Ingenio San Pedro, Lerdo de Tejada, Veracruz. Closure reported by La Jornada and Diario de Xalapa (OEM), August 2026.
This is not one town. It is a country.
San Pedro was 1 of 17 mills in Veracruz.
17 mills in the 2025/26 registry. In grey, San Pedro, which closed.
Since 2010, at least 5 mills have closed in Veracruz (documented closures).
40%
of Mexico's sugarcane comes from Veracruz
Source: CONADESUCA 2025/26 registry and SIAP.
If Mexico's sugar heartland loses mills, it matters to the whole country.
So this is not the story of one company, but of a system. Each mill is the center of a local economy: it absorbs the cane of hundreds of growers, employs its town and sustains the commerce around it. When one shuts down, that whole web wobbles. Understanding what failed at San Pedro means understanding what protects, or endangers, the other sixteen.
Author
Roberto A. Arrucha · Director, Pro-Latam - Invest in Latin America
Key indicators for sugarcane in Veracruz and for national production.
BreakingAugust 19, 2026
The Veracruz government announced an agreement to keep the San Pedro mill from closing and to maintain its operation, according to Economic Development Secretary Ernesto Pérez Astorga. For now only the agreement not to close is confirmed; the details (operator, investment and next harvest) have not yet been published. This report documents the closure announcement and its underlying causes (costs, competitiveness and a drought-hit harvest), which will determine whether the rescue holds. We will update it once the terms are released.
What the official data shows, beyond the simple narrative.
1
Veracruz is Mexico's sugar heartland
It concentrates 17 mills (CONADESUCA 2025/26 registry) and about 40% of national cane production.
Official data
2
Production fell because of drought
National sugar output dropped from about 6.0 to 4.7 million tonnes between 2022 and 2024, with shrinking area and yield.
Official data
3
Imports were a response, not a cause
They jumped from about 7,000 to 468,000-597,000 tonnes in 2023-2024, exactly when production collapsed, and fell back as it recovered.
Official data
4
HFCS substitution did not lower the price
Fructose imports are structural (about 1 million tonnes per year), but a peer-reviewed study shows they do not cause the sugar price.
Academic study
5
The real hit to income: rising costs
Our analysis of CONADESUCA's open cost data shows cane cost per tonne rose about 40% during the drought, squeezing the grower margin even as the price rose.
Analytical interpretation
6
San Pedro closed on low competitiveness, not price
Our analysis of factory data (Infocana) shows it had the worst sugar recovery of the 17 mills (8.02%): least sweet cane, least efficient factory and twice the downtime.
Veracruz is Mexico's largest sugarcane producer and concentrates the most sugar mills in the country. When a mill stops operating, the cane from its supply zone must be relocated or is lost, with effects on producers and regional employment.
Source: official CONADESUCA registry (directory of sugar mills, 2025/26 season, updated 19 January 2026). Veracruz has 17 mills in the registry; after the San Pedro closure in August 2026, 16 remain active. Operator groups and municipalities come from the registry; map locations are approximate (municipal seat) and unverified, pending exact coordinates.
National sugar output fell from about 6.0 to 4.7 million tonnes. Real, but it hit everyone equally.
The drought of these years was not an isolated bad season. It hit planted area, yield per hectare and, in the end, the sugar that reaches the warehouse: when it rains less, cane stores less sweetness and the factory mills fewer tonnes. The national fall shows up in the charts, but its origin is in the field, not the market.
National sugar production by cycle
Production fell in recent cycles due to prolonged drought.
The easy story blames imports and fructose. The data says otherwise.
When sugar is scarce and its price rises, importing is the logical response to keep the country supplied. That is why purchases abroad grow right after a bad harvest, not before: they are the response, not the cause. And fructose, though it competes for the beverage market, has been a stable presence for years; if it did not move the price in a decade, it does not explain today's crisis.
National sugar balance (2013–2025)
National sugar productionSugar exportsSugar importsHFCS imports
Official CONADESUCA data (National Sugar Balance), calendar year. When the harvest collapsed in 2023–2024 on drought, sugar imports jumped (from about 7,000 to nearly 600,000 tonnes) and exports fell by more than half to supply the country: importing was the response to the collapse, not its cause. HFCS hit its decade lows in 2020–2022, right before the crisis; there was no surge to foreshadow it.
