Review Reports - Sustainability and Competitiveness of Mexican Rose Production for Export: A Policy Analysis Matrix Approach Assessing Economic and Social Dimensions

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The manuscript presents a well-structured and empirically grounded assessment of economic policy distortions affecting rose producers in Central Mexico. Its contribution lies in combining the Policy Analysis Matrix with welfare metrics to evaluate producer wellbeing and sectoral competitiveness. The paper is analytically good, organised, and supported by relevant statistical and contextual evidence. It is suitable for publication after minor revisions to strengthen conceptual clarity, methodological transparency, and stylistic precision.

The title accurately reflects the content, yet the abstract would benefit from a more explicit statement of the study’s original contribution. It presently summarises results without indicating how the analysis advances existing knowledge on agricultural policy distortions in export-oriented horticulture. Adding a sentence to clarify the novelty of the empirical approach or policy insight would strengthen its positioning.
The literature review is comprehensive and demonstrates familiarity with historical and contemporary rural development debates in Mexico. To deepen analytical alignment, it would be useful to clarify how the selected literature informs the conceptual use of PAM, particularly the distinction between market failure and policy distortion. This distinction is invoked but not formally elaborated. A clearer articulation of the conceptual boundary between these terms would enhance interpretive coherence.
The methodological section is detailed and sufficiently technical. Nevertheless, two refinements are recommended:
Snowball sampling is reported, with a requirement of 30 years’ experience. The authors should briefly justify why this threshold is appropriate and clarify whether it introduces potential survivorship or selection bias.

The manuscript describes the sources and adjustment procedures but could improve clarity by grouping these into a single coherent paragraph outlining the sequential steps in deriving social prices, particularly the integration of shadow pricing, export parity, and import parity adjustments.

The results are comprehensive and well presented, but certain interpretations could be strengthened:
The discussion repeatedly attributes inefficiency to high labour costs. A comparative reference to labour coefficients in other speciality horticulture systems would help contextualise this finding.

While the comparison to CONEVAL poverty lines is informative, the authors may wish to state explicitly whether the per-capita income is adjusted for family labour contributions or assumes uniform distribution, as this affects welfare interpretation.

The discussion articulates the socioeconomic relevance of floriculture and the gendered employment dynamics. However, several arguments would benefit from additional precision:
At times, the manuscript conflates distortions that benefit producers (e.g., VAT refunds) with those that disadvantage them (e.g., implicit taxation on labour). A more systematic classification distinguishing the direction and magnitude of transfers would enhance explanatory clarity.

The suggestion that policy should reorient toward domestic markets is interesting but not fully substantiated. A brief explanation of how domestic-market development could mitigate current inefficiencies would strengthen this argument.

The manuscript is generally well written, but several minor issues merit attention:
A small number of references appear duplicated with identical titles and years but different numbering (e.g., Salcedo 2007 appears twice). These should be consolidated.

The text occasionally repeats information (such as harvest periods). Consolidating these instances would streamline presentation.
Table 4 and Table 5 headings could be revised for sharper clarity, particularly Table 5, which currently repeats the label used in Table 4.

The conclusion aligns with the study findings but could be strengthened through a more forward-looking emphasis. For instance, adding a brief indication of potential research extensions (e.g., dynamic PAM modelling, comparative analysis across floriculture products) would enhance the manuscript’s scholarly value.

Author Response

Comment 1: The manuscript presents a well-structured and empirically grounded assessment of economic policy distortions affecting rose producers in Central Mexico. Its contribution lies in combining the Policy Analysis Matrix with welfare metrics to evaluate producer wellbeing and sectoral competitiveness. The paper is analytically good, organized, and supported by relevant statistical and contextual evidence. It is suitable for publication after minor revisions to strengthen conceptual clarity, methodological transparency, and stylistic precision.

Response 1: We sincerely thank the reviewer for the careful reading of our manuscript and for their constructive, encouraging comments. We greatly appreciate the positive assessment of our analytical approach, empirical basis, and use of the Policy Analysis Matrix combined with welfare metrics. We have carefully considered the suggestions from all reviewers to strengthen conceptual clarity, methodological transparency, and stylistic precision, and we have revised the manuscript accordingly.

