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Market study presentation: Opportunities for Dutch businesses in the Mexican ornamental sectors

Mexico: "A lot of unlocked potential and opportunities to grow"

Over the last ten years, the ornamental industry in Mexico has grown significantly. And there still is a lot of unlocked potential in this sector and opportunities to grow, also for the Dutch companies that are eager to expand or enter this market. Recently, the Dutch Embassy in Mexico has carried out a market study to identify business opportunities for Dutch suppliers of technology and propagation material in the Mexican ornamental sector. On Monday, November 28, they presented the study online, which was followed by two guest speakers who reacted to the study and shared their perspectives on the ornamental market. In this article, the recording of the presentation and the summary of the study that was presented by Enrique Arias of OPF Mexico, the organization that conducted the study.

Why this study?
The reason for the study is that the ornamental sector is already an important sector in Mexico, and the Netherlands is an important partner of Mexico in this sector, explains Erik Plaiser, Agricultural Counselor for Mexico and Cuba, at the Netherlands Embassy in Mexico City. "A lot of people believe that there is a lot of unlocked potential in this sector and a lot of opportunities for growth." The last time Embassy in Mexico did a study was in 2008. "After that, there was little concrete data available, so we decided it was a good moment to do this study, and in this video, you will hear the main results and conclusions. The 99-page report named "Opportunities for Dutch Businesses in the Mexican Ornamental Sector" can also be downloaded here.

A sample group of 600 growers in main ornamental production states
Areas started out by showing a summary of the study to give a broad idea of what is in there. "It is a market study. That is how we should approach it." For the study, a sample group of 600 growers in the main states where ornamental plants and flowers are produced, namely Morelos, Puebla, Querétaro, Mexico City, Michoacán, Veracruz, and Baja California. In addition, interviews were held with the main opinion leaders of the ornamental sector in Mexico at public, academic, and private levels, and the opinion of the main associations of ornamental growers in the country, members of the Advisory Council of Ornamental Plants & Flowers Mexico, was considered.

Total market by grower size
In Mexico, there are 14,750 Nano growers (with no business relevance given their informality and lack of technification) and a total of 10,818 full-time growers. These are classified by size as follows: 5,805 Micro growers (1,929.32 ha managed), 3,819 Small growers (4,750.08 ha managed), 1,117 Medium growers (3.468,16 ha managed), and 77 Large growers (2,857.65 ha managed), for a total of 13,005.21 ha of full-time use (generating annual revenues of approximately €1,521.58 ) and 10,083 ha served by Nano growers; a total of 23,088 ha and 25,568 growers within the Mexican Ornamental Sector.

Of the 13,005.21 hectares dedicated to the full-time production of "Ornamental Plants" and "Cut Flowers," the following areas can be identified with a high concentration of production. Estado de México (52%) and Morelos (20%) account for more than 70% of the market and are followed by the group of states of Nuevo León, Puebla, and Mexico City, which are of significant size.

Technical level of the growers
The hectares are divided at the technical level, and in the report, one can see how the growers are divided. 52.80% has a low technification level, 33.10% middle-low, 3.16% Middle High, 2.03% high, and 0.02% very high. Business opportunities identified for the Dutch suppliers are associated with the 14% of the growers classified as "Middle," "Middle-high," and "High" technification levels, regarding them as the real market potential for Dutch technological suppliers.

Mexican market has grown significantly over the last ten years
The Mexican ornamentals market has grown significantly and dynamically over the last ten years, both in the number of hectares devoted to production and in the number of employees. "In the last ten years, the Mexican market for cut flowers and foliage has grown by 42.15% in hectares, and in the plant market, the average growth in hectares was 64.29%. In terms of employability, the cut flowers and cut foliage sector grew by 50% in the same period, while in the plants' sector, its growth was 40%."

Main products produced
"In terms of cut flowers and foliage, we can see something that is quite common and is also happening in other countries," he says. Roses are quite common (49.73%), followed by chrysanthemum (41.62%) and gypsophila (22.70%). In producing life plants, the market is dominated by three species; poinsettia - which are currently in season - with 17.19% is the most common and most significant one. Then, the marigold (with 15.63), of which the season just ended with the Day of the Dead and followed by geraniums (15.10%). These species are followed by a second group made up of Echeveria / Succulents, Rose, Adonis, Aromatic plants, Begonia, Kalanchoe, and Aloe Vera. There is also a third group with very low percentages of participation, integrated by Fruit Trees, Lavender, Cactus, Petunia, Dahlia, and Hydrangea. Finally, a little more than 35 species were grouped under the "Others" category.

Opportunities for breeders
One of the behaviors observed in the Mexican ornamental market is the interest in persisting in investments in new varieties. About 30% of the growers of ornamentals have these good practices in their processes, and this represents a very good opportunity for breeders. 34,88% of the growers have incorporated new varieties, highlighting the fact that almost 23% did it more than a year ago, so there is a lot of investment there. We can see that they are trying new varieties and that there is an interest.

Factors that are valued the most by the growers are price and availability, but also accessing new markets is valued highly. All in all, we see that they want help to create partnerships to find new markets/clients. They are willing to pay and are eager for technical accompaniment. They want to have a relationship as a partner, not as a supplier.

The main challenges identified are associated with the lack of registration with SNICS by breeders. According to the head of SADER, "foreign suppliers do not take the necessary steps to register their patents with SNICS, so they cannot be given proper follow-up." According to the study, 41% of the respondents are willing to pay for the rights and find it fair. Some growers did not even know about these regularities. (Eager to learn more about breeders' rights situation in Mexico? Scroll to 45:20 in the video)

R&D projects
In terms of research, the main points of interest from the growers are crop development, pest control and prevention, and disease control and prevention. 56% of the growers interviewed were interested in participating in research and development projects. However, one of the main limitations identified is the lack of proximity between research centers and growers.

Only 4% of the growers in terms of cut flowers and foliage export to other countries. This doesn't mean they don't want to. The possibilities are endless, and particularly the potential of exporting cut flowers to the US and Canadian markets is high as they can ship the flowers by land, so why aren't they doing it? Mainly the Mexican market is so attractive that they are in their comfort zone. That's why they sell most of their products – sometimes even at very low prices- in Mexico. They don't want to take care of all the paperwork.

In Mexico, there are many growers with small hectares. One of the main challenges is how to reach out to these growers. Another challenge is that many are propagating varieties illegally. All in all, face-to-face contact with the growers, contracts, and establishing relationships are keywords. And an opportunity to establish relationships is at the third edition of the OPF exhibition that will take place from September 12-14, which will gather a lot of growers.  

Click here to download the study.                

For more information:
Benjamin Leal
Agricultural Officer at the Embassy of the Kingdom of the Netherlands
Department of Agriculture
Volcán 150 | Piso 2 | Col. Lomas de Chapultepec | C.P. 11000 |CDMX
Tel: (+52) 55 1105 6563  Mob(+52) 55 5466 1160

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