Swine Flu Measures in Mexico Will Hit Only U.S. Trade Sector Generating a Surplus

The disease formerly known as Swine Flu likely will hammer exports of agricultural products such as corn, soybeans, sorghum, beef, poultry and pork.

Written by Cory Chandler

Emergency measures implemented in Mexico to halt the spread of H1N1 influenza will most likely sicken the only U.S. trade sector still generating a surplus in the downturned economy, say two Texas Tech University agricultural economists.

A report by Jaime Málaga, an assistant professor in the Texas Tech Department of Agricultural and Applied Economics, and Pablo Martinez-Mejia, a post-doctorate research associate with the department’s Center for North American Studies, found that the disease formerly known as Swine Flu likely will hammer exports of agricultural products such as corn, soybeans, sorghum, beef, poultry and pork to the U.S.’ second-largest trade partner outside Canada.

“We know that the impact of the ‘swine’ flu crisis in Mexico will be important for the U.S. exporters,” researchers noted. “The magnitude of the effects will depend on how long the Mexican measures continue and how the Mexican domestic and tourist consumers react.”

The U.S. exported more than $16 billion in agricultural and food products to its southern neighbor in 2008 and, if recent history is an indication, it was poised to surpass that amount in 2009 – U.S. agricultural exports to Mexico have quadrupled since 2004, according to U.S. Department of Agriculture reports.

Yet Mexico’s GDP already was expected to drop by more than 7 percent during the first quarter of 2009 before H1N1 prompted the Mexican government to implement emergency measures such as shuttering thousands of restaurants and cutting off tourist travel to popular destinations.

Researchers predict these measures could shave another 1 percent off of Mexico’s GDP if they continue for just another two weeks.

“The impact on the food distributions sector has been disastrous, particularly for the suppliers of high-value food products demanded by resorts and restaurants which purchase high quality products imported from the U.S.,” researchers wrote.

The most obvious victim of this is the U.S. pork industry.

Even though eating the meat doesn’t transmit H1N1, consumers have shied away from pork dishes, curbing what started as a promising year for the industry after Mexico imported $228 million in pork products from the U.S. in January and February – a 20 percent increase over the same period last year, according to estimates by the USDA’s Economic Research Service.

But slumping pork demand also will dampen exports of related products such as corn and soybeans, which are commonly used as pig feed.

The researchers recommend coordinated policy efforts between the two NAFTA partners to protect the agricultural sectors in both countries.

To download a copy of the report, visit /images/2009/05/mexican_flu_impacts.doc.

CONTACT: Jaime Málaga, assistant professor, Department of Agricultural and Applied Economics, Texas Tech University, (806) 742-0261 ext. 241, or jaime.malaga@ttu.edu.