| | |  Business News | October 2009 
Mexico's 'Supply Center' Takes Hit
 Chris Hawley - USA Today
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October 20, 2009
| | Customers shop in Mexico City's Central de Abasto, a wholesale market. A 2008 government report said Mexico's regional centrales were catering to small wholesale or retail customers. (Chris Hawley/USA Today) | |
Mexico City – It was 1 a.m., potato time in Mexico's mother of all markets.
The potatoes were hauled in by dozens of trailers, which discharged the previous day's harvest into giant cleaning machines. Men rummaged quickly through bags, sealing deals with nods and notes scribbled on slips of paper. There was no time to lose: Soon the carrots would arrive, then the green beans and fish and flowers.
This massive wholesale market, known as the Central de Abasto ("Supply Center"), sprawls across an area as big as 600 football fields.
For much of the past 27 years, it stood as a centerpiece of the Mexican economy, but it and similar markets across Mexico are now struggling in the face of changing consumer habits and competition from large chains such as Wal-Mart and Costco.
"The world is changing," said distributor José Flores Lazcano, 67, as he watched wet potatoes pour out of a washing machine. "Four years ago, I was buying 20 tons a day here. Now it's 10. We're not as important as we used to be."
The Central de Abasto, located on the southeastern edge of Mexico City, is the biggest of 64 wholesale markets built in the 1980s and early 1990s. They were part of the Mexican Food System, a government plan to guard against famine following several severe financial crises in Mexico.
The smells of apples, bananas, dill, cilantro and dried chilies fill the half-mile-long passageways of its main building. A network of bridges, underpasses and elevated parking lots designed by architect Abraham Zabludovsky moves customers and trucks smoothly around the complex. Thousands of diableros, or cart-pushers, transport merchandise.
The Central has a 700-member police force, its own garbage-processing plant, 17 bank branches and a day care center.
About 80% of the food supply in Mexico used to pass through the Central de Abasto's 3,755 conjoined warehouses, said Alfredo Neme, president of a Mexican merchants' association. Goods were brought here from farms and then distributed to supermarkets, public markets and street stands.
These days, only 20% of Mexico's food comes through here, Neme says.
The diminished role can be explained in part by structural changes during the past two decades in Mexico's economy. The market was one of Mexico's last experiments in central economic planning, said Gerardo Torres Salcido, a professor at the National Autonomous University of Mexico who has studied wholesale markets.
Other changes during the past two decades, including the 1994 North American Free Trade Agreement with the United States, have opened the country to more private-sector competition and investment.
Meanwhile, there has been a proliferation of large-scale retail chains, many of which also deal directly with wholesale suppliers. Wal-Mart, Mexico's biggest retailer, had 753 supermarkets and discount stores in 2008, up from 225 in 2000. Comercial Mexicana had 230 stores, up from 167 in 2000.
Membership warehouses such as Costco, Sam's Club and City Club nearly tripled, from 57 in 2000 to 152 in 2008.
A 2008 government report said most of the regional centrales were shifting toward small wholesale or retail customers, "meaning they are basically just becoming big public markets."
The Central de Abasto's true health is hard to know, because the Central keeps no numbers on vendors' sales or volume entering the market, said its director, Raymundo Collins.
Neme said his confederation is urging its 90,000 vendors to stay relevant by modernizing and introducing services that supermarkets want, such as artificial fruit-ripening, Internet ordering and packing in shelf-ready boxes.
"Things are different now," Neme said. "Mexico's economy has changed, and the centrales de abasto can't go on the way they used to."
Hawley is Latin America correspondent for USA TODAY and The Arizona Republic
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