Comment 2:

The title accurately reflects the content, yet the abstract would benefit from a more explicit statement of the study’s original contribution. It presently summarizes results without indicating how the analysis advances existing knowledge on agricultural policy distortions in export-oriented horticulture.

Response 2: Title, Abstract, and Keywords, we revised the title in line with the comments from the reviewer and the editor. The new title is: “Sustainability and Competitiveness of Mexican Rose Production for Export: A Policy Analysis Matrix Approach Assessing Economic and Social Dimensions.

Comment 3: Adding a sentence to clarify the novelty of the empirical approach or policy insight would strengthen its positioning.

Responde 3:

The abstract was reorganized and refined to incorporate the reviewer’s comment regarding the empirical approach and policy insight, resulting in the following version:

The agricultural economic policy in Mexico has inadequately addressed the integrated sustainability needs of the rural sector. This study adopts a sustainability perspective to examine economic policy distortions and market failures in the export-oriented rose cultivation sector, and evaluates their effects on the economic and social sustainability of producers in Tenancingo and Villa Guerrero, Mexico. A Policy Analysis Matrix (PAM) and CONEVAL poverty line metrics were used to evaluate private and social profitability as indicators of financial viability and resource use efficiency. Findings indicate that, despite being supported by distortionary policies, the rose export sector remains competitive and financially viable, constituting a key pillar of economic sustainability. Moreover, the social profitability of rose production exceeded its private profitability, suggesting a net positive socioeconomic benefit and a sustainable allocation of resources from a societal perspective. Furthermore, per capita income in the Rose Production Unit (RPU) exceeded the poverty line established by CONEVAL, directly supporting social sustainability and strengthening livelihood resilience. The study concludes that current resource allocation mechanisms are inefficient for sustainability over the long term. It emphasizes the need for policy shifts toward greater innovation, more effective technology transfer, improved market access, and stronger human capital to strengthen the sustainability of the sector. Rose cultivation exhibited a significant positive multiplier effect on the regional economy, reinforcing its contribution to sustainable rural development.

Keywords: agricultural policy; social profitability; economic sustainability; social sustainability; resource use efficiency; sustainable rural development.

Comment 4: The literature review is comprehensive and demonstrates familiarity with historical and contemporary rural development debates in Mexico. To deepen analytical alignment, it would be useful to clarify how the selected literature informs the conceptual use of PAM, particularly the distinction between market failure and policy distortion. This distinction is invoked but not formally elaborated. A clearer articulation of the conceptual boundary between these terms would enhance interpretive coherence.

Response 4: We incorporated the reviewer’s valuable comment by expanding the discussion of how the literature informs the conceptual use of the Policy Analysis Matrix (PAM) and clarifies the distinction between market failure and policy distortion. To address this, we added the following paragraph to the introduction, supported by appropriate references to substantiate the argument: (Lines 103-116) “While both phenomena result in inefficient resource allocation, market failures reflect inherent imperfections in the economic system, whereas policy distortions arise from government interventions that alter market signals (Salinas et al., 2022). Specifically, market failures occur when the free-market mechanism does not allocate resources efficiently, often due to externalities, public goods, information asymmetries, or imperfect competition (Salinas et al., 2022). In contrast, policy distortions arise directly from government measures, including taxes, subsidies, tariffs and quotas, which modify the incentives faced by producers and consumers and lead to departures from socially optimal outcomes (Claudio et al., 2023). The PAM framework is particularly useful for distinguishing between these effects, providing a structured approach to quantifying the welfare impacts attributable to each (Kydd et al., 1997). Understanding this distinction is crucial for designing appropriate interventions, since market failures typically require corrective policies that internalize external costs or benefits, whereas policy distortions call for the reform or removal of the distorting policies themselves (Drèze and Stern, 1990).”

Comment 5: The methodological section is detailed and sufficiently technical. Nevertheless, two refinements are recommended:

Snowball sampling is reported, with a requirement of 30 years’ experience. The authors should briefly justify why this threshold is appropriate and clarify whether it introduces potential survivorship or selection bias.