Alibi confirmed: imports were a response, not a cause, and a peer-reviewed study shows fructose does not move the sugar price.
Suspect 3
Sugar smuggling ('huachicol azucarero')
Many growers point to another culprit: sugar that enters illegally or misdeclared and sinks the price. It is a real complaint, and it deserves careful measurement.
The best-documented mechanism is not open smuggling but the technical kind: sugar cleared through customs declared as food mixtures at 95 to 98 percent sugar, to pay a lower tariff. Because it does not enter recorded as sugar, it is absent from official import statistics, which is why it is so hard to measure and why the figures vary so widely. Industry (CNIAA) and a legislative analysis estimate hundreds of thousands of tonnes between 2022 and 2024, plus the operation of unlicensed mills in Puebla, Oaxaca and Veracruz. Among growers, claims of up to two million tonnes circulate that are unverified and far exceed that estimate. The government acknowledged the problem: in November 2025 it raised the tariffs on sugar imports.
Transparency: by definition, illegal trade is not measured in official statistics. The volume figures are estimates from industry and a legislative analysis (evidence level estimated or reported), not official measurements. The tariff, however, is an official figure (DOF).
≈329,450 t
Estimated illegal sugar (2022–2024)
Industry estimate (CNIAA); associated tax evasion above 5 billion pesos.
What it means: About 110,000 tonnes a year against national consumption of nearly 4 million: enough to pressure the price, far from explaining the crisis on its own.
Sugar smuggling is a real drag on the price, documented by industry and addressed by the government with tariffs of up to 210%. But at its estimated scale, hundreds of thousands of tonnes and not millions, it squeezes the margin from the price side: it is not the origin of a crisis that, at its root, is one of costs and of a harvest collapsed by drought.
The real culprit
The margin, not the market
The blow came from costs and the world price, not from fructose.
A grower does not live on the price, but on the margin: what is left after paying cutting, freight, fertilizer and wages. During the drought those costs climbed while the world price collapsed, and the scissors closed on the grower even as the cane price rose on paper. Add an uneven playing field: Mexico exports sugar under a quota to a single buyer, while fructose from that same country enters tariff-free.
+40%
the cost per tonne of cane rose during the drought, while the world price collapsed
Income vs cost per tonne of cane (Mexico)
The producer's income (cane price) against production cost, per tonne.
Cane price (income)Production costMargin
A national comparison, the only level with a per-tonne cost available. The cost is a CONADESUCA-derived estimate (cost per hectare divided by yield), aligned by season to its closing year. The green area is the margin: it compresses from over 300 MXN/t in 2018–2019 and 2022 to under 100 in 2023–2024.
On top of that, the policy asymmetry: a single buyer, a shifting quota, and fructose that enters tariff-free.
The uneven playing field
Mexican sugar → US
Enters under a quota and agreed floor prices: limited access.
US fructose → Mexico
Enters freely, with no tariff or limit: open access.
≈180-200k t
How much sugar Mexico can sell to the US (2025)
Access is capped by a quota. It fell from about 1 million t; the US is almost the only export market.
What it means: Mexico does not sell abroad what it wants, only what the quota allows. If the quota drops, the surplus stays home and presses the domestic price.
The Suspension Agreement with the US sets floor prices and ties the quota to US needs. Mexican sugar is 11-18% of US supply.
What it means: The export price is not set by the free market but by a bilateral agreement. Mexico is a big supplier, but it follows the rules rather than setting them.
Out of about 1.7 million t consumed. The beverage industry uses it instead of sugar.
What it means: Here is the asymmetry: US fructose enters Mexico freely and without limit, while Mexican sugar faces a quota and agreed prices to enter the US.
Sugar tariffs (2024) and prior import permit (2026)
Mexico raised tariffs and now requires a prior permit (DOF, 28 May 2026) to curb anomalous imports and circumvention.
What it means: It is Mexico's defense against cheap sugar slipping in the back door. It protects the domestic price, but does not touch the fructose flow.
Up about 87% and, for the first time, it also taxes diet drinks.
What it means: A higher tax makes soft drinks more expensive and can lower how much sugar and fructose the country consumes: less domestic demand for the sector.
If it were the price, all would have fallen. San Pedro died of its own weaknesses: the worst sugar recovery of the 17 mills.
