Borderlands: US potato farmers preparing for Mexico opening
Borderlands: US potato farmers preparing for Mexico opening
Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: U.S. potato farmers prepare to export to Mexico; ICTSI invests $230 million to expand at the Port of Manzanillo; a German auto supplier is opening a $17 million plant in Mexico; and Mercado Labs has received series A investments to automate supply chains.
US potato farmers preparing for Mexico opening
After nearly 25 years of export bans, U.S. potato farmers could begin to distribute and sell more fresh potatoes across all of Mexico by early 2022.
American potato farmers and exporters currently are barred from selling fresh potatoes in Mexico due to restrictions by the Mexican government, namely that U.S. growers can only sell them within about a 16-mile zone across the Mexican border.
“It’s been kind of a 25-year-long trade issue between the U.S. and Mexico,” Kam Quarles, CEO of the National Potato Council, told FreightWaves. “It took about the last 15 years for the U.S. and Mexico to negotiate between the two governments over issues like pests and disease, issues that Mexico was worried about.”
The National Potato Council, based in Washington, D.C., represents the interests of U.S. potato growers on federal legislative, regulatory, environmental and trade issues.
Under the new agreement, U.S. exporters will be able to sell fresh potatoes across all of Mexico. As part of the agreement, fresh potatoes from the U.S. will be permitted through the following ports of entry into Mexico.
- El Paso, Texas-Ciudad Juárez, Mexico
- Otay Mesa, California-Tijuana, Mexico
- Nogales, Arizona-Nogales, Mexico
- Calexico East port of entry, California-Mexicali, Mexico
- Laredo, Texas-Nuevo Laredo, Mexico
- Pharr, Texas-Reynosa, Mexico
- San Luis port of entry, Arizona-San Luis Río Colorado, Mexico
The first four ports of entry — El Paso, Otay Mesa, Nogales and Calexico East — will be operational for fresh potato exports beyond the border region when the work agreement goes into effect in 2022.
Under the agreement, Mexican authorities will approve two new ports of entry each year after the conclusion of the first year, with Laredo and Pharr becoming operational for fresh potato exports beyond the border region in 2023.
WATCH: Peter Friedmann, executive director of the Agriculture Transport Coalition, discuss transportation challenges faced by U.S. food exporters.
Shipments will be able to go to municipalities greater than 100,000 people. According to Mexican census figures, there are 190 Mexican cities that are greater than 100,000 people. Collectively, their populations add up to 71 million people.
There are no restrictions regarding the time of year that shipments can occur.
Quarles and other industry officials have also been educating potato growers and exporters on the specific requirements for shipping beyond the 16-mile border zone.
“There are a couple of final pieces the Mexican government needs to publish, various things that still need to be worked out, such as providing notification to their inspectors how the process is going to go when U.S. potatoes show up at a port of entry,” Quarles said.
The Mexican government previously moved to allow the import of U.S. potatoes in 2014 to any part of the country. The National Confederation of Potato Producers of the Mexican Republic (CONPAPA) — Mexico’s version of the National Potato Council — immediately challenged that in court.
Following almost eight years of legal proceedings, the Mexican supreme court finally ruled April 28 against CONPAPA, stating that the Mexican government could proceed with distribution and sale of U.S. potatoes to any part of the country.
“It was a huge, huge challenge getting the agreement done,” Quarles said. “We have an excellent legal and regulatory team down in Mexico that is helping us sort through these legal cases. They did a terrific job.”
The National Potato Council estimates that exports of fresh potatoes to Mexico could expand to more than $150 million annually from the current $60 million.
“If we’re able to realize that benefit from the market, a 15% increase in overall exports for the potato industry, I think it justifies the amount of time that the U.S. and our industry has put into this,” Quarles said. “It’s going to be a huge benefit, we believe, to Mexican consumers and also the domestic potato industry in Mexico.”
Quarles said potato growing states such as Washington, Colorado, Oregon and Idaho, stand to benefit from increased exports of potatoes.
“Idaho may be the ones who are most likely to be directly shipping to Mexico, but I think it’s pretty clear that everyone is going to get a benefit in some way from a big, expanded new market like Mexico,” Quarles said.
Idaho potato growers said they produced lower crop yields this season compared to 2020, with fresh potatoes expected to account for 24.7% of the Idaho crop, compared with 27.1% for the fresh market in the 2020-2021 season, according to the Idaho Grower Shippers Association.
Demand for reefer equipment in the the Idaho market (ROTVI.ID) is at 67.28 index points, according to FreightWaves’ SONAR platform. It’s down compared to October and November when demand for reefer trucks soared as potato crops were in harvest.
ICTSI invests $230M to expand at Port of Manzanillo
International Container Terminal Services Inc. (ICTSI) recently announced it is investing $230 million to expand its second specialized container terminal at the Port of Manzanillo in Colima, Mexico.
The project will expand the terminal’s capacity by 300,000 twenty-foot equivalent units, officials said.
“The investment is intended to expand the operating capacity of the terminal from 1.4 million TEUs to 1.7 million TEUs annually,” said José Antonio Contreras, CEO of Contecon Manzanillo, in a statement.
Contecon Manzanillo is a subsidiary of ICTSI, a Philippines-based company with 32 terminals around the world.
The project, which will begin in the second half of 2022, includes the construction of berths and yards, as well as the acquisition of quay cranes, rubber-tired gantry cranes, port tractors and other equipment.
The Port of Manzanillo is located on Mexico’s central Pacific coastline. It is one of the largest container ports in the country.
German auto supplier to open $17M plant in Mexico
NBHX Trim Group is set to open a manufacturing facility in the Mexican city of Aguascalientes.
The $17 million facility will be 398,265 square feet and is scheduled to open by early 2022.
The factory, which will create 400 jobs, will produce wooden interior automotive components for luxury car brands such as Tesla and Mercedes-Benz. The facility will also produce components for vehicles from General Motors, Nissan and Toyota.
NBHX is based in Bruchsal, Germany, and has 69 factories around the world employing more than 15,000 people.
Mercado Labs receives series A investments to automate supply chains
Existing investors LiveOak Venture Partners, Ironspring Ventures and Supply Chain Ventures also participated in the round. The series A funding will be used to accelerate Mercado’s efforts to digitize and automate the ordering and transport of goods throughout the international supply chain.
“As most products are made globally, we share a passion for increasing visibility and transparency into how products are planned, bought and moved globally,” Rob Garrison, Mercado Lab’s CEO and founder, said in a statement. “Our mission is to shine bright lights into dark corners.”
Mercado Labs did not specify how much money it raised during the series A round.
Founded in 2018, the Dallas-based technology company’s supply chain technology automates and connects the first mile of the supply chain, aiming to make it easier for importers to plan, buy and ship the products they sell.
More articles by Noi Mahoney
26 December 2021, 13:00