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Agricultural SectorsReturn to topOverviewReturn to topUnder NAFTA, Mexico has become one of the largest and fastest growing markets forU.S. agricultural products and one of the best opportunities in the world for U.S.exporters of food products. However, Mexico’s economic performance fell significantlyin 2009, due in part because of Mexico’s dependence on the U.S. economy as well asthe initial effects of the global financial crisis. On average, real GDP growth for 2009decreased by an estimated -8.0 percent, compared to the modest 1.4 percent growthrate recorded in 2008. Experts predict that Mexico’s GDP will rebound by approximately2.8 percent in 2009. Likewise, the Mexican peso has already lost approximately 25percent of its value relative to the dollar over the past year and uncertainty remainsabout the peso’s future stability. Since the end of October 2008, the peso fell from 10pesos to 13.50 pesos per U.S. dollar despite the Central Bank of Mexico’s interventions.The Mexican peso remains around 13 pesos per dollar and many experts expect thepeso to hover near this exchange rate for the near future. While foreign currencyremittances will benefit some families due to this depreciating exchange rate, overallremittances from the United States and Europe were 20 percent lower in 2009 than in2008 and are expected to remain down as migrant labor returns to Mexico. ForeignDirect Investment (FDI) reached $18.8 billion in 2008, but FDI that Mexico had receivedbetween January and September 2009 summed $9.75 billion dollars, a decline of 37%over the same period last year.Overall demand for U.S. agricultural products is expected to remain relatively stable in2010 until there is an upturn in the Mexican economy. Mexican consumers have lessmoney to spend, due to the economic slowdown and decline in foreign remittances fromMexican workers in the United States and Spain. The Mexican agricultural sectoraccounts for approximately 3.8 percent of GDP.Despite the exchange rate effect, overall market share is not likely to be affected, as thegeographic and tariff advantages that the U.S. enjoys in Mexico are likely to continue tomake the U.S., by far, the best import option for most major agricultural goods. Theproducts most likely to be affected are high-value agricultural products, such as redmeats and some processed products. The only products likely to sufferdisproportionately are those affected by Mexico's imposition of punitive tariffs due to theU.S. Government's suspension of the U.S.-Mexico Cross-Border TruckingDemonstration Project.While it is too early to predict the value of agricultural trade in Calendar Year (CY) 2010,trade is most likely to remain relatively stable, although growth will be less than theaverage annual growth rates in agricultural trade seen under NAFTA, of 9 percent peryear, and well below the 25 percent growth seen in Fiscal Year (FY) 2008. Agriculturaltrade is not expected to increase until a recovery is posted, which is not predicted untilthe end of the first quarter of 2010 or later.Total U.S. agricultural, fishery, and forestry exports for CY 2008 reached $16.6 billion,an increase of 25 percent over the previous year’s level exports. However, due to theeconomic and financial crisis which began in late 2008, U.S. exports to Mexico in 2009are down 22.3 percent (January through October comparison) compared to 2008.