If the price were the culprit, all seventeen mills would have fallen together, because they all sell to the same market. They did not. San Pedro carried its own disadvantages: it received the least sweet cane, its factory extracted less sugar from each tonne, and it stopped for twice as long on breakdowns. Three weaknesses that stack up until milling becomes unviable. Its competitiveness killed it, not the market.
What makes a mill competitive
Competitiveness is decided in three links. In the FIELD, what matters is how much cane is harvested per hectare and how sweet it is (its sugar content). In the FACTORY, what matters is what share of that sugar it extracts and how much time it stops for breakdowns or rain. The RESULT is kilos of sugar per tonne of cane. A mill can have good cane and still lose out because of a weak factory or too many stoppages.
The efficiency factors, mill by mill (2024/25 season)
Best in the columnWorst in the column
Mill
Field
Factory
Operations
Result
Cane per hectare(t/ha)
Sugar in the cane(%)
Factory efficiency(%)
Downtime(h)
KARBE(kg/t)
Recovery(%)
Central Progreso
51.0
13.62
80.4
569
113.9
11.00
Tres Valles
54.9
12.81
80.0
517
110.4
10.26
CIASA (Cuatotolapan)
46.5
12.64
80.4
942
113.0
10.24
El Higo
60.0
12.42
81.2
507
111.6
10.14
Central El Potrero
67.0
13.08
76.8
525
-
10.06
El Modelo
80.6
12.69
78.5
892
111.0
10.01
Pánuco
66.2
12.97
76.8
1,145
117.5
9.99
Central La Providencia
66.4
12.42
79.4
637
-
9.95
La Gloria
77.1
12.16
81.3
779
104.0
9.92
Mahuixtlán
66.8
11.76
83.5
1,116
104.9
9.87
San Cristóbal
53.5
12.04
80.3
581
100.5
9.74
San José de Abajo
61.3
12.37
76.8
910
105.2
9.58
Central Motzorongo
61.8
11.97
77.5
311
100.5
9.33
San Nicolás
61.7
11.93
77.1
429
108.2
9.22
Constancia
49.9
12.34
73.4
702
-
9.09
Central San Miguelito
66.7
11.66
77.8
896
-
9.07
San Pedro
63.4
10.86
73.7
1,382
91.1
8.02
Green = best, red = worst, in each column. KARBE is kilos of recoverable sugar per tonne of cane; recovery is the final percentage. Source: Infocana (CONADESUCA), 2024/25 season.
Why San Pedro closed
San Pedro did not close because of one factor or the price: its cane was the least sweet (10.9% sugar vs 12-14% for the leaders), its factory extracted less (73.7% efficiency vs about 80%), and it stopped for more than twice as long (1,382 hours). The result was the worst sugar recovery in Veracruz (8.0%). A low price would have hit everyone equally; this was mill-specific competitiveness.
And at the sector level, cane cost per tonne rose about 40% during the drought (from about 450-630 to 835-863 pesos/t), leaving the producer margin very tight.
Who is next?
If the killer is competitiveness, who else is weak?
The efficiency record reveals the fragile mills. It does not predict closures: it says where to look.
The uncomfortable question is whether San Pedro was an isolated case or the first on a list. Comparing each mill's efficiency over the years separates those that had a bad year from those that come in weak year after year. It is not a closure forecast: it is a map of where to look before it is too late.
This measures factory efficiency (operational health); it does NOT predict closures. A closure also depends on finances, debt, scale and owners' decisions. San Pedro is included as a reference: it had the lowest efficiency and was the one that closed in 2026.
Average sugar recovery over the last 3 complete seasons, compared with the sector average. The dashed grey line in each mini-chart is that average. Sector average: 9.9%.
Mill
Recovery trajectory (17/2018–24/2025)
3-season avg.
Health
San Pedro
8.7%
Closed (reference)
Central San Miguelito
9.2%
Lower operational health
San Nicolás
9.4%
Lower operational health
Central Motzorongo
9.5%
Lower operational health
Constancia
9.5%
Lower operational health
San Cristóbal
9.6%
Lower operational health
San José de Abajo
9.6%
Lower operational health
Pánuco
9.8%
Lower operational health
El Higo
9.8%
Lower operational health
Central La Providencia
9.9%
Lower operational health
Mahuixtlán
10.0%
Stable
Central El Potrero
10.1%
Stable
Tres Valles
10.2%
Stable
El Modelo
10.3%
Stable
La Gloria
10.5%
Stable
Central Progreso
11.5%
Stable
San Pedro is not the first
Veracruz has lost mills for decades.