Response 5: Dear Reviewer, to address your suggestion, we have added the following paragraph in Materials and Methods: (Lines 137-139) “This study used the implementation of the North American Free Trade Agreement (NAFTA) in 1994 as the selection criterion, including only producers who have continuously produced and exported roses since that year”.

Comment 6: The results are comprehensive and well presented, but certain interpretations could be strengthened:

The discussion repeatedly attributes inefficiency to high labour costs. A comparative reference to labour coefficients in other speciality horticulture systems would help contextualise this finding.

Response 6: Dear Reviewer, to better address and clarify your request, we have added the following paragraphs in the discussion: (Lines 480-495) “A critical factor consistently identified as limiting competitiveness is the high cost of labor, which calls for a comparative examination of labor coefficients in alternative specialty horticulture systems. Such an evaluation reveals that, although Mexican rose production faces specific challenges, the high labor intensity characteristic of floriculture generally leads to a larger share of labor costs in total operating expenses compared with less labor-intensive agricultural sectors (Wei et al., 2020). For instance, high-value ornamental crops in various international contexts often exhibit labor cost components ranging from 30% to 50% of total production expenses, a level that, while substantial, is frequently offset by higher per-unit revenues and access to specialized markets (Khachatryan and Wei, 2022). Conversely, in many developing economies, abundant labor and relatively low wage levels can confer a competitive advantage in labor intensive agricultural exports. However, this advantage is diminished when productivity falls behind or when social security contributions and benefit costs substantially increase the effective wage rate (Wei et al., 2023). In Mexico, the cost structure shows that domestic factors of production, including labor, account for more than 80% of total costs, highlighting their substantial impact on profitability and competitiveness (Velázquez-Torres et al., 2022)”.

Comment 7: While the comparison to CONEVAL poverty lines is informative, the authors may wish to state explicitly whether the per-capita income is adjusted for family labour contributions or assumes uniform distribution, as this affects welfare interpretation.

Response 7: Dear Reviewer, to clarify and incorporate your request regarding per capita income, we have included the following paragraphs in the discussion section, supported by bibliographic sources to substantiate the arguments: (Lines 497-514) “This study establishes the economic contribution and welfare conditions of labor in the Mexican rose industry by examining how income distribution among workers affects their overall financial well-being. Given the labor-intensive nature of horticulture, understanding the precise mechanisms of income distribution is crucial for a comprehensive welfare assessment (Wei et al., 2023). Although aggregate per capita income figures offer a valuable starting point, a more detailed interpretation calls for an explicit explanation of the underlying distribution of capital across production factors and its implications for family labor contributions (Broeck and Maertens, 2016; Moran, 2018). It is important to clarify whether the reported average monthly per capita income of MXN $2,945 treats family labor as a single, indivisible unit or assumes an equal distribution across all individuals engaged in rose cultivation, since this distinction substantially affects the interpretation of welfare outcomes relative to the CONEVAL poverty lines. This research primarily focuses on wage employment within the rose industry, where individual workers receive direct compensation, rather than on family-based labor contributions treated as a composite unit. This approach allows for a direct comparison of individual earnings against per capita poverty thresholds, providing a more detailed understanding of economic well-being for each worker. To determine per capita income, total profitability was divided by the number of workers”.

Comment 8: The discussion articulates the socioeconomic relevance of floriculture and the gendered employment dynamics. However, several arguments would benefit from additional precision:

At times, the manuscript conflates distortions that benefit producers (e.g., VAT refunds) with those that disadvantage them (e.g., implicit taxation on labour). A more systematic classification distinguishing the direction and magnitude of transfers would enhance explanatory clarity.

