala. In addition, Mexico is the main exporter of fruits such as (avocado, mango, lemon, raspberries, berries, lemon, mango, guava, and orange juice) and vegetables (peppers, cucumber, lettuce, onion, asparagus, and broccoli) in addition to coffee and sugar among other products to the U.S., Japan, and Canada. While Guatemala exports bananas, coffee, palm oil, sugar, fruits, and vegetables, which, together, represented 36% of the country’s total exports. Costa Rica’s main markets, which are the same ones it exports, focus mainly on bananas, pineapples, and coffee, while Nicaragua exports coffee, cotton, sesame, sugar cane, bananas, tobacco, and mainly peanuts. Peanuts are one of the main oilseeds that it contributes to the country’s economy due to its demand in the international market. Honduras exports coffee, bananas, melons and pineapples. The Dominican Republic exports cocoa, bananas, avocado, peppers, and tomatoes while Panama exports sugar cane, coffee, and bananas. Finally, El Salvador exports coffee and sugar, which are important products in the destination countries.

Mesoamerican countries are basically agricultural, with an economically active population dedicated to agriculture that varies depending on the country from 28% to 54%. Rural employment is associated with agricultural production and the predominant class relations in production systems.

In the Mesoamerican region, as in other regions in Latin America, there are several distribution models for agrochemicals, led in many scenarios by research and development (R&D) companies and in others by post-patent companies. There are more than 500 companies that export products to this region.

The following are some of the R&D and post-patent companies currently working in the Mesoamerica region.

(R&D companies and post-patent acting in the Mesoamerican Region)

There are two very important sectors in this region. The traditional agricultural sector, with not a low level of technology and with a great deal of intensive work, oriented toward self-consumption, which includes a large segment of the population with low monetary incomes. The second agricultural sector is not integrated, with high capitalization and technology, oriented to foreign trade, which is the large production sector, such as sugar cane, which can be local or agro-export, such as the banana and coffee sectors.

In each of the countries of the Measoamerican region, there are distribution companies that allow phytosanitary products to reach farmers who need them in all areas of the geography with local distributors that carry out commercial work in these areas.

In general, as occurs in many Latin American countries, the strategy of reaching farmers in each of the geographical points is developed through the distribution chain. This chain starts at the top with the R&D companies bringing the products to the country or the post-patent companies that take them to the farmers through the main distributors in the second line and then to the dealers in the third in line. From this moment on, these dealers are sending the products to warehouses and stores in the smallest areas so that farmers can access them.

(Mesoamerican Market Access Model – Simplified Model – From Crop Protection Companies to Farmers)

In the countries of Mesoamerica, there are a large number of companies that are in the field of marketing agrochemicals. There are several levels of work in this field. There is the regional working group, where a company has commercial representation in the vast majority of the countries in the region. Then there are the subregional companies that have focused on two or three countries, which is where they can develop their activity because they are aligned in particular crops or production scenarios. Finally, there are local companies that are only present in a country. Below you will find some of the distribution companies that work in this region at the three mentioned levels.

(Regional, Subregional, and Local Distribution Companies Acting in the Mesoamerican Region)

All companies are organized into different groups to promote the development of the crop protection products industry, appropriate uses and management of these products in addition to training for the appropriate and responsible use of agrochemical products.

In the case of the north of the Mesoamerican region, there is Mexico, which has two very important associations:

In the rest of the countries in the region there are associations that group R&D companies as well as post-patent companies in various figures.

In this first group are the organizations associated with CropLife, such as Guatemala (Agrequima – Asociación del Gremio Químico Agrícola), El Salvador (APA- Asociación de Proveedores Agrícolas), Panama (ANDIA – Asociación Nacional de Insumos Agropecuarios y Maquinas), Dominican Republic (AFIPA – Asociación de Fabricantes, Representantes e Importadores de Productos para la Protección de cultivos), Honduras (AHSAFE – Asociación Hondureña de la Industria de Sanidad Agropecuaria y Fertilizantes), Costa Rica ( Cámara de Insumos Agropecuarios), Nicaragua (ANIFODA – asociación Nicaragüense de Formuladores y Distribuidores de Agroquímicos)

In the second group are the associations that bring together companies and national chambers of generic agrochemicals with the aim of optimizing and consolidating their positioning in the Latin American market for phytosanitary products. Here are associations such as ALINA – Asociacion Latinoamericana de la Industria Nacional De Agroquimicos, AgroCare Latinoamérica that brings together companies and national chambers of the generic agrochemical industry in Latin America, such as in Guatemala (Gremiagro  – Gremial de Proveedores de Insumos Agrícolas), El Salvador (APROGE – Association of Suppliers of Generic Agricultural Inputs of El Salvador), and Honduras (CAHPROE – Honduran Chamber of Equivalent Products)

As you can see, the Mesoamerican region is full of many characteristics that make it unique and different from other regions in Latin America.

Doing business in the Mesoamerican region implies dealing with many countries with a very important vocations such as professional exporters of fruits and vegetables, with intensive agriculture using high-quality standards focused on food chain issues in small areas and organized to deliver high-value products. Special exports in Mexico focus on fruits and vegetables, while Central America and the Caribbean stand out in exportation of other types of products such as vegetables and fruits like bananas, coffee, sugar, and peanuts that come from Nicaragua. It also has small-scale and highly diversified local agriculture, like Mexico and Central America.  •

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Javier Chavarro photo courtesy of ©Javier Chavarro 2024

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