2026San Pedro(Lerdo de Tejada)
Closure
Consequence: Cierre por inviabilidad económica; cerca de 1 millón de toneladas de caña a reubicar. Más de 7 mil productores y trabajadores afectados.
Behind each mill are thousands of families. Pick one and size what is at stake.
Exposure: what's at stake if a mill stops milling
The real impact of a closure on the cane and people of its supply zone.
Cane at stake (t)
1,151,908
tonnes that would need to be relocated or lost
% of Veracruz cane
6%
Estimated producersestimate
3,691
in its supply zone
For scale: San Pedro (about 1.15 million t) sustained around 7,000 cane growers in its supply zone (Diario de Xalapa, OEM; August 2026).
Cane milled and the percentage are official data (Infocana, CONADESUCA). Producers are a rough estimate: cane milled times the national ratio (170,000 producers over 53 million tonnes). Dependents (families, workers, businesses) are more.
Illustration (AI)
The way out
Not waiting for better prices: diversify
The agricultural base is solid. The future is in ethanol, bagasse power, and closing the efficiency gap.
The way out will not arrive by waiting for the world price to bounce back. The countries that endured diversified: when sugar does not pay, they send cane to ethanol; with bagasse they generate electricity; and they close the efficiency gap inside the factory. Veracruz already has the agricultural base to do it; what is missing is policy resolve and patient capital.
Future and diversification
Where the opportunity is, if the risks are managed.
Depending on sugar vs. diversifying
Mexico today
Almost all cane goes to sugar, with no operating ethanol mandate. Fully exposed to the world price.
The model that endures (Brazil)
It alternates sugar and ethanol (~50/50) and generates power from bagasse. It cushions price drops.
12.5% of the area
Biofuels target for 2030 (PNACA)
Mexico aims to allocate 12.5% of cane area to ethanol and SAF (about 800 million litres of ethanol). Still no operating blend mandate.
What it means: It is a target, not yet a reality: without a mandate to blend ethanol into gasoline, demand does not take off. The intent exists; the lever to activate it is missing.
Brazilian mills are flex and send about half the cane to ethanol depending on price. It is the resilience model Mexico lacks.
What it means: When sugar does not pay, Brazil sends cane to ethanol, and vice versa. That flexibility cushions price drops; Mexico produces almost only sugar, so each fall hits it head-on.
The CRE granted a permit for a 20 MW bagasse plant. National potential is on the order of 1,000 MW: the most mature, lowest-risk diversification.
What it means: Bagasse, the residue from milling cane, can be burned to generate electricity and sell it. It is the most mature, lowest-risk diversification: it uses what is wasted today.
Brazil produces at around 345 USD/t; India, 430, and the EU, 600-630. Mexico's comparable cost is not published: a gap to document.
What it means: Brazil produces more cheaply than India and the EU. Mexico does not publish its comparable cost, so we do not know for sure how competitive it is: a key missing figure for decisions.
The drought cut the Veracruz harvest; water risk is the sector's biggest operating risk.
What it means: Water is the sector's biggest operating risk. Without water-risk management (irrigation, resistant varieties), any future plan is at the mercy of the weather.
Comparable to Brazil (around 76 t/ha). The agricultural base is solid; the lag is in the factory, costs and diversification.
What it means: The good news: Mexico's fields yield almost like Brazil's. The agricultural base is solid; the lag is not in the land, but in the factory, costs and diversification.
Grupo Porres will no longer operate the mill. State and federal governments are now negotiating what to do, and leaving an entire region in uncertainty is not an option. These are the exits and what is at stake.
The closure was announced on August 4, 2026. After two weeks of efforts by Governor Rocío Nahle and the federal government with Grupo Porres, on August 19 the Veracruz government announced an agreement to avoid the closure and keep the mill operating: in practice, it is the rescue scenario that is being taken. We still lay out the three paths and what each implies, because the underlying question remains open: a rescue that does not cut costs only postpones the problem.
These are prospective scenarios, not predictions or a forecast of what will happen. The pros and cons are analysis; the impact figures come from the report's verified data and from coverage of the decision under way (August 2026).
