Droughts in Northern Mexico could cause € 590 million of agricultural losses

60% of the municipalities in Northern Mexico are currently suffering severe to exceptional droughts, leading to losses in productivity. Investing in modern irrigation will not only increase yields, but also international market opportunities, according to agricultural fintech ProducePay (article translated and adapted from El Sol de Sinaloa).

Beeld: ©Steve Harvey

Productivity and trade

Droughts in Northern Mexico could affect not only crop yields, but also the entire fruit and vegetable supply chain for the domestic and export markets, according to information provided by ProducePay, an agricultural California-based fintech active in Mexico. According to estimates from ProducePay, weather conditions in Mexico could represent losses of up to 12.5 billion Mexican pesos (€ 590 million) a year.

By the end of April 2022, 60% of the municipalities in Northern Mexico (covering the states of Baja California, Baja California Sur, Chihuahua, Coahuila, Durango, Nuevo León, Sinaloa, Sonora and Tamaulipas) suffered severe to exceptional drought, according to data from Mexico’s Drought Monitor. “Although the drought this year is not as severe as last year, the impact it can have on farm productivity in this region, as well as on international agricultural trade, will have a serious impact in the long term. Agricultural producers must invest in technical irrigation systems, which, coupled with the rise in prices of agricultural inputs, will require a large investment and capital”, according to Olmo Bastida, Agro-exports Specialist at ProducePay.

Rain-fed vs irrigated crops

According to SIAP (Mexico’s agricultural information service), almost 40% of the crops in the Northern states are currently rain-fed. As export crops require modern irrigation methods, this explains why only 3% of the region's total production is actually destined for export. “Investment in modernized irrigation will not only improve the agricultural yields, but also increase the international opportunities of these states and lead to greater efficiency in the use of fertilizers,” according to Bastida.

Water mission for Dutch companies

In September this year, the Netherlands Embassy in Mexico is planning to organize a water mission for Dutch companies specialized in water solutions and interested in the Mexican market. For more information, please contact the agricultural team at the Embassy.