Food Distribution Logistics

Yesterday took our delegation from Mexico City to the State of Hidalgo where we solidified the relationship between our two states.  We began the morning with a traditional breakfast, not of eggs, bacon or pancakes, but of fruit and shredded lamb, hosted by the president of the Regional Farmers' Union of Hidalgo. We then toured a mid-sized local dairy operation where we got up close and personal with cows being fed. 

The delegation then split into separate groups with some of us leaving for Hidalgo's largest public university, the Autonomous University of the State of Hidalgo.  There we received an overview of the University's programs and more specifically their focus on agriculture.  Founded in 1961, the University has 13 undergraduate degrees with 4,500 students, and its research touches on 92 different topics.  While there, we heard detailed reports from professors on several research projects including biotechnology, pork disease, animal meat quality, and food safety, among others. 

We also toured the university's own ranch and dairy processing facility. This demonstration farm and pilot plant has 330 cows, uses advanced technology and produces artisan cheese and yogurt products for the local markets.  Uniquely, it also is financially self-supported as it sells its own products.  Purdue University has similar facilities with its nine research farms in Indiana and is committed, as are the representatives from Ball State, Ivy Tech and Indiana Universities, to find a way to work more closely with this ranch and other parts of Hidalgo's University.

In fact, we ended the day with a formal ceremonial signing of a memorandum of understanding between Hidalgo University and our four academic institutions to cooperate more effectively.  Indiana University already had a relationship with Hidalgo but the other universities are now on their way to more interaction whether in the form of faculty discussions, study abroad programs or recruitment for graduate programs.

This was the second agreement signed between our two states yesterday as Lt. Governor Skillman and Hidalgo's Governor Chong had earlier signed a broader MOU to develop a longer term relationship.  This visit and the MOU signing clearly had tremendous meaning to the Hidalgo representatives with every cabinet member of the governor's administration in attendance at the ceremony and local media swarming the delegation at every stop.

One key component of this agreement is the commitment of Indiana to assist Hidalgo in defining its own strategic vision and plan for growing agriculture.  Hidalgo officials were extremely impressed with Indiana's agriculture strategic plan and want to implement something similar.  This could include a focus on food distribution logistics, alternative energy technologies or even biotechnology.  And, should there be an emphasis on the latter, Indiana could directly benefit should Hidalgo officials work to influence the Mexican government to approve more corn varieties.

The entire delegation joined their counterparts from Hidalgo for a wonderful dinner at the Hacienda of Governor Chong.  Built in the 1500s following Spanish rule of Mexico, the home was beautiful with a huge open courtyard in the middle of it where dinner was held.  It was clear that the red carpet had been unrolled for us in Hidalgo and that all of the right steps have been taken to cement the relationship between our two states.

We left Mexico City at an unbelievably early hour this morning for travel to the port city of Vera Cruz which we will tour this afternoon, giving us yet another glimpse of an important Mexican city.

The Indiana delegation's first full day in Mexico built the base of knowledge for all of us to establish strong contacts and relationships and identify potential business opportunities.  We began the morning with a comprehensive briefing by the U.S. embassy political, economic, commercial and agricultural counselors about key trends and challenges in Mexico. I think we all filled our notepads with valuable facts and insights. Some of these included:

• NAFTA clearly has benefited the Mexican economy - now the 10^th largest in the world.  Mexican GDP is approximately $840 billion or $8,000 per capita, but in the southern part of the country poverty is a severe problem.   The new president has recognized that continued economic, labor and education reform will be needed to sustain economic growth.  If implemented, he might succeed in reaching his administration's new goal of becoming the world's 5^th largest economy by 2040.
• Between 2002 and 2006, Indiana's trade with Mexico was up 25% to nearly $2.4 billion in 2006.  In the first three quarters of 2007 there was a 10% increase over the previous year.  It makes sense for us to do business in Mexico…why?  NAFTA, our geographic proximity, a shared Western culture, the solid manufacturing base, political and even macroeconomic stability.
• The United States had record exports of agricultural products to Mexico in 2006 and 2007.  This is expected to continue to increase especially since all the quotas and tariffs associated with NAFTA were lifted as of January 1, 2008.  And, despite a 300% increase in Mexican exports to our country since NAFTA, Mexico's traditional farmers remain disgruntled and are even protesting over perceived uneven success from the agreement and the country's loss of food sovereignty. 

Immediately following the briefing, we participated in a biotechnology roundtable discussion.  A representative from the National Biosafety Committee for Agriculture provided an overview of this issue in Mexico.  There is much debate over the adoption of biotech corn varieties between the government and the agriculture sector - not consumers surprisingly. Corn originated in Mexico and there is an almost religious fervor associated with that heritage and concern that cross-pollination could occur with biotech varieties being introduced. Biotech varieties of cotton and soybeans are commercially produced here but the agriculture sector is slow to adopt this new innovation just as they have been slow to adopt even the most basic of corn hybrids that were introduced over 50 years ago in the United States to increase yields. Don Villwock of Indiana Farm Bureau and Ted McKinney of Dow AgroSciences described a very different adoption story from Indiana and strongly encouraged Mexican government officials to approve more corn varieties because of economic benefits to farmers and investments in rural Mexico.

The delegation broke into groups for the remainder of the afternoon.  One group with grain and biotech interests visited with leadership of national farm associations and also toured a medium-sized feed mill that processed feed for the domestic hog industry.  Another group toured a small but modern pork processing plant which brought already slaughtered pork products from the United States to Mexico for final processing and distribution.  They also visited a traditional "wet" market and several retailers that sell and promote U.S. pork, including Costco. 

Lt. Governor Skillman, who had earlier met with U.S. Ambassador to Mexico Tony Garza, had a full afternoon witnessing the signing of an MOU for exchange and offer support between Ball State's School of Architecture and that of La Salle University in Mexico City.  She also had an opportunity to discuss key agricultural issues with a high ranking Under Secretary from the Mexican Ministry of Agriculture.  In fact, word had already made it to the Under Secretary of the strong view expressed by the Lt. Governor and Indiana delegation at the biotech roundtable that the Mexican government approve more biotech corn varieties.

The Lt. Governor and the delegation hosted a Friends of Indiana reception for all of our new Mexican contacts and friends.  This gave all of us the opportunity to learn more about the individuals and businesses we had met earlier in the day.

We learned a tremendous amount about the Mexican market yesterday and have identified significant opportunities for Indiana in the pork industry, in distribution and logistics, and in advancing biotechnology.  We will take this knowledge with us to the state of Hidalgo today in the hope of building on already strong relationships there.