Mexico: New fertilizer plants, more fertilizer handouts and duty-free fertilizer imports

High prices and import dependence

Just like much of the rest of the world, Mexican farmers are facing record-high fertilizer prices as a result of high gas prices and the war in Ukraine. Mexico imports 65% of its fertilizer consumption; some 25% of its fertilizer imports tend to come from Russia, while average import prices in May 2022 were 116% higher than in May 2021.

As a result, farmers around Mexico have reduced their fertilizer doses, thus jeopardizing crop yields. Some farmers have even decided to stop producing altogether, which will impact national food production, in particular for maize and beans. The Mexican Government is taking several measures to turn this tide.

New investments in fertilizer plants

Last weekend, Mexican President López Obrador toured fertilizer plants in the Mexican States of Baja California, Michoacán and Veracruz. During his tour, he announced an ambitious 500 million USD investment plan to reactivate national fertilizers production. Ammonia and urea production plants in Veracruz, Michoacán and Baja California Sur will be recovered to guarantee the supply of fertilizer to small producers. With this investment, the President expects Mexican production to reach 2.500 tons of urea on a daily basis, with which 25.000 to 30.000 hectares of mostly maize and beans will be fertilized, according to the President.

One of the key players in this new strategy will be State oil and gas company Pemex. Pemex produces two fundamental ingredients needed to obtain urea: ammonia and carbon dioxide. In March, Pemex Director Romero Oropeza had already announced that 300 million USD will be invested for the rehabilitation of three fertilizer production plants in Mexico.

Expansion of free fertilizer handout programme

Apart from announcing rehabilitation of fertilizer production plants, the Mexican Government expanded the coverage of its programme which hands out free fertilizer to poor farmers from five to nine States. The majority of these States are in the relatively poor southern part of Mexico. In total, the Government expects to hand out free fertilizer to more than 2 million subsistence farmers this year.

Duty-free fertilizer imports

Despite the above, Mexico will remain dependent on fertilizer imports for the time being. That is why Mexico also eliminated import duties for ammonium sulfate fertilizer, as part of a broader anti-inflation plan launched in the first week of May.

In mid-June, the first 6,700 tons of duty-free ammonium sulfate arrived in Mexico from the US. At the reception ceremony, Agricultural Minister Villalobos stated that this first shipment is part of a total of 250.000 tons that will enter Mexico from the US.

This number was already surpassed one month later, when Mexican President Lopez Obrador and US President Biden announced that Mexico would buy up to one million ton of ammonium sulfate fertilizer from the US, after the two Presidents met in the White House on12 July.

So far, slashing import duties on ammonium sulfate has reduced the fertilizer price for Mexican producers by 30%, according to Mexico’s Ministry of Agriculture and Rural Development. This amounts to savings of 4.000 Mexican pesos (approximately € 190) per ton for Mexico’s commercial farmers.

Organic fertilizers

Finally, the Mexican Ministry of Agriculture has embarked on a training programme, in which Mexican farmers are trained on the correct use and dosage of fertilizers, and on the use of organic fertilizers.