In Mexico, all eyes are on President Peña Nieto’s efforts to find solutions for minimising the long-term pressures of diving oil prices. Any more tax reforms would be publically unforgiveable, while more budget cuts would quickly drain his groundbreaking economic reforms of any remaining domestic credibility, not to mention fuel social unrest.

The President’s recent visit to the Arab Peninsula (17-21 January) was followed with interest; evidently, new infrastructure deals and MOUs with Saudi Arabia, UAE, Kuwait and Qatar will breath some life into Mexico’s oil sector. Yet given external economic pressures, whether oil can realistically stay on top of the agenda for long remains to be seen. Right now, Peña Nieto is facing a new reality: oil export revenues are being surpassed by agricultural and agri-industrial exports. How can the President capitalise on this lifeline, and what does it mean for investment opportunity?

Peña Nieto is being forced to consider harsh facts. On 11th January, the price of a barrel of Mexican crude hit $22.07; for the state-owned oil company Petróleos (Pemex) to produce one, it costs approximately $23 (El Financiero, 11.01.2016). A month earlier, the Mexican Secretariat of Finance and Public Credit had announced that oil revenues decreased by 38% in the last 10 months compared to the same period in 2014 (La Jornada, 01.12.2015).

Add to this an ongoing contractual dispute between Pemex and the oil workers unions, regulatory deficiencies and lacklustre measures to curb the rise of illegal petroleum siphoning by criminal networks, and one can safely predict that Mexico’s energy woes will continue well into 2016.

The manufacturing industry is still Mexico’s primary source of foreign income; however, last year, the most interesting gains were made by the agricultural sector. According to Mexico’s National Statistics Institute (INEGI), the total value of Mexico’s agricultural and agri-industrial exports in the first eleven months of 2015 reached $24.5 billion (INEGI, 13.01.2016). This actually exceeded petroleum-based export revenues, which totalled $23.4 billion (INEGI, 27.01.2016).

Perhaps Peña Nieto had already taken those figures into account during his first speech at the Bilateral Business Forum in Saudi Arabia (17th January), in which he said ‘the most palpable sign of growth experienced by (Mexico and Saudi Arabia) can be seen in trade. Mexico is a leading exporter of agroindustrial products, while Saudi Arabia is one of the world’s most important food purchasers.’ (Government of Mexico, 17th January 2016) (Gob.mx, 17.01.2016).

Agriculture is playing an important role in keeping Mexico’s net foreign trade deficit to a minimum. The key question remains; how much is already being done to capitalise on agricultural potential, and should investors be confident enough to put their money into Mexican coffee, fruit, vegetables or meat exports?

Initial indicators seem positive. Firstly, those export revenue statistics may be about to play directly into an ongoing debate in the courts about the national ban on genetically modified (GM) maize production. Implemented in 2013 to save corn species diversity, the ban was lifted in August 2015 by a judge, whose decision was swiftly appealed by a group of activists.

The ban still stands; however, as noted by the Financial Times in January 2016, industry leaders like Monsanto continue to advertise GM corn seeds as an easy way out of poverty for local farmers who dream of mass production, nudging the debate ever closer to the doors of the Supreme Court (Financial Times, 14.01.2016).

In addition, current exchange rates are not all bad news for agricultural exporters. The peso is currently suffering a steep depreciation against the dollar; although this is hiking the cost of farming machinery and refining equipment, it means greater competition and export opportunities for local tradesmen. Upon Peña Nieto’s visit to the Arab Peninsula, Francisco Álvarez Laso, President of Pueblo state’s Agricultural Council (CEAGRO), told local media that local producers were enthusiastic about realising the opportunity, and that some were actively seeking to get their products Halal certified (Union Puebla, 18.01.2016).

Mexico’s agri-industrial sector is also set to turn more heads in Europe. Cue the European Commissioner for Agriculture and Rural Development, Phil Hogan, who is due to visit Mexico – accompanied by 34 company leaders and producers’ organisations from 14 EU member states – from 10-12 February 2016. Hogan has said that his visit, which comes on the back of new EU rules for agricultural promotion budgeting, will be ‘intense and valuable in terms of opportunities.’ Investors can expect him to negotiate an expansion of existing Mexico-EU trade agreements with Mexican policymakers (EU Commission – Agriculture and Rural Development, 05.01.2016).

In bolstering the long prized North American Free Trade Agreement (NAFTA), there have also been more technical initiatives to lubricate flows of agricultural products between Mexico and the US. For instance, on 12th January 2016, the two countries inaugurated a new cargo pre-inspection pilot scheme at the Mexican border city of Tijuana, where US customs officers and agriculture specialists can now work alongside local personnel on Mexican soil to pre-inspect low-risk, high-volume products (i.e. fresh fruit and vegetables) before they cross into San Diego, thereby reducing congestion and transaction costs (CBS News, 12.01.2016).

These indicators show that while Mexico’s Secretariat of Energy continue to grapple with oil problems, local agribusiness seems to be heading in the right direction. This will be crucial for plugging the fiscal gap, and investors can be sure that there are opportunities on the horizon.