Global Price Surge Threatens Mexico's Food Production and Security

Monterrey, Mexico – At the wholesale market Mercado de Abastos in Nuevo Leon state, prices of staples like tomatoes, potatoes, beef, and chili peppers have surged in recent weeks, compelling customers to change shopping habits and tighten budgets, while vendors cut profit margins to retain clientele.

“You still have to buy them, because they are daily staples,” said Cesar Ramirez, a 66-year-old retiree.

While shopkeepers cite rising fuel prices, high agricultural costs, and extortion and theft on Mexico’s highways, international pressures are mounting. Global fuel and fertilizer costs, driven up by shipping disruptions at the Strait of Hormuz, are hitting Mexican producers and endangering stable food supplies, especially for low-income people.

Elvira Pasillas, a professor at the Western Institute of Technology and Higher Education (ITESO), noted that low-income households spend up to 70% of their income on food. “They are not only struggling to meet minimum nutritional needs but devoting almost all their income to food,” she added.

According to INEGI, the national statistics agency, 12-month inflation stood at 4.45% in April, while the consumer price index rose 0.20% in March. Pasillas said the cost of the basic goods basket in urban areas increased 8.1% in March, far outstripping headline inflation.

Guillermina Delgado, a 62-year-old homemaker, said she has started limiting purchases, buying only what is truly necessary each week. “Nothing is cheap anymore,” she said. When possible, she goes to the Mercado de Abastos market.

Delgado also cares for her elderly mother, adding financial strain on her husband—a construction worker and the family’s sole breadwinner. Mexico has a high informal labor rate, reaching 54.8% in March. Meanwhile, the country's gross domestic product (GDP) contracted 0.8% in the first quarter, below expected growth.

“We are seeing economic stagnation, reflected in a much more precarious labor market, with rising inflation and much higher food inflation,” said Pasillas, also an economic analysis consultant. “This is creating a bigger problem for people's well-being.”

Fuel, roadblocks, and extortion

Rising energy prices due to the US-Israel war with Iran are also driving up logistics and transport costs.

Fabian Dominguez, manager of the meat shop El Bodegon, said pork and beef prices have risen since the start of the year. The Mexican Meat Council reported beef prices rose 16.5% in January.

The causes include the end of import tariff exemptions from Brazil and Argentina, as well as a screwworm outbreak disrupting cross-border trade. Supply pressure comes as meat consumption in Mexico grew an average of 4.5% per year from 2020 to 2025.

Dominguez said their beef comes mainly from southern Mexico, Canada, and the US. He attributed the price rises to higher fuel costs from the Iran war, along with roadblocks set up by criminal groups or protesters.

In recent months, protests by farmers and truck drivers have caused major logistics delays. Demonstrators demand lower fuel costs and better security, as theft and extortion by criminal gangs increase on highways and rural areas. With global grain prices falling sharply, Mexican producers have protested grain imports and demanded the federal government guarantee minimum prices, similar to price caps now applied to fuel.

Although an oil producer, Mexico imports over half its gasoline and 75% of its natural gas from the US. To mitigate rising oil prices, the government has extended a voluntary agreement with retailers and cut fuel taxes.

However, Pasillas warned these subsidies would reduce tax revenue and strain public finances. “This will also affect overall spending, and particularly put pressure on social programs, especially those supporting the poor,” she added.

Juan Carlos Anaya, founder of data analysis firm Agricultural Market Consulting Group, noted that security threats such as extortion, robbery, and protection money are hampering trade and driving up logistics costs. Cuauhtemoc Rivera, president of the Alliance of Small Merchants (ANPEC), added that extortion affects every link in the supply chain, from farmers to grocery store owners.

In January, Mexican authorities arrested Cesar Sepulveda Arellano, alias “El Botox,” suspected of masterminding the murder of Bernardo Bravo, a prominent lime industry leader in Michoacan. The National Agricultural Council praised the action in a statement: “Insecurity in rural areas and the supply chain not only endangers food producers, but affects final product prices, distorts markets, and threatens the timely supply of food to all Mexicans.”

Dominguez explained that his customers, mostly business owners, are reluctant to pass these costs to end consumers, who often resist paying more. He said the store has seen revenue drop 25-30% compared to last year.

Meanwhile, Graciano Rico, manager of a fruit and vegetable stall opened a year ago at the market, said they have cut profit margins nearly in half to avoid losing new customers. “If we raise prices too high, they'll walk away angry, and we'll lose them,” he said.

Tomato prices soar

Shop owner Ilda Castro said record prices for tomatoes, potatoes, and chili peppers are driving customers to hunt for deals across multiple stores. Castro noted tomato prices have jumped from 20 pesos ($1.15) to as high as 75 pesos ($4.33) per kilogram.

“We hear that in the US, they pay $65 for a 25-pound box, which is over 1,000 pesos. Naturally, any producer would want to send their tomatoes there,” she said.

Last year, the US government imposed a 17% tariff on Mexican tomatoes, citing “unfair trade,” even though Mexico supplies about 90% of US fresh tomato imports. Anaya of the Agricultural Market Consulting Group called the tariff unfair, noting that although dumping has never been proven, it has forced major producers in Sinaloa to reduce planted area.

Carlos Ramirez, manager of a shop supplying mostly restaurants and taco stands, said customers are switching to canned tomatoes or serving smaller salsa portions—a taco staple—to cope with soaring prices.

Production costs are also rising, partly due to a spike in global fertilizer prices, as Mexico imports 70% of its needs. From January to March, urea prices rose 47%, diammonium phosphate 57%, and mono ammonium phosphate 54%—all key fertilizer components—according to data from the Agricultural Market Consulting Group.

However, Pasillas warned the full impact will only be seen in the long term, due to harvest cycles.

Despite many factors affecting food prices, Anaya argued the main issue is the widening price gap along the supply chain. “The gap between consumers and producers is alarming. What can we do along the supply chain?”

The Inflation and Spending Package (PACIC), a voluntary agreement between the Mexican government and participating companies, aims to stabilize food costs by capping a basket of 24 essential items at about 910 pesos ($45). Rivera of ANPEC said that while the program was designed to provide a food basket to the most vulnerable and low-income households, it has not reached them. “The PACIC food basket is sold in modern retail channels—Walmart, Soriana, and Chedraui—in other words, supermarkets and chain stores, exactly the places that this population cannot shop at and does not want to go to,” Rivera said.