Growing Demand for Food & Feed Products
According to the statistics by the Foreign Agricultural Service (FAS) of Mexico, total corn consumption for the year 2020 was registered at 44.7 million metric tons, which was an increase of 2.3% compared to the previous year.
Corn is traditionally a staple food source in many parts of the world. Currently, its range of applications has also extended to feed and biofuel owing to the several beneficial properties associated with corn. Moreover, approximately 20% of the annual corn harvest is currently used by industrial corn processors to produce a variety of products such as sweeteners, starches, oils, ethanol, and animal feeds. In Mexico, corn continues to be the preferred feed grain, given the low international prices and nutritional characteristics. The increasing demand for food and feed products in Mexico, backed by the increasing utilization of corn to produce such by-products, are raising the need for the greater deployment of dry milling machines, which in turn is anticipated to drive the growth of the Mexico dry milling market over the forecast period.
Growing Agriculture Industry and Increasing Government Initiatives
The extensive agricultural support by the Government of Mexico is one of the major reasons anticipated to drive the growth of the Mexico dry milling market. The extensive support program in Mexico is managed by the Mexican Secretariat of Agriculture, Livestock, Rural Development, Fishery, and Food (Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación [SAGARPA]). Moreover, the local government of Mexico is also increasing agricultural investments to encourage and boost this sector. Subsequently, increasing food security concerns in the country have led the government to take initiatives to encourage the agriculture sector, which in turn is fuelling the demand for dry milling machines.
High Maintenance Costs
Corn grain quality is determined by growing conditions, drying operations, and harvest practices. To produce high-quality grain, hybrid selection and timely harvest of corn are some of the most important factors. The high maintenance costs to retain corn quality during the harvesting and dry milling processes is therefore the major concern that is anticipated to hamper the growth of the Mexico dry milling market.
By End Product
The Mexico dry milling market has been segmented on the basis of end product into ethanol, distiller’s dried grains and solubles, fine grits, course grits, flours and others. The flours segment registered the largest market share of 36.28% along with a value of USD 629.56 million in the year 2019. On the other hand, the segment is also anticipated to grow by a CAGR of 5.19% during the forecast period. The flours segment is also expected to gain an incremental $ opportunity of USD 32.71 million in the year 2020 as compared to the previous year and further attain an absolute $ opportunity of USD 330.83 million by growing at 1.5x during the forecast period.
Some of the affluent industry leaders in the Mexico dry milling market are Cargill, Incorporated, SunOpta Inc., Bunge Ltd., Grupo Trimex, Semo Milling, LLC, Gruma, S.A.B. de C.V., Archer-Daniels-Midland Company, Pacific Ethanol, Inc. and Valero Energy Corporation.
January 2019: Cargill, Incorporated announced that it has invested USD 200 million in agriculture trading, oilseeds crushing and edible oil in Pakistan. This move by the company will help in its agricultural trading and supply chain, edible oils, dairy, meat and animal feed businesses while ensuring safety and food traceability.
April 2019: SunOpta Inc. announced that it has acquired Sanmark B.V., a company engaged in organic oils for the food, pharmacy and cosmetic industries.
In 2023, market players might incur losses due to huge gap in currency translation followed by contracting revenues, shrinking profit margins & cost pressure on logistics and supply chain.
Controlling Inflation has become the first priority for global economies from last quarter of 2022 and to be followed in 2023. With skewed economic situations, rise in interest rate by governments to control spending and inflation, spiked oil and gas prices, high inflation, geo-political issues including U.S. & China trade war, Russia-Ukraine conflict to intensify the global economic issues.
The interest rates in the U.S. may be less sensitive in 2023 as compared to 2022; sigh of relief for businesses. Positive business sentiments, healthy business balance sheets, growth in construction spending (private construction value in 2022 stood at $1,429.2 billion, 11.7 percent (±1.0 percent) above the $1,279.5 billion spent in 2021, Residential construction in 2022 was $899.1 billion, up by 13.3 percent (±2.1 percent) from $793.7 billion in 2021, non-residential construction touched $530.1 billion, 9.1 percent (±1.0 percent) above the $485.8 billion in 2021.) showcases minimal impact of recession in the country.
Similarly, spiked spending in the European and major Asia economics including, India, China & Japan to showcase less impact on the global demand.
Author Credits: Anil Kumar, Ipsheeta Dash
Ans: Increasing demand for food and feed products is one of the major factors that is driving the growth of the market.
Ans: The market is anticipated to attain a CAGR of 5.15% over the forecast period, i.e. 2020-2028.
Ans: The major players in the market are Cargill, Incorporated, SunOpta Inc., Bunge Ltd., Grupo Trimex, Semo Milling, LLC, Gruma, S.A.B. de C.V., Archer-Daniels-Midland Company, Pacific Ethanol, Inc. and Valero Energy Corporation.
Ans: The company profiles are selected based on the revenues generated from the product segment, geographical presence of the company which determine the revenue generating capacity as well as the new products being launched into the market by the company.
Ans: The market is majorly segmented by end product, source, application and end user.
Ans: The flours segment, which is a sub-segment of the end product segment, held the largest market share of 36.28% in the year 2019 and is anticipated to display significant growth opportunity.
Ans: High maintenance cost of dry milling machines is one of the major factors anticipated to act as a barrier towards the growth of the Mexico dry milling market.