Impacts on Profitability for the Mexican Strawberry Producers due to an Increase in Exports to USA

Abstract

USA is the main strawberry importer in the world, so in order to supply the demand in 2018 imported 161,889 t; of which 99.07% were originally from Mexico. This paper is intended to determine the economic viability of increase the exported quantity of Mexican strawberry to USA by representing the international strawberry market in a partial equilibrium model. According with the calculated price flexibility in 2018, an increase of 18% in the strawberry exported quantity to US market causes a decrease in the strawberry international price in 6.6%. With this calculated effects, in a simulated scenario it is estimated that the value of the increase in income due to increase in quantity is USD 98,334,125.89, while the value of the decrease in income due to decrease in price is USD 38,631,068.63. The difference between the two values is an increase of USD 59,703,057.26. With these estimations, it can be claimed that an 18% annual increase in the Mexican strawberry exports to USA is viable from an economic perspective. With this scenario, the Benefit-Cost Ratios (B/C R) for the producers of Baja California, Michoacan and Guanajuato are 1.98, 1.90 and 0.92 respectively. That is to say, with an annual increase of 18% in the exported quantity, to produce strawberry for export to USA in Baja California and Michoacan is profitable, while to produce strawberry for export to US market in Guanajuato is not profitable.