In 2004, after in-depth research and analysis, I wrote a paper suggesting that Belize could reverse its fortunes vis-ŕ-vis Mexico, and the growing trade deficit… in a significant way… if it focused on developing four categories of existing products for the Mexican market.
These are sugar, rum, shrimps and exotic wooden furniture/utensils.
I was asked at the time, “what are you smoking Mr. Harrison?” The skeptics commented that Mexico is one of the largest exporters of sugar and shrimps… so why would they want to import such from Belize?
Belize still does not understand the nature of world trade. One of the US major exports to Europe and Japan is automobiles… and what do you think is included in the major exports of Europe and Japan to the US? You guessed it right… automobiles. They have found ways to differentiate their products…..so that they export autos with different brand images, features and benefits to each other.
It turned out that Mexican shrimp imports from Belize, since then, is what allowed the farmed shrimp industry in Belize to survive the years when exports to the US and Europe were almost non-existent. The Mexicans were sending trucks all the way to Belize shrimp farms to pick up products. The volume they were taking was mere for the relatively small markets of Campeche, Yucatan and Quintana Roo, the south east region. The market from Mexico City to the north is much larger and much wealthier. There are parts of northern Mexico that are as wealthy as regions in the United States. The Mexican state owns majority shares in a company called Ocean Gardens. This is the vehicle that the Mexicans used to corner around 20% of the US market for shrimps by exercising great power in distribution in key regional markets in the US.
Mexico exports medium and jumbo shrimps and also imports large amounts of small-medium shrimps from the US South-East growers, among others. So there is a two-way trade. Mexico is willing to help Belize in many strategic partnerships but Belize seems to not have the capacity nor capability to want nor to negotiate those partnerships. There is still a lot of skepticism and cynicism in Belize for doing business with Mexico and Mexicans…a hang-over from times before the Mexican peso crash in the early 1990’s. Mexico has advanced a lot since then, especially in the area of international trade…and is now one of the 10 largest markets in the world.
On paper, to a surface researcher, Mexico appears to be one of the largest exporters of sugar in the world. The retail price of sugar to Mexican consumers is much higher than most places in the world and brown sugar is more expensive than white sugar. It is called “MAS CABADO” sugar… and more valued for its nutrients and less-processed/more-natural state. What is not immediately apparent is that Mexico has a program called PITEX. It’s the vehicle that Mexico uses to sell its own sugar at “export” prices to the production companies in Mexico that use sugar in its processing. Mexico understands that for these processing companies to be competitive in export markets, they have to obtain their inputs at international market prices, much lower than what they get from the Mexican consumer. So….its APPEARS on paper that the Mexicans “export” a lot of sugar…but what indeed happens, is that Mexico imports ship loads of sugar from Cuba, Colombia and other places…to satisfy its domestic demand.
During a time when Mexican sugar was near collapse in the 1980’s, the Coca Cola company in Mexico started buying up much of the sugar production capacity in the country, since sugar is one of their principal ingredients. They have used this control over sugar resources to their competitive advantage…however, there are many users of sugar who prefer to work outside of this near-monopoly environment. Indeed, there was serious interest among big Mexican players who were interested in BSI and/or purchasing from them.
Mexico, with all its 100 million population and 23 million international tourists, does not have a major rum brand of its own. Appleton, from Jamaica, is the largest rum brand in Mexico. Belize can take up significant market share in Mexico, with its own brands….and in strategic relations with Appleton. At this stage, it seems, that is does not have the capacity nor capability to undertake such an ambition. This effort can be phased… by first focusing the near markets of the Mexican south-east… where the “campechana” and “mojito” is very popular rum-based drinks and where focus on Cancun City could be the spring board, worth an investment of US$5 million in a concentrated and sustained campaign over 5 years to position our brands at the level of Appleton. Of course, these moves are not for the faint of heart.
Mexico, apart from the rich jungles of Chiapas and Tabasco in the south-west is pretty much a barren country. Most of the local furniture is made of pine and/or compressed hard boards. Just SEARS and LIVERPOOL purchase thousands of container loads of wooden furniture and utensils from outside of Mexico. There are other upscale establishments like Palacio de Hierro. They order many container loads of one single item, at a time. Since Belize’s capacity is small… mostly due to domestic capacity for supply of timber, its focus should be in exotic items for the Mexicans with high disposable incomes using mahogany, cedar, teak, rose wood, zericote, jobillo, granadillo, etc. Belize needs to create policies that allow for the orderly import of timber from Guatemala, Honduras and Nicaragua….in combination with undertaking/facilitating major investments in reforestation of these valuable species.
AS AN ASIDE – BEEF?
I have not….and would not….recommend a major focus on beef exports to Mexico. Mostly because the large demand would force Belize to become barren just like Mexico has become… and we need our tourism industry to continue growing… which is not based on having barren topography and loss of surface water that would result from converting large surface area of forests into pasture. In addition, the beef would be exported as live animals, and it is my informed opinion… that Belize needs to advance more in processing, and less in raw materials production. Of course, a scientifically conducted cost-benefit analysis could convince me otherwise. I have not seen any to this date… although I know there is a lot being invested in pushing this agenda.
Richard Harrison is a local businessman and investor in the manufacturing and service industries. Mr. Harrison holds a Masters in Business Administration degree from Lancaster University, United Kingdom. Send comments to email@example.com