Response 8: Dear Reviewer, thank you very much for this thoughtful observation. We agree that our initial discussion could give the impression that VAT refunds for exporters and implicit taxation on labor were being treated as analytically equivalent. Our intention, however, was not to conflate conceptually distinct distortions, but to reflect a policy environment in which measures that transfer resources to producers coexist with others that impose additional costs on them. To improve precision and explanatory clarity we have added the following paragraph to the discussion section: (Lines 466-475) “The Mexican government frequently implements policies that generate both direct and indirect transfers, creating a complex mix of incentives and disincentives for producers in the floriculture sector. For instance, the government’s objective of stimulating foreign exchange earnings through export promotion often results in policies that confer benefits on exporters, while, at the same time, broader fiscal policies can impose an implicit tax burden on labor that ultimately disadvantages producers (Fox and Dahlgran, 1990). This intricate policy environment, characterized by both supportive and restrictive measures, creates a distortionary framework in which the ultimate economic incidence of these policies often falls on consumers, despite the initial intent to promote export-led growth”.

Comment 9: The suggestion that policy should reorient toward domestic markets is interesting but not fully substantiated. A brief explanation of how domestic-market development could mitigate current inefficiencies would strengthen this argument.

Response 9: Dear Reviewer, thank for your valuable osbervation. We have included two paragraphs (line 582-591) to attend your observation.

Comment 10: The manuscript is generally well written, but several minor issues merit attention:

A small number of references appear duplicated with identical titles and years but different numbering (e.g., Salcedo 2007 appears twice). These should be consolidated.

Response 10: Dear Reviewer, we have reviewed the references section to ensure full compliance with the journal’s formatting requirements.

Comment 11: The text occasionally repeats information (such as harvest periods). Consolidating these instances would streamline presentation.

Response 11: Dear Reviewer, thank you for your valuable input. We have eliminated the repetition and carefully revised the manuscript’s writing.

Comment 12: Table 4 and Table 5 headings could be revised for sharper clarity, particularly Table 5, which currently repeats the label used in Table 4.

Response 12: Dear Reviewer, thank you for this valuable observation. We have revised the titles of Tables 4 and 5 and adopted clearer headings for both tables:

Table 4. Competitiveness and protection indicators from the PAM for Rose Production Units in Tenancingo and Villa Guerrero, State of Mexico.

Table 5. Financial viability indicators (NPV, IRR and benefit–cost ratios) for Rose Production Units in Ten-ancingo and Villa Guerrero, State of Mexico.

Comment 13: The conclusion aligns with the study findings but could be strengthened through a more forward-looking emphasis. For instance, adding a brief indication of potential research extensions (e.g., dynamic PAM modelling, comparative analysis across floriculture products) would enhance the manuscript’s scholarly value.

Response 13: Dear Reviewer, we revised the conclusion to take your valuable comment into account. (Lines 558-592) “In the analyzed model, low profitability in the sector is linked to a market failure associated with its treatment as a luxury good rather than a necessity, which accounts for its restricted growth. At the same time, the productive framework is driven by macroeconomic and sectoral policies that foster regional specialization grounded in natural resource based comparative advantages. In this setting, international markets require technological innovation, qualified labor, and adherence to voluntary and mandatory standards, none of which are fully evidenced in the present study.

In the analyzed model, low profitability in the sector is linked to a market failure associated with its treatment as a luxury good rather than a necessity, which accounts for its restricted growth. At the same time, the productive framework is driven by macroeconomic and sectoral policies that foster regional specialization grounded in natural resource based comparative advantages. In this setting, international markets require technological innovation, qualified labor, and adherence to voluntary and mandatory standards, none of which are fully evidenced in the present study.

The substitution of technology with labor has generated a distortionary policy environment that leads to market failure. This indicates that the region’s specialization does not rest on a genuine comparative advantage and instead requires technology transfer and training. Establishing collaborative agreements with educational and research institutions to develop human capital and implement product and personnel certification processes may be the most effective path for future development.

Rose production had a positive effect on the regional economy by generating employment with wages above the food basket threshold established by CONEVAL. The study also revealed a marked feminization of the workforce in this crop, which represents an opportunity for a clearly vulnerable group whose labor has historically been undervalued.

The identified policy distortion imposes an indirect tax burden on domestic consumers while strongly protecting the export crop. The analysis shows that resource allocation is inefficient, since exports represent only a small fraction of total production. Therefore, prioritizing the domestic market could mitigate the adverse effects of these distortions on national consumers, particularly because rose exports in this setting do not contribute substantially to foreign exchange revenues.

