CCM/Heineken would ‘look elsewhere’ for malted barley if US leaves NAFTA

By Mary Ellen Shoup contact

- Last updated on GMT

CCB/Heineken sources 100% of its barley needs from barley farmers in Montana, according to the US Grains Council. ©GettyImages/rusak
CCB/Heineken sources 100% of its barley needs from barley farmers in Montana, according to the US Grains Council. ©GettyImages/rusak

Related tags: International trade

Under the North American Free Trade Agreement (NAFTA), Cuauhtémoc-Moctezuma-Heineken (CCM/Heineken) of Mexico has been able to source all of its malted barley from Montana [US] tax-free, but that relationship could change with the EU and Mexico currently renegotiating their free trade agreement.

CCM/Heineken brews Mexican beer brands including Dos Equis, Sol, and Tecate. The subsidiary of Heineken sourced all of its barley needs from Montana in 2017 totaling 4.6 million bushels (100,000 metric tons), according to the US Grains Council (USGC). 

HeinekenMexicanBeer

As a result of the partnership, 40% of the malting barley supply produced out of the Malteurop malting facility in Great Falls, Montana, goes towards CCM/Heineken beer production.

Prior to NAFTA, Mexico set base tariffs for barley and malt at 128% and 17% respectively, according to USGC. Once NAFTA was in place, the agreement provided duty-free access for 120,000 tons of US barley, with remaining tariffs eliminated over the first 10 years of the agreement allowing US barley and malt to enter Mexico duty-free.

However, competing duty-free barley supplies from other markets such as Europe coupled with the possible US withdrawal from NAFTA may pose a threat to the US-Mexico grain trade relationship, USGC said.

Mexico and the EU are currently renegotiating the terms of its Free Trade Agreement (signed in 2000) to include reduced and duty-free taxes on imports and exports that would boost agricultural trade between the two nations.  

“CCM/Heineken confirmed the company will need to look elsewhere for their malting barley needs should NAFTA be terminated and tariffs on US barley be re-imposed,”​ USGC said.

The fourth round of NAFTA renegotiations recently ended where US negotiators have argued for less free trade to reduce its trade deficit, but those working in US agriculture have opposed this plan as they would lose duty-free access to their top exports markets, particularly Mexico.

“Ending NAFTA could mean a lose-lose situation between CCM/Heineken and US barley farmers,”​ Javier Chávez, USGC Mexico marketing specialist, said.

“US farmers are supportive of the importance of this agreement to business on both sides of the border.”

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