Mexico’s energy reform may ease its dependence on food imports, Baker Institute says

EXPERT ALERT

David Ruth
713-348-6327
david@rice.edu

Jeff Falk
713-348-6775
jfalk@rice.edu

Mexico’s energy reform may ease its dependence on food imports, Baker Institute says
Duhalt: Mexican farmers might finally have access to more affordable fertilizers

HOUSTON – (June 24, 2014) – Natural gas availability in Mexico is restricted, and output of ammonia and fertilizers has plummeted since the late 1990s, with farmers among the hardest hit. Twenty years after NAFTA came into force, the country is more dependent on food imports than ever.

ADRIAN DUHALT

Mexican President Enrique Peña Nieto’s energy reform could help change that, according to Adrian Duhalt, the Puentes Consortium Visiting Scholar in the Mexico Center at Rice University’s Baker Institute for Public Policy. He shares his perspective in a new Baker Institute blog post, “How Mexico’s Energy Reforms May Ease its Dependence on Food Imports.”

Duhalt, who is also an associate professor at the Universidad de las Americas Puebla, is available to comment on these and other developments related to Mexican energy reform.

After Mexico’s Congress approved the energy reform bill in December, the Peña administration launched a campaign to promote the benefits of regulatory changes in the sector. “In evaluating the outcomes of reform, however, one potential advantage has received little attention from analysts: the expected production increase of affordable fertilizers,” Duhalt said. “Recent developments suggest that (state oil company) Pemex has taken significant steps toward this goal.”

The objective of increasing domestic fertilizer supplies is twofold, Duhalt said. The government seeks to reduce fertilizer imports, which account for 80 percent of Mexico’s fertilizer needs, while easing the country’s dependence on food imports, which account for 45 percent of Mexico’s basic staple foods. “These are alarming figures from any perspective,” he said.

Duhalt said the production of fertilizers and regulatory changes in the energy sector are closely connected. “Natural gas is the main ingredient for ammonia production,” he said. “Thus, greater availability of natural gas would allow Pemex to make more ammonia, which in turn would help reactivate the production of fertilizers at facilities that have remained idle since the late 1990s.”

Currently, however, both transport capacity and natural gas availability in Mexico are limited, Duhalt said.

“As natural gas production has declined in recent years, one-third of domestic consumption has been met through imports,” he said. “Pemex’s only ammonia-producing petrochemical complex in Cosoleacaque, Veracruz, has had difficulty obtaining the natural gas it needs; low supply and high demand compound existing problems with the country’s insufficient pipeline infrastructure.”

Duhalt said that addressing the complicated agriculture scenario in Mexico extends beyond natural gas, ammonia and fertilizer production. “If the federal government’s strategy is successfully executed, however, Mexican farmers might finally have access to more affordable fertilizers and be able to increase productivity,” he said. “All in all, the country could be one step closer to reducing its dependence on food imports.”

For more information or to interview Duhalt, contact Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

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Follow the Baker Institute Mexico Center via Twitter @BakerMexicoCtr.

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Related materials:

Duhalt biography: http://bakerinstitute.org/experts/adrian-duhalt.

Baker Institute Mexico Center: http://bakerinstitute.org/mexico-center.

Founded in 1993, Rice University’s Baker Institute ranks among the top 15 university-affiliated think tanks in the world. As a premier nonpartisan think tank, the institute conducts research on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy. The institute’s strong track record of achievement reflects the work of its endowed fellows, Rice University faculty scholars and staff, coupled with its outreach to the Rice student body through fellow-taught classes — including a public policy course — and student leadership and internship programs. Learn more about the institute at www.bakerinstitute.org or on the institute’s blog, http://blogs.chron.com/bakerblog.