It is necessary to review and, where appropriate, adjust fiscal policies to enable a more efficient allocation of resources that strengthens the domestic market. As this study suggests, such measures could improve the living conditions of farmers engaged in this activity and promote more sustainable production systems”.

Reviewer 2 Report

Comments and Suggestions for Authors

Dear authors,

Your study provides a well-constructed analysis of policy distortions and their impact on the competitiveness and welfare of rose producers in Tenancingo and Villa Guerrero.
To strengthen the presentation, I consider a moderate restructuring useful: the current introduction combines the historical context, the description of the sector and the review of the literature, and separating a separate section from the Literature Review would greatly clarify the contribution of the paper. At the same time, the explicit formulation of the hypotheses either at the end of the introduction or in the methodology would help to orient the reader, given that the analysis starts from clear premises regarding the impact of distortive policies and the competitiveness of the system.
The results are presented coherently, including the observations on the low IRR, the reliance on policy transfers and the pressure of labor costs. To strengthen the final section, I recommend introducing some limitations of the study, such as the use of data from a single year, the construction based on a representative RPU and the sensitivity of the estimates to international prices. This would provide additional transparency and facilitate openness to future research directions.
I consider the paper to be solid, relevant, and well-documented; the suggested adjustments aim to clarify the form.

Author Response

Comment 1: Your study provides a well-constructed analysis of policy distortions and their impact on the competitiveness and welfare of rose producers in Tenancingo and Villa Guerrero.

To strengthen the presentation, I consider a moderate restructuring useful: the current introduction combines the historical context, the description of the sector and the review of the literature, and separating a separate section from the Literature Review would greatly clarify the contribution of the paper.

Response 1: Dear reviewer, after carefully considering this comment and reviewing the introduction, we decided to retain the original structure and content. However, we have added a new paragraph to better connect the ideas and improve the overall coherence of the section: (Lines 51-59) “Some international studies have examined how government policies, including fiscal incentives and trade regulations, shape production practices, market access, and sustainability initiatives in these industries (Awa et al., 2024; Erazo-Álvarez, 2023). In particular, Erazo-Álvarez (2023) evaluates the effectiveness of different tax incentives in promoting investment and development in the Latin American flower industry, taking into account the diverse economic and regulatory contexts across countries. Other studies highlight how the perishable nature of horticultural goods requires a stable and skilled labor supply, shaping policy considerations related to labor availability and wage structures (Wei et al., 2023)”.

Comment 2: At the same time, the explicit formulation of the hypotheses either at the end of the introduction or in the methodology would help to orient the reader, given that the analysis starts from clear premises regarding the impact of distortive policies and the competitiveness of the system.

Response 2: Dear Reviewer, in line with your recommendation, we have formulated the following hypothesis: (Lines 51-59) “The hypothesis of this research was that export-oriented rose cultivation in Ten-ancingo and Villa Guerrero, Mexico, remains competitive and socially profitable under the current agricultural policy framework, thereby contributing to economic and social sustainability. At the same time, it was assumed that existing distortions in resource al-location limit sustainability over the long run, implying that policy adjustments to promote innovation, improve technology transfer, and strengthen market integration are essential to enhance the overall resilience of the sector”.

Comment 3: The results are presented coherently, including the observations on the low IRR, the reliance on policy transfers and the pressure of labor costs. To strengthen the final section, I recommend introducing some limitations of the study, such as the use of data from a single year, the construction based on a representative RPU and the sensitivity of the estimates to international prices. This would provide additional transparency and facilitate openness to future research directions.

I consider the paper to be solid, relevant, and well-documented; the suggested adjustments aim to clarify the form.

Reposne 3: Dear Reviewer, we have incorporated a section on limitations and implications into the discussion section. (Lines 558-592) “In the analyzed model, low profitability in the sector is linked to a market failure associated with its treatment as a luxury good rather than a necessity, which accounts for its restricted growth. At the same time, the productive framework is driven by macroeconomic and sectoral policies that foster regional specialization grounded in natural resource based comparative advantages. In this setting, international markets require technological innovation, qualified labor, and adherence to voluntary and mandatory standards, none of which are fully evidenced in the present study.