State and federal governments inject support (incentives, subsidies or investment) and restructure the mill to keep it grinding. This is the path Governor Rocío Nahle and the federal government are now negotiating with Grupo Porres.
For
+Preserves about 1,000 direct jobs and the cane chain (growers and hauliers) of the Papaloapan Basin.
+Prevents roughly 1 million tonnes of cane from being left with no destination.
+Buys time to modernize and tackle costs, not just put out the fire.
Against
−The mill closed for economic unviability: if the rescue does not fix cost and competitiveness, it shifts the loss to the public purse year after year.
−The historical rescue vehicle (FEESA) was extinguished by decree in 2021; there is no ready state mechanism, one would have to be created.
−Risk of permanent dependence on subsidy and of support that never reaches the root.
Economic and social impact: Social: sustains employment and cushions the regional blow. Economic: recurring fiscal cost if the margin stays negative; success depends on cutting costs, not just reopening.
Precedent:The government operated 9 expropriated mills through FEESA (2001–2021), a fund extinguished by decree in the DOF in 2021.
Grupo Porres transfers the mill to another operator (a sugar group with scale or a growers' cooperative) that brings capital and restarts it.
For
+Keeps the mill in private hands, with no permanent fiscal burden.
+An operator with scale and capital could modernize and restart grinding.
+A market exists: there is precedent of private interest in Mexican mills.
Against
−A buyer only steps in if the numbers work; the same cost problem deters bids except at fire-sale prices or with heavy investment.
−Time is short: a lost harvest scatters growers and workers and degrades the assets.
−Risk that the asset is bought to be dismantled, not operated.
Economic and social impact: Social: keeps jobs only if the buyer actually operates. Economic: avoids public spending, but depends on a viable offer arriving in time.
Precedent:The SAE registered groups interested in acquiring mills; in the same region, the San Gabriel mill was transferred by decree in 2015.
The closure is accepted and public effort concentrates on relocating the cane, compensating and retraining workers, and reconverting land and activity (other crops, bioenergy).
For
+Stops propping up a structurally unviable plant with public money.
+Frees resources for reconversion and diversification instead of subsidizing losses.
+Orders the exit: cane is reassigned and support goes to people, not to the factory.
Against
−It is the worst social outcome: the precedent shows that closed-mill towns shut down (La Concepción; Independencia now in ruins).
−Roughly 1 million tonnes of cane must be relocated to other mills, with logistical cost and no guarantee they fit.
−Loss of about 1,000 direct jobs and thousands tied to the chain; a blow to Los Tuxtlas and the Papaloapan Basin.
Economic and social impact: Social: unemployment and migration, a region in uncertainty. Economic: immediate fiscal saving, but reconversion takes years and rarely absorbs all the displaced.
Precedent:Since 2010, at least 5 mills have closed in Veracruz; several left towns shut down or in ruins.
Every figure here is classified by evidence tier and traced to its source.
Official data
Sector estimate
Press report
Analytical interpretation
Hypothetical scenario
Demonstration data
Frequently asked questions
Why did the San Pedro sugar mill in Veracruz close?
Because of low competitiveness, not the price. Factory data (Infocana, CONADESUCA) shows San Pedro had the worst sugar recovery of Veracruz's 17 mills (8.02%): less sweet cane, a less efficient factory and twice the downtime. Its closure was reported in August 2026.
How important is Veracruz to Mexico's sugar?
Veracruz has 17 mills (CONADESUCA 2025/26 registry) and about 40% of national sugarcane production, more than any other state.
Did sugar imports or fructose cause the crisis?
No. Imports rose exactly when production fell due to the drought, so they were a response, not the cause. A peer-reviewed study also shows fructose (HFCS) does not move the sugar price.
What really hit cane producers' income?
Rising costs and the falling world price. The cost per tonne of cane rose about 40% during the drought while the international price collapsed, squeezing the producer's margin.
How many mills have closed in Veracruz?
At least 5 documented since 2010: La Concepción (2010), Independencia (2011), San Gabriel (2011), Nuevo San Francisco (2012) and San Pedro (2026).
What is the way out for Veracruz's sugar industry?
Diversify instead of waiting for better prices: ethanol, bagasse cogeneration, and closing the factory-efficiency gap. The agricultural base is solid, with a per-hectare yield comparable to Brazil's.
