Central America has a large span of north and south, across subtropical and tropical climate zones. The central plateau area and the coastal lowland area have a considerable altitude difference, the vertical characteristics of the climate are significant, the biodiversity is rich, suitable for a variety of plant and animal growth, there are very good agricultural development conditions.
Mexico has relatively rich agricultural resources, and the demand for fertilizer remains high. In 2023, Mexico's fertilizer consumption exceeds 6 million tons, of which nitrogen fertilizer is the most used fertilizer in Mexico according to nutrient elements, accounting for more than 65%, followed by phosphate fertilizer, accounting for about 20%. Mexico's fertilizer production capacity is limited, according to the analysis of Yuan Zhe consulting, Mexico's annual fertilizer production is only more than 2 million tons, and 3-4 million tons of fertilizer are imported every year.
In 2022, the Mexican crop protection products market grew by 17.4% to reach $1.155 billion. At this level, the country ranks 13th in the global crop protection sales ranking in 2022.Between 2017 and 2022, the Mexican crop protection market has grown steadily with an average annual growth rate of 5.9%, slightly higher than the industry average.The Mexican crop protection market is expected to grow at an average annual rate of 3.2% to reach $1.35 billion by 2027.Maize is the largest crop planted in the country and is mainly grown as a subsistence crop for domestic consumption.
To boost crop yields and meet growing demand at home and abroad, Mexico has been investing in improving irrigation infrastructure in recent years, including through improved technology. Mexico ranks sixth in the world in irrigated agricultural land area, and more than 60% of the country's agricultural production requires irrigation, including corn, wheat and sorghum.
Guatemala
In 2022, Guatemala's market for crop protection products grew by 15.6 percent to $185 million. Between 2017 and 2022, the crop protection market in Guatemala grew at an average annual rate of 11.6%, well above the industry average. Crop conditions have generally improved in recent years, with corn acreage and yields stable, but sorghum production declined by about 10 percent in 2022.
In 2022, Guatemala imported $482 million of fertilizer, making it the 52nd largest importer of fertilizer in the world, and fertilizer is Guatemala's 14th largest import. The main sources of Guatemala's fertilizer imports are Russia ($194 million), Norway ($57.4 million), China ($52.1 million), Belarus ($44.6 million) and the United States ($25.2 million). The fastest growing markets for Guatemalan fertilizer imports between 2021 and 2022 are Russia ($169 million), Belarus ($44.6 million) and Norway ($37.1 million).
Guatemala is still in its early stages of development, with agriculture accounting for a large share of GDP (13.3%) and export earnings (32%). Agriculture is mainly focused on the production of high-quality fruits and vegetables (mainly for export), with less focus on the production of staple crops such as corn, beans and rice. The country's labor costs remain low, making it price-competitive in export markets. In terms of $/ ha, the average expenditure on agrochemicals was relatively high, possibly due to the large market share of fruits and vegetables.The main trends in production are an increase in palm and melon acreage and a decrease in rubber and sorghum acreage. Corn acreage remained largely unchanged, although dry bean production increased slightly and rice acreage also increased slightly.
Compared to other developing countries, Guatemala has a stronger manufacturing infrastructure for active ingredients for agrochemicals, but formulation capacity is weak, with 63.6% of imports being raw drugs. The main source of products is China, but the high value-added products are mostly from the European Union and the United States.
Nicaragua
Crop conditions in Nicaragua over the past two seasons have also been relatively good. Crop conditions in 2023 are also generally good, with less stress on crops from drought.Corn production has been rising after declining in 2020 and is expected to reach its near-term average. Rice yields are estimated to be above average, reflecting increased adoption of high-yielding varieties and expanded acreage. Sorghum production fell sharply in early 2023 due to reduced acreage and remained low throughout the year, with sorghum production expected to be about 20 percent below the five-year average.
In 2021, fertilizer consumption in Nicaragua was 68.7 kg per hectare. While fertilizer consumption in Nicaragua has fluctuated considerably in recent years, it has tended to increase between 1972 and 2021, reaching 68.7 kg per hectare in 2021.Although agriculture accounts for only 15.8% of GDP and employs 30.6% of the workforce, it is still an important part of the Nicaraguan economy. The use of agrochemicals per hectare is high compared to other developing markets and similar to other Latin American countries such as Bolivia, Guatemala and Ecuador.
Nicaragua's climate is suitable for the production of a wide variety of crops, from temperate uplands to tropical marshes. However, the issue of climate change remains a concern, with drought affecting the agricultural and agrochemical markets in recent years.As in many developing markets, there is a tension between growing crops to feed a growing but impoverished local population on the one hand and exporting them to support the economy on the other.
Nicaragua has limited production capacity for agrochemical formulations, with imports from the United States, China and India accounting for only 1 per cent of raw drugs. The most important sources of products are China, the United States, the European Union and India. A large number of products are supplied through companies and pharmaceutical enterprises in neighbouring Costa Rica and Guatemala.Only 10 percent of Nicaragua's arable land is irrigated, and improved irrigation would increase crop yields. If these problems can be overcome, the Nicaraguan agrochemicals market can be expected to continue to grow.
Distribution of agricultural chemicals
The Central American region, like the rest of Latin America, has a diverse distribution model for agrochemicals, dominated in many cases by R&D companies and in others by generic pesticide companies. More than 500 companies export to the region.
The region has two very important components.The traditional agricultural sector - low-skilled, labor-intensive, self-sufficient and includes a large low-income population.The second agricultural sector is cooperative, highly capitalized, highly technical, and oriented towards foreign trade, which is the large production areas, such as sugar cane, bananas, and coffee.Each country in the Central American region has distribution companies that deliver crop protection products to local areas to farmers who need them, primarily through local distributors operating in those areas.
As you can see, the Central American region is full of many unique characteristics that set it apart from the rest of Latin America. Doing business in Central America means dealing with many organizations with very important missions. Professional fruit and vegetable exporters, for example, employ intensive agriculture with high quality standards, focus on food value chain issues in small regions, and organize to provide high-value products.As a market with great growth potential, the agrochemicals market in Central America is expected to continue to expand in the coming years along with growing local demand and expanding demand for agricultural exports.
The launch of a large number of biologics is also expected to drive growth, which is expected to exceed the expected growth rate of traditional agrochemicals.