Reviewer 3 Report

Comments and Suggestions for Authors

The introduction provides a good overview of the evolution of Mexico's agricultural policies, but it lacks sufficient citations of international studies (e.g., floral industry policies in other Latin American countries). It is recommended to add relevant international comparisons to enhance the breadth and depth of the research. (see lines 31-68)

The description of the PAM in the introduction is too brief. It is suggested to expand the last two paragraphs of the introduction. (see lines 83-92)

3.There are no figures in the manuscript. Should some figures be added, such as adding a map of grower distribution data in the study area to the Materials and Methods section?

The study in the Tenancingo and Villa Guerrero municipalities was classified as small-scale and used "snowball sampling," which may lead to sample bias. It is recommended to acknowledge the limited representativeness of the sample in the limitations section and suggest expanding the geographical scope or using random sampling in future research.

Some paragraphs lack smooth transitions, particularly between the "Materials and Methods" and "Results" sections. It is recommended to enhance the logical connection between paragraphs; for example, after introducing the PAM method, more clearly explain how it was applied to the specific data.

Are the cost factors in Table 3 complete? Should costs such as seeds and transportation also be considered? (see lines 328-330)

The results section is rich in data, but the discussion section does not sufficiently use existing literature to explain the mechanisms behind the phenomena. For example, why does labour cost constitute the main part of the implicit tax? It is recommended to provide further analysis combining the structure of Mexico's labour market or agricultural policy background. (see lines 425-428)

The policy recommendations proposed in the conclusion are relatively general. It is recommended to propose more specific and actionable suggestions based on the research findings, for example, proposing improvement paths regarding "Value-Added Tax refunds" or "labour training."

The formatting of the references is inconsistent. It is recommended to standardize them according to the journal's requirements.

Author Response

Comment 1: The introduction provides a good overview of the evolution of Mexico's agricultural policies, but it lacks sufficient citations of international studies (e.g., floral industry policies in other Latin American countries). It is recommended to add relevant international comparisons to enhance the breadth and depth of the research. (see lines 31-68).

Response 1: Dear reviewer, in line with the comment to include international studies we formulated the following paragraph: (Lines 51-59) “Some international studies have examined how government policies, including fiscal incentives and trade regulations, shape production practices, market access, and sustainability initiatives in these industries (Awa et al., 2024; Erazo-Álvarez, 2023). In particular, Erazo-Álvarez (2023) evaluates the effectiveness of different tax incentives in promoting investment and development in the Latin American flower industry, taking into account the diverse economic and regulatory contexts across countries. Other studies highlight how the perishable nature of horticultural goods requires a stable and skilled labor supply, shaping policy considerations related to labor availability and wage structures (Wei et al., 2023)”.

Comment 2: The description of the PAM in the introduction is too brief. It is suggested to expand the last two paragraphs of the introduction. (see lines 83-92)

Response 2: Dear Reviewer, thank you very much for this helpful suggestion. We fully agree that the Policy Analysis Matrix (PAM) is central to the study; however, in the introduction our aim was to provide only a concise conceptual overview, and the last two paragraphs already summarize and cite six key references on the use and methodology of PAM. Because the PAM methodology is described in detail in the Materials and Methods section, we consider that expanding the methodological discussion or adding more literature in the introduction would be redundant. Therefore, we have kept the current version and only added a few paragraphs to respond to other reviewers’ comments.

Comment 3: There are no figures in the manuscript. Should some figures be added, such as adding a map of grower distribution data in the study area to the Materials and Methods section?

Response 3: Dear Reviewer, thank you for this helpful suggestion. In our experience, including maps often raises copyright and permission issues, and we consider that a map is not strictly necessary in this case because the geographic characteristics and distribution of growers are already described in detail in the Materials and Methods section.

Comment 4: The study in the Tenancingo and Villa Guerrero municipalities was classified as small-scale and used "snowball sampling," which may lead to sample bias. It is recommended to acknowledge the limited representativeness of the sample in the limitations section and suggest expanding the geographical scope or using random sampling in future research.

Response 4: Dear Reviewer, thank you for this important observation. The study focuses on small producers, for whom economic and personal information is highly sensitive, and broader access to such data was not feasible. Consequently, we worked only with those few producers who were willing to share their sensitive information, which justified the use of snowball sampling. In line with your recommendation, we now explicitly acknowledge the limited representativeness of the sample in the limitations section and suggest that future research expand the geographical scope and apply random sampling where possible. (Lines 541-554) “Several limitations should be considered when interpreting these results. The analysis is based on a small number of export-oriented rose production units in Ten-ancingo and Villa Guerrero and on a static Policy Analysis Matrix with CONEVAL poverty lines, so it does not capture interannual shocks or dynamic adjustments in technology, labor demand, and land use (Sharma et al., 2017). Furthermore, data were obtained through nonrandom snowball sampling of small export-oriented producers, highlighting the need for future studies to expand the geographical scope and apply probabilistic sampling designs. In addition, per capita income is derived from average profitability divided by the number of workers and mainly reflects wage employment, without fully accounting for intra household allocation of family labor, non-wage income, or diversified livelihood strategies. Finally, the sustainability assessment is restricted to economic and social dimensions and approximates policy distortions through observed price gaps, leaving environmental externalities, occupational health risks, and value chain distributional effects outside the scope of the PAM framework (Stemmler, 2023)”.

Comment 5: Some paragraphs lack smooth transitions, particularly between the "Materials and Methods" and "Results" sections. It is recommended to enhance the logical connection between paragraphs; for example, after introducing the PAM method, more clearly explain how it was applied to the specific data.

Response 5: Dear Reviewer, thank you for this helpful comment. To improve the logical flow between the Materials and Methods and Results sections, we have aligned and numbered the subsections in both parts of the manuscript. For example, in Materials and Methods, subsection 2.1.1 “Divergence affecting input costs” now clearly describes the calculation procedures, while in the Results section subsection 3.1.1 “Divergence affecting input costs” presents the corresponding empirical values. We also added a short linking sentence after introducing the PAM method to clarify how each methodological component is directly reflected in the subsequent results.

Comment 6: Are the cost factors in Table 3 complete? Should costs such as seeds and transportation also be considered? (see lines 328-330)

Response 6: Dear Reviewer, thank you for your comment. Yes, those costs are included in Table 3.

Comment 7: The results section is rich in data, but the discussion section does not sufficiently use existing literature to explain the mechanisms behind the phenomena. For example, why does labour cost constitute the main part of the implicit tax? It is recommended to provide further analysis combining the structure of Mexico's labour market or agricultural policy background. (see lines 425-428)

Response 7: Dear Reviewer, since expanding the discussion was a recurring comment, we have substantially broadened this section and have also added paragraphs addressing the study’s limitations and implications.

Comment 8: The policy recommendations proposed in the conclusion are relatively general. It is recommended to propose more specific and actionable suggestions based on the research findings, for example, proposing improvement paths regarding "Value-Added Tax refunds" or "labour training."

Response 8: Dear Reviewer, we revised the conclusion to take your valuable comment into account. (Lines 558-592) “In the analyzed model, low profitability in the sector is linked to a market failure associated with its treatment as a luxury good rather than a necessity, which accounts for its restricted growth. At the same time, the productive framework is driven by macroeconomic and sectoral policies that foster regional specialization grounded in natural resource based comparative advantages. In this setting, international markets require technological innovation, qualified labor, and adherence to voluntary and mandatory standards, none of which are fully evidenced in the present study.

Comment 9: The formatting of the references is inconsistent. It is recommended to standardize them according to the journal's requirements.

Response 9: Dear Reviewer, we have reviewed the references section to ensure full compliance with the journal’s formatting requirements.

Round 2

Reviewer 3 Report

Comments and Suggestions for Authors

Excellent progress in the revision process. I greatly appreciate the quality of the revision. Therefore, I accept all your revisions and, furthermore, I accept the manuscript for publication.